Neoliberalism refers primarily to the 20th-century resurgence of 19th-century ideas associated with laissez-faire economic liberalism. These include extensive economic liberalisation policies such as privatisation, fiscal austerity, deregulation, unrestricted free trade, and reductions in government spending in order to increase the role of the private sector in the economy and society. These market-based ideas and the policies they inspired constitute a paradigm shift away from the post-war Keynesian consensus which lasted from 1945 to 1980.
The term has been used in English since the start of the 20th century with different meanings, but became more prevalent in its current meaning in the 1970s and 1980s by scholars in a wide variety of social sciences, as well as being used by critics. Modern advocates of free market policies avoid the term "neoliberal" and some scholars have described the term as meaning different things to different people, as neoliberalism "mutated" into geopolitically distinct hybrids as it travelled around the world. As such, neoliberalism shares many attributes with other contested concepts, including democracy.
The definition and usage of the term have changed over time. It was originally an economic philosophy that emerged among European liberal scholars in the 1930s in an attempt to trace a so-called "third" or "middle" way between the conflicting philosophies of classical liberalism and socialist planning. The impetus for this development arose from a desire to avoid repeating the economic failures of the early 1930s, which were mostly blamed by neoliberals on the economic policy of classical liberalism. In the decades that followed, the use of the term neoliberal tended to refer to theories at variance with the more laissez-faire doctrine of classical liberalism, and promoted instead a market economy under the guidance and rules of a strong state, a model which came to be known as the social market economy.
In the 1960s, usage of the term "neoliberal" heavily declined. When the term was reintroduced in the 1980s in connection with Augusto Pinochet's economic reforms in Chile, the usage of the term had shifted. It had not only become a term with negative connotations employed principally by critics of market reform, but it also had shifted in meaning from a moderate form of liberalism to a more radical and laissez-faire capitalist set of ideas. Scholars now tended to associate it with the theories of economists Friedrich Hayek, Milton Friedman and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan and Alan Greenspan. Once the new meaning of neoliberalism was established as a common usage among Spanish-speaking scholars, it diffused into the English-language study of political economy. By 1994, with the passage of NAFTA and the Zapatistas' reaction to this development in Chiapas, the term entered global circulation. Scholarship on the phenomenon of neoliberalism has been growing. The impact of the global 2008–2009 crisis has also given rise to new scholarship that critiques neoliberalism and seeks developmental alternatives.