• 0 The Unseen Hand: Neoliberalism's Corrupting Influence on Democracy.

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    The Unseen Hand: Neoliberalism's Corrupting Influence on Democracy. Adrian Mark Dore 2nd February 2025 Abstract: This paper argues that the philosophical principles underpinning neoliberalism are fundamentally incompatible with the core tenets of democratic governance. Through critically analysing its three central tenets – the intertwined nature of economic and political freedom, the primacy of individual liberty, and the inherent dangers of state intervention – I demonstrate their inherent logical contradictions within a democratic framework. Furthermore, I present a case arguing that the real-world application of neoliberal policies empirically supports this theoretical conclusion, illustrating how prioritising financial interests and implementing its core prescriptions actively undermine democratic processes and societal well-being. This contradiction is not merely theoretical—it poses a clear and present threat to democratic resilience in the 21st century. Keywords: Neoliberalism, Democracy, Political Philosophy, Economic Policy, Political Economy, Wealth Inequality, State Intervention, Individual Liberty. 1. Introduction: Neoliberalism, as a dominant paradigm in economic and political thought for several decades, advocates for the liberalisation of markets, deregulation, privatisation, and a minimal role for the state. While proponents often frame these policies as conducive to individual freedom and economic prosperity, this paper contends that a rigorous examination through a democratic lens reveals a fundamental tension, if not outright contradiction, between the core principles of neoliberalism and the essential characteristics of a democratic society. I will first deconstruct the central tenets of neoliberalism, demonstrating their logical incompatibility with democratic ideals. Subsequently, I will argue that the observed outcomes of neoliberal policy implementation provide empirical validation for this theoretical critique, illustrating how its practical application actively erodes democratic norms and fosters undemocratic outcomes.   1.1. Core tenets: Neoliberalism’s core tenets have been applied in various forms, such as the Chicago School and German ordoliberalism, the Pinochet-led Chilean coup of 1973, the Thatcher–Reagan revolutions, the IMF and World Bank–driven structural adjustments, and the European Third Way, plus other variants. These variants share a common thread of market-oriented principles, albeit adapted to different political and economic landscapes. Acknowledging the nuances and specific historical contexts when analysing these variants is important, but their underlying connection through core neoliberal tenets remains true. In this paper, we evaluate these core tenets, not individual implementations, as my argument is that the fundamental philosophical principles underpinning neoliberalism are inherently incompatible with democratic governance. The specific variations are secondary to this central contradiction. 1.2. The Democratic Lens: For this critique, democracy is understood as an egalitarian and participatory system in which all citizens have equal political voice, power, and access to decision-making. This conception is rooted in the principles of political equality, inclusive participation, and collective self-determination. While variations such as deliberative democracy offer alternative models, they may fall short when not anchored in genuine egalitarianism. Indeed, without structural mechanisms to ensure equal influence, deliberative models risk legitimising elite dominance under the guise of reasoned debate. Through this egalitarian lens, the contradictions between neoliberalism and democratic governance are most clearly exposed. 2. Theoretical Critique: The Undemocratic Principles of Neoliberalism: The following theoretical critique will focus on the core philosophical principles shared across various forms of neoliberalism, demonstrating their inherent undemocratic nature, irrespective of specific policy adaptations. 2.1. The False Dichotomy of Intertwined Economic and Political Freedom: The neoliberal assertion that economic freedom is a necessary and inseparable condition for political freedom rests on a flawed dichotomy. In a democratic framework, the state derives its legitimacy from the collective will of the citizenry, and the economy, regardless of its ownership structure, operates within a legal and regulatory environment established through democratic processes. Economic policy, therefore, constitutes a subset of political action. The neoliberal desire to insulate a sphere of "economic freedom" from democratic control inherently challenges the electorate's sovereignty and the government's fundamental role as the agent of the people's will. Karl Polanyi's book The Great Transformation pointed out the false dichotomy in the liberal assertion that markets can and should be separate from and govern society. Polanyi demonstrates that economies have always been embedded in social relations throughout history. The attempt to disembed the market is historically