Why do our political parties persist with economic rationalism?
By May 2017
He who gnaweth a cow’s horn gnaweth in vain and shorteneth his life; for he grindeth away his teeth, yet his belly is empty. So said an Indian prophet, we are told. Astute as his observation was, to be fair to inveterate gnawers the example of a dog will tell you how hard it is to give the thing up once you’ve started in on it. It’s not for nutrition that dogs go on chewing a cow’s horn long after the last flecks of blood and viscera have gone, but for the narcotic effect of the chewing. I have seen them: a dog with a cow’s horn falls into a kind of stupor from which no amount of shouting, whistling or clod-throwing can release it. I have seen the same thing – we all have – among the power elites.
For three decades now, the politicians and their advisers, economists in both public and private spheres, many of the media wiseacres, and pretty well all our business leaders, including the most egregious rent-seekers, have had their jaws jammed round the idea that free markets are in every way beautiful, and that government, even of the most democratic kind, is the market’s natural enemy and tends always to the horrid – even towards “evil”. Call it what you will – economic rationalism, neoliberalism, trickle-down economics, monetarism, Friedmanism, Hayekism – this is the cow’s horn of the political culture.
How else has the doctrine survived the madness performed in its name? Put aside the full-blown atrocities of the ideology in practice that Naomi Klein describes in The Shock Doctrine. Forget the criminal tragedy of Russia that gave the world Vladimir Putin. Forget the grotesque inequality that gave it Donald Trump. Forget the 2008 financial debacle. Leave out altogether, if you will, the example of the United States, where the doctrine evolved in partnership with the long campaign by corporations and “libertarian” ideologues to reverse the New Deal and stamp out every other manifestation of Keynesian and liberal thinking. Forget the corporatisation and debasement of American democracy. As the American journalist Matt Taibbi said in a 2009 article about that “great vampire squid wrapped around the face of humanity” Goldman Sachs, “in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy”. But ignore this: pay no heed to recent indications that Goldman Sachs is already having as much influence in Trump’s administration as it had in Obama’s. And, leaving aside the fact that our prime minister is himself a Goldman Sachs man, think only of the local example.
How are your wages compared to ten years ago? How’s your power bill looking? How are you getting on with the banks? Assured, are you, by their commitment to Corporate Social Responsibility and balancing the needs of customers and shareholders? Is life much better since all your services became “contestable”? Not feeling a little gouged every time you walk through an airport or drive on a freeway or enrol in a course? How’s your debt going, keeping body and soul together? Any houses trickled down to you? Not feeling that despite regular smashed avocados you might be gently, almost imperceptibly, sinking into the realms of at least relative poverty? And politics: how’s that looking? Dynamic, innovative, agile – or, in its pointless, inconsequential plots and bad acting, more like Midsomer Murders on 24/7 repeat?
Does anyone believe reducing the corporate tax rate from 30% to 25% over several years will yield all the “competitiveness” of which the PM speaks, or the jobs, or that it will benefit anyone but their senior executives? Does anyone think cutting penalty rates will make the world a better place? Does anyone believe giveaways to business and takeaways from wage-earners will lead to Jobs and Growth? If we find it puzzling that so much of the daily political story is made up of matters that concern hardly anyone outside the hoary little legions who depend on them for nutriment, it might be because the economic debate has lost all inspiration and credibility. We are to be satisfied with a daily regimen of “there are no quick fixes to the challenges we face”, “there are no overnight solutions” and “it will take time to turn these issues around”, and such occasional acts of less-than-electrifying dispatch as the government’s recent instruction to the ACCC – to look into power prices and report back in 15 months. Whereupon the government – should it be the same government in 15 months – will consider what action, if any, should be taken “to ensure markets are competitive and energy consumers … can have confidence in the reliability, security, pricing and terms and conditions of supply”.
