Unmaking socio-economic cohesion – part 1

While the Morrison government promulgates the US’ and Australian ‘shared values’, the nightmare that is the American health system looms large. Yet dominant opinion since the 1980s would have Australia mimic the US’ and Thatcherite Britain’s ideological predisposition.

Why is the defence and maintenance of public institutions that serve to cohere Australian society so difficult? I have summarised on this site the historic role of the nation state earlier facilitating, if haltingly, such coherence.

The proximate material roots of neoliberalism are to be found in the end of the post-World War II long boom. The boom, generating unprecedented ‘trickle down’ in the first world, was a product of time-bound Pax Americana and Fordism – thus destined to self-extinguish. OPEC countries, taking revenge for the neo-colonial appropriation of cheap oil, hammered the nails in the coffin.

Nixon took the US dollar off gold in August 1971, dismantling a key plank of Pax Americana in the (relatively) fixed exchange rate regime, already undermined by the growth of the eurodollar market. By the 1980s, financial capital was in full flight in search of opportunity, no matter how destabilising.

It was bad timing for the Whitlam Labor ascendancy. The Whitlam government expected and needed ongoing boom conditions to pay for its extensive program.

Capital needed alternative fields of long-term profits. Attacking the gains of wage labour was the first imperative. In the US, capital moved from the unionised North to the anti-union ‘right to work’ South. This drive was systematised in restructured globalisation that furthered commodification of peasant production, corporate demolition of petty commodity production and large scale proletarianisation of peasant and petty producer families.

Complementing that drive was the opening up of a goldmine in waiting – the public sector.

The moves needed ideological cover. Old warhorses Milton Friedman, Friedrich Hayek and others were resurrected and feted. Friedman’s 1962 Capitalism and Freedom and his 1980 Free to Choose (with Rose Friedman) were vapid, at times ridiculous. Hayek’s 1944 Road to Serfdom, his polemic against a humanised capitalism, is one of the most dishonest books ever written – an embarrassment.

Rationality of argument has never been a strong suit within the neoliberalist camp, but the velvet glove of sweet reason was cover for the iron first of the appropriation of political power for the vested interests. Friedman and Hayek were figureheads, as were the light- but pig-headed Reagan and Thatcher. Symptoms.

The hard yards ideologically were done elsewhere – in the business-funded ‘free market’ think tanks (like the British Institute of Economic Affairs) and in inter-connected bureaucracies everywhere. In Australia, Treasury officials returning from R&R in prestigious international organisations brought back the new faith. The OECD early brought an authoritative voice to the push.

Malcolm Fraser’s Toryism put a brake on some developments – out of disdain for Treasury advice he had created a separate Department of Finance. But Fraser abolished Labor’s Department of Urban & Regional Development and Labor’s hard-won Medibank. Treasurer John Howard laid the Campbell Committee egg that hatched into comprehensive financial deregulation.

Labor came to office in 1983 and ultimately fell into line under enormous pressure. The media and the Opposition invented crises, forcing the government into ill-informed policy responses (remember the ongoing ‘current account deficit’ affair). Year after year the media pushed for austerity, parlaying arguments for privatisation and contracting out of public delivery of economic and social services.

Predictable problems with public sector delivery, such as customer service failings and budgetary financing, were met not with made-to-measure resolution, but with an unprecedented scorched earth solution. Away with the past. There was now a miracle permanent ‘cure’, offered behind the weasel words of efficiency, innovation, etc.

The public was never convinced but the public was never asked. Once Labor climbed on board, as did ‘centre left’ parties globally, voters were effectively disenfranchised on the main issues of the era.

For example, the privatisation of the Commonwealth Bank has been a disaster for broad financial services in the public interest. Under the commercialisation agenda driven by CEO David Murray, immediate large scale branch closures ensued; worse, practices conducive to criminality flourished within the bank and which remain in place unchecked.

Howard finished off the job. The privatisation of the vertically integrated Telstra was a milestone in irrationality, with disastrous long term consequences. Jobs Network was intrinsically dysfunctional, corrupting not-for-profit organisations in the bargain.

Contributors to Cahill & Toner’s 2018 Wrong Way: how privatisation and economic reform backfired expose the ongoing dysfunctionality across child care, prisons, aged care, banking, VET, etc. There has been no general mea culpa from anyone in authority or amongst its proponents.

