EVAN JONES. The state and the economy

Apr 8, 2020

Right-wing governments are splashing the cash  – what gives? Neoliberalism is temporarily being abandoned, but will it continue after this crisis is over?

Sydney Morning Herald journalist Matt Wade finished a recent article with: “In the shadow of a pandemic, we’ll have to get used to a bigger role for government in the economy”.

Perhaps what Wade meant is ‘a different role for government in the economy’. Residents of New South Wales are familiar with the over-arching activism of successive Liberal-National governments in this State since 2011 in plundering public property and in privileging developers, miners and rapacious elements of the rural sector. In Sydney, infrastructural monstrosities rule unhindered. More of this we don’t need.

Behind Wade’s suggestion is an issue of historical import. Hark back two hundred years in Britain, experiencing industrialisation and urbanisation at a furious pace. What were the forces of ‘free enterprise’ doing at the time? Employing people under intolerable conditions and housing them in spec-built tenements in intolerable conditions.

From such conditions there arose dysentery, typhus, typhoid fever, smallpox, whooping cough, measles, diphtheria, scarlet fever, tuberculosis, and … (Asiatic!) cholera. Infant mortality raged. Out of this crisis the consummate bureaucrat Edwin Chadwick produced his 1842 Report on the Sanitary Conditions of the Labouring Classes.

Chadwick highlighted, predictably, that suffering differed across the classes, but he also highlighted that the privileged classes were not immune. Horrors. Meanwhile the denizens of ‘the private sector’ were in their counting houses and reposing on estates acquired from an impoverished gentry. Here was a problem of the collective, and an evolving  state had to step into the breach. By default.

There was never an age of laissez-faire. The state was dismantling timeworn structures at the behest of an ascendant bourgeoisie. Simultaneously, the state was confronted with problems arising structurally from the new order.

In 1833 there was legislated the Factory Act, which restricted the use of child labour in textile mills. That in itself was the product of thirty years of manoeuvring, and a foretaste of more factory Acts to come.

Since that time, the state has never ceased to pick up the pieces, direct traffic of a wayward economy and society. Its bailiwick – economic development and infrastructure, economic crises, natural calamities, scams of every description, class conflict, social deprivation, war and the aftermath of war, etc.

Thus has ensued a quantitative increase in the state’s presence, in terms of expenditures, and perennial qualitative transformations in the nature and subjects of regulations – all of which are the object of political and social contestation.

The state is hydra-headed. At root is the natural prerogative of states to make war, and to promote its economic interests abroad. The state, as a matter of course, will privilege the powerful. The state will also, less regularly, privilege the less powerful and the dispossessed. From this latter category came the building blocks of the modern ‘welfare state’.

That the state would privilege the powerful was transparent – as in the brutal repression of agitation for worker rights and political reform, as in the barbaric 1834 Poor Law Amendment Act. Previously, the British state oversaw centuries of enclosure movements by which a working class was forcibly created. State-legitimised class rule was embodied in the carry over and enforcement of Master-Servant statutes, which structured workplace subordination and incidentally formed the basis for modern employment law.

Contrary tendencies with the state attending to the less powerful were not driven by ideas but pressure from below, facts on the ground. Political processes in turn produced defensive philosophies and ideologies. Thus in late 19th Century Britain a tarnished classical liberalism was countered by a philosophical ‘social liberalism’ – as in the works of T. H. Green and, most accessibly, of Leonard Hobhouse.

In the 20th Century, the pressure of events (crisis) and a social liberalist mindset operated dialectically to produce J. M. Keynes and his path-breaking analysis of an economic system behind the 1930s Depression. Ditto William Beveridge’s monumental overseeing of the creation of Britain’s National Health Service during World War II.

Hawke/Keating’s Labor ushered in the neoliberal era in Australia, and John Howard determinedly cemented it. Howard tenaciously cleared out the small-l liberals in his Party. In Labor ranks, nobody had the courage to question elements of the Hawke/Keating legacy. Advisory staff to both major Parties, young, know only the neoliberal age. Public servants, especially the newly fragilised Senior Executive Service, adopted the correct line to save their jobs and pay their mortgages.

There ushered in through the front door an army of vested interests, hiding behind a front of ignorant but zealous ideologues.

This is ground zero. The past is irrelevant. An age of stunning intellectual vacuity. The arguments were all bullshit, floating on nothing. Neoliberalist tenets, unlike those of classical liberalism, had no organic relation with existing conditions. Neoliberalism was a vehicle for plundering public assets, exploiting small business, undermining hard-won workforce conditions and dismantling the hard-won welfare state.

The neoliberal era was not a move to ‘the small state’. It involved a reorientation to significantly different priorities – essentially catering to the wishlist of corporate capital. In the process political and bureaucratic personnel have decapacitated the state apparatus to effect robust management of any crisis, leave alone to effect progressive change.

Utterly representative was the Coalition’s belligerent indifference to the impact of climate change and to expert pressure on the need to prepare for impending bushfire devastation.

It is welcome that this federal government, intrinsically reactionary, prone to lassitude, arrogant in its ignorance, has turned on the sluice gates. For lack of grounding, it is forced into the ultimate in pragmatism, dependent on a federal Treasury out of its depth.

But will it change its ways after this crisis relents? There’s no evidence of that, here or elsewhere. With a nasty budget black hole, that ‘bigger role’ will, in all likelihood, not be turned to permanently enhancing Newstart or abolishing robodebt siphoning but to further tightening the screws.

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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