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Rudd, neoliberalism, and the poverty of thought
Rudd, neoliberalism, and the poverty of thought
by Anthony Nolan
Kevin Rudd has certainly nailed his colours to the masthead with his article The Global Financial Crisis published in the February 2009 edition of The Monthly.
As a plain language account of the dominance of neo-liberalism in Western political economy over the last thirty or so years it is exemplary. Indeed, in the following edition of The Monthly Robert Manne's adjunct piece makes the comment that:
It is strange but nonetheless true that, thus far, the most impressive Australian essay on this crisis and its implications was the one written by the prime minister during his holiday break...
Manne's article, to which we return later, provides significant amplification of Rudd's argument as well as important analysis of critical comment in response to Rudd:
Rudd's argument is concise and readable and there is therefore no need to recap what he says. There are some highlights, however, that draw attention to particular issues at stake in what is clearly a struggle for informed public opinion not only about political economy but around the nature of Australian democracy and what might be reasonably be called at this stage our political ecology.
Addressing the tendency of neo-liberals to simply ignore evidence that fails to fit their understanding Rudd claims that:
Despite three crises in a decade, despite the clear warnings that came with them and after them, the neo-liberals were so convinced of the ideological righteousness of their cause, and so blinded by their unquestioning belief that markets were inherently self-correcting, that they refused even to recognise the severity of the problems that emerged. The problems did not fit the model, so the evidence was simply discarded. Hardline neo-liberals were not interested, because they knew in their hearts they were right.
Precisely. The hallmark of the true ideologue is a refusal to acknowledge facts that are contrary to his or her intellectual framework. Facts that don't fit with the material interests of particular classes of academics, journalists and economic theorists also rarely get an airing.
This would simply be a type of muted old fashioned class struggle between capital and labour were it not for an alignment of class interests in ongoing hyper-exploitation of natural resources that threatens the very foundations not merely of capitalism but human social life on the planet. Rudd nods in the direction of the ecological crisis without further development when he writes:
Neo-liberals in government also become notoriously reluctant to identify and respond to instances of market failure. Climate change is a potent example. What Sir Nicholas Stern legitimately describes as the greatest market failure in human history is dismissed by neo-liberals as a prescription for wanton interference in market forces.
He is, of course, referring to global warming and the intensification of the erosion of the conditions of planetary habitability. That is a market failure, right?
To the astonishment of the right wing commentariat who thought that the ALP had been totally captured by neo-liberalism during the Hawke/Keating ascendancy, Rudd drives right to the heart of the neo-liberal agenda by identifying its strategies and refuting, with factually based argument, its fundamental premises. He identifies a successful attack of the legitimacy of the state as the key neo-liberal strategy:
The central thrust of this ideology has been that government activity should be constrained, and ultimately replaced, by market forces.
Happily, on the basis of the evidence of the failure of this theory that now dominates every news broadcast, newsheet and even intimate conversation Rudd says it is time to bury it:
The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes. Neo-liberalism, and the free-market fundamentalism it has produced, has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself.
Robert Manne's adjunct article extends Rudd's argument. Manne, however, also provides a précis of commentary and response that is eye-popping. The responses cited by Manne are tragically intellectually crude. Indeed, so crude are they that I found myself wondering whether the authors were actually members of an intellectual and political cabal on the payroll of a foreign power or whether they simply lacked the intellectual training and historical knowledge to follow the line of Rudd's argument. Most alarmingly, I have concluded that the latter is correct.
Two samples from Manne will suffice to illustrate the seriousness of the problem:
The jaw-dropping lesson that Julie Novak, of the Institute of Public Affairs, drew from the global financial crisis was that the financial sector had been "hamstrung by regulations such as corporate reporting and accountancy standards".
In a final comment, Manne, one-time editor of Quadrant and possibly the most significant public intellectual in Australia presenting reasoned argument writes that:
In testimony to Congress on 23 October last year, Alan Greenspan confessed to a "shocked disbelief" at the failure of his lifelong market faith. To judge by the initial response to the Rudd essay, among the Australian neo-liberal commentariat and political class that often painful process known as thought has not yet even begun.
Intrigued by his analysis I read yesterday's Australian virtually cover to cover and discovered that Manne is quite correct. The neo-liberal commentariat appears to be totally incapable of genuine intellectual engagement with social democrats, and this despite the fact that a very large number of articles are focussed on Rudd's critique.