It’s still raging. Liberal-National governments in New South Wales since 2011 have turned privatisation and contracting out into an art form of incompetence, serving of selective interests (mostly developers) and corruption. The selloff of the social housing complex and the associated destruction of community in Sydney’s The Rocks was a supreme act of venality. The brutal privatisation of the Land Titles Office was the ultimate in perfidy.

In the US, the admirable US Postal Service is constantly under attack. In Europe, the construction of the EU itself was designed to inhibit functional delivery of public services with the dictate that all such be subject to ‘competition’. Even Scandinavian countries have caved in. For example, Sweden has privatised significant sections of social housing, upper secondary schooling and aged care.

The deception of general benefit has also been facilitated by a statistical artifice – the elevated status of the concept of gross domestic product as the key indicator of a country’s economic vitality. Myriad politicians and experts have claimed that Australia has experienced the miracle of 28 years or so of continued economic growth since the 1991 recession. Ergo, all those ‘reforms’ we introduced on a bipartisan basis in the 1980s and 1990s have been an indubitable success.

The structural flaws of the GDP concept are well known. Systematic work on such statistics began during the early 1930s and was furthered during World War II in the context of a clear ‘national interest’. Keynes’ macroeconomic theory gave the work added justification. However, the resulting statistics have been deified and their weaknesses glossed over. That GDP per capita is a mean average is transparent.

GDP statistics hide structural transformations. Since 1991 a significant proportion of the workforce has suffered degrading conditions – by design. Scams like wages underpayment are reported as sensationalist items, but only specialists are familiar with the character and extent of the degradation. Howard’s draconian WorkChoices (sic) was fortunately headed off at the pass, yet Treasurer Frydenberg is still looking for labour market reform (sic) to drive post-Covid economic recovery.

The spatial dimension, highlighted by long-suffering low-status geographers, is also sidelined.

Wealthy elites and their dogsbodies who carry the can care nothing for the fact that the policies that have produced their obscene differentiation have dismantled the social fabric. The local Robodebt scam is an exemplary reflection of their contempt.

In the US, where real wages have stagnated since the long boom’s end, the contempt runs deep. Amazon’s founder Jeff Bozos, the world’s richest person, employs his global workforce on near slave labour conditions. The Food Stamps program (formally SNAP) is the rock bottom safety net – its very necessity an indictment. In 2018-19, 38 million people (12% of the population) were beneficiaries. Soon after his inauguration, Trump foreshadowed tightening access, which would have cut an estimated 750,000 plus people from aid. The introduction set for April 2020 was narrowly averted by a suit of several dozen States and the onset of the pandemic. Trump and Republican legislators are still trying to emasculate Social Security (1935; fashioned by businessmen and not communists, by the way) and Medicare (1966). Without these essential planks of the US welfare system, you may as well top yourself at 65.

Political sociologist Wolfgang Streeck (‘How Will Capitalism End?’, New Left Review, May-June 2014) claims that:

“… the stability of capitalism as a socio-economic system depends on its Eigendynamik [internal momentum] being contained by countervailing forces – by collective interests and institutions subjecting capital accumulation to social checks and balances. The implication is that capitalism may undermine itself by being too successful.”

That momentum shows no sign of abating. Verbal dissent is mostly restricted to alternative media. Peaceful mass demonstrations are perverted by violent agents provocateurs prone to property destruction and/or subject to violent repression (the French gilets jaunes; Black Lives Matter). Petty economic crime, driven by desperation, is met with harsh imprisonment.

The adult franchise, great hope of the Nineteenth Century, has been knackered. It has been long impoverished by the asymmetric power of unequal monetary resources, complemented by gerrymandering, voter disenfranchisement, bauble bribes, lies, etc. And fundamentally vitiated by potentially viable governing centre-left parties complicit, compromised, weak – Tweedledum and Tweedledee.

Championing the return to substantial public provision of public goods (in conjunction with a resuscitated uncorrupted not-for-profit sector) remains a hazardous choice for aspiring politicians.

Welcome to the new normal.

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Evan Jones, now retired, lectured in political economy at Sydney University for 34 years. His current preoccupations are malpractice in the Australian banking sector, French politics, and mainstream media disinformation.

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