unique, inherently unsustainable, and harmful to society. The real question, for Polanyi, was not whether the market should be regulated, but how it should be embedded within society to serve human needs and the common good. 2.2. The Intellectual Severing of Economics from Moral Philosophy: The father of modern economics, Adam Smith, the author of “The Wealth of Nations” in 1766, never called himself an economist, but rather a moral philosopher, trying to find the meaning of a good society. This is a moral question, as Smith recognised the interconnectedness between economics, politics and morality. It was only in 1890 that Alfred Marshall, in his book “Principles of Economics”, decoupled economics from politics and moral issues, establishing economics as a “science” on its own. This is the foundation Hayek and the Mont Pelerin Society (authors of Neoliberalism) used to justify economics as separate from society (R. Reich 2020). The illogical nature of this argument is immediately apparent in today’s informed world. It would be difficult to argue that economic decisions have not seriously impacted society, politics and the environment as they are so interconnected. 2.3. Subverting the democratic principle of political equality: Neoliberalism prioritises the interests of financial capital, placing it at the centre of the economy. This results in the growth of financial capital, leading to increased power, ultimately resulting in further wealth accumulation. And so, we end up with an endless vicious cycle that results in a shift in power away from the majority into the hands of a small, wealthy minority. This power is often translated into political influence through lobbying, political funding, think tanks, revolving door, media control, cronyism and many other corrupting influences. They use their power and influence over the government and the rest of the establishment for their ends. Neoliberalism is fundamentally undemocratic as it facilitates the undermining of the majority’s power.  2.4. Economic security rather than economic freedom: As argued earlier, economic freedom is inseparable from democratic rules and institutions. Here I argue further: the central democratic goal should not be economic freedom in isolation, but rather economic security as the precondition for all meaningful freedoms. Economic security – a state of basic well-being and reduced vulnerability – is far more conducive to genuine political participation. When individuals are burdened by economic precarity, their capacity to engage in informed political action is severely limited. It is through policies that foster economic security, often requiring a more active role for the state in providing social safety nets and regulating markets, that a broader and more equitable foundation for democratic participation can be built. The neoliberal focus on unfettered 'economic freedom,' particularly in the context of existing inequalities, can exacerbate economic insecurity for many, undermining the political freedoms it claims to promote. 2.5. Neoliberalism as a Project to Contain Democracy: In his book Neoliberal Resilience, Aldo Madariaga argues that neoliberalism is not merely a set of free-market ideas but a political project designed to entrench elite dominance. Its goal is to reduce the state's power and, more crucially, to prevent any collective actor, such as unions, political parties, or even democratic governments, from interfering with private enterprise. This drive to shift the balance of power explains neoliberalism’s resilience. At its core, neoliberalism is animated by a fear of the “tyranny of the majority.” Influential figures like James Buchanan worried that democratic majorities, particularly the propertyless, might use their vote to constrain economic liberty. In Democracy in Deficit, Buchanan focused not on markets but on political institutions that might enable redistribution. Walter Lippmann, an intellectual forefather of the Mont Pelerin Society, posed the central question not whether the majority should rule but what kind of majority. Across the world, neoliberals have bolstered executive authority, empowered unaccountable technocrats, and reshaped electoral systems—all to safeguard “economic liberty” from democratic pressure. This bolstering of executive power is often supported by ideologically aligned think tanks that shape policy narratives and is further entrenched by the movement of individuals between government and the private sector, potentially leading to the capture of regulatory bodies. While the Mont Pelerin Society understood the deep interrelationships of politics, economy, and morality, it strategically adopted Alfred Marshall’s narrow, apolitical framing of economics to mask its undemocratic intentions. Wendy Brown’s book "Undoing the Demos" critically analyses how neoliberalism operates as a "stealth revolution," subtly but profoundly reshaping our understanding of the state, the individual, and the very meaning of democracy. It urges readers to recognise this transformation and actively resist the economisation of political life to preserve and reimagine democratic possibilities. Francesco Laruffa, in his article on  "Making Sense of (Post)Neoliberalism," had this to say, “Neoliberalism has come to mean different things to different people. However, it is possible to identify a common core among otherwise conflicting interpretations of neoliberalism. In particular, what emerges from the discussion of the literature is that neoliberalism can be conceived as a political ideology (articulated by key neoliberal thinkers) and as a political practice (which has become dominant since the 1980s), which embraces the utopia of a “market citizenship” as a substitute for democratic citizenship.” 