British historian Tony Judt died last week. CPD fellow Ben Eltham turns to Judt’s monumental career to find out what’s missing from this federal election campaign.

As Judt argues in Ill Fares the Land, the stage-managed and media-centric nature of modern election campaigning is not just the product of a televisual and multi-mediated society. It’s also the result of a fundamental suspicion amongst voters about whether modern elections actually mean anything. With the end of the Cold War and the exhaustion of the great political conversation of the second half of the 20th century, politics in Western democracies has settled down a smaller, more modest and more pragmatic affair. As left-leaning governments like those of Tony Blair and Bob Hawke and Paul Keating implemented privatisations, tariff deregulations, industrial relations liberalisations and other pro-market, pro-globalisation reforms, many of the really big questions about how we should structure our society went by the wayside.

Read the whole post here.

In the outer-urban and provincial Australia in which I live, there are hundreds of thousands, or perhaps millions, of people whose tenor of life has not altered to any remarkable degree since their parents’ days. They treasure their ageing V8 utes and winter dinners of fibrous roast beef served with Yorkshire pudding. They know in their hearts that Australia is God’s own country, even if they’ve never left its shores. They still fondly imagine a trade apprenticeship to be a passport to a solid 50 years of the good life, in a cosy life-niche. And they nurture the comfortable conviction that just about everybody else in the country – aside from a few mildly amusing egg-heads who drive through their towns in Audis, Saabs and Subarus – feels more or less the same.

Contrariwise, in the bustling, cosmopolitan and yet still strangely lonely and characterless neighbourhoods of our inner cities, there are tens of thousands of earnest, highly strung folks whose work-lives are their avocation; whose “politics” stem from the innermost sanctum of their souls; and for whom the private economy is not the engine of prosperity, but a moral abomination on the scale of the slave trade.

In between sits ‘Middle Australia’:

Rather, they’re in that vast, uncharted space between these extremes, a space suffused with vaguely nostalgic images of a kinder, simpler nation from a lost era, as well as with the sundry appurtenances of our imagined future – obscure Asian condiments in the kitchen, snatches of modernist decor, a TV the size of a ping-pong table that transmits the world news 24/7. In many respects, indeed, they hanker most of all to be told that these two aspects of our imagination are compatible – that we can remain tied to kith and kin, and to many of the values of our parents and ancestors, all the while cleaving to the promise of a new world that feeds on personal re-invention, endless self-adaption, and only half-glimpsed opportunities.

What’s of interest here is twofold.

First, although both portraits are caricatures, I have a sneaky feeling that they’re caricatures in the minds of politicians, press gallery aficionados, and political strategists, as well as a projection in the mind of the weary Foucauldian urbanite. In truth, neither the suburban nostalgists or the cosmopolitan liberals, to the extent that there are real sociological types corresponding to these pen portraits, think all that much more than anyone else about politics.

The missing element, the third term, in the culture wars dichotomy, is voter disinterest. Yet politicians have to assume that voters are reachable, and classifiable. And the act of naming informs political strategy. It’s only one set of possible cleavages one could imagine, and that accounts for why some issues are given much more prominence than they should be.

Secondly, though, and as Sauer-Thompson observes, this is to his credit, Burchell has put his finger on something sociologically valid. We can’t have a “little Australia” and have a globalised economy, in the manner in which a globalised economy currently operates. “Sustainability” is a deeply ambiguous word which the ALP is deploying to cover over a lot of fissures in our social landscape, as well as in our policy options. Those who take it as code for a more ecologically focused, less growth obsessed future are almost certainly falling into the trap of a very modernist ALP mind set. The tragedy of these attempts not to represent the options as they are, but wish division away, is that our future choices, are already set in stone and we will most probably not be confronting the results of our desire to wish away contradictions in the next parliamentary term.

He draws on data from a survey conducted by Sydney University political science PhD student Stewart Jackson presented at the 2009 Australian Political Studies Association conference, and on an analysis of AES data by Macquarie University sociologist Ben Spies-Butcher. “Labor-Greens swingers” include many who were strong Labor identifiers and they have views on economic questions further to the left of existing Greens voters. Conversely, Tietze argues that Jackson’s survey, which contrasted attitudes between Greens members who’d joined prior to and after 2000, suggests a shift to a more party centred rather than social movement picture of the tasks of The Greens. I was surprised to see that Jackson found that 14% of the latter identified as ‘right wing’. 52% of the recent members disagreed with a proposition that their party should move leftwards.

