political ideology
17 Feb 2009
These Are Old Ideas, Kevin
Rudd's recent bagging of neoliberalism wasn't the revolutionary step some people seem to think it was. Real change will take a lot more than a few nostalgic phrases, writes Andrew Crook
By far the most nauseating aspect of Kevin Rudd's Monthly essay was the predictable pants-wetting over its purported subject matter: "neoliberalism".
If John Howard and Lynton Crosby had famously dog-whistled middle Australia then Rudd was doing precisely the same thing for his old alma mater ANU. Rudd was speaking the language of an Academy anxious to call time on scorched-earth economics, the essay's fearless tone giving the impression that he was a central figure in a epoch-defining clash over Big Ideas. But sadly, nothing could be further from the truth.
Neoliberalism, according to Rudd, was a "particular brand of free-market fundamentalism, extreme capitalism and excessive greed" responsible for the global financial crisis. No arguments there. But on the question of what to do about it the essay breaks with the reality-based community. In Kev's world, it's still 1975, the keys to the economy are within easy reach and "Keynesian social democracy" is the best of all worlds. It's as if globalisation never happened. To wit:
"The intellectual challenge for social democrats is not just to repudiate the neoliberal extremism that has landed us in this mess, but to advance the case that the social-democratic state offers the best guarantee of preserving the productive capacity of properly regulated competitive markets, while ensuring that government is the regulator, that government is the funder or provider of public goods and that government offsets the inevitable inequalities of the market with a commitment to fairness for all."
The way Rudd talks, the levers of government have been gathering dust in a corner somewhere, junked by those reckless free-marketeers responsible for the current crisis. All the nation needs is a nerd from Nambour to apply some spit and polish and it's macro-economic nirvana time all over again. With enough willpower the transnational economy can be simply reined in, if not by prudent policy making, then perhaps by a patented Rudd death stare.
But sadly it's not quite that simple — neither the Government, nor social movements, have the political or economic tools to deal with this current crisis. Global neoliberalism's iron cage has been bent out of shape, but it is far from being broken.
Recent events are illustrative. The battle over the stimulus package completely ignored the fact that after 30 years of deregulation and globalisation, the real economy, and its army of workers, have been hollowed out from within — Rudd's 12.7 billion in cash handouts will never be enough to breathe life back into the limp subtopia ringing the nation's capitals.
The proposals to bolster market regulation are an interim measure to prop up an unsustainable, cartel-ridden economy — an economy that he assumes, over time, will magically re-embed itself in what's left of the social. But this is unlikely to happen, global financial flows obeying neither ASIC's ham-fisted regulatory efforts nor the RBA's "ahead-of-the-curve" approach to slashing interest rates.
In the post-World War II era of "real Keynesianism", demand was managed not just by infrastructure spending and targeted stimulus packages but also by a high tax, high wage economy and broad-based social spending. Keynesianism worked because it was anchored in an homogenous social base with greater social equality, and with its roots in a protected manufacturing sector. But employers, by declaring war on real wages under the aegis of neoliberalism, threw the baby out with the bathwater, to borrow a recent Ruddism. Our slavish dependence on foreign markets is now almost totally complete.
David McKnight, writing last week on newmatilda.com, claims Rudd's essay goes beyond superficialities and actually represents a serious break from the status quo. Unfortunately, McKnight has trouble naming the exact nature of the political intervention that would allow Rudd to claim that he's backing his rhetoric with effective action. An interest in true social democracy — the democratic politicisation of economy — is nowhere to be found in Rudd's essay.
McKnight might be better off revisiting a previous debate that ensnared the ALP back in 2004, following Mark Latham's defeat at the hands of John Howard. Among a number of middling contributions from people like Evan Thornley and Bill Shorten, La Trobe academic Chris Scanlon said the following:
"If Labor is to rebuild, it might begin by getting back into the practice of politicising the economy, reconnecting big questions about how we produce and reproduce social life with everyday issues and concerns...[The] ALP can't differentiate itself on economic grounds, because the global economy determines the sort of economic policy any Australian government can pursue."
Scanlon's two insights remain broadly true — whatever Rudd may say about building a "social-democratic state", real social democracy requires the enmeshing of politics and the economy, but this won't eventuate while the ALP is beholden to global financial flows (ie for the foreseeable future). This means, according to Scanlon, putting "values, society and economy back together", a task that, if anything, is receding further from view.
