The lie of the term Neoliberalism
This article is part of the Intermediate course on Libertarianism and the Austrian School of Economics -> State Interventions
Last updated: 2026-08-20
The historical origin of the term “neoliberalism”
Neoliberalism is a derogatory term generally used by left-wing movements to refer to Crony Capitalism, and any practice similar to the Modern Mercantilism carried out by the state.
By definition: “Free Market” is the opposite of “Crony Capitalism”.
But the history of the invention holds a paradox: it was not coined by the left, but by reformist thinkers of the liberal spectrum itself at the end of the 1930s. What the left did do —especially from the 1970s–80s onward and with force in Latin America— was turn it into a catch-all insult (they use it in any situation).
1. Who coined the term and where?
The term “neoliberalism” was officially born in August 1938 during the Walter Lippmann Colloquium held in Paris. This international gathering brought together intellectuals concerned about the deep crisis of classical libertarianism in the face of the advance of fascism, Stalinism, and state interventionism.
The neologism was proposed by the German sociologist and economist Alexander Rüstow.
2. What did it originally mean? (And the stance of the Austrian School)
Far from what the left understands today —and from what orthodox free-traders defend— the original “neoliberalism” of Rüstow and of German ordoliberalism (such as Wilhelm Röpke) was born of a direct critique of nineteenth-century traditional laissez-faire, which had very little of laissez-faire (that is, let do). The laissez-faire being criticized was rather Crony Capitalism.
The role of the State:
The creators of the term argued that the free market did not function by itself in a vacuum, so the State had to intervene actively to design regulatory frameworks, prevent the formation of monopolies, and guarantee social order (an approach that would later give shape to the European Social Market Economy).
The rejection by the Austrians:
Key figures of the Austrian School such as Ludwig von Mises and Friedrich Hayek took part in the debates but showed themselves deeply skeptical of this current.
For Mises, this “new libertarianism” granted too much space to state interventionism. Austrian economists never called themselves “neoliberals”; they preferred the terms “classical liberal” or “old Whig.”
3. The appropriation and transformation by the left
The turn of the 1970s and 1980s:
Coinciding with the crisis of the Keynesian model and the rise of free-market policies driven by figures such as Margaret Thatcher, Ronald Reagan, or the reforms in Latin America, the global left and structuralist currents (such as ECLAC/CEPAL) rescued the word “neoliberalism.”
The discursive catch-all:
The term was redefined to turn it into an umbrella concept and an eminently pejorative one. Today it is used to disqualify in a homogeneous way any economic measure oriented toward the reduction of public spending, deregulation, trade openness, and privatizations, regardless of their theoretical nuances.
In short
The term was not invented by the left, but by reformist liberal intellectuals in 1938 who were seeking a “new libertarianism” with greater state supervision (Keynesianism, perhaps?).
However, it was recycled and popularized by the left from the last decades of the twentieth century onward to turn it into the critical and generalizing label with which the free market is identified today.
This article is part of the Intermediate course on Libertarianism and the Austrian School of Economics -> State Interventions
| Previous topic | Next related topic | |
|---|---|---|
| <- Crony Capitalism | <---> | The birth of Fractional-Reserve Banking -> |
Last updated: 2026-08-20
| | | |
This site was written based on publicly available free articles from the internet.
The content of this site is available under the: Creative Commons Attribution 4.0 International (CC BY 4.0) license.
You can freely copy, redistribute and modify the material, as long as the source is mentioned: liberwiki.com