When commentators refer to "neoliberalism" they are referring to the idea that corporations are the most important aspect of society. The word comes from "liberalism" (or more specifically "classical liberalism") which is the set of economic ideas perhaps best articulated by Adam Smith in "The Wealth of Nations", a book widely viewed as a classic on how free markets and capitalism work. Smith's work is where terms like "the invisible hand" come from; Smith argued that truly free markets were able to regulate themselves and would always bend toward correct actions. Smith however did acknowledge that monopolies and other economic conditions would prevent truly free markets and some limited government to protect against that was necessary, which most proponents conveniently leave off.
"Neoliberalism", with neo being a prefix that means "new", is literally the "new liberalism", a modern offshoot of those ideas. Government is seen as a necessary evil that must be kept minimal, taxes must all be kept minimal and never applied to capital, and the private sector and "invisible hand" of the market are the most powerful forces that must be trusted to work out in the long run. In other words, the role of government is to protect the rights of business in order to maintain a free market that is safe for capital to invest. The theory is that a free market full of competition will eventually stabilize and bring valuable goods at reasonable prices and pay reasonable wages, and this free market process is "automatic", meaning that government need not and should not ever intervene. Smith's work was in the late 1700s, a very different world before industrial automation when most of the world's population were farmers. Neoliberalism is effectively the attempt at carrying his ideas into the new industrialized (and now global) economy, and Chomsky's book does a great job at showing how this policy has been disastrous and counter to democratic ideals.
Neoliberalism has been on the upswing in the United States for decades, but probably most noticeably became public policy during the Reagan era. The Adam Smith Institute proudly provides both a good description of neoliberal policy and a boast that they have influenced such policy decisions since the 1970s, to give an example. Since then, Republican and Democratic presidents and Congresses have pushed for free market "invisible hand" solutions to problems. The parties disagree slightly on implementation -- with Republicans tending to lean completely toward "market-based solutions" while Democrats acknowledge some small "safety nets" might be necessary -- but both overwhelmingly agree that private business and not government needs to fix problems. We see this as members of both political parties have de-regulated banks and businesses (they call it "red tape"), cut funding for social programs and benefits, and pushed to privatize many services including utilities like water and even social security. This idea that capital -- investing in privately-owned businesses that control resources and sell to others for profit -- is superior to any other economic model and will always automatically lead to solutions of public problems is exactly the definition of capitalism.
If you don't believe how similar the two major parties are on neoliberalism, try to ask most politicians on either side about the free market or capitalism. Both Republicans and Democrats loudly trumpet private for-profit insurances as the model for healthcare, and reject any sort of publicly-funded model like single payer medicare for all, or even simply a public option to compete with private insurance. (Their differences on healthcare really only come down to whether government can require by law people to buy insurance, otherwise their plans are effectively the same). Nancy Pelosi, Democratic House leader, loudly proclaimed "we're capitalists, and that's just the way it is" when asked at a recent town hall. Bill Clinton worked with Republicans on many reforms during the 1990s, including de-regulation of banks and capital as well as "reform" of social programs like welfare (that lead to those programs being ineffective, allowing politicians to later use that as "evidence" the programs don't work and scrap them all-together). Even today, Democrats' arguments the GOP tax reform plan are mostly about not following proper Senate procedure.. We have to make taxes lower for business and capital to let the free market, is what the GOP argues, and Democrats largely agree with them. Notice how much even Democrats scream "It will raise your taxes!" -- further promoting "tax phobia", teaching citizens to be afraid of taxes and treat them as "theft" -- rather than fighting for a program that raises taxes on the wealthy to ensure a fair and just economic system for all. They're not arguing for a fair system, they're arguing that Republican voters and donors are reaping the benefits instead of their own Democratic voters and donors. Either way, it is unjust since someone most "lose" in order for another to "win" and make profits in such a "free market" capitalist system.
The "invisible hand" of the market will fix everything and government should keep interference to a minimum, according to both major parties. They only disagree on the best way to encourage a free market, not the concept of a market-based solution itself. Contrast the Green Party's platform that explicitly says:
The Green Party seeks to build an alternative economic system based on ecology and decentralization of power, an alternative that rejects both the capitalist system that maintains private ownership over almost all production as well as the state-socialist system that assumes control over industries without democratic, local decision making. We believe the old models of capitalism (private ownership of production) and state socialism (state ownership of production) are not ecologically sound, socially just, or democratic and that both contain built-in structures that advance injustices.
When was the last time you saw a politician saying natural resources and industry should be democratically-controlled by communities rather than owned and operated by capitalists? Unless you've seen a Green Party candidate speaking recently (or maybe a DSA-backed candidate), you probably have never seen this from major party candidates. We don't have a real debate on economic policy in this country because leaders and most establishment candidates of both parties are largely in agreement on such issues. Neoliberalism has infiltrated most of our discussion to the point that many accept its tenants as "common sense" or "obvious" because they've never heard an alternative. They almost treat the "invisible hand" and "free market" as a religion, that "free market competition" doctrine cannot be wrong and any questioning of it is blasphemy.
