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Neo-liberal Economy
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Neo-liberalism systematically tries to dismantle many of the structures that limit and regulate the operation of the market, both with regard to relationships between capital and labour and with regard to relationships between different capitalist enterprises. As such it cannot but increase the potential instability in the system, since many of these limits were precisely designed to restrain such instability.
  The increased instability of capitalism arising from neo-liberalism, coupled with the intensity of the attacks on workers' living standards where neo-liberal policies are adopted, is likely to provide many opportunities in the coming period for socialists to intervene and help to struggle against such policies. What is also important is to show how these policies arise from the nature of capitalism as a system and the particular strategies adopted by the ruling class to keep that system going.

Neo-liberal economics is based around three main elements. Firstly, there is a re-conceptualisation of the role of government expenditure. State spending is explicitly seen as justified only by the need to make domestic capital more competitive. This allows for spending on education, health and other public services to a certain degree, but only when this can be justified in economic terms as leading to an increase in efficiency. In addition, the provision of such services is seen as something which can best be provided by the private sector, with the role of the state mainly to manage the awarding of the relevant contracts and ensuring that no single monopoly provider gains too much power in the market at the expense of other capitalists. So privatisation is central to neo-liberalism.
  Secondly, neo-liberal thought is based around the breaking down of national economic barriers. The most important of these is in the financial sector. Neo-liberalism strongly advocates the removal of capital and exchange controls and the opening up of financial markets to foreign investment. National controls on imports of goods and services, especially tariffs and quotas, on intellectual property rights, on the awarding of government contracts and on productive investment are all to be removed and handed to international institutions, notably the World Trade Organisation (WTO). However, national controls on the movement of labour remain.
  Thirdly, there is an extensive programme of domestic deregulation. A central plank of neo-liberalism is a programme for 'flexible' labour markets, with maximum freedom for employers in the terms of hiring and firing workers and strict limits on trade union rights. Areas like pensions are also embedded as much as possible in a market framework. State- imposed limits on the behaviour of companies, such as the controls on interest rates and lending activities are removed – for example the Glass-Steagall Act separating commercial and investment banking, imposed in the wake of the 1930s depression in the USA, was recently repealed. Again, the regulatory role of the state is restricted to competition and anti-trust policy, in support of those capitalists who might lose out if a monopoly becomes too strong, rather than providing a counterweight to the power of capital.
  It is worth noting here that the main focus of neo-liberalism is on the 'micro' side of the economy, the way in which capitalism functions at the level of individual markets and companies; rather than on 'macroeconomics' – the operation of national economies as a whole. Certain macroeconomic policies, most notably the Stability and Growth Pact, which limits government borrowing within the countries participating in the euro, can be used to further neo-liberal objectives. However, they are not central to neo-liberalism, as is shown both by the fact that the Pact has been ignored in effect by the two most important EU governments, France and Germany (to the disquiet of the European Commission) and by the way in which advocates of neo-liberalism such as The Economist magazine and the Financial Times are opposed to the continuation of the Pact. More generally, neo-liberalism is quite compatible with 'Keynesian' policies of boosting government spending, cutting taxes and lowering interest rates in order to increase economic growth, as has been done by the Bush government in the USA since 2001. The key question is who gets the benefit of such spending, tax cuts and cheap money. For neo-liberalism, these policies must be justified by the interests of capital, as has indeed been the case in the United States under Bush.
  To summarise, the central element of neo-liberalism is the opening up of spaces for capital that were previously restricted, either for geographical reasons or through state involvement or regulation, coupled with the increased integration of the state with business around an agenda of increased competitiveness within these newly opened spaces.