Update: A shorter version of this post was published in today’s Crikey email.
One of the ironies of globalisation is that a lot of domestic critics of the Howard government have imported their analysis uncritically from international debates. For instance, Clive Hamilton writes of [in an op/ed also discussed on another LP post]:
the economic rationalist view of the world, which wants everything left to the market, even when the market manifestly fails.
While it is true that the Howard government has followed international trends towards the privatisation of risk and the individualisation of security, it’s quite wrong to describe the alleged Liberal party as a supporter of the market, or as representative of a neoliberal ideological position. The Hawke and Keating governments in fact much more closely aligned policy to competition and to markets.
There’s endless evidence, if a class and ideological analysis that actually fits the facts is attempted, that what the Howard government is about is protection of special interests as opposed to competition – or illiberal measures (such as WorkChoices) in pursuit of class grudges. You could look at the absurdities and inefficiencies of the employment services arrangements which are designed to buy off dissent (through propping up and co-opting church agencies) and distribute wealth to private training providers at the expense of awful policy and poor labour market outcomes for the vulnerable. But what should open any academic or leftie’s eyes to the true nature of the beast is the latest instalment in the farce that is telecommunications policy.
As Stephen Mayne wrote yesterday in Crikey:
One of the striking features of the Australian political system over the past decade has been the conformity that big business has shown to the Howard Government agenda. With a business sector still dominated by licensed businesses and domestically focused service companies such as retailers and banks, it is rare indeed for a major corporate figure to attack the government publicly.
That’s the way the highly disciplined Howard government likes it. Step out of line and you’ll be crunched. It’s a lesson that even Rupert Murdoch has painfully learnt for backing Paul Keating before the 1996 election when Kerry Packer strategically changed horses and was dutifully rewarded with regulatory protection, unprecedented political access and a taxpayer funded memorial service.
This is what makes Telstra’s war with the Federal Government so unusual because it’s just not part of our corporate culture. While there is clearly blame on both sides for Australia’s pathetically slow broadband, it’s hard not to conclude that the Federal Government and its ever-supportive man in charge at the ACCC, Graeme Samuel, aren’t putting “retribution for insolence” ahead of sensible policy.
Crikey has long argued against the dangers of monopolies, oligopolies, cartels and concentrated corporate power – but when was the last time the Howard Government died in a ditch for consumers or genuinely facilitated greater competition in a market place?
When indeed?
A rational approach to telecommunications policy, as long argued by Lindsay Tanner, would see the renationalisation of infrastructure and investment in things like fibre-optic broadband being a matter for public provision, and access to networks equally available to any retail competitor. That would deliver both the social democratic aims of equitable and inexpensive access to a wide range of citizens to communications technologies and platforms, while also ensuring that the roles of public and national purposes were safeguarded from purely commercial or self-interested motivations. But it would also harness markets and competition to social uses, while providing a genuine opportunity for innovation within those markets, as opposed to deals for mates which is far more the Howard government’s style.
It’s about time that people genuinely concerned with both a critique of economic and social policy Howard style that fits the facts and with developing electorally attractive social democratic alternatives to it realised that the problem isn’t markets per se but a sort of bastardised class mercantilism.
Elsewhere: Nick Gruen queries Clive Hamilton’s take on economic rationalism at Troppo.
Mark, I don’t follow this post. so what is the reason for the govt’s incompetence re Telstra and stupidly slow and expensive broadband (say, compared to the US!)?
Are you arguing that if the government really had a mode of operation premised on economic rationalism the Telstra would be split into services and infrastructure sections?
But this isn’t what is happening because the govt works according to ideological, partisan interests?
So Clive is wrong because he argues that the “economic rationalist view of the world, … wants everything left to the market, even when the market manifestly fails”? how does this tie to your example of telstra? (if a market is interest driven??)
are you mistaking the ‘rationalism’ of ‘economic rationmalism’ for the ‘rationalism’ of the enlightenement or something? it is not the same ‘rationality’ there are multiple rationalities (as foucault might’ve said). the market is a mechanism determined by interests, while government is the art of controlling and engaging with interests. Isn’t economic rationalism another way of indicating the fallacy of an interest-free mode of governance (where the interests governing other interests, and resultant hegemonic hierarchy, are simply forgotten)?
