Greg Bailey. Lobbyists and Consultants.

May 27, 2015

Current Affairs. 

John Menadue has written an excellent summary of what might originally have been a problem of the sociology of knowledge, where particular groups in society appropriate the debates relating to public policy. They usually ignore the intellectual currents that lie more deeply behind these policies, even though they have been strongly influenced by them. Whilst it is the task of intellectuals to expose these currents, it should be the task of public servants to assess their validity, when translated into specific policy recommendations, for implementation in the public sphere.

In 2000 I published a book applying technical myth analysis to narratives (newspapers, government reports) dealing with public policy as I had become so disturbed by the effects of deregulation and privatization and so disillusioned with the Labor Party’s abandonment of its traditional support base. In Chapters 2 and 5 I examined the role of business economists and consultants respectively and canvassed some of the issues Menadue has so eloquently summarized.[1] I touched on the role of lobbyists, but did not realize then how influential they would become. Certainly their preponderance in influencing government decision making in terms of public policy is decisive and seriously undermines democratic values and forms of decision-making. But this is part and parcel of neo-liberalism understood as both a political and a cultural system. It is essentially a form of neo-feudalism where those who control the resources are able to exercise greater control of these resources over time because of their access to political power and the commonality of their interests and those of the politicians.

Since the early nineties, if not before, public policy seems to have been largely defined by lobbyists, consultants, business economists and right wing journalists, all buttressed to some extent by think tanks like the Institute of Public Affairs, the Sydney Institute and the Centre for Independent Studies.

There are two aspects to the communicative function of these groups. Firstly, they are explicitly involved in presenting the virtues and benefits of a ‘free market’ to the general public. The main conduit for these views is via the mass media, both electronic and print. For the last two decades comment about matters of economic policy has, and continues to be, almost always sought from business economists and consultants from the four large consulting firms. As such these groups, and especially the large consulting firms, have become virtual public relations experts, spruiking the virtues of the free-market. Their message has a high degree of unanimity around it, even though there are no doubt slight individual differences.

Secondly, in conjunction with the registered lobby groups they apply their persuasive powers to individual ministers and other politicians to influence specific policies consistent with their more general belief in free markets. These policies in truth may have nothing to do with pure free market concepts but benefit small vested groups. The rejection of the mining rent resources tax is a good recent example as are the abolition of carbon pricing, and a likely rejection of a possible investigation of oligopolistic pressures in iron ore pricing. And, as Menadue, rightly says, they oppose any reform that may benefit society as a whole, as opposed to their own vested interest. Unless something is done to allow ‘non-organized’ voices to be heard in the forums where policy is influenced, democratic values and practices are certain to be diminished as they already have been, as Menadue’s article so clearly shows.

What is paradoxical about this is that the early Australian justifications for deregulation and privatization argued that government activity everywhere should be minimized because it was so easily captive to vested interests. As an example of this belief consider the following opinion expressed in 1994:

“In general, the decentralised decision-making of all members of an economy taps a richer base of ideas and provides a more effective system of screening profitable from unprofitable forms of change than a centralised group of people nominating industries or technologies for selective treatment. We were pleased to note the Prime Minister’s recent speech to the CAI in which he said “Government’s concern should be with the broader community and social change, while the focus of competition should provide the signals to which industry in the free play of the market will adapt.”[2]

Yet capture of the government by vested interests is exactly what has happened in the intervening twenty years. The underlying impulse in much that has been taking place in public policy fora is self-aggrandizement for specific groups. Success breeds success, of course, and the loss of valuable reform, especially in economic matters, renewable energy and climate change mitigation, has been astounding.

The contradiction between a perfectly free market, admittedly a practical impossibility, and rule by vested interests is facilitated by a central aspect of the neo-liberal state: the control of the flow of ‘community’ knowledge and a severe narrowing down of the level of public debate. The domination of the print media by the Murdoch press is an obvious example, but this control even spins over to more quality newspapers like the Age, which have progressively ramped up the reporting of free market propaganda over the past two decades. Even the ABC has felt compelled to swing some way towards this view by giving the Institute of Public Affairs important time slots on Radio 774, as does the Age regularly. This is not to say the press should not publish opposing views, but where there is an overwhelming preponderance of one point of view in public policy, then any pretense at pluralism may be just that, pretense. Finally, one can point to the great success Chris Richardson has had in getting his voice heard continually on economic matters when he was principal of Access Economics, which has now been melded into Deloitte’s, one of the large consulting firms.