2.6. Based on a flawed “economic driver” premise: Neoliberalism has misunderstood what truly drives a successful economy. It places financial capital at the centre, as though money alone creates wealth. But this reverses the actual causal relationship. Markets are not separate from society — they are society in motion. Every buyer and seller is a member of society. Every transaction reflects social capacity, security, trust, and stability. When society is strong, the market is strong. When society falters, so too does the market. By neglecting this truth, neoliberalism installs the wrong driver at the heart of the economy. It overemphasises the freedom of capital, especially the freedom to invest, move, and accumulate, and undercuts the foundations that capital depends on: healthy communities, educated workers, robust public infrastructure, and environmental stability. In doing so, it undermines the very conditions that allow markets to thrive. Financial capital is not the creator of value — it is a facilitator. People create value by combining ideas, effort, resources, and relationships. Capital follows value; it does not lead it. A democratic economy must therefore be built around strengthening the real source of value: society itself. True economic leadership means recognising that societal wellbeing is the primary market driver. Rebuild that, and the rest follows. Without it, no amount of financial engineering can produce sustainable growth. By not correctly identifying society's critical role over financial capital, the Neoliberal philosophy is fundamentally undemocratic. 2.7. Neoliberal Distrust in Democratic Governance: The neoliberal tenet that views state intervention as inherently dangerous and detrimental to economic efficiency and individual liberty reveals a fundamental distrust of democratic agency. In a democratic society, the state is, in principle, accountable to the people and serves as a mechanism for enacting their collective will. While acknowledging the potential for state failure, the neoliberal perspective often disregards the essential roles of government in ensuring fair play, protecting fundamental rights, providing public goods, and mitigating market failures – all crucial for a well-functioning society and a stable democratic order. The advocacy for a minimal state, based on a generalised suspicion of democratic institutions, undermines the capacity of a democratic society to address complex social and economic challenges through collective action and to fulfil its mandate of promoting the well-being of its citizens. Thus, the undermining of government is undemocratic.   3. Empirical Validation: The Undemocratic Outcomes of Neoliberal Application: The theoretical inconsistencies between neoliberal principles and democratic ideals are further substantiated by the observed outcomes of neoliberal policy implementation across various contexts. 3.1. The Ascendancy of Financial Interests and the Erosion of Democratic Power: The practical application of neoliberalism, often guided by the principle of shareholder primacy articulated by figures like Milton Friedman, has demonstrably placed financial interests at the centre of economic activity. The prioritisation of shareholder value, as reflected in dominant business models and accounting practices, has facilitated an unprecedented accumulation of wealth in the hands of a minority (Van der Zwan, 2014). This concentration of financial capital has, in turn, translated into increased political power for the wealthy, enabling them to exert disproportionate influence on policy formulation and political discourse (Hacker & Pierson, 2010). This "vicious cycle" of wealth and power effectively transfers decision-making authority from the majority to a select few, directly undermining the core democratic principle of popular sovereignty.   3.2. The Misidentification of Economic Drivers and the Prioritisation of Capital over Societal Well-being Neoliberalism's foundational premise—that financial capital is the primary driver of economic growth—has led to policy prescriptions that prioritise capital accumulation over societal well-being. Yet empirical evidence shows that healthy, well-supported societies—where citizens can innovate, consume, and participate—are the true engines of sustainable economic growth (Stiglitz, 2012). Policies enacted under the neoliberal paradigm, such as austerity measures and reduced investment in public services, often undermine societal well-being, thereby weakening the very foundations of a robust market. The continued reliance on flawed economic assumptions, to the detriment of the majority, reveals a profound disconnect between neoliberal priorities and the democratic imperative of promoting the welfare of all citizens.  