Good post Mark. It might be worth distinguishing short and long term interests here.
Would I be right in extrapolating that this ‘bastardised class mercantalism’ is essential a technique for getting re-elected? Prosperity and Security are the two planks on which everything else is built. Or do you think it’s actually ideological. Perhaps is it the result of stacking social conservatism upon neoloberalism
If it is the former, then it is a short term strategic position. What can we make of long term trends? My first thought is that many of Howard’s policies seem designed to secure the long term future of the Coalition, knocking out traditional enemy after traditional enemy (Universities, Unions, State Gov’s.) Could it be that such a static conservative approach will come back and bite the coalition in the end as new and unexpected opposition rise up, able to jump the old barriers with ease.
glen, “economic rationalism” is really only a slogan not a concept – the “rationalism” was supposed to signify that the neo-classical doctrines fashionable in the 80s were “rational” as opposed to “ideological” which was the charge against them. It’s not a term used anywhere else other than Australia, and most who employ it as an epithet (though it was originally coined by its supporters) usually equate it with neoliberalism.
So I would answer yes to your last question.
As to the point about Telstra, yes, the government works according to partisan interests but their ideological content is very weak. There are pockets within the state of institutions which have a commitment to neoliberal economics – for instance the Productivity Commission and the ACCC – but I’d argue that the government merely pays lip service to them.
It’s a mistake – and you can justify this in Foucauldian terms if you like (he agreed with Poulantzas’ analysis of the state as an assemblage of forces – following Gramsci – rather than the Marxist or Marxisant view that the state was a unified interest of class power) – to see the state and the government as the same thing or all state institutions as pulling in the same direction.
I don’t want to get too theoretical about it here, but my point is that a Gramscian analysis of the forces at work would be more useful than the sort of analysis which denies that markets are complex instruments which can be put to various ideological purposes. The irony is that this is the exact mirror image of the “economic rationalists” who argue that markets are simple mechanisms.
Yes.
And one reason it isn’t is that the government is protecting its own cartel-like interests in trying to bump up the share price – and is horrified that the current management – unlike the Zwitkowski regime – is actually acting like a private business. And there’s a heap of merchant bankers, lawyers, and consultants who will benefit from the sale going ahead. Not to mention the entities which end up as the owners.
The public are the last people the government will consider.
So I’m also arguing that social democrats don’t need to be phobic about markets, if markets – designed and regulated wisely and with the public benefit in mind – deliver better outcomes.
But also that analysis of the practices of the government can make a better opposition to those practices if it hews closely to the facts rather than to some imported imaginary construct. And the facts are that this government is mainly motivated by protecting vested interests (often in return for their subservience) and in a sort of narrow class ideology. What Howard actually does really has bugger all to do with economic rationalism most of the time.
Top post – and top comment too, Mark. I’m going to have to find and dust off my long-forgotten Gramsci.
The trouble with catering to special interests, of course, is that it is a very good strategy for governments electorally (read George Stigler). You’re right that thoat Howard’s way has an extral twist – the deliberate punishment of special interests (rather than simple neglect) that oppose him. But in telco policy it’s the competing special interests (farmers versus merchant bankers) that’s really stuffing things up by leaving us in the worst of all possible worlds. The mass of consumers’ interests, of course, rate nowhere in policy making.
Mark – I think we would agree that ideology has only modest explanatory power in understanding the actions of any Australian government, and in any case the Liberal Party does not have a strong pro-market culture. It was only with the emergence of the Dries in the late 1970s that there was any significant push for a consistent pro-market line. This is not very surprising. Successful political parties draw on a sociological base, and for the Liberals that was business (and for Labor, the unions). Both interest group protection/promotion and ideological adventurism are checked by electoral realities.
Incidentally, I don’t think ‘economic rationalism’ was coined by its supporters, though as I have argued (pdf) it did catch on partly because its supporters were prepared to use it. Pusey’s book attacking it probably did most to promote the term. Nothing much should be read into ‘rationalism’. I expect it originally had something to do with accepting economic realities and acting accordingly, rather than it being a reference to ‘rationalism’ in a philosophical sense.
ok, that makes more sense, thanks for the clarification, Mark. I was having trouble with the terms.
