ALLAN PATIENCE. What’s Next After Neo-Liberalism?

The evidence is now irrefutable that the neo-liberal project that has dominated public policy across the major economies for nearly four decades now has been an unmitigated disaster. If nothing else, those who voted for Donald Trump have made that abundantly clear. In Australia neo-liberal (or economic rationalist) policies have resulted in wages stagnation, widespread job insecurity and declining living standards for the majority of the population. Neo-liberal taxation strategies favouring big corporations and the rich are a major cause of the fiscal crises facing governments at all levels across the country. Gold-plated promises that a deregulated economy, freed-up market, and pared-back state would see the majority of Australians benefiting from the trickle-down effects of economic growth have gone up in smoke.

As the French economist Thomas Picketty has shown, inequality has intensified across the capitalist world: the rich are certainly getting richer while the less well off are certainly getting poorer. Moreover, economic growth right across the developed world has stalled as neo-liberalism’s counterproductive “reforms” have been rolled out. On the international stage their most egregious consequence – to date – has been the Global Financial Crisis (GFC) of 2007/8. Given the reach of neoliberalism, there are bound to be more – and worse – GFCs to come. And the Australian economy is simply in no position to weather the coming shocks in the way it coped with the GFC.

What neo-liberalism has bequeathed to Australia is increasing evidence of blatant corruption in Australia’s finance industry, aggressive profiteering and arrogant service provision by the big four banks, huge energy price hikes, skyrocketing private medical insurance premiums, and evidence of stand-over tactics by insurance companies. This amounts to the vandalizing of the Australian economy and its plural communities in the name of an economic doctrine cum political ideology that must now be abandonned. It’s time to face the truth: the neo-liberal emperor is – and always has been – grotesquely naked. Nonetheless, the appearance of the big four bank CEOs before a parliamentary committee in October made it perfectly clear that they believe they hold the public policy whip handle. They offered meaningless mea culpas and departed from the committee to carry on as usual, convinced they have the backing of a querulously insecure Prime Minister and a bumbling Treasurer as prone to fundamentalist thinking in economics as he is in religion.

If our mainstream political leaders are unable to comprehend that their enthrallment to neo-liberal dogmas is now seriously politically counterproductive, they will very soon be handing over power to extremists and populists posing as saviours – wolves in sheep’s clothing. The most cynical among them will be joined by the most ignorant to produce something like Marine Le Pen in France, Nigel Farage it Britain, and of course Donald Trump in America. In Australia this would result in the likes of Pauline Hanson and her sidekick Malcolm Roberts entering a loose coalition with ideologues on the right like Cory Bernardi and Eric Abetz to confect an ideology of populist hysteria, inflaming fear while offering up simplistic solutions to complex problems in politics. This could well cripple the country for generations to come. It has to be stopped.

What is to be done?

The onus is now very heavily on Bill Shorten and the Labor Party to break away from neo-liberalism’s siren songs and chart a fresh social democratic course in Australian politics. This means bringing government back – making it clear that a vibrant private sector can only flourish where there is a robust public sector complementing, competing and cooperating with it. This fresh policy direction needs to place communities at its centre, nurturing interactions and collaborations across ethnic and religious, socio-economic, gender, and age divides – divides that at present are deepening dangerously, leading to social breakdowns, rising crime, mental health crises, and a faltering economy.

The task for Labor is to identify closely with the victims of neo-liberalism. It will require developing policies that will deal swiftly and comprehensively to alleviate the humiliations of a jobs-poor economy, the vast alienation that is opening up between the haves and the have-nots, and the personal suffering that this has unleashed on too many good people in the Australian community. That suffering is real and widespread. This appears to be beyond both the empathy and understanding of too many politicians whose gaze is fixed on an ideological vision that bares no relationship to the realities of the people struggling to get on in the world. Politicians deserve condemnation for not recognizing this a long time ago. If Labor doesn’t wake up very soon it will be shoved aside by the Greens and any other progressive group on the left. Or, more worryingly, One Nation and its ilk will step into the policy vacuum Labor has helped to create.

It’s time for a raft of strong public institutions at the commanding heights of the economy, to compete with the capitalist carpetbaggers currently dominating those arenas.

First, we need a publicly owned bank to compete with the big four banks. It must offer friendly customer-focused service to small account holders – precisely for the reasons the original Commonwealth was established, to look after the little people whom the private banks then treated with disdain – and they still do today. Watch the public flock to such a bank!

We need a publicly owned energy supply commission, to sort out the crazy mess into which private electricity and gas suppliers have managed to plunge the economy while creating a new parasitic version of capitalism in our midst.

We need a public legal entity to compete with the big, unscrupulously profit-focused law firms that constitute one of the surest guarantees that justice is only available for those who can pay for it.

We need a comprehensive public medical service (including specialists), along with a publicly owned health insurance commission, to ensure that good medical services are available to everyone, not just those who pay the highest private health insurance premiums.

These and many more publicly responsible competitors in the private sector are urgently needed to begin to ameliorate the ravages of neoliberalism. And the capital they generate above their capital costs can go into general revenue, to be spent on better public housing and transport, while investing in alternative energy research and development and public education.

