JERRY ROBERTS. Corruption or Ideology?

Just when critics of neoliberalism are finding a seat at the table economists are mounting a counter-attack blaming society’s ills on political corruption.  John Menadue summarises their argument under the heading of rent-seekers, regulatory capture and lobbyists.  The neoliberal critics, of whom I am one, maintain that ideology is a major factor in the absurd situation in which we Australians find ourselves in relation to electricity, gas, housing, inequality and the dictatorship of multinational corporations.  About political corruption only one point can be made with certainty.  It is not a new problem.

The Roman statesman and philosopher, Cicero, in his Second Philippic made the most famous of all statements on the dumbing-down of an entire population by the corruption of power.  Cicero wrote this speech in October, 44BC, seven months after Cassius, Brutus and the conspirators stabbed Julius Caesar to death in the Forum on the Ides of March.  Cicero compared Mark Antony to his mentor, Caesar.  It sounds even better in the Latin but I like Michael Grant’s translation.

“You and he are not in any way comparable,” wrote Cicero.  “His (Caesar’s) character was an amalgamation of genius, method, memory, culture, thoroughness, intellect and industry.  His achievements in war, though disastrous for our country, were none the less mighty.  After working for many years to become King and autocrat he surmounted tremendous efforts and perils and achieved his purpose.  By entertainments, public works, food-distributions and banquets he seduced the ignorant populace, his friends he bound to his allegiance by rewarding them, his enemies by what looked like mercy.   By a mixture of intimidation and indulgence he inculcated in a free community the habit of servitude.”

Like politicians before and since, Mark Antony did not like being called a drunken, lecherous crook.  He despatched his thugs to beat the old man to death and chop off the hand that wrote the Philippics.  Shakespeare too turned to Caesar for one of his purple patches on political cronyism.  “Let me have men about me who are fat,” said Shakespeare’s Caesar. “Sleek-headed men such as sleep of night.  Yon Cassius hath a lean and hungry look.  He thinks too much.  Such men are dangerous.” Today’s fat, sleek-headed men who used to surround Caesar at the Colosseum watching the gladiators in scenes beloved of Hollywood directors now sit in the corporate boxes watching the football.

In a folksy moment the West Australian Premier, Mark McGowan, suggested the aristocrats in the private boxes at the new Perth Stadium should be restricted to drinking mid-strength beer, same as everybody else on the ground, not their usual brews of Moet champagne and Grange Hermitage.  I’m sure Mark knows the purpose of private boxes at football grounds.  They serve the same purpose as yachts moored in the Mediterranean, private jets parked on the airport at Aspen and hotels reserved at Davos.  They exist for the duchessing of politicians and other corporate clients. Rather than worry about what type of booze the fat cats slop down their throats I am sure Mark has instructed his front bench and back bench to pay for their own seats in the public stands if they want to go to the footy and never to enter a private box, a floating gin palace, ski lodge in the Rocky Mountains or a hotel lobby at Davos.  If they need to meet property developers, industrialists, bankers or trade union officials they are to hold the meetings in their own offices in Parliament House with lots of witnesses, including the permanent head of the department and a stenographer.  Following the meeting the Hon Member writes to the participants summarising what was discussed and stating the government’s position in plain language.  These are old rules in the Westminster system and they exist for a reason.

Of more concern than deals behind closed doors is what has gone down in plain view these last 30 years of the neoliberal ascendancy.  Several years ago I saw a chart showing the ratio of chief executives’ salaries compared to the wage of the lowest-paid employee in the firm.  In Australia at the time the average figure was something like 20:1. In Britain it was 40:1, in the USA 80:1 and in Japan 4:1.  So if the caretaker at the Nissan factory was earning $20,000 a year the big boss was on $80,000.  The Japanese business culture was commendable from that point of view.  The ratio in USA and many other countries is now into the hundreds.