Suggestion: I think you need to have a wiki-glossary as part of the blog. Terms like ‘economic rationalism’, if they have a specific historical meaning, would be better served with a standing definition of sorts. It would be an excellent resource for the blogosphere…
So what is the difference between ‘neoliberalism’ and ‘economic rationalism’ in this context? have you heard wendy brown’s lecture (avail somewhere on the net) where she argues neoliberlaism is an ‘economic rationalism’ (but, obviously, not in any specific Australian way!!)?
Yes, a clear definition of Australian political positions and the true meaning of slogans would be useful. While you’re at it, could you set out the correct position on the Middle East.
‘Neoliberalism’ is an ideology that is philosophically in favour of markets and small government, while ‘economic rationalism’ is an issue movement that involves support for markets, but for a variety of reasons; eg Hawke and Keating supported some market reforms not because of any philosophical commitment to economic freedom but because they thought that this would increase economic growth, living standards and the tax base.
So while all neoliberals would be economic rationalists in the Australian political sense, only some economic rationalists are neoliberals.
Indeed, Australia is a case study in the synergies between market economics and big-spending government.
Andrew. It is one of many case studies, of course, along with most Anglo countries and the US in particular, since they have varieties of liberal conservatism. That’s what I was trying to say before, these terms are so fluid as to be useless for describing governments, as opposed to individual Ministers at particular points in their political lives. Individual members of government come and go from their positions, and shape them more by the practical task of staying in power and managing crises than by adherence to ideology, which really only comes distinctively into play early on in a government’s lifespan. Things are of course much more complicated than this, but such is blog commenting!
Thanks, Andrew, I think you may be right about economic rationalism – though I’d still be interested in tracing who exactly coined it – it seems odd for people who oppose it to describe it as “rational” but perhaps they meant “narrowly rational”. I think you’re spot on about historic Liberal Party culture too.
Glen, I haven’t read Wendy Brown’s lecture but I’ve read an earlier piece of hers on rationality, economics and politics. Unfortunately I have to dash to go to work now, but I’ll try and read it again during the day so I can respond.
Oh, and yes, One Night Parrot, I agree with that analysis – policy is very often shaped by the desire to destroy or restrict the freedom of dissent of opposing groups.
Perhaps the opposers of “economic rationalism” thought that the proponents were rationalising rather than rational?
Mark – An article I cited in my link has the earliest use in the 1970s by a Fairfax newspaper. ‘New Right’ was the dominant term in the 1980s, but ‘economic rationalism’ took over in the 1990s, and ‘neoliberalism’ is now probably used more often than ‘economic rationalism’. I’d argue that they all have distinct though overlapping meanings, though the distinctions often get lost in the way people use them.
Here’s a relevant chunk, which I’ve transcribed from a recording on the web, from Wendy Brown’s public lecture “American nightmare: Neo-conservatism, Neo-Liberalism and the De-Democratisation of America”, which I think is the one that Glen is referring to.
Brown is specifically referring to how she reads the American situation, but I think that some of her analysis can be applied to Australia.
Brown is drawing on Foucault’s notion of governmentality – a political rationality:
“As a political rationality neoliberalism involves a particular organization of the social, the subject and the state. So, a political rationality is not equal to an ideology, stemming from or masking an economic reality, nor is it merely a spillover effect of the economic on the political or the social. Rather by political rationality, and I’m drawing expressly on Foucault here, I’m talking about a specific form of normative political reason that organizes the meaning of the political sphere, governance practices, citizenship, & the social. So, while neoliberal political rationality is based on a certain conception of the market what I’m trying to underscore is its specificity as a form of political reasoning & an articulation of the very nature & meaning of the political, the social and the subject, because it’s here that the usurpation or the overtaking of other more democratic rationalities occurs.”
“So, what are the salient features of neoliberalism as a political rationality?