The top end of the Oz editorial goes so far as to quote Rudd's Monthly essay but fails entirely to address any specifics, opting instead for a long whinge about how winding back WorkChoices is going to cost jobs. Apparently the editorialist failed to note the front page article about Sue Morphett which portrayed her as a Howardite battler on $1.8M a year who has also just cost Australians 1800 jobs. The ed piece then goes on to hail Ralph Willis and Bill Kelty, architects of some versions of the Accord, as models of social responsibility. Who would have imagined? The editorial neglects to mention the failed deal of the Accord, which was wage restraint in exchange for capital investment. The second phase, the bit where Australian business put its money back into the Australian economy never really happened but never mind.
The real payoff, however, is the bottom of the editorial which has the header "Capitalism No Crime". Imagine that? It gets better, of course, as the argument is put that:
The inescapable truth is that only capitalism creates wealth and that government regulation generates few sustainable jobs.
Only capitalism creates wealth? Oh please, pass the port and the reefer my way will you? This is so puerile it is making my molars ache.
My thirteen year old has a better level of political analysis than that. His reply is that capitalism creates wealth, alright, but that it is controlled by particular classes who then pay wages to employees. The employees don't get to share in that wealth. They work for their share of common earnings.
Moreover, he goes on, the wealth that is controlled by a tiny proportion of the world's population comes at the expense of the common stock of natural resources like breathable air, seas fit to breed fish stocks, forests, rivers, lakes and so on, and that the accrual of private wealth at the rate and in the manner pursued for the last two hundred and fifty years or so is no longer sustainable. In other words, between mouthfuls of his breakfast, he explains to me that, if things go on this way, it may well be that capitalism will become a crime as it robs everybody of the means of subsistence.
The alternative, in Rudd's words, is social capitalism or old fashioned social democracy. But don't tell the Melbourne Club as they are as yet psychologically unready for that possibility.
Best for last. Stephen Matchett's rear end piece in the Review section manages to suggest that current fiction unjustly attacks economists and does not understand how only economists have a realistic grasp of social life. He defends economists from the Stalinist-like attack of novelists of whom I've never heard and does so, oddly enough, without once mentioning that Hayek was an economist.
We are up against it all right.
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The perfect reference on Neoliberalism
From the now deceased Pierre Bourdieux but he gets it right. On the matter of the unreality of what he describes as the neoliberal utopia:
In other words the class interests of specific groups have been holding the world to ransom at the same time as successfully arguing that our oppression is actually our salvation. Nice one.
Too right
Yes, Anthony Nolan, situations like Pac Brands, let alone the $ trillions looted in America, let alone criminal wars in third world countries, let alone the systematic starvation of large sections of the the planetary population in giant open-air concentration camps like Africa, are normalised
i.e. it is virtuous for executives and sharks to murder and thieve like Fagan's gang or a dog in a butcher stop, but let some stiff, virtually anywhere, tries to obtain even what's rightfully theirs, the system goes berserk with righteous indignation.
Did I say that?
Paul Walter: "Eliot and co, puhlease!! No more alibiing for those responsible, or denial that the system must be improved upon in certain ways, unless you are prepared to advocate those responsible also copping the consequences, in the ways that so many others are having to cop, for the above's benefit."
There must be another Eliot here, or something.
It's not a democratic question
Anthony Nolan: "A growing number of people reject the so called right of particular classes to ongoing engrossment even as their stupid and psychologically immature greed imperils the ecological conditions of existence. Worse is the way that they encourage others to aspire to them as models of human virtue."
You're treating the subject as a question of democracy. It's no such thing. People can vote for what they like. Getting it is another question entirely. It's obvious the route you'd like to take Australia isn't affordable, therefore, it's not possible. I don't care if every man, woman, and the proverbial dog votes for it, it's not happening. That's a reality. I'm simply saying that once the pretence of illusion is given away, things will begin to improve.
You've not made one economic point to prove anything I've written is wrong.
So you like individualism when it's your kind of individualism? Fairly standard thinking for most people.
Nobody need conform to any economic lifestyle. Liberalism, of course, offers that choice (you can choose to be poor). Socialism, of course, doesn't (you must be poor). I'll back a person's need for wanting things every single time when the chips are down. I'll, of course, end up being proved correct. I've made a very healthy living from it thus far.
Your present government enjoys popularity because it offers things. Voting bribes. The problem they face is the money will eventually run out. If the money were infinite it would be a great system. Again, though, the reality comes crushing home to ruin the fantasy. As it has for every other past "alternative" system.