This debate about the economy's relationship to society has been recently taken up in the blogosphere with references leading back to another key theorist, Karl Polanyi. Polanyi argues that:
"[An] economic system that functions autonomously of political, social, and cultural intervention is essentially a utopian project. If the market could in fact operate fully disembedded from society, humans and nature would be destroyed. The market is not governed by its own internal laws but rather is and has always been regulated by humans."
But this "re-embedding" is not an easy task by any means, for in truth it was never governments that were responsible for the rough alignment of social and economic ends but social movements. In the industrial era this was the job of organised labour, but beginning in the 1970s, falling rates of unionism combined with relentless cultural fragmentation discouraged all attempts to rediscover the "solidarity" or "unity" that dominated social movement approaches in the post-World War II era.
Rather than re-create the past, a new social movement posture is desperately needed — one which, in the words of Melbourne University academic Kevin McDonald, embraces the emerging complexity (or "fluidarity") of the present context. Far from the historical labour movement catch-cry of "touch one, touch all", McDonald demonstrates how the raw fuel powering today's social movements are increasingly individuals (especially within minorities) struggling to assert a coherent sense of self in an unstable, globalised world. There are already some promising examples of global movements venturing down this path and even some progressive trade unions that are beginning to break with the more recent past and rediscover a conflictive posture.
It is to these movements, not Kevin Rudd's "social market", that a society serious about overturning neoliberalism must ultimately turn.
But for the most part, the Australian public remains frightened and frazzled — after 30 long years of being told to refashion our lives as up-beat entrepreneurs, the near-collapse of the market we have been exhorted to place all our faith in is almost too much to bear.
Contrary to the new dawn Rudd wants to depict, it's hard right now to see a truly mass movement beginning the process of rebellion against bankrupt neo-liberal ideology. In fact in our darkest hours you can actually detect the reverse: the beginnings of an "anti-politics" in which the slightest hostility to the status-quo is shouted down in the interests of national psychic harmony. Generation Y may well be cynical, but don't think for a moment that a vague hostility to grown-ups equates to the requisite stomach for challenging the powerful.
Re-reading his Monthly essay, one might excuse Rudd for conflating two distinct eras in the evolution of Australian life — 1975 was, after all, the last time an opposition leader called Malcolm threatened to block a spending bill in the name of fiscal prudence. But simply mouthing words like "neoliberalism", "Keynes" and "stimulus package" will do nothing to cure the political and economic emptiness that continues to gnaw at the heart of the nation.
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Yup! Dazza.
Wow!
Four of the people in that audience are asleep…maybe Rudd is on to some population control program and we dont know it, ie bore a significant proportion of the population to death!
But Andrew, I’ve read through your essay and I can’t work what *your* point is.
What program of re-politicisation would you specifically put forward? Wage fixing? A return to closed shop unionism? Higher tariffs? Re-regulating shopping hours?
And about these "mass movements" - what would they look like? 1968 in Paris? The shearer’s strike of the 1890’s? Or even further back - the Chartists?
I’m just curious …
How can we be sure that the relatively disembedded market we have just lived through hasn’t already destroyed nature and humans per Dr Polya’s quote? The effects of this market will be felt for some time before any new politic arises to challenge it.
If we do make it past this next bit of history Ben, I am hoping that the glimmerings of anti-consumerism may provide a clue to what the new movement could look like, but it would require a massive will to change on our part. Whatever it is, it better be outside anything that relies on changes to tariffs, unionism or any other market fiddling. i am predicting Keynes will not feature heavily.
Keynes is history and it was his post work that was most interesting.
In terms of the unique challenges facing Australia - a completely new paradigm in economic thinking is required and the main core theme which will make it succeed is:
CENTRAL PLACE THEORY
Its the hinge upon which all economic and social policy can swing - and if accepted as such we will no longer need to bored to tears by Rudds lecturing and Garnaut’s inane Climate Change solutions.
And it will happen anyway, its the false economics of our heavily subsidised export industries and the false prophet-eering of private-isation which has screwed us to the wall. Barney Foran nailed it in the Future Dilemmas Report (circa 2000), and if we can face the facts of how stupid we have been and still are then we can move on.