First, in contrast to a classical economic liberalism, neoliberalism is neither confined to an expressly economic sphere, nor does it cast market rationality as natural and self-regulating, even in the economic sphere. Part of what makes neoliberal ‘neo’ is that it depicts free markets, free trade and entrepreneurial rationality as achieved and normative. That is as promulgated through law & through social and economic policy & not simply as occurring by dint of nature. Second, neoliberals regard the political and social spheres as appropriately dominated by market concerns & organised by market rationality. So, more than simply facilitating the economy, for neoliberals the state itself must construct and construe itself in market terms as well as develop policies and promulgate a political culture that figures citizens exhaustively as rational economic actors in every sphere of life. And familiar here are the many privatisation and outsourcing schemes for welfare, education, prison, the police, the military etc. But this aspect of neoliberalism also entails a host of policies that figure and produce citizens as individual entrepreneurs & consumers whose moral autonomy is measured by their capacity for self-care, their ability to provide for their own needs, and service their own ambition(s?); whether as welfare recipients, patients, students, workers in transient occupations, or consumers of pharmaceuticals. Third, neoliberal political rationality produces governance criteria along the same lines & this means not only that governance talk increasingly becomes market-speak but that business persons literally replace lawyers as the governing class in liberal democracy(s?), and business norms replace juridical principles as governance criteria.”
On another note, I think what you’re referring to Mark is, partly, what Brendan Gleeson,in ‘Australian Hearlands’, following Shaun Wilson and Nick Turnbull, calls ‘privatised keynesianism’: “a massive government subsidiation of private collective consumption.”
I think this misses the historical context. ‘Neoliberalism’ is partly a reaction against the expansion of the state in ways that undermined the self-help and mutual help of earlier times, with that expansion of the state in itself being a reaction against the perceived failures of self-help and mutual help. All part of the self-correcting nature of open, democratic socieities?
“I think what youâre referring to Mark is, partly, what Brendan Gleeson,in âAustralian Hearlandsâ, following Shaun Wilson and Nick Turnbull, calls âprivatised keynesianismâ: âa massive government subsidiation of private collective consumption.â? ”
This I think is a related but nevertheless separate development. ‘Neoliberals’ object to this practice as ‘churning’, ie people should be taxed less and buy things in the market. But if we are going to have high taxes, we can avoid some of the problems of direct government provision by using market mechanisms.
How so, exactly, Andrew? When was the precise time that the state, in your mind, was too “expanded”, and what is the evidence that this undermined self-help and mutual help of “earlier times”? And when, precisely, is this ideal “earlier time”? And where do notions of egalitarianism (a premise of the “free” market) fit into this idea?
Excellent post, Mark.
Weathergirl – Prior to the welfare state there were many friendly societies that provided mutual help for working class people (some of them still exist, in a narrower and more commercial way, as health insurance funds). There was much wider dependence on family in time of need (eg my grandfather grew up in a single parent family from the usual early 20th century cause, death of the other parent, living with and relying on other members of the extended family). I’m not saying we could or should go back to this, but something was lost when bureaucracy replaced these former social ties, and on both sides of politics there have been moves to try to restore lost social capital.
Obviously neoliberals are not egalitarians in the contemporary context, beyond non-controversial ideas such as equality before the law.
Clive Hamilton is a hair shirt wearing bore. The Liberal Party is about as Economically Rational as my bottom. Big taxing, big spending nanny staters is what they are.
I still wouldn’t vote for the ALP because they are significantly worse.
âa massive government subsidiation of private collective consumption.â?
James: Where can I get me some of that?
Heckler: Out in the remote communities.
James: Curses. Foiled again.
Economic rationalism is nothing but an excuse to screw over the regional and rural Australians.
Yes you’re right about Tanner on the Telstra issue.
Telstra would fight that too – its more regulation. Also its clear businesses are in it for the shareholders and not for the stakeholders – at least in Telstra’s case.
Economic rationalism is nothing but an excuse to screw over the regional and rural Australians.
Yes that was deliberate and I do support many economic rationalist arguments but not this one.
There is very little evidence for me to believe the CIS,ACCI, PC, etc aren’t in the government’s pockets and just say whatever this government wants them to say. I often have my doubts about the ACCC too.
Wendy Brown’s take is more expansive (though I’m not clear on the distinction between a political rationality and an ideology or a general worldview)and seems to boil down to the same view that the public sphere is viewed in market terms. My only trouble is that this is true except when its not – as in Defence (outside purchasing). It’s the selective application of it that makes economic rationalism about as useful as crying “managerialism” when it comes to what organisations do. Which is Mark’s original view, I guess, namely that the ER is selectively applied to particular groups, and is not an all pervasive rationality.
Still didn’t get a chance to re-read Wendy today – she is one of my favourite political philosophers, btw. In response to Robyn’s point, it’s surprising if she sees rationality as continuous and evenly applied across the policy field and indeed the terrain of the state – particularly given her debt to Foucault.