Tietze is clearly one of those Greens activists who would agree with that statement.

What he’s unsure about is whether The Greens in toto are in fact a social democratic party, and his use of the data suggests that party members are less to the left than many of its supporters. He also sees a gap in the party’s ideology:

In their book The Greens, the most complete statement of Australian Greens ideology to date, Bob Brown and Peter Singer develop a compelling description of ecological and social crisis. These crises are caused, they argue, by a flawed value system – so, for example, out-of-control consumption and waste needs to be tackled by a new ‘Green ethics’. Despite radical language that attacks many aspects of neoliberalism, Brown and Singer make no recourse to systemic structural analysis. Even the greed of the rich is painted as individually irrational and shaped largely by incorrect ideas.

The conceptual absence of class or social constestation beyond descriptions of injustice and irrationality results in a curious silence about issues of power. Because Brown and Singer see Green ethics as universally applicable, they implicitly expect that the state will implement the radical reforms they propose. The corruption of past radicals in the ALP is portrayed as a matter of individuals being bought off, professionalised and shielded from accountability and not as a result of the inherently conservatising nature of engagement with the capitalist state and parliamentary system.

I’d note that I’m just summarising rather than necessarily endorsing Tietze’s critique, but I’d be very interested indeed in hearing from Greens members and supporters on it.

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.

But it’s also legitimate to raise a number of questions – about the viability of such businesses, and the bouyancy or otherwise of labour markets for workers with such skills, and probably more close to the actual point – whether these sort of schemes would only be available in manufacturing. I think that’s probably the case, and I think this has more to do with the Rudd government’s strong preference for support of the manufacturing industry than anything else.

I’m not sure it’s just about the unionised nature of such firms, either. I don’t think anything similar would be contemplated for unionised cleaners for instance, or child care workers, at the lower end of the private sector income food chain. It may be that a case could be made for this sort of program in the public interest, but ought it not to be made according to the actual reasons for selectivity, and the equity (as well as efficiency) justifications and implications set out?

Rudd’s rather anodyne response to this threat is that “we will continue to work in partnership with the private sector to do what we can to support Australia’s credit markets.” This means more work for the Government-banking oligopoly combination. Bankers and officials have been busy discussing options while the rest of us were having a break.

This approach — and this is not to suggest there’s a viable alternative — is not merely entrenching the position of the major banks, which have been allowed to consume competitors, but also entrenching the Federal Government at the heart of our financial system.

It’s not nationalisation; it’s more like the worst of both worlds. Politicians and bureaucrats are now key decisionmakers in our financial system, but they have limited control via the major banks, which continue to operate — as they’re required to — in the best interests of their shareholders. Responsibility and accountability are diffused between ministers, Treasury, agencies and the banks themselves. And there are multiple ways in which it could go wrong. Taxpayers could be left, via government guarantees, with failed businesses and debt. Business might struggle to obtain necessary capital. The only guaranteed winners are the big banks…

The AFR’s editorial today on this mess noted “extraordinary times call for extraordinary measures, but their long-term effects are likely to be profound, and they need to be managed with as much care as possible…”

Those long-term effects have been more or less ignored until now, in the urgent need for action. What’s the Government’s exit strategy to eventually remove itself from its now dominant role in the financial system? Does it intend to exit at all? And how much of a trade-off are taxpayers getting from the privileged financial and policy-making role now accorded the banking oligopoly?

The working theory, both here and overseas where the simpler option of nationalisation has had to be pursued, is that governments shouldn’t be in finance, and will get out just as soon as they can while maintaining the stability of the financial system.

This may prove to be wishful thinking, and not only because the duration of the financial crisis and the wider recession is unknown. Wartime policies have a habit of persisting long after victory has been declared. Our better economic thinkers should be turning their attention to the new financial system we’ve suddenly acquired over the last six months — and how much of it we want to keep when — if — things get back to normal.

I think Keane is right that there’s some danger in both ignoring the longer term implications of some of the crisis management decisions being taken, and of ending up with the worst of both worlds with public involvement in financial decison-making. I think Keane’s bias is probably towards the free market end of the ideological spectrum, and I suspect that a lot of those making such decisions and defending their necessity are unwilling (unlike Keane) to contemplate their long term effects precisely because the nature of the decisions runs so spectactularly counter to their liberal predilections.

