How Neoliberalism Fuels Racial Injustice

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What’s missing from most modern discussions of racial injustice is the overarching ideology that has amplified, legitimized, and advanced every facet of systemic racism we see today.

A number of key phrases have been foundation to the international conversations surrounding this topic—systemic racism, the cycle of poverty, mass incarceration, racial profiling, police brutality, the military-industrial complex, the school-to-prison pipeline, gentrification, the wealth gap, and more. Typically absent in the discussion we’re having, however, is an ideology that not only ties together but also explains the persevering existence of all these social factors that enable racial injustice today—neoliberalism. Neoliberalism is a belief system that has served as the guiding force of policymaking for the last five decades, underpinned the way most of us instinctively perceive civics and society itself, and lent further power and legitimacy to the forces driving racial inequality. Any movement with its sights sincerely set on combating the pervasive injustices that terrorize communities of color today must reckon with the neoliberal principles and practices that underlie the modern socio-economic zeitgeist.

Neoliberalism, in simplest and fairest terms, refers to a system in which the government steps back and grants significant freedoms to market forces—corporations and other private entities. In practice, this is manifested in the deregulation of commercial bodies, reduction of public spending, minimized government regulation, lowering of taxes on the wealthy, and other policies that shift social responsibilities away from the state and grant greater liberties to private bodies.

What this essay will focus on, however, is not the validity, accuracy, or veracity of neoliberalism as an economic school of thought. What matters here is that the real-world application of neoliberal principles, the way they have been put into practice for the last half a decade, has only eroded and undermined efforts to achieve racial justice.

It is vital to understand the roots of neoliberal thought and how it came to pervade the international understanding of society at its most basic level. The rise of this ideology can be traced back to the 1970s energy crisis that prompted a rethinking of Western economic policymaking. On August 23rd, 1971, conservative-aligned Supreme Court justice, Lewis Powell, wrote a confidential memorandum to the United States Chamber of Commerce, titled “Attack on the American Free Enterprise System.” The memo condemned in harshest language the rising left-wing and consumers’ rights movement in the U.S., asserting that corporations must seize political, economic, and cultural authority in order to not be trampled by growing anti-Big Business sentiment. Powell called for minimized government intervention and the renewed prioritization of corporate freedom. He went on to declare the advent of a culture war—a battle that conservatives must fight in public schools, on university campuses, and on television, all with the purpose of drilling into citizens’ minds the idea that unions, workers’ rights, and anything that impedes corporations’ full and total freedom is contradictory with American liberty. This memorandum has come to serve as the blueprint of American conservatism and fuelled the right-wing surge of the late 20th century in the United States. Modern conservative goals and ambitions have not shifted significantly from those outlined in the Powell memorandum in 1971.

Powell’s vision of a “liberated” United States with fewer restrictions on corporate and private interests, as well as a government that has decided to step back from traditional caretaker roles, is foundational to neoliberalism as instituted in America. It is important to remember that neoliberalism is not exclusive to one political party—in fact, early neoliberal policies began taking clearer shape during the administration of Jimmy Carter, a Democratic president. Under his presidency, various industries underwent privatization and deregulation, such as banking and various transportation sectors. However, neoliberal ambitions seized center stage during the subsequent Reagan administration, giving rise to “Reaganomics”—the set of policies promoted by the president that were centered around the empowerment of corporate and private interests, reduced public spending, and minimized government regulation.

The long-term consequences of Reaganomics are varied and contested today, but it is indisputable that the Reagan era oversaw widening income inequality, increased poverty, and intensified mass incarceration, specifically amongst communities of color (a trend massively worsened by the so-called “War on Drugs”, which was an atrocious failure and is now universally recognized to have disproportionately targeted Black Americans). The budgets for social services such as Medicaid, food stamps, education programs, and environmental protections were slashed, with Reagan labelling such expenses unnecessary, unhelpful, and superfluous. Of course, cuts to such welfare programs were felt not by Reagan, his cronies, or the white upper-class voters who put him in the Oval Office, but by working-class Americans and communities of color whose safety, well-being, and basic necessities were provided for by such services.