Andrew, you haven’t answered my questions. They were:
When was the precise time that the state, in your mind, was too âexpandedâ??
What is the evidence that this undermined self-help and mutual help of âearlier timesâ??
And when, precisely, is this ideal âearlier timeâ??
And where do notions of egalitarianism (a premise of the âfreeâ? market) fit into this idea?
Your answers are very vague. You write:
It’s always risky to present your own personal circumstance as evidence of widespread dependence on family, but I accept that this was in many situations the case. What, then, when you have no family or they are poor? What do you have but the welfare state? Back to the friendly societies, when people are already overextended and have had little choice but to adopt individualist ethics promoted by neoliberalism?
You write:
I think this is a perverse reading of the situation. You don’t think neoliberalism itself and its accordant individualism is responsible for loss of social ties?
I won’t answer for Andrew, but I think things are much more complex than that. The impulse for collective provision of welfare came originally because these social bonds and support networks were fraying in the late 19th and early 20th centuries – largely because of urbanisation, changes in family structure and increased division of labour.
I don’t think either it’s easy to demonstrate that “neoliberalism” – which we don’t have in Australia anyway, as I’m arguing (marketisation and privatisation of risk is a separable phenomenon) – is “responsible” for loss of social ties. Most social change is very complex – things like more fluid labour markets and different career patterns – which do contribute to it – are observable in societies other than those where neoliberalism reigns (to different degrees – but that’s getting at an intervening variable rather than a primary cause). There’s no doubt whatsoever that there’s a relationship between capitalism and individualism, but you need an explanation which is sensitive both to historical change and to cultural difference. For instance, as Alan Macfarlane and other historians have demonstrated, individualism pre-dated capitalism in England itself (but not in Scotland). Broad patterns of family structure and kinship actually have a lot to do with it.
I think I wrote a post on this once, but I’m too knackered to search for it. But if you google around for a review of Goran Theborn’s book on the family, it’s a great resource.
I should note that I agree with much of wg’s comment. But there’s also value, as I’m trying to contend, in discarding left myths which give too much weight to economic forces and ideology, so that we can formulate positive solutions for things like the loss of social capital rather than just being on the back foot sniping at Howard.
Weathergirl – There is no precise time; we are talking about broad cultural and institutional trends here. And I think this critique is probably less strong than it was say in the 1970s and 1980s, when there was concern about a general declining work ethic. Since then of course the concern has shifted radically to ‘work-life balance’. Also, analysis of the dynamics of the welfare state has suggested that the problem is not as bad as the aggregate levels of dependence at any one time suggest, since there are many people moving in and out of income support.
The social capital literature suggests that social ties were negatively affected by the rise of the welfare state because there was no longer any requirement for mutuality to meet various basic needs – the government did it for you. The market has had similar effects; for example many household services once produced by women for their families are now provided in the market instead. Technology – fuelled by capitalism – has had an impact through TV and such things as ending the need to eat at the same time together.
Cultural individualism has similarities to the market, but I think it pre-dates the market reforms of the last 20 years, and (perhaps ironically) was made a mass phenomenon by the left-wing counter-culture of the 1960s and the entitlement mentality of feminism.
Andrew, a lot of the social capital literature needs a more comparative frame – too much of it is too specific to English speaking societies.
I take it you’re trying to get a rise out of people with the last phrase in the last paragraph!
But it is true that cultural individualism got a big boost in the 60s – but I think you’re confusing rights-based individualism with the rise of social movements – which usually are forces working for collectivism rather than individualism (as in feminism). Where there is some relevance, it’s in the framing by more liberal currents in the social movements of demands in basically liberal terms of freedom and autonomy, but I’d argue that’s secondary to broader cultural changes rather than causative of them.
Too much measured and polite sharing of views!
GAH BOO GRAEME BIRD WOZ RIGHTT FREE MARKETS IS THE BEST WAT ARE U MARK A COMMIE!?!
WG asked – ” And where do notions of egalitarianism (a premise of the âfreeâ? market) fit
into this idea? ”
I haven’t ever heard that egalitarianism had anything to do with the activity in a market. It may do , I’ve worked and traded in lots of markets but I’ve never been aware of any eqality among participants. Could you explain this idea a little more ?