But first we need to rid Canberra of the insidious lobby industries which Rudd and Co has cuddled up to and I think it was Senator Faulkner that had promised to make inroads into cleaning up that cesspit.
Ben, I think you’re being overly conservative about the possibilities new social movements bring to the table — all those policy stances you mention were, after all, the product of a dirty compromise between the Australian state and a domestic labour movement threatening socialism.
As I argue, social movements attuned to the post-industrial era do exist (see McDonald’s ‘Global Movements’ for a comprehensive run-down) and will potentially do more to produce effective policy at the national and global level than policy wonks sulking over the end of neoliberalism ever will. The challenge is theirs — and ours.
Dear Andrew
I enjoy your insight into current ‘Labor think’ and its policy of "’Anything’ - as long as its not neo-liberalism".
Translated clearly to mean ‘GOVERNMENT CONTROL’ - and the Shangri-la - Labor Controlled - Government Control….
Perhaps Polanyi does hold the key … "The market is not governed by its own internal laws but rather is and has always been regulated by humans."
Well yes, in so far …
Yet it can be argued that markets have their own ontology and are powerful instruments, and which, as the USA’s financial implosion clearly show, cannot be contained, let alone controlled by the most powerful of nations.
"So it does seem clear that the current financial crises’ fundamental cause is ‘unregulated’ markets." No argument there you say… (hmmm & essay in itself?)
But is this truly so?
Is Australia’s current woe either the product of an ‘unregulated’ market - as Kevin blames on Neo-Liberalists or rather perhaps the alternative the product of too much ‘regulation’?.
Granted Neo-Liberalists went a long way to free banking, capital and trade markets, and in the process swept aside a host of restrictions. At the same time, ensured that capital and trade markets are cloaked under an Aegis of the best of breed – a strict, prudent regulatory and supervisory authority.
Arguably this ‘un-regulation’ undermined organized labour and as arguable may well have caused falling rates of unionism combined with relentless cultural fragmentation. I tend to agree with you – both are these the most significant factors.
Hmmm………..
Surely the most material and most significant undermining is the rigidity to the international factor equalization of wages. This rigidity is as a result of Australia being at its fundamental core the most entrenched ‘regulated’ market in the world.
Wages, the core market ‘factor of production’ is regulated by a navy that keeps millions of economic migrants at bay across the Arafura, Timor & Torres Straits and DINA in turn chases hundreds of thousands away that eagerly await a fair go. Although this is the all important key to understanding what Australia is – for both Labor and the Liberals are skivvies to this grotesque Omertà - a precept of racism, religious intolerance and the prevention of the influx of lesser peoples (der untermensch). Despite the many, many token Darfurians to appease, flag and dull the twinges of a Jimminy conscience
So be that; (…some of ones best friends’ friends, are racists.)
Painful as this admission may be - the important point is that the precept leads to regulation and the regulation has huge economic consequence – probably Australia largest economic consequence.
As the ‘working class family’ cannot come to the jobs - the jobs go to the working class families. In this case - the ASEAN working class have taken the jobs and the factories while the Australian worker is largely left with crumby jobs that cannot trans-locate. Jobs that hinge on the extraction of resources - foul land stripping of iron, coal, zinc and uranium. Resources the rent of the multinational land owner; and trains scuttle their controlled output, and these jobs, solidarity and unity to the quickest and nearest ports.
This all in within a framework of rigid regulation - notwithstanding the attempts to rediscover the cliché “working class family” so beloved by Rudd and the "solidarity" or "unity" that once dominated social movement approaches in the post-World War II era.
And Labor is powerless to change this. dunno4sure¿
I agree with the sentiment that Rudd’s essay is neither a radical repudiation of the recent past (despite his superficial attacks on neoliberalism) or a blueprint for our future, which, given his recent forays with fiscal policy is not likely to produce a more secure and socially cohesive Oz as we head into an age of declining cheap energy (as argued here).