Incommensurable dialogue
Paul Morrella, we are clearly at such cross purposes that I wonder how it might be possible to treat what you've written with respect in replying. It appears to me that you are concerned about the economics of the situation without appearing to understand that the matter of money and how one acquires it is not the only significant consideration in making life choices.
You are quite right to say that the economic choice that socialism (say USSR) offered was poverty. Unless you were in the nomenklatura, the list of names of the party elite who were given access to lifestyle luxury and roubles. In the industrialised centre - Europe, North America, Australia and other parts - democracy and the market offer the option of a range of income from between poverty through to very great wealth. A lot of people settle for enough, by whatever their standards are of sufficient, because that amount allows them freedom in other realms of their life. They value their freedom.
Liberal democracy, as a distinct sort, also offers vastly more options for personal freedom than did any variant of socialism. The cold war was won by the West for many good reasons. The possibility of material abundance rather than shortage is one. Personal liberty is another.
In short, I am not advocating any form of socialism. You keep suggesting that Rudd and Obama are socialist. This is real old cold war strategy and doing it, which is to say setting up a straw man, takes a determined effort to ignore what the other in a dialogue is saying. Either that or your idea of socialist policy is so broad as to rob the term itself of any meaning.
You operate in bad faith. Doing so fails to meet the requirements of democratic dialogue. Let me repeat - no one is advocating socialism. I think markets are effective and efficient. Liberal democracy has a tradition of treating certain activities of private individuals as a private matter. This is a good.
On the latter point, what is happening is that economic activity is not being treated as a private matter. That is because it isn't a purely private business. It is a highly social activity. Moreover, as we live in a democracy, it is a realm of activity over which it is entirely politically legitimate to exercise democratic forms of control. State policy is a realm of contest around exactly that. Neoliberalism argues against policy control on the grounds that regulation of markets distorts the market. It doesn't matter if it is because the state is providing services that compete with or entirely occupy the space that private service might do or if it is by regulation and rule. Neoliberalism wants to let market conditions determine the conditions of social life. That is a distortion of social life.
Social democracy is arguing for greater regulation especially of banks and finance. It is also clearly doing everything it can to sustain the stable economic and political that markets require.
Ecologically informed social democracy will eventually produce policy directed at preserving our mutual conditions of biological existence.
It is abundantly clear that the economic efforts made so far may not be sufficient to avert long term recession or depression but social democracy is intent on at least trying. Hayek referred to these period as "creative destruction". Totally nuts. Anyone even vaguely aware of what happened to people lives during the great depression would agree.
As to not addressing the economic issues you raised - I really don't do economics. The issue is how to advance democracy. A stable economy is only a means to that end. We've left the economy in the wrong hands for too long and it is time to democratise economic activity. Classes have arisen who now conduct themselves like the old French aristocracy and they command similar levels of comparative wealth. Their economic interests are antithetical to democratic interests.
Finally, I see democratic practise as a radical project and in fact the only conceivable radical project. Democratic principles ought to inform every realm of human activity from the purely economic to the intimate and personal. This is still a relatively new project but it is currently alive and flourishing. At last.
Fiona: Anthony, do make sure that you are addressing the "right" Paul - I hope I saved you a little embarrassment tonight.
Humans aren't bees
Anthony Nolan: "Without doubt liberalism is the single greatest cause of our ecological crisis."
One merely need glance at much of past Communist Eastern Europe for an understanding of the stupidity of this statement.
Strong individualism in society leads to a stronger society. It should be obvious that strong individualism ultimately relies on finding a common ground. The entrepreneur doesn't sit atop society (valued above all others) because he/she is offering something nobody wants. The more a society values and encourages individual excellence the more success that society will achieve. This should on all past evidence be self evident.
Your dreams of a new ordered society (social structure) will fall apart, they always have in the past. Humans ultimately choose that which offers them most.
Individualism no substitute for individuality
Paul Morrella : "humans...choose what offers them most."
The choice of unlimited control of resources and unlimited wealth as substitutes for a decent life lived according to reasonable values can no longer be offered. That shop is shut.
See Orson Wells' Citizen Kane for what is wrong with the wealthy who desperately promote their lifestyles as reasonable choices for everyone or at least what one ought to aspire to. By this mechanism the innocent, the inadequately educated and the ethically ignorant are roped in to unending labour in order to engage in unlimited consumption which they imagine makes for a meaningful life.