It is easy to see how the Reagan era embodied and exemplified neoliberal ideals. Public welfare took a backseat to corporate and private powers. Wealth was concentrated in the hands of the elite few, justified by the misguided belief that it would eventually “trickle down” to the rest of the population and benefit the American people as a whole rather than just the already rich. Conservatives painted social programs as a waste of state resources and government regulations as grave infringements on the fundamental freedoms and liberties America was founded on. Such rhetoric successfully brushed under the rug what was really happening—the empowerment of the financial elite at the expense of the working class, underprivileged, and communities of color.

This is where neoliberalism fails racial justice. It ignores the role of racial power dynamics and fundamentally unequal distribution of resources, claiming that the “market” can be relied upon to bring prosperity to all people. In its emphasis on corporate freedom and reduced government intervention, it leaves no room to tackle the systemic hurdles faced by the underprivileged: the working class and people of color in particular. Neoliberalism has been consistently employed since the 1970s to dismiss such people as liabilities and offer no recognition of the very real and concrete obstacles making it difficult for such workers to achieve true financial independence. In addition, the rollback of government services as per neoliberal policies has drastically reduced programs essential to supporting underprivileged families: healthcare, education, food, housing, and other forms of welfare. The privatization of certain sectors of society, such as prisons, has provided new vehicles of exploitation, subjugation, and entrapment of people of color, as we shall see in greater detail below.

One of the most persistent myths peddled by neoliberals is that empowering corporations and the wealthiest citizens will allow money to “trickle down” to the working class, eventually benefitting the entire populace. Despite being thoroughly debunked, such a claim not only lingers but is one of the defining platforms for modern politicians and lawmakers to oppose taxes on the wealthy. As a 2019 analysis by the Economic Policy Institute demonstrates, the last four decades of America’s economic gains have been almost entirely enjoyed by the upper and elite classes of citizens, while the working class’s real wages have seen very little benefit—in fact, they have remained almost flat since 1973. That year – 1973 – is significant; it marks the beginning of neoliberal policies taking root in the United States.


The EPI report proceeds to directly take aim at the neoliberal policymaking that is responsible for this staggeringly unequal distribution of economic gain: “…the income, wages, and wealth generated over the last four decades have failed to ‘trickle down’ to the vast majority largely because policy choices made on behalf of those with the most income, wealth, and power have exacerbated inequality” (“The Productivity-Pay Gap”, para 4). In other words, ever since neoliberal practices began taking hold of America in the 1970s, the wealthiest and most powerful elites have been granted oversized influence in socio-economic decision-making, allowing them to hoard their resources and deny workers the fruits of their labor.

What does this have to do with racial justice? The systemic exploitation of workers, not only enabled but actively encouraged by neoliberalism, have disproportionately hurt communities of color. The U.S. Decennial Census indicates that the gap between the earnings of Black and White workers shrank considerably from 1940 to 1970, but progress slowed to a near-halt after that. As a report in the journal Democracy makes clear, “the 2016 Survey of Consumer Finances indicates that the absolute racial wealth gap exceeds $100,000 per family, and the typical black family owns only about $0.10 per dollar owned by the typical white family…Black households have median wealth of about $17,600, and $20,700 for Latino households, which contrasts with $171,000 in median wealth for white households” (Meserve, para 5).

During the Reagan era—and while similar policies were being instituted in the United Kingdom by Prime Minister Margaret Thatcher—the rising school of neoliberalism managed to convince everyday families that poverty was not a result of systemic injustices and improper allocation of government resources, but because people simply did not work hard enough. This is summed up by Thatcher in her now-famous quote reeking of privilege, elitism, and painful tone-deafness: “Poverty is not a lack of money, but a lack of character.” Neoliberals will have you believe that the cycle of poverty, wealth bias, systemic racism, and the fundamental obstacles handicapping underprivileged citizens’ ability to access basic resources—all of these factors mean nothing. If you’re poor, you’re just not working hard enough.