Having said that, John Quiggin is one exception to both rules, and has made an interesting case – in debate with Paul Krugman – for doing bank nationalisation properly if you’re going to do it at all:

Financial restructuring is going to be a huge challenge, involving both a radical redesign of national regulations and the construction of an almost completely new global financial architecture. To attempt this task while leaving the banks under the control of discredited managers nominally responsible to shareholders whose equity has, in the absence of massive transfers from taxpayers, been wiped out by bad debts, seems like doing live electrical work while wearing a blindfold and standing in a pool of water.

But of more moment, probably, is the response of those who actually make decisions about the labour market. Predictably, the Howard era Fair Pay Commission Chair, Ian Harper, warned that the low paid couldn’t expect much. This, despite the fact that the pay rises awarded by the FPC over the past two years failed to have the dire impact on employment predicted by business lobbies. It was interesting in this context to read a good piece by Mike Steketee in The Australian last week:

Some economists argue that cutting wages, particularly for the unskilled and low skilled, is the surest way of keeping more people in work. Quite apart from the fact that Labor’s ruling out such an option helped it win the last election, the main problem facing businesses is lack of demand for their products.

Cutting wages would reduce consumer demand further and it would run directly counter to the Government’s policy of putting more money into people’s pockets to try to put a floor under demand. In any case, the wages share of national income is the lowest for a generation, suggesting labour costs are less of a burden for business than in the past.

In short, it’s aggregate demand, stupid.

There’s some anecdotal evidence around that some employers are looking at other means of addressing costs than shedding labour. At issue here is also the skills shortage – it’s precisely the less skilled and lower paid who are at more risk in an economic downturn which widens inequality, as Steketee points out. So disinvestment in skills is also a false economy. But it’ll be interesting to see whether an understanding of the nexus between consumer spending and employment and employment expectations actually cuts through. Harper’s tired nostrums suggest that certain orthodoxies have survived the global financial crisis.

After a decade or so when we heard so much blah about corporate social responsibility, it’d be nice to see some recognition from business that the economy is part of that responsibility. That’s actually in the collective self-interest of business, but as Keynes and others showed, that’s precisely what the incentive structure of capitalist economics has difficulty incorporating. There may well be some room here for some creative thinking from government, going beyond pump priming. Fingers crossed.

The issue is not going to go away, regardless of the short-term success or failure of attempts to reach a global agreement to stabilise the climate. The more clearly the political right is identified with the anti-science side of this debate, the harder it will be to salvage any of its existing institutions.

Kevin Rudd’s rhetoric in 2007 recognised that Australian politics deals particularly badly with long term issues. Our statist political culture means that interest groups of all kinds seek to cut deals for whatever their short term interests require, and the veneer of “ideas” – particularly neo-liberal ones – is particularly thin, hardly sufficing to pave over the cracks of corporate self-interest. Rudd, of course, has hardly fulfilled the hopes he himself aroused. But surely it’s worth wondering what long term costs the right will bear after the time passes when denialism loses any patina of plausibility.

So I was happy to find this point rather elegantly made by the Canadian academic Leo Panitch:

First, let’s be clear about capitalism – and with it the character of the state under capitalism. There is a conventional assumption, a leftover of the cold war perhaps, that somehow capitalism is essentially about the market and socialism is essentially about the state. In fact, a central historical feature of the state in capitalist societies is the role it plays as guarantor of private property and, most importantly for the smooth running of the financial markets, that it will always honour its bonds – that is, its borrowing from the private banks.

Because of this guarantee – the promise to pay others back from taxation revenue in the future – government bonds, whether issued to finance war or to finance welfare, constitute the least risky form of lending. As such, it forms the foundation of financial markets’ role in sustaining the ability of capitalists generally to accumulate – to continue to invest and make profits. This centrality of the state for capitalist accumulation is most notable with respect to those dominant states, like the USA, whose bonds are the foundation on which all calculations of value in global capitalism are based; states that host and support the main centres of international financial markets, such as New York and the City of London.

Understanding the role of the state in a capitalist society helps us to see why, when a government bails them out with public money, the bankers do not see this as the start of socialism. On the contrary, they see it as the government fulfilling its duty to the financial markets – whose smooth running it both depends on and sustains, by providing the basis of confidence in the credibility of the banking system.

