These Are Old Ideas, Kevin


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, 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.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.