In some countries, including Australia, governments are finally making disapproving noises about the monstrous salaries paid to modern managers, like the geniuses who run our banks. The role model for these characters is a piece of work called Jack Welch who was chief executive of General Electric in America where he made a fortune for himself and his company by sacking American workers and sending jobs offshore, thereby contributing to the decline of America’s industrial heartland and the consequent election of Donald Trump.  He sacked so many workers that he was known as Neutron Bomb Jack for his ability to leave the company’s buildings standing intact but entirely denuded of human beings.  One would like to think that public opinion will turn against this managerial upper crust but, in the meantime, we should tax them at the 80 cents in the dollar rate recommended by Picketty.   Is it written down anywhere that any community needs to tolerate the presence of these Orwellian pigs who stick their disgusting snouts in the trough and turn their countries into Animal Farm?  They justify their salaries by claiming they are worth that much on the “market,” thus taking neoliberalism to its idiotic conclusion.

My response to Ian McAuley’s post of 18 September appeared on the same page with a comment from Scott MacWilliam who referred to Chalmers Johnson’s interpretation of Japan’s post-war reconstruction.  Scott used the expression “capitalist development state” of a type not seen much nowadays.  I think this is what we used to call nation-building which was the normal mode of government in Canberra until the neoliberals took over with their view of government being restricted to the creation of markets for the benefit of investors.  Scott did not mention the German side of the equation raised by Ian McAuley.  If he had he could have described the German variation of neoliberalism known as ordo liberalism and the part played by Wilhelm Ropke, Alexander Rustow and Walter Eucken. The German position is even more controversial today in the Euro era and Yanis Varoufakis should be read on this point.

Scott’s general point is the same as mine.  There is a tendency in neoliberal analysis to over-simplify the working of the political economy.  The same point is made by Geoff Edwards in his response to Michael Keating’s post on the Productivity Commission and irrigation (28 September).  Geoff’s comment about markets and the public interest is a general criticism of neoliberalism and is well put. “The (water) reforms suffer from a weakness of all regimes that rely upon markets to determine where the public interest lies.  For this reason anything that the Productivity Commission opines on the subject needs to be taken with a grain of salt.”

The most radical policy before the Australian public at present is Nicholas Gruen’s proposal to add a retail division to the Reserve Bank.  This is so radical I can’t imagine it will get to first base in Canberra.  Jim Coombs has described the earlier role played by the Commonwealth Bank in more regulated days.   Jim’s father, Nugget Coombs, was not surprised when Ben Chifley moved to nationalise the banks because he was familiar with Chifley’s psychology.  He deeply admired Chifley.  They all did.  Jack Curtin was the brain but it was Chifley’s personal warmth that held the Labor Party together and it soon fell apart after his death.  Nugget Coombs thought Chifley’s nationalisation move was unnecessary because the existing arrangements with the Commonwealth were accepted by the trading banks and were working smoothly.

Jim Coombs on these pages asks what is neoliberalism?  The best answer in his case is that neoliberalism is the exact opposite of everything his father worked for throughout his long career devoted to public service.  I don’t have his Dad’s exact words in front of me but they were pretty close to the following:  As far as is possible the basic constituents of a good life should be available to the people outside the market.  This is a classic statement of the social democratic position and is the polar opposite of neoliberalism and all the policies of the last 30 years.

Keith Tribe says what distinguishes neoliberalism from classical liberalism is the inversion of the relationship between politics and economics.  “Arguments for liberty become economic rather than political, identifying the impersonality of market forces as the chief means of securing popular welfare and personal liberty.”  He notes that Friedrich Hayek’s book, The Road to Serfdom, quickly became “the canonical work of neoliberalism” but like many of us brought up on British liberalism he wonders how Hayek could seriously argue that the home of Adam Smith and John Stuart Mill was being led down the road to Hitler’s Germany by the liberalism of Keynes and Beveridge.  Yet this is indeed the feeble foundation on which was built the byzantine structure of market theories worshipped by economists in the religion known as neoliberalism.