3.3. The Consequences of Deregulation, Limited Taxation, and Privatisation for Democratic Capacity The core policy prescriptions of neoliberalism—deregulation, limited taxation, and privatisation—have, in practice, often weakened the capacity of democratic governments to effectively regulate markets in the public interest, fund essential public services, and ensure equitable access to vital resources (Harvey, 2005). Deregulation can lead to environmental degradation and financial instability, directly impacting societal well-being. Limited taxation reduces the state's ability to invest in social infrastructure and address inequality. The privatisation of essential services can prioritise profit over public needs, potentially excluding vulnerable populations. Such outcomes reveal how neoliberalism systematically erodes the state’s capacity to serve as an agent of the democratic will and safeguard all its citizens' interests. Lobbying and the capture of government departments are direct manifestations of how private interests diminish the influence of the democratically elected government. 3.4. Mechanisms of Democratic Erosion Under Neoliberalism. In this paper, I referred to how wealth translates into power. Here, I elaborate on some of the techniques that facilitate this exchange. I refer to these techniques as "Corrupting Influencers". They have earned this name as their sole purpose is to divert the course of democracy through underhanded, deceitful means. Multiple billions, called ‘dark money’, are spent yearly by the rich to influence political and social opinion through these corrupting influencers.  The lack of transparency makes it challenging to provide a definitive figure. However, substantial evidence from reputable organisations and academic research demonstrates that billions of dollars in undisclosed money are spent to influence political outcomes, and by extension, public and social opinion. For a tiny minority to change the rules and regulations to favour them over the majority under the gaze of the majority requires money and stealth, precisely what the corrupting influencers embody. Although the corrupting influencers are not a declared philosophy of neoliberalism, it would have been implicitly understood that they are crucial to their war chest. That is why they deserve attention. This paper would be incomplete without addressing the methods used to corrupt democracy. I will list the techniques used and only explain where the name is not self-explanatory or less commonly used. Otherwise, abundant information explains these techniques, and I don’t want to make this paper unnecessarily wordy. Some of these practices may appear innocuous, which is their very appeal. If one can hide one’s nefarious activities under our noses under the guise of altruistic behaviour, that’s a huge advantage for the dishonest.  Many of these corrupting influencers do not work in isolation but in tandem. You will often see lobbying, political funding, revolving door, think tanks, cronyism and others employed in pursuit of a single objective, providing overwhelming support to swing decisions in their favour In no specific order:- Lobbying, political funding, revolving door, revolving door variants, think tanks, cronyism, media ownership, corruption, unfair tax system, lack of transparency, political polarisation, regulatory body capture, academia capture, biased guidance, weaponising the legal system, poor oversight and poor public awareness. Revolving door variants: A revolving door involves personnel moving from the government into the corporate world or vice versa. This variant is where high-profile people (e.g., Presidents, Prime Ministers) aren’t employed but act as consultants. Think tanks: All corrupting influencers are bad when used to divert the course of democracy but think tanks (often called stink tanks) are a particularly nasty form of corruption. Companies that admit to being lobbyists and are listed as public-relations agencies or reputation launderers are ‘vulnerable to retribution for daring to criticise or speak out’, as they represent identifiable clients. Tink tanks, on the other hand, are immune to this criticism as they are supposed to represent unbiased thought, and donors are confidential. Thus, the wealthy invest heavily in think tanks to protect their identity while influencing decision-making through supposedly “independent thinkers.” They are anything but independent thinkers. Unfair tax system: Neoliberalism has shifted the tax burden onto the middle and lower classes under the pretext of freeing up greater investment capital from the rich. This hasn’t materialised, but it has created inequality and enormous social problems, which muddy the political waters and hide underlying economic issues. Lack of transparency: Lobbying, political funding, revolving door and think tanks are major contributors to critical decisions being made behind closed doors beyond the scrutiny of public view, massively increasing the lack of government transparency. Political polarisation: Neoliberal policies increase inequality