Some of us recall the early days of economic rationalism, when it was a kind of religion, and converts spoke in economic tongues and apostates in whispers. To question the precepts of the new order was tantamount to confessing one’s unworthiness. Parishioners and comrades who let it slip that they thought a political philosophy should draw on more fields of knowledge and experience than economics, and that not everything before the Great Economic Awakening lacked wisdom and intelligence, were self-evidently fossils of the ancien régime, counter-revolutionaries, infidels, Whitlamites. That is, until political necessity demanded some kind of compromise with doctrinal purity: a subsidy for the sugar industry to save a northern seat or two, something less than annihilation of the car industry to save them in Adelaide or Geelong. Here’s a bit of drought relief; there’s a bone for the environment.
The trouble with economic rationalists is not that they believe in free markets; rather, as fundamentalists, they cannot allow themselves to believe that anyone else does. In truth, pretty well everyone believes in them, but most folk also believe that societies, like life itself, are too complex, human needs too various and human nature too obnoxious to be left to private enterprise – commitments to the triple bottom line and Corporate Social Responsibility notwithstanding. As the examples of education and energy and employment go to show – along with child care, aged care, roads and roof insulation, to name a few of the responsibilities rendered corporate in recent years – some things just need regulation. Some, believe it or not, are better left in public hands. And to say that is not the same thing as saying you believe in a command economy – unless, that is, you think Bob Menzies ran a command economy.
It might be, rather, to say that the future belongs to the person or party who can offer up a compelling case for the mixed economy that in one form or another we have always had. To get things started, Labor could do worse than to announce in words no one can mistake that it is done with economic rationalism now and forever. Malcolm Turnbull’s conditioned instincts will tell him to call it crude and outrageous populism – it’s the econocrats’ equivalent of what Stalinists called “reactionary tendencies” – and he’ll add that it betrays Labor’s great achievements under Hawke and Keating. But they weren’t pure and he’s not either. He should take one last look at the US election and then offer Labor a unity ticket. Let them all note what happened when Trump and Bernie Sanders both recommended letting go of the neoliberal bone. Trump bowled over the candidate who had only pretended to let it go, and, according to a Fox News poll, right now Sanders is probably the most admired national politician in the United States. Fawning to popular prejudice, quailing before opinion polls, inciting fear, encouraging delusions and hysteria, abandoning your principles to save your political skin. Populism has all these unattractive faces, and one other – sometimes it’s an expression of righteous anger, of resistance. Populists, like the people they appeal to, are capable of being right.
Quite apart from the prospect of pulling the debate back to what used to be called the main game, and offering the prospect of finding a new coherent narrative for the country, renouncing the doctrine, clearing it out from the debate and the language, would actually free politicians from the pointless, barely endurable hypocrisy and doublespeak that balancing corporate and democratic ideology requires.
Let us take as our models for the new order two old dogs from the existing one.
In late March this year, after the new ACTU leader, Sally McManus, declared her belief that the neoliberal “experiment” had “run its course”, the chief political architect of that experiment, Paul Keating, said that she was right. In earlier days “liberal” economics had dramatically lifted real wages and personal wealth, he said, but since 2008 it has “run into a dead end and has had no answer to the contemporary malaise”.
A fortnight earlier, John Hewson, once the most zealous neoliberal in the country, wrote a column that in 1992 would have made the basis of a speech for Keating: the Keating who in that year made like a democratic socialist and with some justification painted Hewson as a heartless and unreasoning fanatic. Too often the makers of public policy forget that they “are attempting to improve our society, not just our economy”, Hewson wrote. “Do we want to build a society where we consciously create an underclass … a group of people who cannot hope to share in the life, ambitions and achievements of the rest of our society?” Talk about a bleeding heart! Then he went after privatisation, the banks, the miners, monopolies, multinational tax dodging and unfair wages. In conclusion, Professor Hewson said he hadn’t “suddenly woken up a socialist” but was rather “still basically an economist”. And one who believed in markets. “But I want them to work for the greater benefit of our whole society, not just to benefit a few.”
Sorry, John, but judged by your old neoliberal canons you have woken up a socialist – or at least a social democrat, or someone in the very broad centre of Australian public opinion since Federation, and at all events a natural fit for a Labor Party where you might be usefully set to work writing a manifesto for the new order. Fightback would be a good title.