Tag Archive for 'free markets'

What does a conservative leader of the Liberal party look like?

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by
Mark
1 month, 2 weeks ago
in Authoritarianism, Climate change, Economics, Elections, Howardia, Markets, Philosophy, Policy and Politics
. 16 Comments

… and no, I won’t be posting a photo of Tony Abbott in any form of swimwear to answer that question. But it’s interesting to observe the blue thread that runs through all of Abbott’s pronouncements – a mindset that Father Knows Best. The answer to the question posed by Ben Eltham in New Matilda, writing on the Coalition’s climate change policy [see this post for LP discussion] – “have the Libs lost faith in the market?” – is surely that conservatives don’t necessarily have faith in it. The Howard government’s practice, in many respects, was as much conservative as neo-liberal, if not more – an increasingly large state, a dirigiste approach to doling out public money to corporations, all manner of attempted pro-family social engineering, and so forth. To some degree, the era of 80s bipartisanship on ‘economic reform’ left an institutional and legal bias towards economic liberalism in state institutions; Treasury, the Productivity Commission, competition law, and so on. But with a lazy Treasurer, for most of the time, Howardism only used economic liberalism as a fig leaf.

I think what we’re seeing now, with Tony Abbott, is that fig leaf being discarded.

We’re back to old fashioned paternalism – faith, country, and trust in your betters. And in the economic sphere, Abbott, who knows nothing much of economics, is happy for the state to sit down and carve up the pie in consultation with his preferred interest groups. All this is really classic National Party stuff.

What’s perhaps astonishing on the surface, at least, is how little we’re hearing from the so-called libertarians and classical liberals about Abbott’s lack of faith in the market. Could it be that they’re mostly more interested in anti-Labor partisanship than their own ostensible creed?

Living capitalism freely

Published
by
Mark
5 months, 1 week ago
in Authoritarianism, Culture, International, Life, Markets, Philosophy, Politics and Sociology
. 52 Comments

Steven Shaviro, who blogs at The Pinocchio Theory, has written an excellent piece on the Global Financial Crisis. Shaviro captures how capitalism is lived – and how it produces a demeanour of fatalism. He emphasises the way in which the economy constructs itself as natural, and in so doing, acts as something which is quite inimical to the freedom it is supposed to foster.

There are some juicy quotes from Hayek in Shaviro’s piece. The market, Hayek wrote, subjects “man” [sic] to “the bitter necessity of submitting himself to rules he does not like in order to maintain himself against competing groups.” We are “force[d] to be free”, according to Hayek.

Shaviro’s is the sort of critique of neo-liberalism Kevin Rudd would never write.

It makes clear the deep continuity between the project of neo-liberals such as Hayek and the Enlightenment urge to control and discipline – to remake new humans who are ‘rational’, and thus ‘free’. It would be interesting to compare the sorts of dispositions and attitudes which underlie this logic of governmentality with those of Soviet Marxism.

The real question here is the one of our relation, as individuals, to the economy as a whole — or to the so-called “free market.” We are told that the market is made of individuals just like us. We are told that it consists in nothing more, and nothing less, than the summation of billions of decisions made by billions of autonomous individuals, each of us making choices for ourselves. And yet, we actually experience the market as a vast, ineluctable force. It feels like something entirely alien to us, over which we have no power, and from which there can be no appeal. This is why economic catastrophe is something invisible, impalpable: it affects every aspect of our lives, yet we are unable to “see” it in itself, to discern it as an actual force, behind its all-too-evident effects.

Continue reading ‘Living capitalism freely’

Tax the rich!

Published
by
Mark
1 year ago
in Economics, Government, Markets and Policy
. 104 Comments

There’s been a lot of discussion in the wake of the GFC of imposing some sort of cap or limitation on executive and board remuneration. The basic idea – which was accepted by the G8 – goes to a real issue – the perverse incentives to short term-ism which impact on the management and performance of public companies (and particularly, in the current context, banks and other entities in the financial sector). The fact that there’s a bit of a populist angle is a bonus for pollies.

Whether or not what emerges is something of a regulatory dog’s breakfast is probably an easy question to answer, if you treat it as a rhetorical question, but not one of those Kevin Rudd style ones.