and create social divisions, which leads to political polarisation (e.g., a divided America), which hinders consensus-building, which is essential for democratic function. Regulatory body capture: Neoliberals gain control over regulatory bodies that regulate their industries through poor oversight, lack of transparency, and other corrupting influences. That’s like marking your own exam paper. Biased guidance: The work that think tanks do under the umbrella of “independent thinkers” is anything but. Unfortunately, government bodies use them as such, resulting in biased guidance. Weaponising the legal system: By keeping the legal system complex, it places it out of reach of the average person and is used by the wealthy as a weapon of extortion. Poor oversight: By weakening the government, they cannot enforce laws and regulations, allowing opportunities for exploitation. Poor public awareness: Through media ownership, they set the narrative. 3.5. Anticipating the Standard Defence: Markets, Corruption, and Growth Proponents of neoliberalism often defend its principles by claiming that free markets help curb corruption and that economic growth—delivered through liberalised markets—is a prerequisite for democratic stability. However, such assertions do not hold up to scrutiny. In practice, neoliberal reforms have demonstrably intensified corruption rather than reduced it. The growing influence of private capital has led to a proliferation of lobbying, opaque party financing, ideologically driven think tanks, revolving-door employment between public office and private sector interests, and the systematic capture of government departments. This is not the depoliticisation of corruption—it is its institutionalisation. Furthermore, the claim that economic growth must precede or sustain democracy is both ahistorical and ideologically loaded. Empirical evidence increasingly shows that strong, participatory democratic institutions provide the foundation for long-term, inclusive economic prosperity—not the other way around. Growth that undermines transparency, equality, and accountability does not sustain democracy—it corrodes it from within. Neoliberalism claims that free markets promote competition, innovation, and efficiency, but this is as misleading as saying financial capital drives economic growth. Societal well-being drives growth, and when you have growth, you have competition, innovation, and efficiency. Fewer rules don’t ignite much interest in a declining market – the possibility of growth provides the spur, and societal well-being underlies this growth, not free markets. Neoliberal advocates caution against excessive government control, suggesting that state intervention can lead to inefficiencies, bureaucracy, and misallocation of resources. These are valid concerns that require rigorous oversight, just as allowing corporations too much rope requires rigorous oversight. That’s why we have big governments to provide oversight. No system is perfect, and a degree of inefficiency is a downside of big government, but this is a small price to pay for the huge advantages it provides. 4. Conclusion My analysis has demonstrated that the fundamental philosophical principles of neoliberalism, rather than specific policy implementations, directly oppose democratic ideals. Neoliberalism is fundamentally incompatible with democratic governance in theory and practice. Its philosophical foundation—rooted in the primacy of market mechanisms, the distrust of collective decision-making, and the privileging of financial capital—directly opposes the democratic ideals of political equality, inclusive participation, and the pursuit of the common good. By severing economics from its moral and political roots, neoliberalism has reframed policy debates in purely technocratic terms, excluding the very voices democracy is meant to empower. It exposes contradictions at the heart of neoliberal thought, chief among them the idea that economic freedom precedes political freedom, and the belief that financial capital is the true engine of economic growth, each of which ultimately undermines democratic agency. Empirical evidence has further validated these concerns, demonstrating how neoliberal reforms have consistently led to rising inequality, the erosion of state capacity, and the entrenchment of elite dominance over both the economy and democratic institutions. Neoliberalism is not simply a neutral economic toolkit, but a political project that has actively reshaped democratic societies in ways that diminish the power of the many in favour of the few. Its resilience lies not in its capacity to deliver prosperity for all, but in its ability to insulate economic decision-making from democratic oversight. In doing so, it weakens the very foundations of democratic life. The empirical evidence, particularly the proliferation of 'Corrupting Influencers' designed to prioritise economic outcomes over social well-being, starkly illustrates the practical manifestation of neoliberalism's inherent distrust of democratic governance and its tendency to subvert political equality. As we confront rising authoritarianism, deepening inequality, and ecological crises, the need to reassert democratic control over economic life has never been more urgent. This demands not just a rejection of neoliberalism’s tenets, but the active construction of a democratic economic model—one rooted in societal well-being, equitable participation, and the long-term health of both people and planet. 