The best assessment of Rudd’s essay is that it is a smokescreen to hide the fact that he and his government are pretty much helpless to prevent the expected economic disaster about to unfold here in the lucky country. It’s not their fault that successive governments have dismantled the mechanisms of publicly owned infrastructure and allowed our domestic manufacturing capacity to shrink to virtually nothing. But admitting there is a huge problem looming and taking steps to address that requires that we also admit that a lot of people are going suffer financial loss. As Jago Dodson and Neil Sipe noted in their book our basic urban infrastructure and its associated social derivative is likely to seriously undermined when we lose our access to cheap fuel. Of course equally as drastic will be the consequences of massive job losses…
The post WW2 era of so-called economic growth coupled with the marvels of the technological age may have delivered a soft and indulgent lifestyle to the western world but the model is clearly unsustainable. Pretending that it can be fixed with a bit of pump priming and a bigger stick is farcical. david
An essay released with the clear intention to divert attention, create some space,distract attention from the other business, save some time, keep the enemy busy ,bamboozle, keep the chook’s busy, throw a false lead, send them down the river without a paddle, Side track, give a red herring, and give a bum steer while Rome burns etc, etc.
Andrew - I don’t think protectionism is that easily dismissed, as many countries appear to be moving back towards higher trade barriers in the wake of the current crisis - but perhaps we’re not arguing about that.
I’ll take the time to read Kevin MacDonald’s book, but my immediate argument is that the social movements in Western countries that MacDonald describes (Erath! First, Critical Mass, Act Up) are not *mass* movement - they are niche movements with more in common to small pressure groups, think-tanks or terrorist cells than the labor movements of the later 19th century.
I think Ben Eltham has got it right.
For many years a lot of us have fought the utopian free marketeers. (In fact I wrote a book Beyond Right and Left, devoted in part to this) And in the immediate future in dealing with climate change and the global crisis we will need new regulatory measures.
Finally, we have a PM who agrees and publicly argues that neo-liberalism is the wrong policy paradigm. This is valuable and useful but it is not good enough for Anderw Crook. Rather than sneering and invoking some etherial new social movement, let’s take Rudd at his word. Let’s engage with it. Let’s use it as a benchmark for how own government.
David McKnight
University of NSW
Hi David,
Ethereal! Wow. I don’t think it’s really that helpful to be positing a choice between new social movements and bland policy pragmatism, climate change or no climate change. As you argue in your book, the old Left was transcended long ago — as ex-Marxists were grappling the death of their hallowed meta-project, society and culture were moving on.
The mourning process over the death of socialism is hard but using climate change, or the GFC, as a trigger to embrace arcane regulatory debates represents a dead end for society, for culture and for creativity generally.
As for "taking Rudd at his word" and engaging with his response, it takes less than a minute to realise the PM’s rhetoric is out of all proportion to his "social market" solutions. The harder truth is that Rudd, nor anyone else, has any kind of effective control over the global financial flows dictating the current crisis. Petitioning a feeble Australian state to deal with these dilemmas will not make it less so.
The paraphrase one of Rudd’s heroes, speaking in an entirely different context, we must begin to do the things we cannot think to do.
"let’s take Rudd at his word"
This is the funniest thing I’ve read all day - thanks for the laugh David.
All evidence points to the opposite.
I agree with Andrew, though it took his answer to Ben’s question before i understood exactly what he meant.
The "golden straitjacket" of freemarket policies is held in place by the global financial system - not to mention free trade agreements with the global hegemon.
The race to the bottom in terms of labour costs keeps Australian labour priced well out of the global market for manufacturing.
That said, to write of Keynes is possibly the biggest mistake we could make. George Monbiot talks at length in his book The Age Of Consent about the alternative world economic system that keynes proposed at the Bretton woods conference. It was desighned with many built in measures to make sure a rising tide really did float all boats, which i won’t discuss here but will implore any one who reads this to investigate.
It was very ambitious and received with massive excitement in economic circles at the time and graced the cover of The Economist. But it wasn’t the system we got.
I find it amazing how little discussion there is about this topic, especially now.
In any case, while we should certainly all watch our food miles etc., a retreat from the global system is not an option. If Australia, for example tried to produce its own computers, economies of scale would mean that each unit cost far too much for the average person to afford.
Global Mass movements are the future because only they will have the clout to challenge the global institutions corporations and systems we need to bring to heel.
Ben’s comment that "Erath! First, Critical Mass, Act Up) are not *mass* movement - they are niche movements with more in common to small pressure groups,"
shows he is missing the point. The point is not to create massive movements in the West. But for western dissenters to be proper class traitors and join forces with the mass movements that have emerged and are emerging out of the global dispossessed. there are mass movements represented at events like the World Social Forum but they are not from the West.