So it is misleading to see government involvement in the banks – whether it be the pure bailout of the original Paulson program in the US, or the subsequent non-controlling equities taken by the US, British and other governments – as per se a move away even from neoliberalism. (It is also misleading to see neoliberalism as being about the withdrawal of the state from the markets – and therefore this current involvement of the state as a defeat of neoliberalism. The state under neoliberalism has been very active in promoting the vast expansion of financial markets and facilitating their volatile growth; and, as this volatility inevitably led to repeated financial crises, in keeping the financial system going from moments of chaos to moments of chaos.)

Yes, the road ahead looks difficult. But this is no time to abandon our faith in the capacity for enterprises and markets free of oppressive state intervention to reinvent ourselves and bounce back. Human ingenuity will prevail, confidence will eventually return and the wheels of commerce will spin again. There is too much evidence that the world, despite periodic setbacks, continues to progress.

He parses this intriguing paragraph thus:

Interesting isn’t it. The defence of free market capitalism depends on faith not on reason. Reason cannot do the job any more given the global financial crisis and its aftershocks on the economy. So faith is called in to plug the gaps.

Of course, faith was always a big component of economic liberalism. Enlightenment doctrines (and Marxism is another), having toppled God from his epistemological throne as the prime cause, took on some of the characteristics of the theism they thought they’d banished. So economic science has always been contaminated by ideology. Normative values such as “progress” and “ingenuity” underpin a worldview which partakes in blindness as well as insight. Now that a leap of faith is required to defend one’s choice of belief, we’re beginning to see this aspect of economic liberalism in plain view. We’re being asked to sign up to a metaphysics.

Coincidentally, John Quiggin has posted the inaugural number in a promised series of observations about economic doctrines which have been discredited by the Global Financial Crisis. First cab off the rank – the efficient markets hypothesis. His conclusion?

Once the EMH is abandoned, it seems likely that markets will do better than governments in planning investments in some cases (those where a good judgement of consumer demand is important, for example) and worse in others (those requiring long-term planning, for example). The logical implication is that a mixed economy will outperform both central planning and laissez faire, as was indeed the experience of the 20th century.

If we follow Quiggin in his reasoning, we’re effectively aligning ourselves with the sceptical and reflexive reasoning which is another legacy of the Enlightenment. It’s not as much fun as blind declarations of faith in the face of contrary evidence, and sorting folks into friends and enemies, the saved and the damned, but it’s a much better basis for managing an economy which needs to fulfil multiple objectives – including those of social justice.

Update: The second in Quiggin’s series – refuting the case for privatisation.

Update: This post now has a sequel.

Prediction at the minute level is a fool’s game, though it’s one a lot of people like to indulge in. Nevertheless, I think it’s safe to say that 2009 will be an interesting year. Many patterns which were becoming evident in 2008 – a year of transition politically and economically – will crystallise into a more definable shape this year.

Perhaps most important is the election of Barack Obama.

The wilder expectations attached to his persona won’t be fulfilled, but I think it’s not too audacious to hope that two things which would bring America into line with the minimum norms of a social democratic state may eventuate on his watch – (near) universal healthcare and the Employee Free Choice Act.

Now that the election is over, we in Australia have the luxury of being able to ignore the minutiae of the political game in the States. Who really cares about Rod Blagojevich or whether Caroline Kennedy will or should be a Senator? We should be looking at the bigger game – and here what I think is usually ignored is the fact that Obama’s able to do some triangulation of his own – bringing pressure to bear on Congress and the interest groups through mobilising the activists and supporters on his email list. And he’ll do that. It should provide a measure of protection against the power of the wingnut media (at a time when many of their mouthpieces are being hit hard by both changes in media consumption patterns and the recession), and potentially also smash some roadblocks to progressive change.

What’s less easy to predict is the degree to which Obama’s economic policy will impact internationally. So far the concentration has been on domestic stimulus and fairness. But there can be little doubt that 2008 saw the crash of the Washington Consensus with the Global Financial Crisis.

Discussion about whether Obama’s election will revive the climate change negotiations takes us to the Rudd government. Here, I think in one way Rudd’s election was a precursor to Obama’s in terms of popular mobilisation and here in another way I think the government is in danger of throwing away the momentum that younger voters in particular provided it over the global warming issue. As 2009 begins, I think it’s becoming quite clear that the right wing opinionista Emperors are wearing no clothes (perhaps a scary thought if taken too literally), and I hope that some of the backwash from a shifting world climate of opinion seeps into the Rudd government. Not holding my breath though.