In terms of the economy, New Right thinkers such as Robert Nozick Robert Nozickreject one-nation ideas of preventing the excesses of capitalism in order to help the poor. The election of Margaret Thatcher in 1979 in the UK marked the end of the post-war consensus, where both major parties had broadly agreed to follow Keynesian economic policies of intervention, progressive taxation, and a mixed economy. American economist Milton Friedman (1912–2000) argued that governments were to blame for the economic problems of the 1970s. He proposed that it was necessary to accept a level of unemployment, and that a successful economic policy would instead focus on inflation, which can be managed only through control of money supply. Government’s role should be to encourage production and the way to do that would be to cut regulation and taxes and to support entrepreneurship.
Neo-liberal economists follow the liberal ideas of the eighteenth-century Scottish economist Adam Smith, who argued that the ‘invisible hand of the market’ should guide economic policy. They seek a return to what they see as a golden age of entrepreneurialism and self-help, where voluntary organisations rather than the state supported the poor. This led them to support a mass programme of privatisation in the UK in the 1980s. Neo-liberals, like classical liberals, believe that the state is coercive and infantilising and operates in a collectivist way. The state should therefore be minimal, allowing free individuals the liberty to make rational choices. This was also reflected in a belief that the welfare state had created a dependency culture, and that this state must be drastically reduced to allow individuals to manage their own affairs and stand on their own two feet. Nozick argued that welfare itself was a violation of property rights. Thatcher famously suggested that there was ‘no such thing as society’. Neo-liberals argue in favour of tax cuts or even flat taxes, believing that their policies will create a more prosperous and equitable society.
Neo-liberal economists argue that their policies will result in a ‘trickle-down’ effect. If the wealthy are allowed to keep more of their money, they will make more money, employ more people and pay them better. Therefore the wealth will ‘trickle down’ through all levels of society.