However, the lifestyle of the 17/18 C French Royal Court cannot be democratised because there are finite limits to the wealth the earth can provide.
A growing number of people reject the so called right of particular classes to ongoing engrossment even as their stupid and psychologically immature greed imperils the ecological conditions of existence. Worse is the way that they encourage others to aspire to them as models of human virtue.
Strong individualism is no substitute for strong individuality. Strong individualism gives us people who think that they express their individuality by consumer choice of mass produced automobiles. Strong individuality, by contrast, depends on a capacity for authenticity and moral agency in what choices one exercises.
Liberalism gives us individualism and dull conformity.
I only need read the figures
Anthony Nolan: "The problem is that he is generalising his own values onto others. He mistakes his own interest in advantage-seeking and self-maximisation for a gerneralisable rule."
No, the problem, as I see it, is that I've come between you and your alternative fantasy land.
The fact is that the Austalian Government can continue to run poor economic policies, and it can continue to dog whistle (like that childish anti-business rant), and people will pay the consequences, the first of which will be cutting of government services. That you even try and dispute this by personal insults is simply pointless.
Don't be offended
Hi Paul Morrella - don't be offended.
At stake are competing views of human species nature.
One of them, mine, has the weight of significant historical and anthropological scholarship behind it. Humans are primarily a social species who have lived for 99% of our history in small hunter gatherer bands. Our sociality is at the core of our beings.
Your view, so far as I can tell, derives from the liberal heritage of Locke and Hobbes both of whose views of human nature have been repeatedly discredited. Hobbes was so wrong that to read him is to understand that he was delusional.
Without doubt liberalism is the single greatest cause of our ecological crisis. It is also the single greatest cause of almost every social ill because to order society along the lines of liberal individualism violates the most fundamental human needs to live according to our species nature.
Don't doubt the basic human
Paul Walter: "We surely have a better idea of what wealth is and how it can be used, and a better appreciation of the "human", than existed in the then pioneer times of Ricardo and Dickens. We can now see, surely, that resources can have uses apart from individual self gratification."
Actually, most anti-free marketeers have a general fear of their fellow man. There's simply no reason to believe that people will be any more exploited than they already are (if that's even the case). The illusion of "safety" does have its qualities, I grant you that. It's also a very powerful tool. That's why politicians "do" things, when in fact they're doing very little.
Anyone advocating the type of system I am isn't going to win a political debate. Not yet anyway. That's not the point. The system I advocate is already here (all over the world). What we are seeing is merely a number of measures pretending otherwise. Actually, it's those measures (pretence) doing the most damage.
For example, employment is totally unregulated. Always has been, and always will be. It relies solely on profit. Without profit there isn't employment. A business will employ up and until a magic mark is reached, irrespective of what any law says. The never ending game is of course testing the limits of that mark.
Those guys at the clothing may well have the best conditions in the world: the guys in China now have their jobs (and China scores the revenue). That, my man, is an unregulated market place. A very small point in world-wide game. The rules of the game are in place, they can't be changed. It's only a matter of accepting them, and profiting from that acceptence (in many, many ways). Or it's the reverse.
People of course will opt for whoever (political terms) gives them the most hope (logical reaction really). Hope of course also has a magic mark, and then acceptance sets in. Acceptance of a situation is the first step in correcting the situation. Acceptance hasn't been reached yet (anywhere). It will be, though.
The "basic human" is a neoliberal
I think what Paul Morrella means when he writes about the "basic human" is that he has a special understanding as to human nature and that the "basic human", by which he means the unadorned and intuitive human, is a self-seeking and self-maximising person who will always attempt to gain advantage over others. Therefore, he appears to think we ought to order society along lines suited to this (apparent to him) fact of human "nature".
The problem is that he is generalising his own values onto others. He mistakes his own interest in advantage-seeking and self-maximisation for a gerneralisable rule.
It certainly has been my experience of the sort of people who vote for the Liberal Party or hold to the theories of Hayek that I have been dealing with people whose social and ethical competencies have advanced not one iota on those of Hobbes and his peers. Almost pre-modern, really.
But as I live in a modern, multi-cultural and pluralist democracy and not some feudal lower north shore redoubt of ignorance I would never generalise the values of the latter electorate onto my neighbours and friends.
John Howard, Peter Reith, Peter Costello and (eeek) the Mad Monk hisself...how basic can you get? Then there is good ole Iron Bar Tuckey and Bill Heffernan. Less than basic. This mob is the shallow end of the gene pool if you ask me.