Where Hayek (and Marx) went wrong is explained succinctly by Jean Curthoys in her 2010 essay.  Jean refers to Robert Conquest’s criticism of 20th Century totalitarianism where he concludes that “excessive ideation” transformed concepts that might properly be “abstractions” into “absolutes.”  We see this in recent times in Australia and other countries with the creation of “quasi” markets to impose neoliberal ideology on to fields such as health and education.  At its extreme this will give us an American health system where you live or die according to the bean-counting of an accountant working for an insurance company.  In Australia we prefer nurses and doctors to at least have some say in the decision.  The Australian fight in this arena is described by Ian McAuley and others on these pages.  Jean Curthoys sums it up: “Of decisive importance is that both Marxism and neoliberalism have an attenuated view of politics, one which, in the case of neoliberalism, has seriously corroded the liberal tradition.  For both see freedom as residing fundamentally in their ideal ‘system’ rather than in the ‘eternal vigilance’ that sustains – and is sustained by – a rich political life.  In short, neoliberalism presents itself as the definitive critique of Marxism when, in fact, it is its ideological flipside.”

One of neoliberalism’s harshest critics is Philip Mirowski of Notre Dame who sees Hayek’s thinking steering dangerously close to that of “Hitler’s crown jurist,” Carl Schmitt, and quotes Christian Arnsperger’s view that Hayek invented the theory to end all theories, “denying to others the very thing that gave his own life meaning – the imprimatur to theorise about society as a whole, to personally claim to understand the meaning and purpose of human evolution and the capacity to impose his vision upon them through a political project verging on totalitarianism.”  Arnsperger thus explains the frustration many of us have experienced during the neoliberal era when questioning policy only to be met with a brick wall of minds enclosed in market theory.

I have despised neoliberalism with a passion ever since I watched with mounting horror the massive privatisations and deregulations of the Thatcher era and read Hayek’s theoretical justification for this institutional destruction and the early criticism against it from Hugh Stretton, Michael Pusey and Simon Marginson.  This current attempt by economists to shut down debate on neoliberalism by putting the spotlight on political corruption is unhelpful and downright dangerous.

As Keynes wrote in the introduction to the General Theory: “The difficulty lies not in the new ideas but in escaping from the old ones, which ramify for those who have been brought up, as most of us have been, into every corner of our minds.”

We will scratch the surface at best or dig a deeper hole if we try to go forward from here without understanding neoliberalism.

Jerry Roberts is a former parliamentary reporter who retains his Pitmans shorthand and his interest in politics.

 

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Wayne McMillan

Thanks Jerry for a stimulating article. A lot of critics see corruption as endemic in all governments today, but has it always been like this? My answer is YES! Power corrupts and absolute power corrupts absolutely despite ideology. I disagree with you Jerry only on that one point that power trumps (pun not intended) ideology. Of course there are some ideas that are more dangerous than other ideas. There are true believers on the right and left who are oblivious to historical, empirical evidence when it contradicts their views and interests. The free marketeers who believe unquestionably in the laissez… Read more »

It starts with taxation, surely. As noted in the post above, Picketty recommends 80 cents in the dollar for our millionaire manager types. He admits that won’t raise much revenue but it sends a message that greed is not good while asserting national sovereignty and restoring at least a semblance of public decency. If the managers and the companies employing them threaten to take their God-given talents offshore they should be encouraged to leave quickly. I’m sure we can foster enterprising Australian firms committed to our country and our people and staff them with managers who don’t need to be… Read more »

Dog's breakfast

Wonderful, thank you Jerry and contributors. I am of the opinion that Jerry’s nod to history and theory is necessary, as a platform or a foundation upon which to build the new house. But have to agree with Paul’s comment on not getting caught up in ideological fights without ever laying a glove on the actual perpetrators of the problems. There is sufficient room between those ideas to take both on board. The further I have come, the more I think that the ideologies are necessary for background, but that each problem we face must be fought head on, ideology… Read more »

I think you are wrong on this Paul. How to you fight corruption when the prevailing ethic is ‘greed is good,’ which is what neoliberalism amounts to? The fox is in charge of the hen house.