This of course is only the beginning. Other measures – increasing taxes on the rich, imposing scrupulous regulations on strategic areas in the private sector – have to be taken on board and explained carefully and well to voters by the ALP. If Labor fails to go in these directions it will be the end of the ALP as we know it.

Dr Allan Patience is a political scientist in the University of Melbourne


Dr Allan Patience is a Principal Fellow in Political Science at the University of Melbourne.

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8 Responses to ALLAN PATIENCE. What’s Next After Neo-Liberalism?

  1. Avatar Julian says:

    Many thanks Allan for a splendid summary of the present malaise.
    Thanks also to those who replied – much food for thought overall.

  2. Avatar Scott MacWilliam says:

    Didn’t Keynes once say: “When it comes to the class struggle as such my local and personal patriotism … are attached to my own surroundings. I can be influenced by what seems to me to be Justice and good sense; but the class war will find me on the side of the educated bourgeoisie.” And Warren Buffett more recently acknowledge the current outcome of the class war: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning”? Buffett doesn’t hire economists or read economic forecasts, so sure are his sights on accumulation without the trimmings. Keynesianism, so-called economic rationalism, neo-liberalism, class apologetics all. And now we get incessant cries for reform which never ask: reform what? Make America/Australia/Britain et al great again? Rebuild capitalism as the ship sinks? “A positive role for government” with its echoes of Comte, Owen and the utopian socialists? Why not aim for the future possibility of free development for all with chains for none?

  3. Avatar Dog's Breakfast says:

    “In Australia neo-liberal (or economic rationalist)” In an otherwise excellent summary Allan, I have to depart from you here. Neoliberal economics has very little to do with rational economics. I don’t advocate abandoning the study of economics, only removing the shibboleths and dogmas that have become mainstream.

    ‘Rational’ economics would look at policies that have failed, seek to understand why and abandon them post-haste. Why has outsourcing and selling everything off not worked – because the profit motive rarely intersects with the public interest. Why does trickle-down economics not work – because 40 years of trying has shown that it doesn’t. I could go on.

    Don’t abandon rational economics, recognise that what neoliberal economics does departs radically from rational economic study, and that the market is an extremely imperfect vehicle for the distribution of goods and wealth, and regulate appropriately (or just take them over as national monopolies in many cases in Australia – the NBN, the energy market etc)

  4. Avatar Peter Graves says:

    Exactly ! The current paradigm of economics and the policy advice derived from it was wrong in 1975, is demonstrably wrong and will be wrong for Australia and its people. The Chicago School of economic theory was designed on the basis of destroying a role for “Government” in the economy (Nik-Khah, E., & Van Horn, R. (2012). Inland empire: economics imperialism as an imperative of Chicago neoliberalism. Journal of Economic Methodology, 19(3), 259-282.) and seemingly uncritically adopted in western universities and their subsequent PhDs, who have advised governments.

    A similar influence can be seen in the US pharmaceutical industry:
    Nik-Khah, E. (2014). Neoliberal pharmaceutical science and the Chicago School of Economics. Social studies of science, 44(4), 489-517.

    Start by recovering the positive role of the Australian government (beyond the “balanced budget”) and its functions in building this nation and helping its people. Focus first on “people” rather than the mantra of “the economy”.

  5. Avatar Karencummings says:

    Great article. With clear steps to unwind some of the worst features of neo Liberalism.

  6. Avatar Rodney Topor says:

    I generally support the direction of this article, but it omits any reference to the important education system. I believe that we need to reform the education system along the following lines, among others:
    1. Find a way to improve academic standards at schools and universities, including improved funding.
    2. Reduce reporting and administrative requirements in schools and universities so that limited funds can be used for teaching and research.
    3. Stop, or at least reduce, public subsidies for private schools and universities.
    4. Fund and promote public schools over private schools, to encourage students from diverse races and religions to attend the same schools, which leads to a less divided community.
    5. Fund and promote vocational education (e.g., TAFE) to meet the needs of less academically oriented students and to provide employment opportunities.
    6. Reform or abandon the corrupt private vocational education institutions.

  7. Avatar slorter says:

    The real problem is an economic one while ever we cling to neocon economic dogma held by both the left and right of politics nothing will change. The Democrats lost, the Republicans also lost! The Democratic Party has to be cleaned out and Democratic Party leadership will fight against this change of allegiance which is reflected in their long fight against Bernie Sanders and other progressives going back to Dennis Kucinich! The Democrats need to do what Britain’s Labour Party did by cleaning out Tony Blair’s Thatcherites.
    Paul Craig Roberts : “Change cannot occur if the displaced ruling class is left intact after a revolution against them. We have proof of this throughout South America. Every revolution by the indigenous people has left unmolested the Spanish ruling class, and every revolution has been overthrown by collusion between the ruling class and Washington.”

    Obama spent eight years rescuing Wall Street instead of the economy, that was enough for most voters to see how deceptive his promises had been. Remember the Rust Belt swing states that shifted away from backing Obama for the last two terms are not racist states. They voted for Obama twice!

    Donald Trump is Obama’s legacy and the Democratic Party!

    If we are not careful here in Australia Pauline Hanson and her ilk will be the Labor Party’s legacy as well!

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