Can neo-liberalism redeem the Democrats? Will the party be restored if it jettisons what remains of its New Deal past and adopts the neo- liberals' free market creed? The answer is a definitive ''no'' - for neo- liberalism is deeply implicated in the Democrats' demise.

Far from being outsiders, as they claim, the neo-liberals have, under different labels, been at the core of the Democratic Party for more than a decade. The neo-liberal Democrats took over their party's Presidential nominating process as early as 1972. In that incarnation, they were called McGovernites. George McGovern's campaign manager was Gary Hart, his economic adviser the neo-liberal sage Lester C. Thurow. Together, they did not so much capture the Democratic Party as displace it, ''reforming'' the economically liberal but socially conservative blue collar ethnic Democrats out of the party.

In the House, yuppie politicians point to Thomas P. O'Neill as proof of the party's continuing adherence to outdated New Deal concepts. True, Tip has retained symbolic power, but the strength of New Deal stalwarts in the House was shattered as early as 1974. It was then that the ''New Politics'' Democrats arrived, swept in on a wave of post-Watergate revulsion, and proceeded to dismantle the seniority system that had allowed New Deal Democratic chairmen to look

after the economic interests of their working-class constituencies. The leading candidates in the final 1976 primaries - Jimmy Carter and Jerry Brown - were neo-liberals in all but name. Mr. Brown won the California governorship in 1974 by campaigning against the ideas of his New Deal father, the former Governor, Edmund G. Brown. Like the neo- liberals, Jerry Brown was described as ''a product of the Democratic left who says things with great appeal to the Republican right.'' In 1976, both he and Mr. Carter campaigned against what he called the ''bankruptcy of the whole New Deal, Fair Deal, Great Society tradition.'' Jimmy Carter won in 1976 by temporarily reviving the New Deal coalition, but once in office he revealed his true neo-liberal colors. His primary appeal - his seeming ability to ease the breach between whites and blacks - ran headlong into his fiscal conservatism. He backed off from the Government intervention and broad- based job programs that might have brought black and white Democrats together, and thus further exacerbated the party's true weakness - its fatal racial divisions. Middle- and lower-middle class white males felt themselves under dual attack, as the Carter Administration proceeded to back job quotas and to allow inflation and bracket creep to erode their paychecks. The upshot was that the Republicans' major gains in 1980 came from middle-income Roman Catholic families who had long been a mainstay of the Democratic Party.