Neoliberalism is an economic doctrine, most prominently propagated by New Right luminaries such as Milton Friedman. It is essentially based on selective adoption of the policies of Adam Smith's classical liberalism, divorced from the underlying assumptions upon which those policies were based. Much like the original "free trade" doctrines of Smith's day, proponents of modern neoliberalism tacitly recognise that the policies of neoliberalism are to be applied only to others.
Neoliberal structural adjustment calls for the liquidation and privatisation of all revenue-producing state enterprises, public utilities, and social services (health care, education, etc.), the elimination of tariffs and other measures traditionally used to protect developing industry, and the deregulation of capital markets. Laws and regulations guaranteeing a minimum wage, safe working conditions, and the right of workers to organise must be struck down as "trade barriers," as must social welfare programmes and environmental protection laws. Agriculture must be reoriented from production for domestic needs to cash-crop export-oriented agriculture.
Not surprisingly, the major proponents of neoliberalism are rather selective in deciding who is subject to its rules. Indeed, since the Great Depression, both the business community and government in today's industrialised nations realised that economic well-being was too important to be left to the devices of an irrational and chaotic entity such as "the market," at least not their economic well-being. Thus, neoliberal dogma has generally been propagated in other countries.
The countries in which a "neoliberal economic miracle" has been proclaimed belong exclusively to what is sometimes called the Third World, or, by those with a taste for irony, "developing countries." While the number of billionaires and foreign investors generally increases exponentially in countries in which neoliberal structural adjustment policies (SAP) have been adopted, the domestic economy is generally decimated, and poverty skyrockets. This may explain why the populations of Third World countries can rarely be won over to neoliberalism by democratic means.
Indeed, for over fifty years, US-sponsored military coups have followed a pattern so familiar as to be traditional. A reformist government is elected, often despite substantial financial support and propaganda efforts on behalf of Washington's candidate. The reform government begins to introduce programmes and reforms that are taken as a matter of course in the industrialised world — minimum wage, protection for trade unions, child nutrition programmes, free public education, regulation, and, occasionally, nationalisation of industries given away to foreign investors by their corrupt predecessor governments. While these measures are overwhelmingly popular amongst the domestic population, they are less popular with foreign capital and the governments that represent it. The development loans extended to the predecessor government (conditioned upon the adoption of neoliberal SAPs) are cancelled, and military aid is increased. Soon enough, the military will overthrow the lawful government and begin dismantling all manner of social programmes, ushering in another new era of solicitude to foreign investors. The stocks of the corporations that sponsored the coup increase in value, and everyone (who matters) is happy.
While the main critique of neoliberalism rightly focusses on the self-serving hypocrisy of its proponents and the selective application of its dogma, it is important to note that neoliberal doctrine is also inherently flawed. This may seem obvious to those who survey the wreckage of neoliberal "success stories" such as Chile, Nicaragua, Brazil, Colombia, and India, there are, of course, those for whom mere empirical evidence is not sufficient. For those who hold fast to Adam Smith's (slightly modified1) vision, it is worth noting that one of the most important underlying premises upon which his work was based has long since been eliminated. Smith wrote, of course, at a time in which capital was largely tied up in land, and was thus highly immobile. Labour, on the other hand, was much more mobile than today. The major restrictions on free movement of labour — immigration laws and similar measures — would not begin to surface for over a century. Thus, if workers in Smith's day felt that they were being cheated by their employers, they could move to the next county, to the neighbouring country, or simply move right across the Atlantic.
These days, of course, free mobility of labour has gone rather out of style. While highly qualified professionals will often have no difficulty moving between countries, unskilled and semiskilled workers will be met with detention and deportation, assuming that they make it across the border alive (in states with highly militarised borders such as the US, this is not always likely). However, under the existing "free trade" agreements, capital — corporations and investors — may move freely across the globe. A US corporation may demand to be treated like a domestic corporation in Guatemala, but a Guatemalan worker will know better than to demand the same courtesy in the US.
This shift from a mobile workforce and immobile capital to globally mobile capital and an immobile workforce has fundamentally altered the balance of bargaining power upon which Smith's assumptions and those of the classical Liberals rested. With labour able to "vote with its feet," state intervention was not a sine qua non of improving working conditions and wages, and ensuring that the majority of the population was not destitute. Now, however, corporate capital is more powerful than ever. Since the adoption of NAFTA and similar free trade agreements, corporations in the US and other industrialised countries have taken a much more aggressive stance in dealing with workers. Practices that were unthinkable twenty years ago (and remain nominally unlawful today), such as threatening to transfer a plant to Mexico in the event of union organisation, are now commonplace. Due to the ability of corporations, with their newfound mobility, to play workforces off against each other, workers have found it much more difficult to ensure that they are paid adequately.
1For example, Smith's description of the developing corporate capitalism as being driven by "the vile maxim of the masters of mankind" has been neatly excised from this version of history.