In today’s Crikey, Bernard Keane looks at an alternative – a super tax on high incomes – say 50c in the dollar for every dollar earned over a million.

It’s intriguing to contemplate the arguments that might be made against such a proposal. It’s much simpler and neater – and fairer than complex regulatory instruments would be. It doesn’t “distort incentives” between different professions, or different types of firms. It ought to be something that free marketeers and anti-regulation types prefer to capping salaries.

Of course, they probably won’t accept that. It smacks too much of old-fashioned social democracy, in that it restores a greater degree of progressivism to the taxation of income. For that very reason, it’s also unlikely to be taken up by Kevin Rudd. I imagine we’ll see some fiendishly complex regulation instead. That’s the thing about Ruddesque anti-neo-liberalism. Its opposite isn’t really social democracy but rather managerialist policy wonkery.

The Overshadow

Published
by
Mark
1 year, 1 month ago
in Economics and Politics
. 43 Comments

Props to Paul Burns for cooking up the latest apt nickname for Peter Costello – it says it all, really. If the Liberal Party thought they’d recovered from the political morass they sunk themselves into with the stimulus package naysaying, they’d be quite wrong. Most voters won’t be reading every single one of the five hundred or so articles about Costello’s continuing ambitions/frontbench refusal/refusal to comment in every single paper. But the Liberals have succeeded in conveying the message that they are opposed to doing anything much right now about the economic situation and that they’re much more interested in themselves. Good one.

Just how dire the gap between Liberal obsessions and public opinion is can be discerned from a perusal of Possum’s close reading of the figures in the latest Essential Research poll.

All this raises the question of Joe Hockey’s suitability for the Shadow Treasury. He’s been touted by Malcolm Turnbull as a “great communicator”. Opinions might reasonably differ on that. But if we accept the claim for the sake of argument, what exactly will be communicating?

It hasn’t escaped notice that Hockey’s elevation (and Christopher Pyne’s promotion) leaves a gaggle of “moderates” at the top of the opposition tree. Perhaps there’s a need to pacify the Liberal right by reciting endless mantras about the virtues of free markets (although again, whether the Howard government incarnated such virtues is surely dubious). The problem here is that “free markets” are, in the public mind, the cause of our current woes and pledging one’s faith in their wonderfulness is also coming across as code for… doing nothing. And waiting for the economy to tank.

I’ve always argued that to claim that Malcolm Turnbull has an “economic strategy” is to stretch words beyond the limit of their meanings. Continue reading ‘The Overshadow’

Quadrant’s economic recovery program

Published
by
Kim
1 year, 1 month ago
in Economics
. 41 Comments

From the Quadrant blog:

The world’s economies are not suffering from a lack of demand, and the right policy response is not a demand stimulus. Increased public sector spending will only add to the market confusions that already exist…

There’s been much talk about ideological divides between tax-cutters and infrastructure and bonus spends in the wake of Kevin Rudd’s essay in The Monthly and the debate over the stimulus package. That talk, of course, obscures how close the two parties actually are, and an alternative way of looking at the issues might concentrate on the electoral coalitions which would benefit respectively from tax cuts or the combination of bonus payments that taper out as you go up the income ladder and education spending. Naturally, there’s an argument about which mode of proceeding would provide the greatest multiplier or have the quickest effect. But, in truth, the technical or policy differences are difficult to separate out from the politics. That doesn’t quite mean that ideology is dead, though, because the Quadrant essay by Steven Kates from which the quote above comes does show that there are those around there who are going to make a “private economic activity good, state intervention bad” claim almost regardless of the circumstances.

In a way, Kevin Rudd does have a real target for his claims about “neo-liberalism” even if his story has to exaggerate the influence of the purist form of the ideas underpinning it, and misleadingly imply that they’ve only influenced one side of politics. But most people aren’t aware of the arcana of “Austrian economics” and the sort of “let the market sort it out” line this quote exemplifies is going to stick to the Liberals and Malcolm Turnbull. And at the worst possible time. Turnbull’s low tax, small government rhetoric and his opposition to the level of state stimulus ensure that, even if his message is supposed to be more nuanced. And I’m sure most Australian voters aren’t all that interested in passionate arguments about the role of the New Deal in the Depression. Ideology? You can run, Malcolm, but you may not be able to hide.