Paul Frijters

you focus on the enemy that has robbed you and that you can influence, the politicians. You name, blame, and then talk of a moral revival and renewal in that sphere. Preferably, you stand for parliament yourself. But you stay away from vague cultural critique that makes it easy to sideline you. ‘X is corrupt, we should do Y’ is far harder to ignore than ‘ideology Z is the cause of all ills’. You thus have not yet risen to the challenge and told me your alternative. What ideology/utopia do you have to challenge your supposed adversary with? We are… Read more »

Thanks gentlemen for the comments. What happened to the ladies? My better half (considerably better) has no interest in politics and I’m not interested in anything else but we still love each other. The problem we are discussing started 10,000 years ago in the Neolithic revolution when some of our ancestors settled down from their nomadic hunting and gathering to farm fertile land. My great mate Ian Tarrant, teacher and anthropologist, summed it up in his book, Under the Carlie Tree. “This shift to settled agriculture also meant a change in attitude which was to have a marked effect on… Read more »

Paul Frijters

“For me it all starts with a theory. ” a theory is not an ideology. My theory (on which I worked before delving into corruption stuff in 2010) can be found at https://www.amazon.co.uk/Economic-Theory-Greed-Groups-Networks/dp/1107678943 It includes stuff on hunter-gatherers and all that. We don’t differ much in terms of our take on agriculture. “The ideologies they inspired set out to change not just the relationship between labour and capital, business and government but the nature of man himself.” True for the socialists, although their ideal human looks remarkably like the one the Catholic Church imagined. The ideal peasant village is very… Read more »

Paul Frijters

this conspiracy stuff is so unhelpful and blatantly non-nonsensical. 1. The same broad church of economics is in dictatorial Russia, welfare-land Scandinavia, raw-capitalism India/China, and everything in between. And in no country is there only a state or a market. 2. Individualism, the rise of political parties as job agencies, and the changing landscape of the media are very broad phenomena and wont be rolled back or altered by banging on about a supposedly evil ideology. Just like the preachings of the Catholic church against materialism never made the slightest difference to reality, so too will gratuitous whining about ‘neoliberalism’… Read more »

Greg Bailey

This is an excellent summary of neoliberalism, but I wonder if it understates the extent which its become institutionalised in the manner so excellently put by Geoff Edwards. To his short summary we could perhaps add the extent to which politics has become privatised in the sense that it has become a distinctive career path leading from university, to a minister/member’s office, a safe seat, and then a job as a consultant or lobbyist. In every respect the career is more important than allegiance to a wide set of electors, and mirrors perfectly the indifference CEOS feel towards their workers… Read more »

John Richardson

A very insightful article Jerry … thank you. I was particularly interested in your comments regarding CEO’s remuneration … I’m not sure if you are aware that the restraint & relativity evident in Japanese pay scales was once the case here. Going back 50 years or so, there was a widespread practice in the private sector that the CEO/GM would not be paid more than 12 times the remuneration of the lowest paid employee in an enterprise. Not only did this act as a restraint at the top but it also acted to ensure that those at the bottom were… Read more »

Paul Frijters

Hi Jerry, thanks for the post. I sympathise with much of what you say, but do not think we are going to get anywhere when we focus on ideology. Imagine a wolf coming to your house, dressed as a sheep, who then robs you of all you hold dear ‘in the name of all sheep’. Suppose you hate sheep the rest of your life and seek vengeance on anything that looks like a sheep. Is that not giving the wolf an added, final victory? He has even robbed you of the ability to see the difference between the cause of… Read more »

Geoff Edwards

Thanks, Jerry Roberts. As I understand the situation, there are three elements to the entrenchment of neoliberalism as Australian (and global) policy orthodoxy. One is the capture of academic economics by a narrow instrumental neo-classical sub-discipline; another is the appeal to leaders in business and government of a pro-business world view, as promulgated by the Friedman school, drawing upon a narrow economics inadequately informed by history, philosophy or science; and the conversion of Rupert Murdoch during the 1980s to this ideology as it neatly meshed with his culture war on the academic and environmental Left. I bow to John Menadue’s… Read more »

michael lacey

An excellent read thank you! Welcome to the Neoliberal world global religion! Its function is to create an cheap, obedient, docile, uncritical workforce who will work to support the upper-class’s lifestyle and the economy. Keeping wages low, or debt pressure high, means workers will be less likely to complain or make demands. As workers struggle to provide their families with all the temptations that a capitalist society offers, they become far less likely to risk their employment, and less able to improve their situation. With corporate feudalism They have taken this corrosive social vision and dressed it up with a… Read more »