4.1. A better economic policy: This does not require invention but the return to a proven economic model, as used by Germany post-World War II with great success—a social market economy. This system blends capitalism with government intervention to ensure social welfare, fair competition, and labour rights. Implemented by Chancellor Konrad Adenauer in 1949,  Germany experienced a Wirtschaftswunder (“economic miracle”) that transformed it from post-war devastation into a major developed nation. Similar social market economies developed elsewhere, notably in Scandinavia and Austria. Many countries in Europe thrived under some form of social market economy, but in the 1980s, some, especially Britain, fell under the curse of neoliberalism. This is not an economic panacea; it is just a vastly better system that serves society and markets equally, thus strengthening democracy rather than eroding it. 4.2. Institutionalising Real Change Beyond Policy Shifts: History has proved that economic policies are transient. Neoliberal founders from the Mont Pelerin Society recognised this. They realised they had to embed their ideology into laws, regulations, and institutions, to ensure that even when political winds shifted, the system stayed tilted in their favour. As noted under section 2.5 (Neoliberalism’s Resilience), Aldo Madariaga and Wendy Brown's research shows that Neoliberals set about corrupting every facet of the economy by changing laws and regulations to serve their needs, thus institutionalising Neoliberal philosophy. When economic policies change, their philosophy endures.   Therefore, it would be naïve to suggest that replacing our Neoliberal economic policy will dramatically change things.  Unless we change the underlying structures that define how power is exercised and success is measured, new policies will be swallowed by the same old system. If we want lasting, democratic transformation, we must change not just what we do but also how we judge what’s worth doing. 4.3. Changing our Measurement Standards: The Fastest Route to Democratic Recovery Neoliberalism did not succeed merely through policy—it prevailed by redefining what we measure and, therefore, what we value. It hardwired financial capital into the purpose of both business and the economy, pushing social and environmental concerns to the periphery. To reverse this, we don’t just need new policies—we need to reset the measuring stick at every level. Measurement defines purpose. If profit is all we measure, then profit becomes the purpose, no matter the cost to people or the planet. Likewise, if GDP is the only benchmark for economic success, then growth becomes the end goal, even if it erodes societal well-being and democratic cohesion. What gets measured gets managed. What gets ignored gets destroyed. At the business level, the Value Creation Causal Model (VCCM) offers a practical, systemic alternative. It is not an abstract theory or a PR gimmick like CSR reports—it is a new operating system for capitalism that puts people and the planet on equal footing with profits. By centring environmental, community, people, and financial capital in a single integrated model, the VCCM gives businesses a roadmap to serve society while sustaining markets. At the macroeconomic level, we must also replace GDP with a more comprehensive quality-of-life metric—one that measures well-being. This is critically important as we have already identified societal well-being as the primary economic driver. Only by aligning business and economic performance with human and planetary outcomes can we rebuild an economy that serves democratic life rather than undermines it. This isn’t just about better accounting. It’s about reclaiming democracy through how we define success. Changing what we measure—at both business and economic levels—doesn’t just reform capitalism; it rewires its incentives and repurposes its engine. Neoliberalism institutionalised inequality. With the VCCM and a new economic scorecard rooted in shared well-being, we can institutionalise fairness, resilience, and prosperity. It won’t solve everything, but without it, nothing changes. References: Brown, W. (2015 ). Undoing the Demos. Zone Books Hacker, J. S., & Pierson, P. (2010). Winner-take-all politics: How Washington made the rich richer--and turned its back on the middle class. Simon & Schuster.   Harvey, D. (2005). A brief history of neoliberalism. Oxford University Press. Madariaga, A. (2020) Neoliberal Resilience (Princeton University Press)   Polanyi, K. (2024).The Great Transformation: The Political and Economic Origins of Our Time. Penguin Modern Classics Stiglitz, J. E. (2012). The price of inequality: How today's divided society endangers our future. W. W. Norton & Company.   Reich, R. (2020).  The System: Who Rigged It, How We Fix It. Picador Van der Zwan, N. (2014). Making sense of financialisation. Socio-economic review, 12(1), 99-129.