So neoliberalism has as its base a very capitalist-focused, free market economy with minimal government and taxes. But that isn't all. This focus on capitalism and privately-held resources has led to the problems we see in our government and foreign policy.
In order to expand profits and capital, businesses must continue to expand claim more resources (buy more private property). Naturally, this leads to businesses buying other businesses to get their resources, and leads to monopolies. Of course, in today's world, it is easy to hop on a plane or set up an electronic bank account around the world, so monopolies are not restricted to their home country. It is now easy for big business to "invade" other countries and attempt to gain private control of the resources of that country as well as the home country. They can do so economically, but it's really easy if they can use another source of power: military.
Viewed through this lens, United States intervention in other countries since World War 2 makes much more sense. George W. Bush is famous for describing the wars in Afghanistan and Iraq as "bringing democracy" to the people, but that never entirely made sense as presidents for decades have been close allies with very authoritarian regimes. We fund and provide weapons to Saudi Arabia, for example, despite the country being a royal dictatorship with some of the worst civil rights violations in the world. Why?
"Democracy" is a euphemism for neoliberals. They don't mean to bring literal democracy -- as in people directly governing themselves through popular vote -- or freedom, but rather to import American-style neoliberal free markets. As Chomsky put it, we're not making the world safe for democracy but making the world safe for capital, much as Adam Smith argued in his book that capital needed to be safe for a free market to continue to function. In some sense, the fight was for freedom, but freedom of business capital, not individual freedoms. When you see that, it becomes clear why many "allies" of the United States are among the worst human rights offenders in the world while we demonize other countries. Our "allies" are ones willing to do business with us (like Saudi Arabia selling us our oil addiction), while our "enemies" are ones that are economic rivals (or simply more socialist states uninterested in cooperating with privately-controlled American corporations). Notice tensions are cooling with rival countries like Russia as they become more capitalist and open to American businesses and capital, incidentally. Of course, we utilize any economic rivals as a source of anxiety to push for more military and defense spending, which itself is typically handled by privately-owned military industrial "contractors that profit from further spending. The spending that generates military profits must come from somewhere, and so taxes are raised, wages are lowered, to ensure the nation keeps spending while the capitalists continue to profit.
"Free trade agreements" are all about securing favorable conditions for corporations and capital. Since agreements like NAFTA have been signed, we've seen a shrinking middle class with lower salaries and benefits, and a growing poverty class with no safety net, as corporate taxes are cut to help fund offshoring of those corporations to generate even larger capital and profits. Not only that, but in the process, we've granted corporation more and more "human rights", allowing corporations to sue governments for profit loss (arguing for example that social programs prevent them from making as much profit as they could have) and further weaken our social safety nets. We've also empowered the president to make such binding agreements without consulting Congress, further centralizing economic power in the hands of a few individuals rather than the people. De-regulation and trade agreements have effectively left corporations with more rights than individuals. Again, leaders of both parties have generally championed free trade agreements and their effects, with only a few such as Bernie Sanders speaking out against them.
To enforce trade agreements and business property rights, we see our police forces drift toward "police states" that become more concerned with protecting private property than actually defending citizens against injustice. A well-known recent event was the DAPL protests, in which peaceful protesters were violently attacked by police forces who considered themselves "defending" the property on behalf of the pipeline that supposedly owned the land (nevermind that the protesters were largely Native Americans that had rightful ownership of that land under treaties with the United States - again, our police and military make the world safe for business and capital, not individual human rights).
While Republicans are often detestable for socially-backwards views, we must remember that Democrats usually support the same neoliberal policies Republicans do. Such policies lead to massive wealth inequalities that elevate a select few into "rich" status at the expense of pushing large amounts of Americans down into poverty, all while reducing our individual freedoms, weakening our democracy, and transforming our country into a police state more interested in protecting capital than human civil rights. Unfortunately Republicans winning elections is often a backlash to such policies hurting the average American, much like how Democrats win after average Americans continue to suffer under the same neoliberal Republican policies. Both sides get to bash each other over the head with the negative effects every 4-8 years and win in landslides because people are angry and yet feel trapped in the two party system. In effect, both parties get to "have their cake and eat it too" as they implement neoliberal policies that profit themselves and simply wait for the next cycle to sweep them into power for even more profits.
The way to combat this is not to support either major party, but to fight the entire neoliberal establishment as a whole. I believe the best way to do so is build a new political party and movement that focuses on people and planet over profits, that values human and individual rights, that believes corporations are not entitled to make money no matter what. A party that acknowledges that natural resources are precious, and their extraction and use deeply impacts the entire community if not region or whole world, and so we need more bottom-up democratic structures managing those resources rather than top-down corporate dictatorships. The Green Party is exactly that party, and I invite you to join in building the party rather than propping up either of our current major neoliberal parties. And if you want to learn more about neoliberalism and how today's world was built by both major parties, Chomsky's book is an excellent introduction to the subject.
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