A new Keynes for new times?

Published
by
Mark
1 year, 1 month ago
in Activism, Economics, Ethics, International, Markets, Politics and Sociology
. 38 Comments

I was having a chat with a friend over dinner last night, and we were talking about transformational politics. The missing ingredient in Kevin Rudd’s discussion of social democracy appears to be any sense that there’s some goal ahead, other than tinkering with things as they are in the service of some vague desire for social justice. As I’ve remarked before, it appears that at some point in the 1970s social democrats simply gave up on any desire to bring about structural change. My friend recounted having seen Rudd speak at a politics in the pub gathering in 2004 when he was asked about his overarching goals. He replied in terms of “using the levers of the state”. That’s probably of a piece with his bureaucratic penchant, but it begs the question of the use to which these “levers” are being put. One can be too hard on politicians, and I have no doubt that Kevin Rudd does have some sort of desire for a fairer society – perhaps impelled by his Christian beliefs. But I’m not at all sure it has all that much to do with classical social democracy.

In this context, one of the chief architects of the Alternative Economic Strategy of the 1970s and 1980s, which had a significant influence on both British and Australian policy debates, Stuart Holland, has published an interesting article on Keynes in Red Pepper. Part of Holland’s concern at the time – when working for and with Tony Benn – was to escape the polarity of planning and public ownership versus the free market, but not in the Third Way way. Rather, the AES proposed to deepen democracy within economic and state institutions – a way forward for a genuinely liberal democratic socialism which would actually, well, change stuff. It couldn’t be further from top down policy wonkery.

That was then, of course, and this is now, but Holland makes – in my view – a very interesting argument about the Keynes revival. He points out that a revived Keynesianism should be more than just demand management on one hand or investment in infrastructure to support private capital on the other. Perhaps those are necessary first steps as an emergency measure to cushion the deleterious effects of a global financial crisis, but I think his argument is worth consideration for social democrats with an eye to actually transformational ends. Continue reading ‘A new Keynes for new times?’

Refuting the “accident theory” of the Global Financial Crisis

Published
by
Mark
1 year, 1 month ago
in Economics, International and USA
. 15 Comments

The current line from the defenders of the free market faith is that unfortunate failures of regulation were the cause of the Global Financial Crisis, and thus of the growing travails afflicting us in the real economy. Thus neo-liberalism, the PM’s latest political target, is let off the hook. But if Kevin Rudd had really wanted to write a radical analysis in his screed against neo-liberalism, he might have hired Peter Cowan as a ghost writer. In the latest New Left Review, Cowan seeks to refute the “accident theory” of the GFC: Continue reading ‘Refuting the “accident theory” of the Global Financial Crisis’

Jobs, jobs, jobs (if you make car parts)

Published
by
Mark
1 year, 1 month ago
in Economics, Energy, Industrial Relations, Markets, Politics and Poverty
. 37 Comments

Following on from one of the conclusions that can be drawn from the thread on Bernard Keane’s critique of the Rudd government’s involvement with bankers – that there’s a growing perception that the long term implications of “emergency” economic decisions haven’t been well considered – I was intrigued to read a report about a car parts supplier in Adelaide:

The Government is “actively considering” a joint submission from the Adelaide exhaust system and shock absorber manufacturer Tenneco and the Australian Manufacturing Workers Union that it provide accredited training and also pay the wages of the company’s 600 workers for days the company is forced to halt production.

I think we’re seeing an increasingly corporatist trend in economic policy, and what’s rather intriguing is that the usual voices of neo-liberal orthodoxy aren’t running around the shop demanding “let the free market rip!” (unless I’m missing something). Perhaps that’s because these sort of moves appear widely supported by big business.

