A requiem to neo liberalism
With the political
scalping of Malcolm Turnbull in last August’s Liberal leadership spill, one is
wont to muse on whether the demise of Turnbull also represents the demise of
neo liberalism. There is no better representative of modern liberalism than the
corporate banker come Liberal politician, Turnbull, who supported large
corporate tax breaks, resisted until it was futile the calls for a Banking
Royal Commission, and who was, all in all, a keen advocate of free markets.
Those from within the Liberal Party ranks who describe Turnbull as “not one of
us” have perhaps already left the moors of the economic liberalism that pervaded
the Liberal Party in the 80s and 90s, when it was the HR Nicholls Society, and
not the conservative shock jocks of today, prodding the Liberals to move
further to their version of the ‘right’. Indeed, it was not until John Howard’s
tenure as leader that we saw the Liberal Party move towards a more nationalist disposition,
where Howard’s notion of a broad church was understood to allow for a somewhat
reactionary mood to permeate Liberal Party corridors.
Neo liberalism, as a
global phenomenon, sprang out of the ashes of the Cold War, with the implosion
of the crusty Soviet Union leaving many on the right to argue that the fall of
Soviet Communism presented the best ever evidence for the idea that all forms
of government controls were an anathema to a healthy operating social system. The
fall of the wall resulted in a unipolar peace; a peace that led many to see an
end of history, as articulated by Francis Fukuyama, where all the peoples of
the world, be they eastern bloc ex-communists, disenfranchised Arabs, or greed-is-good
Deng Xiaoping Chinese, were caught in a funnel sucking us inexorably towards
the norms of economic and social freedom offered by the West. It was an idea
adopted by Western politicians of all persuasions. In the US, Bill Clinton was
quick to seize on the economic benefits of the efficient redeployment of
capital. In the UK, Tony Blair shook off the shackles of old Labour and adopted
of pro-market, globalist outlook. And in Australia, the Hawke-Keating
government had a jump on the others, having already introduced a swathe of
market reforms, including lowering tariffs, privatising state-owned enterprises
and deregulating the banks.
Under the spell of neo
liberal orthodoxy, the sovereignty of private business was never to be
questioned. Gone were the days of Keating’s mentor, Jack Lang, who summarily
introduced an end to NSW Government interest payments on debt in the 1930’s as
a means of responding to the perils of the Great Depression. Now, there was no
greater civic good than to reduce government and free up capital for private
enterprise to spend as dictated by the efficiencies of the market. Hawke and
Keating reduced the corporate tax rate from 48 percent down to 36 percent. Turnbull,
reflecting on the economic credentials of the Hawke-Keating government, and in
pursuit of further tax cuts, argued strenuously that corporate tax relief was,
ipso facto, always good policy. The inanity of such an argument, that by
extension inevitably leads to a zero percent corporate tax rate, is also seen
in the advocacy of corporate tax rate reduction for the purpose of retaining a
competitive position amongst global tax rates. This also naturally results in a
fight to the bottom by national governments, with only international
corporations coming out winners, leaving the middle class to foot the bill for
health and education.
Parallel trends have
been in play across most other western democracies since the 1980s. In 2001,
the new George W. Bush administration embarked upon one of the largest tax
reduction programs in US history, amounting to 1.35 trillion US dollars in tax
relief. Still further cuts were introduced to the US in 2003. The UK corporate
tax rate has fallen from 52% in 1980 down to 19% today. However, over the last
two decades there has also been a corresponding decline in the respect for
government institutions and the direction of policy. From the disaster of the 2nd
Iraq war to the pain of wage stagnation, large sections of the western world
have become disillusioned with Fukuyama’s vision. In the past couple of years,
we have seen Britain vote to exit the European Union, and the US vote in Donald
Trump as president. We have seen the rise of socialist candidates in the US, in
Bernie Sanders and Elizabeth Warren. And we are in the midst of witnessing large
scale and persistent yellow vest protests in France against the current state
of wealth distribution and the policies of Emmanuel Macron, who, along with
Angela Merkel, stand as one of the final stalwarts of neo liberalism.
It is clear that the
Brexit vote and the Trump ascendancy herald a monumental epoch change. It Is
not simply a matter of British voters being unawares of the full implications
of their referendum or of Trump managing to temporarily pull the lid over the eyes
of American voters. This is about a structural change affecting the whole
dynamic of global politics. Neo liberalism is now flanked on two sides: on one
side is the economic nationalism practised by Trump and inspired by his former Svengali,
Steve Bannon, along with the Brexiteers, and on the other is the progressive
socialism expounded by Sanders and his growing band of proteges in the US, and,
across the Atlantic, Jeremy Corbyn in the UK.
