Critics of neoliberalism often chide supporters for their apparent uncaring attitude towards things like poverty and inequality. Research from New York University suggests some of these accusations may be warranted, with the rise in neoliberalism over the past 25 years coinciding with a rise in acceptance of rising income inequality.
“Our institutions, policies, and laws not only structure our social life, but also have a great influence on the kind of people and society we become,” the researchers explain. “Institutions can promote well-being and solidarity, or they can encourage competition, individualism, and hierarchy. In our work, we find that neoliberalism has fostered preference for greater income inequality not just in industrialized nations, but throughout the world.”
Rising inequality
Neoliberalism is a predominantly free market-led philosophy and has become the predominant socioeconomic framework across much of the world since the late 1970s. Advocates, such as Margaret Thatcher, argued that it was as much a case of changing human values as it was the economy itself.
The researchers wanted to test whether Thatcher was fundamentally right and that neoliberalism has changed society’s values and made us more tolerant of income inequality. They analyzed over 160 countries to determine the relationship between economic institutions and human values between 1995 and 2019.
For instance, the level of neoliberalism was gauged via the Economic Freedom Index that is produced each year by the Fraser Institute. The impact of neoliberalism on societal values and attitudes towards inequality was measured via data from the World Values Survey, which tracks global attitudes.
The results show that countries with a higher-than-average level of neoliberalism also scored higher than average on preference for income inequality.
“Our results suggest that a few years is sufficient for—as Thatcher put it—systems to change ‘souls,'” the authors conclude.
“While it is perhaps intuitive that human beings shape the nature of the economies in which they live, our work shows the reverse—that economic systems mold human psychology to fit them. Neoliberal, free-market reforms appear to increase people’s preference for high levels of income inequality.”
