Neoliberalism is a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade. The role of the state is to create and preserve the institutional framework appropriate to such practices. It must set up those military, defence, police, and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets.

Neo-liberalism is premised on four basic postulates. These are:

• Market Driven Economy Neo-liberalism believes in restoring the market to its position of primacy, which was lost during the era of Keynesian Welfare Economics. It believes in ‘principles of laissez-faire economics’ and ‘in the sanctity and supremacy of market mechanisms’ for ‘equitable outcomes’. In other words, ‘the morality of the market’.
• Premium on Individual Liberty/Freedom Neo-liberal ethos is all for ‘the maximisation of individual liberty and freedom through the rolling back of the State from the economy’.
• Monetarism Neo-liberalism, at least, in the context of the UK held ‘that inflation, not unemployment, was the major problem’ and could be rectified by regulating the money supply.
• Relegation of the Welfare State Neo-liberalism believes in ‘cutting back of the Welfare State, which was regarded as shifting the potential of free market and encouraging a culture of dependency’. It is relevant to mention here that Neo-liberalism as a concept, encompasses the Neo-liberal view of the State, and it is for this reason that we are giving a separate sub-section to the latter.

The Neo-liberals are the advocates of a ‘Minimalist Role for the State’. They are ‘inherently suspicious of the State. They regard State activity as interfering in the natural order of life – be this in relation to the functioning of the market or the way in which social relations within society are formed and played out’. The basic tenets of the Neo-liberal State are as follows:

• Focus on Individual Liberty - The principle of individuals not having the right to coerce each other should be extended to the State, ‘which after all is only an amalgam of individuals.
• Greater Innovation - Greater freedom greater innovation and progress; innovation would not occur where the State owns or controls the means of production.
• Importance of Incentive - Incentive is greatly motivating, while State intervention leads to ‘caution and inertia’.
• Significance of Free Markets - Free markets are conducive to ‘social coordination’. ‘Unlike a totalitarian State, a market economy evolves unconsciously, without depending on coercion, by relying on millions of individual actors constantly responding to price signals’.
• More Freedom - Planned societies are less free. They involve social engineering – the (former) Soviet Union being a classical example – but social engineering in whose interests? Free markets promote freedom.
• Social Justice - The Neo-liberal view of the State perceives ‘social justice carried out by the State to be inherently unfair’. This is because ‘certain individuals enjoy rewards they do not deserve, while others have rewards removed that they should be entitled to’.
• Pro-consumer Stance - State power can be unfairly monopolised, as interest groups form and are granted special treatment. The natural workings of the market are then upset. Monopolised State power adversely affects consumers. ‘They pay more and get less, as agencies of the State become increasingly captured by the individual interests of particular interest groups’. The above, then, is the essence of Neo-liberalism and the Neo-liberal view of the State. Our discussion of the Neo-liberal perspective will, however, not be complete without some reference to Neo-liberalism impacting upon the discipline of Public Administration in the last two decades.