I read a message I tell you what it says - good or bad
Paul Walter: "Paul Morrella, are you not forgetting that socialism in its intended sense is concerned with a philosophical notion of justice enacted through redistributing wealth on the basis of human need, inevitably downwards, rather than concentrating it in fewer and fewer hands as capitalism does, as part, it seems, of a perverse atavistic self replication, rendered obsolete by history? "
The road to ruin is laid with the best intentions. Socialism of course provided none of those things.
And anyway I wasn't making a philosophical argument. I'm flat out stating that the economic vandalism (it's happening in a lot of places) now being undertaken will have major ramifications (for numerous nations). The most obvious is a large reduction in government wealth, hence spending, hence size. If you can tell me how the tab will be paid, when it falls due, you're a better man than me Gunga Din. The use of inflation larceny seems the most probable, though, that won't work either.
The best way to reduce government services is through attrition. When I say "best" I mean for politicians. For example a politician may make a claim of "free health care". The point that the cancer treatment may be thirty years (and four technologies) out of date is neither here nor there. This is across the board in all "free" government offerings. Everywhere.
The point is of course that governments don't create wealth. They surely can destroy it though.
Anthony Nolan: "Paul Morrella are you sure you feel well?"
I've nothing against Mr Rudd personally. I can, though, politically motivated economic drivel (much of it making no sense) a mile away. I didn't take it very seriously, hence I'm probably not the one that needs the check-up.
Remember TINA?
Paul Morrella are you sure you feel well?
It's the end of the world as socialists know it, and I feel fine
John Pratt: "Paul, you seem to believe in small government and low taxation."
I most certainly do. Due to a number of reasons, I also see Australia as a possible chance of being a paradise on earth (there are not many others). The only thing to fear is fear itself.
These "bailouts" are interest free loans, often with minimal conditions attached, or direct stakes in flailing entities, with all the responsibility that comes with that. It's nothing to do with giving tax dollars back. It's corporate cronyism, and it's a sham. A very dangerous and very expensive one at that.
I'll assume you're writing in regard to individual hand-outs.
Firstly, they're not a return of all taxpayers' funds. If this were the intended case, the money would be returned through a standard tax cut.
Secondly, less than fifty per cent of people in western nations are net taxpayers. On present trends this number will continue to decline, and very dramatically in the next decade. It's bigger than the elephant in the room.
The reason standard tax cuts were not the way foward was because of the fear of taking them away down the track. A purely political fear. One thus must assume any talk, or hint, of future tax increases is an even bigger fear. So that rules that little revenue raiser out.
Thirdly, any money returned isn't actually the government's money. It's borrowed. Australians (well, lots of them) wrongly assume they're spending a surplus. The surplus has long since been spent in Australia. Australians are now on the credit card, and it means repayment of principal with interest.
The obvious conclusion is that in the future Australia (and pretty much everywhere) will see major cut-backs in government spending. That means smaller government. In some cases such as in Europe, very dramatically smaller government.
Those who plan for the future will always be better off than those who ignore it. There's one way to have guaranteed wealth and security, and it aint through government help.
Fiona: A word in your shell-like, Paul Morrella. The relative pronoun "who" is the appropriate one to use when referring to people. The relative pronoun "that" is the appropriate one to use when referring to non-human things - unless, of course, you regard people as things.
A small light in the dark
Paul Walter: "The multi- trillion dollar global bailouts alone represent such a blatant, egregious ransacking of the common wealth. Only a fool or poltroon could remain ignorant of the injustices committed by the few on the many, and the real consequences have not yet even begun, to flow through (or "trickle down", as some might be tempted to wryly observe)."
You would be hard pressed finding anyone wearing a free market hat agreeing with the bailout system. That's classic socialism. Actually, it's a perverted new-age Keynesism. Lets call it socialism.
You're right about the rip-off of "common wealth". I believe it'll end up being the biggest in recent economic history. The "distributors" have distributed it all away. We're now (those at least wearing the common wealth hat) are working on the never-never. Future governments are most definitely going to be restricted in the finance department.
The one good outcome: It will end the phony war between big and small government proponents. Due totally to circumstances, it's going to be small government all the way. That's ultimately a very good thing.
PS The fools with the current ideas believe they'll inflate all their troubles away. They seriously don't know how wrong they're going to be!
