‘Neoliberalism’ and ‘Capitalism’ – what’s the difference?

I wrote this in response to a discussion  of this theme on the NEON list. Thinking it was both too long for an email list and might be a useful resource for some people, I posted it here…
What’s the difference between ‘neoliberalism’ and ‘capitalism’ 
I think that neoliberalism and capitalism are simply different types of thing.
Capitalism is not an ideology. The term is quite often used simply to designate something like ‘a belief in free markets, individual private property, etc.’. This is NOT what ‘capitalism’ means.The name for that set of beliefs is liberalism.  A liberal can be a capitalist or not, and a capitalist can be a liberal or not. Historically liberalism does tend to be the default ideology of capitalists, but this is by no means a universal rule.
Capitalism is essentially a set of social practices whose aim is the accumulation of capital. It is not exactly the same thing as commerce, as profit-seeking, as commodity-trading, as the general commodification of all goods, services and social relation, as ‘free’ markets in goods and services, as wage-labour and the oppression of labour to prevent workers intervening in labour markets in their own interests, or even as the private ownership of capital; although it can and usually does involve all those things.
It’s worth keeping in mind, for example, that Marx never used the word ‘capitalism’. He referred to capital, capitalists and the capitalist mode of production. ‘Capitalism’ later became a shorthand for a number of different things.
-Firstly, it became shorthand simply for what capitalists do i.e. strive to accumulate capital.
-Secondly it became shorthand for what Marx calls the capitalist mode of production. This is a name for the whole ensemble of social relationships, institutions, practices, ideological mechanisms, etc. which capitalists use in order to make social conditions as favourable as possible for the accumulation of capital by them.
‘Neoliberalism’ is the name for a particular political philosophy and set of beliefs, and the political programmes informed by them, which claim to understand something about human nature and economics, and which claims that their understanding of human nature and economics gives them superior insights into how to use government mechanisms in order to maximise human flourishing. One of those beliefs is that the only real way to maximise human flourishing is to maximise the profits of capitalists.
In particular, in practice, neoliberalism favours a set of mechanisms with which we’re all familiar in order to achieve this aim, such as privatisation of public utilities and deregulation of financial markets. In effect it has favoured a policy agenda which has vastly increased the power and prestige of finance capital (banks, hedge funds, lenders in general) at the expense of everyone else (manufacturers, consumers, workers, borrowers).  It’s debatable how far this favouring of ‘finance capital’ over ‘industrial capital’ is built into neoliberal ‘theory’, but it is inherent to the way in which what I call ‘actually existing neoliberalism’ has functioned since the early 70s.
 Marxist critics (notably David Harvey) tend to take the view that essentially, neoliberalism, while nominally a coherent political philosophy, is in practice a political strategy used by finance capital to reassert the power that it lost in the middle decades of the 20th century, following the Russian revolution, the rise of European social democracy, the Wall Street crash of 1929 and the New Deal in the US.
Commentators like Will Hutton tend to like to assert that there are ‘many types of capitalism’ eg the American model of neoliberal financial capitalism vs. other models which place a greater stress on, for example, state investment in infrastructure and state support for full employment as means to managing levels of demand and investment in the overall economy.
I tend to think this is a misleading formulation. I think it’s more useful to say that there are various essentially pro-capitalist models of government which take different views of the correct relationship between capitalism and the non-capitalist parts of the economy.
 So far example, ‘social democracy’ doesn’t just want a different type of capitalism to the neoliberals – it wants a society in which large chunks of social life are decidedly non-capitalist in nature, and capitalism is kept in its proper place as an engine of economic growth, but is not allowed to dictate values and norms across the whole of culture and society.This is all very well until you start asking what those governments are going to do when capitalists want to control bits of the economy, and accumulate capital there, that the public don’t think they should be allowed to accumulate capital from. Social democrats tend to think you can just sort all this out one way or another without anyone getting too upset.
 Marxists tend to think that this is a naive view – that if you don’t abolish capitalism sooner or later, or at least have governments who are constantly alert to the tendency of capitalists to do everything in their power to evade regulation and accumulate power and wealth at the expense of others, then  capitalism will break loose from its social-democratic chains and burn your welfare institutions down. Look at the world since 1980 and you can see that they are obviously, basically, correct. This is why I’ve tended to argue that even if you want to be a moderate social democrat by the standards of, say, the 1960s, you have to take a view of things which is tendentially ‘anti-capitalist’ or you are just going to end up completely outmanoeuvred by capitalists.
From this point of view, we can see that neoliberalism as a political philosophy and programme which is unusually ‘maximalist’ in its attitude to capitalism. Whereas historically liberals, conservatives and social democrats, while all being, basically in favour of capitalism, had assumed that there were various areas of social life which ought to be organised along lines not entirely dictated by the drive for capital accumulation. The neoliberals are distinctive in opposing this view. They think that capitalist conditions should be extended as far as possible into every domain of social life, by force if necessary. The language they usually use is one of ‘markets’ being good things. But in practice they never simply mean ‘markets’ – they always mean ‘markets in which large corporations are able to dominate because they are unregulated and unopposed by any countervailing social forces’.
It’s important to be clear here that in theory you can be pro-market and anti-capitalist. You could have a society in which there are strict limits on capital accumulation, but everything from education to water to sexual services is treated as a freely-exhchangeable commodity. This is the kind of world which some of the people on the wilder fringes of the libertarian, ‘anarcho-capitalist’ Right seem to think they want. The trouble is, because they don’t understand anything about how capitalism actually works, they don’t understand that without powerful government or other social institutions, there is no way to prevent such a situation quickly turning into one in which large corporations lord it over everyone else.
All this does create a situation in which it’s very difficult to differentiate between capitalism and neoliberalism, because neoliberalism is the most fanatically pro-capitalist ideology ever, and because it has become the default ideology of almost all actual capitalists, and certainly of almost all pro-capitalist political parties
Still, it is important to differentiate them because they are not only not the same thing – they are not the same KIND of thing. Capitalism is an economic practice. Neoliberalism is a philosophy about how societies in which that practice prevails should be managed, and a programme which is at least nominally informed that philosophy, or looks like it is.
Further notes from Prof. Alan Finlayson!  :
“(1) I think the ‘varieties of capitalism’ stuff has something going for it even if only an anti-essentialist steer and a reminder that there are some residual elements that may be resources one day; (2) I’m not sure neoliberalism is just about opening things up to corporate ‘markets’. As an ideology it’s also about literalising the market metaphor; thinking all interacations as governed by a logic ‘like’ that of markets. So families are sites of affective and genetic transaction; love and sex are forms of capital. I think that matters because the privatisation has a kind of brutal but consistent and applicable materialist logic to it whereas the reduction of all action to market action has a hysterical and metaphysical aspect to it which makes it a different beast politically speaking.”
All correct, of course.