These two political
movements have arisen, not just in response to the growing largesse being accrued
by the corporate classes, but, more importantly, in response to the disruptions
and uncertainties that such free movement of capital has afflicted upon the
economic well-being of the lower classes. Despite these shortcomings, much
ought to be made of the benefits brought by global liberalism. A salutary
outcome of global free trade is the rise in living standards across East Asia
and the Subcontinent. The uplifting of 100s of millions, if not billions, of
people from subsistence living to relative posterity is something that should
be hugely welcomed, given that in the 70s and 80s global poverty was a clear
stain upon civilisation.
But the very same
forces that have improved the lives of millions in the developing countries have
disenfranchised millions in the developed world. The economic nationalists
provide succour in the story that these wrongs will be righted by preventing
immigration and treating free trade agreements with a high degree of caution. The
woes of the world are caused by the ideological globalists that promote
unrestrained trade and the politically correct liberals that refuse to deal
with the real issues that are tearing at the fabric of the western world.
On the international
front, the economic nationalists are in virulent opposition to the post cold
war unipolar view of the world, where the US positioned itself acting as the
global policeman. Under the George W. Bush and Barak Obama administrations, the
US found itself involved in three global conflicts; a cultural war against Russia
under Vladimir Putin, a religious war against Islamic militants in the Middle
East and an economic battle with China. Of these, Trump has withdrawn from the
Middle East and sought conciliation with Russia, whilst bringing full focus on the
trade disputes it has with China. There may be some strategic sense in this
global retreat of US political influence, though one suspects that the overtures
made to Russia is grounded on a shared nationalist outlook adopted by the
current White House administration and the occupiers of the Kremlin. There is
no doubt that they also share a common disdain towards the fourth estate, Trump
being dismissive of the record of Russian journalists suspected of having been
murdered by Putin’s regime. It is disturbing that whilst Trump shakes Putin’s
hand, Putin’s other hand is high fiving the Crown Prince of Saudi Arabia over
the murder of a Washington Post contributor in the Saudi embassy in Istanbul.
Progressive socialism,
like economic nationalism, is reactionary towards globalism, and in particular
free trade agreements. However, it does not resort to the cheap finger pointing
adopted by the likes of Trump and Nigel Farage. Free trade fails the socialist
test because, although it may bring capital to under privileged and under
developed regions, it is nonetheless the tool of the capitalists, and, as such,
is a means for exploitation. We may suppose that until international labour
organisations hold seats at the tables of such agreements, progressive
socialism will likely hold an inward eye towards the economic freedoms of their
country men and women.
Where does this leave
Australia? In August, Turnbull was taken down, essentially, by an
uncompromising reactionary right who carry agendas not dissimilar to their anti-progressive
nationalist counterparts in the US. But do these forces pose any significant
long term threat here? Turnbull is right to suggest that there are protective
factors in Australia, such as its compulsory voting and its history of having resisted
the major impacts of the Great Financial Crisis. Australia is only one of two
G20 countries to have compulsory voting at the national level. Interestingly, the
other is Brazil, where compulsory voting has not prevented that country from
falling under the yoke of nationalist populism given their recent election of the
far-right anti-progressive Jair Bolsonaro as president. And the relatively
healthy state of Australia’s economy is no guarantor that it will not throw its
weight behind anti liberal movements. The reaction to neo liberalism is more to
do with the strains on the workforce that are brought about by the shifting conditions
of industry than it is to do with overall economic policy failures.
It is true that the
immediate political landscape looks dire for the horrible hard right. Having
overplayed its hand in the political asphyxiation of Turnbull, the reactionaries
have created a wave of anger towards the Liberals across the community. We have
subsequently seen safe Liberal seats fall with the Wentworth byelection and the
Victorian state election. Further decimation can be expected in the May federal
election should Scott Morrison ignore the tea leaves and remain acquiescent to
the reactionary forces within his party.
However, the
international political winds can only be kept out for so long. Trump, or
Trumpism, should not be viewed as an aberration. The Republican Party has been
totally subdued by his policy positions, not through the force of his
personality, but by the fact that their base fully endorses those views. Similar
movements are prevailing across Europe. And effective opposition to this nationalist
movement is not coming from centrist liberalism, but from the progressive
socialism encapsulated by Sanders and Corbyn. Sanders may not have the legs to
make it through the 2020 Democratic Primaries, and so it will be fascinating to
watch how the Democratic Party navigates its way though the current political
minefield and who will ultimately represent it in the 2020 Presidentials. With the changing tides of
political discourse, it is only be a matter of time before Australia is duly
swept up by the growing disaffection with neo liberalism. As sure as the Sea
Peoples finally reached and ravaged Egypt,
economic nationalism and progressive socialism will come to dominant
Australia’s, and the world’s, political scene.
So long neo liberalism!
Thanks for the memories! Thanks for supply side economics and a floated dollar,
thanks for Crazy Rich Asians and Michael J Fox in Family Ties, thanks for
privatised prisons and seven figure annual CEO salaries before counting bonuses!
Thanks and goodbye!
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