Such rhetoric was especially weaponized against Black Americans during the 1970s and onwards, and very little has it subsided today. Stereotypes surrounding communities of color assert that they are lazy, unwilling to work, morally deficient, intellectually lesser, lacking commitment, somehow more inclined to commit crime instead of paying the bills with a decent, honest job—anything to explain why people of color continuously lag behind Whites in terms of income, generational wealth, and financial independence. Why are Black people, on average, significantly poorer than Whites? Not because of the centuries of injustice weighing down and entrapping their communities in poverty; not because of the lack of investment in Black neighborhoods, schools, and infrastructure; not because of the mass incarceration and unending police violence that has traumatized Black families; not because of implicit and explicit racial prejudices that have been demonstrated by countless studies to set people of color back in all kinds of workplaces—but because Black people simply need to work harder. The fact that such a thought is genuinely a common and widely accepted talking point among mainstream politicians, commentators, and everyday voters is a testament to the toxic manifestations of neoliberal thought.

Neoliberalism has eroded efforts to combat racial injustice by distorting the root causes of racial inequality. Politicians have been quick to claim that lack of responsibility or education among Black Americans is to blame for the poor economic conditions of their communities. However, we now know from empirical research that is not the case. The 2014 Survey of Income and Program Participation data demonstrates that the White-Black gap in median wealth for a family where the head did not complete high school is about $80,000; about $110,000 for families where the head has a high school diploma; nearly $200,000 where the head has a college degree; and exceeding $300,000 for families where the head has a masters, doctorate, or professional degree. In other words, the wealth gap actually increases even as Black Americans receive higher levels of education, instead of shrinking as neoliberalism claims it would. Black Americans can be well-educated high-achievers and still face the same systemic racial disparities as their less educated peers do. Clearly, whether or not a Black worker has a college degree does not determine whether they are suffer the legacy of centuries of racial injustice.

The privatization of the prison system is one of the most distressing examples of neoliberalism at work—turning the literal justice system into a for-profit industry. Privatization creates the desire for profit; profit requires demand; demand calls for supply. And of course, who serves as the supply for prisons? Prisoners. Private prisons such as GEO Group and CoreCivic make their money by locking up more and more people, and more prisoners means more profit. Across America, incarceration rates have skyrocketed since the 70s—specifically, an increase of about 700%. Right now, there are more than 2 million people in prison, feeding a demand created by neoliberalism in practice. About half of the incarcerated population is Black. The disproportionate jailing of Black Americans—due to racially biased arrests and convictions as well as higher rates of police surveillance of minority neighborhoods—have been disastrous for Black communities: families are torn apart, children lose parents, and former convicts struggle to secure jobs that can provide for them and their people. We must keep in mind that the destruction of Black communities by mass incarceration is literally a product of the for-profit prison industry cultivated by neoliberal economics.

Neoliberalism is a philosophy that not only fails to address racial injustice, but actively ignores and enables it. It diverts all responsibility to the market, allowing corporations and private for-profit bodies to call the shots while chipping away at governmental programs needed to support communities of color. Neoliberal tactics have only promoted the exploitation of the working class, disproportionately hurting Black workers, while funnelling the benefits of economic gain to the upper and elite class. The privatization of sectors such as healthcare and the prison system have preyed upon the most vulnerable communities—once again, people of color. In order to truly address the roots of racial injustice and work to empower the people who experience it every single day, we must rethink the ideology that has amplified and lent legitimacy to the efforts to subjugate communities of color: neoliberalism.


Image source: Internet


Works Cited

Meserve, Jack. “Neoliberalism and Race.” Democracy Journal, 11 June 2019,

“The Productivity–Pay Gap.” Economic Policy Institute,

“The Racism of Neoliberalism.” Evonomics, 24 Feb. 2020,


Adeeb Chowdhury is an aspiring lawyer and the leader of multiple social justice foundations in his city of Chittagong. He is currently studying Political Science at the State University of New York in Plattsburgh.


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