Chavez in Bolivia and Morales in Venezuela both rode to power on the back of genuine mas movements.
The west doesn’t have to lead all the time. Peace
I haven’t seen a rational discussion of trade in a long time. Pulling back from open slather does not have to mean isolationism. We can import computers, but for god’s sake we can also grow our own food and have a basic manufacturing sector, so we’re not totally at the mercy of foreign forces, long oil-driven supply lines and distant natural disasters.
Likewise we can regulate money flows through our borders, as used to be routine. Oh, shock, horror, do I mean the wicked Bad Old Days? You know, economic performance since 1980 has never equalled the post-war bad old days, when governments managed economies. Back then we didn’t export our jobs, or put whole sectors out of business in the name of creative destruction. I know, that’s supposed to be good, but the numbers I just referred to don’t back the rhetoric/ideology. I hope to write more about this soon in NM.
Meantime, can we have a bit of rationality?
No Kevin’s certainly no Gough.
Gough tried to do it all in one term, he was kicked out midway through that term.
About where Kevin is now in the electoral cycle.
If Kevin leaves it all to his next term, Kevin may survive, the survival of the libs (neo or otherwise) is questionable, and the middle class of this country, even more questionable.
The Indian model may very well be one to take note of, all you "slum dog millionaires" out there.
Good night customers, Oli
The issues of how we allocate crucial social capital - and the broader issue of how and WHY goods and services are allocated the way they are in the economy, must be analysed separately in order to understand both the reality of our current situation, but also prospects for change.
I completely agree with the author - Change must primarily come from people’s attitudes at the grass roots levels - supported by a more psychologically aware policy regime. Rudd has not confronted this challenge.
If we continue to want the level of material comfort that so many in Australia crave, not only are we stuck with the free market, but we should embrace it. The financial crisis was the logical conclusion drawn from a force more powerful than a political and economic ideology - our own status anxiety and materialism.
It is possible to increase the regulation of the financial markets, but leave other elements of free market capitalism intact. Unless we want to adopt a different lifestyle, it is the preferred choice.
Many on the left like to over inflate the impact of neo-liberalism on our lives. Unregulated finance is a product of neo-liberalism, as is privatisation of key public assets - As for the rest - our own materialistic culture takes a greater share of the blame.
There was a dangerous trend developing under Howard, in which Australians would tolerate market failure in education, health - and to a growing degree - the labor market. This was part of an economic rationalist - ideologically driven notion, that a free market can do a better job than the government in achieving these key social outcomes. It is wrong. Hopefully Australians can step back from this notion.
Speaking more generally - A move to a dynamic and free market allocation of resources, is as much a part of a consumer/materialistic culture than of an economic system. Consumerism and materialism are values constructed from more than neo-liberalism. Keyenesian economics developed to replace classic economics, but did nothing to displace peoples thirst for the cheap consumer lifestyle. This has increased a steady pace since the industrial revolution.
Damn I could go on…better not :-). I love this topic!
"Unregulated finance is a product of neo-liberalism" - but we have not experienced "unregulated finance" since money and interest rates have been brought under the absolute control of our central banks. Any structure which evolves from a centrally controlled monetary system, with or without regulation, is doomed to fail.
What is the point of hyperinflating a currency, forcing interest rates to unsustainably low levels, if it results in the massive structural changes to our economy which has destroyed much of our production base and the reduction of real net earnings in our labour force?
Central to every major economic crisis over the past few decades has been our central banking system with its absolute control over our money supply and the fixing of interest rates to sustain overspending by both government as well as consumers. Massive amounts of capital are also channelled into unproductive and predatory banking and finance sectors instead of finding its way into the hands of our producers of real economic goods such as our labour force.
All of this has hamstrung our primary producers and our fixed income earners who have spent themselves into a state of complete economic exhaustion already.
As China, Russia, Germany and a few of Oil producing Nations of the Middle East plan their new barter systems, their proposed asset based currencies and their slowly evolving real asset exchange banks, we stumble about blinded by our illogical faith in Central Bank controlled Keynesian economic systems which have never worked nor will they ever work regardless as to how much we fiddle with the tweaking knobs.