Neoliberalism unhinged

Neoliberals are now blatantly breaching their original ideology based on individualism and free markets by resorting to subsidies, nationalization, trade restrictions, etc. – i.e. to favour their own.


By Chris Johansen, GI Co-editor

Richard Denniss, Chief Economist at the Australia Institute, has recently published ‘Dead Right: How neoliberalism ate itself and what comes next’ in Quarterly Essay. He was in Perth on 12th June for the launch of this publication, presenting a rollicking overview of it and participating in an entertaining Q&A. This was hosted by WA Fabians along with UnionsWA, CPSU-PSU and Senator Louise Pratt at Rosie O’Grady’s, Northbridge. You can see a video of the evening here – highly recommended!

He pointed out that the term ‘neoliberalism’ is only about 30 years old and briefly refers to all things small government and reliance on individual initiative, as opposed to community and government action for the betterment of society as a whole. Its greatest achievement has been to gain wide acceptance of the concept of ‘trickle-down economics’, whereby it is argued that government policies favouring the captains of industry would eventually benefit the masses. An example is the Coalition Government’s recent, although now aborted, proposal for company tax cuts, most of the benefits of which are much more likely to spill into the bank accounts of those captains than trickle down to anywhere else.

However, Richard reminded us that after 30 years of neoliberalism we have greater income inequality, ever-increasing job insecurity, deterioration of employment terms and conditions, plummeting housing affordability, rapidly disappearing public and social services, etc. – and an increasingly polarized society.

Emanating from the hard right of the Coalition, once the champions of neoliberalism, are indications that they have abandoned, or at least wound back, their dreams of small government and reliance on individual initiative. For example, there are calls to nationalize coal-fired power stations (e.g. Liddell in NSW), continue and further increase subsidies for fossil fuel extraction (e.g. Adani), use billions of government funds on Snowy 2.0, interfere with free trade (e.g. some Liberals wanting to stop live exports, some captains of industry demanding tariff protection), etc. The Abbott Government thought that it would further their cause to undermine the credibility of ‘experts’ (e.g. climate change and renewable energy), but this has backfired in that they now cannot credibly call upon ‘experts’ to support their current policies. The neoliberal champions seem to have lost their ideology, exposing their underlying aim of wanting to “shovel public money to friends and cut it from their enemies” – which is just old-fashioned politics.

Richard reminded us of a statement by Margaret Thatcher, credited with introducing neoliberalism to not only UK but eventually the entire western world, that economics is the method but the objective is hearts and souls. Economics and economists are skilfully used by neoliberal advocates as an excuse to implement their political agenda. An example is over emphasis on GDP (‘gross domestic hoax’ according to Richard), rather than using the several other available parameters that more closely measure societal well-being (e.g. Gini Coefficient, Genuine Progress Indicator, Human Development Index, etc.). GDP was invented after WW2 when it was indeed relevant to reconstruction of devastated economies, and did then reflect improvement in societal well-being as well-being was directly dependent on reconstruction activity.

The Government likes to boast of ‘27 years of economic growth’ but then tells us we are facing a ‘budget emergency’ (where did all the profits go?) and thus have to reduce Government expenditure on health, education, old age and other pensions, unemployment benefits and the social safety net in general. This is little more than a process to keep wealth with the wealthy and let the rest use their ‘individual initiative’ to meet their needs.

An indication that the neoliberal project is starting to unravel is their increasing tendency to impose red tape, legal strictures, fund-raising restrictions, etc. on activists, unionists, and opponents in general – heavy handed government rather than small government. A basic tenet of neoliberalism is opposition to red tape, government restriction, etc. but what they really mean is that these measures should be directed towards their enemies and not their friends. The more under siege they feel the more repressive they become – an age-old reaction of governments with a shallow philosophy.

These cracks in the neoliberal wall suggest that now is a good time to start demolishing that wall. And Richard proposes that this is best done by changing the national political conversation. Away from the flawed economic arguments of the sacredness of the GDP, ruthless reduction of the budget deficit, reducing the wastage of social welfare, etc. Towards protection and furthering of a vibrant democracy where the main topic of national discussion is what we want our society to really look like. Among nations, Australia is a relatively rich one and can muster the funds to progress toward what it really considers as an ideal society. There are plenty of options for mustering funds now forgone, as used in other countries, such as introduction of wealth and inheritance taxes, closing of abundant tax loopholes now available to wealthy individuals and organizations, and so on.

Header photo: UK PM Margaret Thatcher visiting Pohang University of Science and Technology, a private research university in South Korea, 1986 – proselytizing neoliberalism. Credit: Wikimedia commons