Henry Olsen is Editor of UnHerd.com's Flyover Country theme and a Senior Fellow at the Ethics and Public Policy Center in Washington, DC. He is the author of 'The Working Class Republican: Ronald Reagan and the Return of Blue-Collar Conservatism'.

Neoliberalism was supposed to be the late 20th Century’s crowning achievement. Its vision of ever-expanding global prosperity promised to end poverty forever, while the personal freedoms that were supposed to arise in its wake would make even the hardened dictatorship of Communist China see the error of their ways. The giddiness surrounding this new world order is best expressed by political theorist Francis Fukuyama famous claim that neoliberal, democratic societies would bring about “the end of history”.

History, it seems, isn’t quite dead yet. Whether of the Right or the Left variety, populism is essentially a critique of neoliberalism’s perceived failings. As these movements gain political steam throughout the West, it’s time to rediscover the true meaning of neoliberalism.

When the principles of economic efficiency and private choice come into conflict with those of human sufficiency and dignity, those resisting are choosing 19th Century liberalism over 20th neoliberalism -

Neoliberalism’s emphasis on the free flow of goods, money, and people exposes those without strong job skills to economic competition from foreigners – a competition they find very hard to win. It’s no surprise, then, that populist movements rooted in these communities focus on restricting the very competition that neoliberalism insists upon.

They also tend to support high degrees of social spending to alleviate the economic pain neoliberal-inspired competition creates. Populists like Donald Trump often reject cuts to pension or health services, and frequently support increased spending in areas like family benefits.

Yet at the same time, right-wing populists do not reject the concept of the liberal economic order. They often call for tax cuts to stimulate the economy. Italy’s Lega, for example, proposes a 20% flat income tax, a dramatic change from Italy’s current progressive system with a top rate of 43%. Right-wing populists also tend not to criticise capitalism itself.

That cannot be said about left-wing populist critiques. This type of populism adopts a much more systematic critique of the neoliberal order. Rather than focus on limiting or reforming the principle of free movement, it goes to the heart of the liberal economic order itself: the ability of private parties to accumulate and distribute capital according to their preferences.

Could true neoliberalism save the West? By Henry Olsen

Britain’s Jeremy Corbyn is the most visible example of this type of populism. Last year he vowed to end the UK’s “failed model of capitalism,” and earlier this year he was unable to name even one good thing about capitalism. Corbyn and his supporters have argued for the re-introduction of “bold socialist policies” like nationalisation should Labour regain power.

Other leftist populists offer similar ideas. France’s Jean Luc Melanchon argued for a €100 billion public spending program and nationalisation to address France’s systemically weak economy. Spain’s Podemos also calls for dramatic increases in public spending and an end to Spain’s adherence to the EU’s limits on deficit spending.

The emphasis on significantly increased public spending points to the key left-wing populist critique: capitalism mainly benefits the owners of capital, not the people. Their alternative approach – whether through nationalisation, regulation, or spending – seeks to establish much greater government control over the allocation of wealth. This is a feature, not a bug, of their programme.

The current political economy is called “neo” liberal precisely because it welcomes the changes introduced in the early 20th Century in response to late 19th Century liberal capitalism -

Advocates of neoliberalism therefore face a set of choices. They can resist both populist challenges and try to preserve the late 20th Century consensus without essential alteration. Or they can adopt some of the ideas of the populists in an attempt to address the problems many voters see with the current state of affairs. The path they choose will say a lot about how seriously they take the “neo” in neoliberalism.

The term neoliberal is now associated with a form of free market purism. But the current political economy is called “neo” liberal precisely because it welcomed the changes introduced in the early 20th Century in response to late 19th Century liberal capitalism. The early liberal capitalist order had low levels of social spending and regulation, which the early social democratic and labour movements argued were unjust – it placed too much risk and harm on the backs of the workers who were building the system. In essence they argued that liberalism had to treat its workers as people with certain basic needs that even economic efficiency could not ignore.

The arguments of right- and left-wing populists stem from this very premise. If workers needed labour unions and social welfare in the early 20th Century to protect them from penury and a low wage trap, today’s populists argue that limits on migration or trade are the modern means to the same ends. Similarly, enhanced family benefits can sustain the economic health of a family in a modern world where both parents often work. A measure of universal basic income, perhaps tied to work rather than simple existence, can reallocate to citizens some of the gains from global trade from the owners of capital – just as pensions, health insurance, and other means of social welfare did in the last century.

Could true neoliberalism save the West? By Charlotte Pickles

Resisting those arguments, as many are wont to do, reveals a commitment to a liberal, not a neoliberal, order. When the principles of economic efficiency and private choice come into conflict with those of human sufficiency and dignity, those resisting are choosing 19th Century liberalism over 20th neoliberalism.

Taken to its logical conclusion, that means a future in which the 20th Century protections that enabled liberal democratic capitalism to resist authoritarian alternatives from the Right and the Left are steadily clawed back. It is ironic that the very people who contend that right- or left-wing populism is authoritarian are adopting policies that increase the likelihood that their people will choose genuine authoritarianism.

Neoliberalism can and ought to survive. When it works, it balances the good that comes from economic freedom with the good that comes from public recognition of the primacy of the human over the material. The “neo” elements of neoliberalism ought not to be frozen; they should instead evolve to deliver for the modern capitalist model. Failure to do that will dramatically increase the risk that what comes next isn’t liberal at all.