Mark:
Andrew:
I wish I were equipped to answer these, but I’m tired and don’t have RW Connell handy.
Yes, Mark, I know it’s complex. Was writing in blinkered shorthand, as one tends to do, but perhaps one shouldn’t.
Nice bloke, Bob Connell, by the way, weathergirl! He’d be a great guy to nut out these questions with at the pub.
I have always admired Stephen Maynes’ attitude toward encouraging competition among businesses. He seems to be a rare voice in the business press unfortunately. He has always been willing to show up the rotten state of the relationship between the government and it’s issuing of licences in one form or another to various monopolies.
One question I have for Mark is would you be prepared to accept that greater competition itself could deliver an enhanced result for most people in Australia ?
In the paragraph after the quote from Crikey you outline “using” the market for a chosen set of predetermined outcomes but I think these attempts are usually doomed to a messy and slow demise.
For example “A rational approach to telecommunications policy, as long argued by Lindsay Tanner, would see the renationalisation of infrastructure and investment in things like fibre-optic broadband being a matter for public provision, and access to networks equally available to any retail competitor ”
Sounds like a recipe for disaster – good intentions undoubtably but why not let the market work it out?
There won’t be equal outcomes for all broadband users – no,remote country users will have to pay large amounts for their service and perhaps they should.Service providers will concentrate on the large population centres and people in other areas will have to pay a premium for access.
I think in this instance (not all instances) greater competition would deliver better outcomes for consumers, boredinhk. Telecommunications is by nature the sort of market where entry costs are very high, because the cost of infrastructure is so high. Rather than the current approach, where competition is artificially induced (and with very heavy and legalistic regulation by the Gov’t and ACCC, which as well has its own cost) but one provider has to bear the cost of capital investment and therefore has an incentive to attempt to act as an oligopoly, seeing the infrastructure as a public good makes sense. The infrastructure (high speed broadband to take the current example) has the capacity not only to increase economic efficiency and activity across a broad range of sectors, but also to empower citizens and ensure equity as among urban and rural dwellers. What we have at the moment is very far from letting the market sort it out. We have a half state owned corporation which is pulled in different directions, and any competition that exists is artificially produced through a regulatory and legal process that fails to either balance all the complex interests created by the artificial structure of the market or to benefit consumers and the public good.
Hence the Tanner solution. Invest publically in the infrastructure, and let retail competition deliver low cost services on the publicly owned platform.
Mark – The 1960s is a huge topic, obviously, but by aggressively working to smash the old social order the counter-cultural left did not create the participative democracy they wanted, but instead accelerated the growth in individualism already underway in Western society by helping to clear away conservative obstacles.
Well, yes, Andrew, I don’t disagree, though I wouldn’t put it the same way, but I think you’re over-rating the importance of the counter-cultural left as opposed to other trends that were already underway.
For my 2c, in general terms the Angosphere has moved ,since the fifties, from the Military-industrial complex model to the Military-entertainment service oriented complex model.
Biggest industry today being tourism here.
In terms of the particular case of Telstra , I agree with Mark that we need to move away from trad Left/statist bureacratic models towards a more market oriented model. In the case of the Banks, when the pig banks pulled out of country Victoria then that created a niche for the Bendigo bank.
Another example in the telecommunications field is India where copper and fibre rollout phases are being entirely skipped over in favour of WiFi.
Markets are not the answer for everything – in the US Health care sector, for example democratic and libertarian socialists could ethically argue for increased state sector involvement imho. So long as the overall size and power of the state decreased then this would not be a problem ( in terms of electabilty) and would save lives from day one.
There are some very exciting market based forms of leftist agitation ( Policy Analysis Markets ) opening up alongside the internet. There is more on this at…
http://www.nex.com/innews.htm
I would broadly suggest that the lefts long ‘ kiss’ with the state should now be seen as the kiss of death until we become the go-to people for smaller government. Less-is-more. Small-is-beautiful.
professor, in general I think we need to be agnostic about solutions – but creative about wedding equality and liberty. The left has let the right occupy the terrain of championing freedom for far too long.
Btw there is a good resource to help deconstruct the harmful ideology of ‘ Austrian economics’ here at…
http://world.std.com/~mhuben/leftlib.html
‘ From each according to their gullibilty – to each according to their greed ‘