What Menadue has so successfully demonstrated is the institutional organization necessary for the domination of public policy formation by a few voices. But there had to be a cultural space provided for these voices that would enable them to become so influential. Really this was opened up in the eighties following a period of economic stagnation in the seventies, a rejection of Keynesian pump-priming actions to increase investment. It was complemented by a view propagated by the Chicago School, and increasing numbers of other academic economists, that the purity of the market should be lauded, as in theory it represents the democratic choice of millions of consumers. And, as a corollary, that the government functions to lessen consumer choice because it represents vested interests that would potentially violate market flows and distort market choices.

Lobbying groups cannot and should not be banned, of course. This would be an extreme position, because in the final analysis they represent the kind of pressures any interest/pressure group would attempt to place on politicians. The problem occurs when politicians and lobbyists (including here consultants and the heads of the various industry, and now union groups) all come from the same background/class and their interests substantially coalesce. The movement of personnel between the federal treasury and the reserve bank, and the large consulting firms and into business economists’ positions over the past thirty years has been well documented. It leads to a considerable consensus of opinion amongst the upper level of the federal and state bureaucracy and the professional ideologists in the large consulting firms, lobbyists and ratings agencies. This is further exacerbated by the movement of politicians, once they retire, into consultancy firms, into honorary positions at universities and also into lobbying firms, as has also been documented elsewhere.

There is also the question of how much money all the groups involved in lobbying take out of the economy and whether this would be spent better in the production of actual physical and social capital rather than in support of rent seeking. Was there any justification, for example, in the $81 million paid to banks to organize funding for the ill-fated East West Link in Melbourne, when the state government could have borrowed the money itself at a much smaller cost? It would be instructive, but very difficult to quantify the amount of money governments and the private sector pay to the large consulting firms each year.

Whether the excellent proposals Menadue has suggested to limit the influence and effectiveness of consultancy firms can be implemented remains to be seen. I have no doubt they would be resisted very strongly by those whose activities they are meant to restrict.

In all of the argument pertaining to the underlying cultural conditions producing this dominance of knowledge and influence, the cultural conditions resulting from it are more difficult to spell out, but are crucial in reverting to acceptable democratic practices. Most commentary on public policy formation and political behaviour over the past twenty years has focused on how neo-liberal ideology has influenced economic policy and the withdrawal of government from many aspects of governing. Yet a recent book published in France (and now available in English translation) in 2009 argues that neo-liberalism has become a new form of rationality operating on all levels of society. P. Dardot and C. Laval have argued that the practice of neo-liberalism underlying free-market economics goes far beyond economic and political institutions. It functions as a new rationality in the world and that “far from limiting itself to the economic sphere, it tends to totalize, that is, to ‘form a world’ by its capacity to integrate all the dimensions of human existence.”[3] If this is true it is going to make real reform, and movement away from dominance by vested interests, very difficult.

Thus the move away from post-war government intervention to rebuild broken economies required a set of beliefs that would be condemnatory of government, laudatory of private sector entrepreneurialism and critical of vested interests who could capture legislative decisions. Time and again in the eighties and nineties the theorists of the free market attacked vested interests, of which the government is one, as undermining the democratic workings of the market. If this seems like a paradox now, so was it then.

What this has morphed into is a ‘neo-liberal’ ideology that places the market and individuality above everything. Once again the dominance of the consultants/lobbyists, business economists in pushing the barrow of vested interests must also be seen as part of the process of knowledge creation and control in contemporary first world (especially Anglo-Saxon) countries but also as an integral part in its repression of contrary opinions and in establishing this as the norm. In this sense their role in the creation and control of knowledge is little different from what one would have found in the centrally planned economies of the former soviet bloc.

Dr Greg Bailey is Associate Professor, Program Coordinator (Asian Studies), College of Arts, Social Sciences and Commerce, Latrobe University.

[1] Mythologies of Change and Certainty in Late Twentieth Century Australia, Australian Scholarly Publishing, Melbourne, 2000.
[2] “Revitalisation and Structural Adjustment of the Australian Economy”, Business Council Bulletin, 9 (October 1994), p.10. An almost identical formulation is given in J.J. Carlton, “Privatisation and Deregulation”, Canberra Bulletin of Public Administration, XIII/3 (1986), p.202; Competition and Economic Efficiency, EPAC Background Paper. No.19, (AGPS, Canberra, 1992), p.69.
[3] P. Dardot and C. Laval, La Nouvelle Raison du Monde: Essai sur la Société Néolibérale, La Découverte, Paris, 2009, p.6.

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