If the Tenneco plan goes ahead, it puts some flesh on the government’s rhetoric about the need to preserve skills through a downturn due to the underlying shortages in the labour market. It might also be argued that directing wage subsidies to those already in skilled full time employment is preferable to targeting retraining and labour market measures to those same workers if and when they’re on the dole. Continue reading ‘Jobs, jobs, jobs (if you make car parts)’

Guest post by the Search Foundation: The global financial crisis

Published
by
Guest Poster
1 year, 4 months ago
in Activism, Economics, International, Markets and Sociology
. 33 Comments

MB writes: The Search Foundation, working with Professor Frank Stilwell of Sydney University, has prepared a short statement on the global financial crisis and possible responses. The idea behind the statement is to stimulate thought about a progressive agenda among unions and progressive organisations, and the Foundation itself will be working on an agenda for concrete reform proposals directed at refocusing the economic debate on the “the core needs of working Australians”. I don’t necessarily endorse the whole of the statement, but I think it’s well worth posting here to stimulate debate.

The global financial crisis

The global financial crisis has dominated the headlines for months and has affected countries all around the world. Although national governments have stepped in to prevent the collapse of the financial system, the world is heading for a major recession. Australians nearing retirement have seen the value of their super fall dramatically while workers face the prospect of job losses and falling house prices as the financial crisis hits the rest of the economy. So, how did this happen and what can we do about it?

Continue reading ‘Guest post by the Search Foundation: The global financial crisis’

G20 Summit: A new Bretton Woods?

Published
by
Mark
1 year, 4 months ago
in Economics, International, Media, Sociology and USA
. 60 Comments

The G20 Summit has come and gone, and if today’s coverage in the Australian press is any indication, the most important of the tea leaves to be read is whether George W. Bush snubbed Kevin Rudd over the “Kirribilli leak”. Yep, a non-story that has burbled along for weeks, now diverted into intra-press gallery trading of accusations and a tedious talking point for the opposition – that’s the most important aspect of the events in Washington according to our “quality” media. As far as I can work out, if Bush is indeed upset that his ignorance of the function and nature of the G20 was revealed to the world, that just confirms what a lot of folks have always known about W – that’s he’s at best unengaged, at worst ignorant. But I suppose our fearless journos aren’t allowed to draw that conclusion lest a global diplomatic crisis add to our woes from the global financial crisis!

But, anyway, the lame duck President made his ritual obeisance to the virtues of American leadership and the glories of the free market. One imagines there’s some personal and political imperative there, but the reality of his governance is better disclosed in the fate of the TARP funds which Treasury Secretary Henry Paulson was given by Congress – it appears that crony capitalism and socialism for the rich is the name of the game according to American blogs such as naked capitalism, Obsidian Wings, firedoglake and naked capitalism again.

But Bush will soon be fading into history, and Barack Obama sensibly declined to act at the summit without executive authority, so what emerged from the G20 is more in the nature of a directions statement for the way forward, as The Big Picture foresaw:

Hopefully, a long term agenda for regulatory cooperation and communication can be set with the next meeting’s agenda decided upon. Far better to talk then not, but no real decisions will come out of this meeting. There will be gnashing of teeth and venting of rage at the mess that excess securitization has created, and the international regulation of and accounting for such derivatives will probably be a focus.

Planet Money looks at what transpired, and links to the text of the communique here. Continue reading ‘G20 Summit: A new Bretton Woods?’

The state of the capitalist economy IV

Published
by
Mark
1 year, 4 months ago
in China, Developing world, Economics, Europe, International, Markets, Sociology and USA
. 79 Comments

One of the intriguing things about wading through some of the business and economics shelves of some CBD bookshops in (fruitless) search of some of the titles John Quiggin reviewed in the Fin Review on Friday (not online of course) was seeing tomes with titles such as “Bubbles last forever!”, “How to make enormous amounts of money from endless bubbles!”, “Greenspan is the greatest!”. I’m exaggerating, but not much. I suspect their shelf life is almost over, and they’re headed for the remainder bin soon. At any rate, I’ll have to cross my fingers and hope the AUD recovers soon so I can afford to buy something a tad more contemporary – and serious – from Amazon.

Since September, I’ve been wading through far more reading matter than I’d ever imagined possible on economics and finance. Much of it has been, by necessity, somewhat ephemeral. However, it’s good to see some commentators coming out with something of a longer view.

Continue reading ‘The state of the capitalist economy IV’