A philosophical notion of justice
Paul Morrella, are you not forgetting that socialism in its intended sense is concerned with a philosophical notion of justice enacted through redistributing wealth on the basis of human need, inevitably downwards, rather than concentrating it in fewer and fewer hands as capitalism does, as part, it seems, of a perverse atavistic self replication, rendered obsolete by history? In old capitalism there is still a degenerate Hobbesian feudal tendency inherent in an actually evolving system deteriorating from creativity to opportunism to lazy reaction. We surely have a better idea of what wealth is and how it can be used, and a better appreciation of the "human", than existed in the then pioneer times of Ricardo and Dickens. We can now see, surely, that resources can have uses apart from individual self gratification.
Can't we move on from decapitating the goose that lays the golden egg to a more efficient and purposeful husbandry?
We've had it out several times already. What you are describing equates more appropriately to unreconstructed historical 19th century capitalism, in which Stalinism can be seen as but of several outcomes or manifestations, depending on the historical mix of a given time. Fascism, corporatism, these are also descriptions of a complicated phenomena that the old "red smear" explicative scarcely does justice to.
The worst case scenario of the current hybrid system, as with Stalinism, abandons both without even the dynamism and individualism of capitalism, and the humanity, collectivism and vision of both Christianity and Socialism.
Fortunately for us in the West, the marriage of capitalism and social democracy has made our world tolerable. But the darker side of our Dorian Gray western civilisation is reflected in the mechanisms of imperialism colonialism and neo colonialism and the pivotal role of the phenomena of as- undeal-with-yet rapacity that John Pratt and Anthony Nolan are discussing, in the Killing times thread.
Maybe it is right, as Fukuyama is said to have argued, that human civilisation remains intractably lodged in a sort of permutating 19th century classical liberalism, per Marx and Ricardo and described forensically by Dickens and other great onlookers, that lacks a mechanism yet for moving things forward - something that captures the best of Smithian capitalism to blend it with the socially enlightened, rationalist humanist critique of it, socialism.
I've already said I agree with the conclusions that the Stalinist experiment was a failure, although I'd ascribe this to international affairs and prototype developmental problems rather than the theoretical diagnosis that drove people to that experiment, on the basis of the manifest failure of old capitalism to answer true human needs fairly and efficiently. That is a new program developed out of the observation of the old. In turn we've also had fascism, Keynisan social liberalist and neoliberalist permutation since also since and all have not quite answered the needs of all people. Social democracy comes closest for me, but as you have correctly said, Paul, the less desirable tendencies with it have not been quite worked out with it, either.
As I've said before, what we have is actually what Anthony Nolan describes elsewhere as an underlying hegemony or unresolved pluralism that has adapted, having never actually been dismantled or itself developed beyond tentative social democracy at all, with much activity also occurring concerning the related concept of homogeneity. That is why we rebel in different ways, for and against, both at political and cultural levels. With some times conflicting results.
What we all fear is annihilation, but what Lefties, Hansonists, liberals, Greens and Conservatives, differ on is the order and means for dealing with a necessarily ill-defined situation that our common anxieties point to.
Let us not call it socialism at all
Social democracy has little in common with socialism and attempts to tar the two with the same brush have no effect except to make the wielder of such a brush look absurd. Small person, immense brush. Socialism, for a start, typically demands the state ownership of the means of production. Rudd disavows this as does the rest of the ALP in policy. One government bus doesn't make a socialist state and nor does guaranteeing bank deposits.
Have a look at Wikipedia, and at Heilbroner's mad recantings.
Or look up the history of social democracy itself.
The government is just giving us our money back
Paul, you seem to believe in small government and low taxation.
If the government gives us our tax dollars back like it doing with the cash bailouts, isn't that just what you have been advocating? The only difference with these tax cuts is the money has been given to the poor as well as the rich. That is what I call a real tax cut.
The government is just giving us our money back.
Surely conservatives should be happy with that.
Exactly
John Pratt is correct in the above. Normally the people to get serious sized handouts (research and devlopment tax breaks and so on) are the middle classes and management classes. They are shocked that the government is giving money to ... others than them! Oh horror. Socialists in Canberra!
a serenity prayer
Yes, Kathy, he is an opportunist.
And also true that the real damage most of all in human terms, from the bubble burst, is yet to be experienced or seen.
Eliot and co, puhlease!!
No more alibiing for those responsible, or denial that the system must be improved upon in certain ways, unless you are prepared to advocate those responsible also copping the consequences, in the ways that so many others are having to cop, for the above's benefit.
$160 million for running a company into the ground and ruining tens of thousands of shareholders, stake holders, customers and workers alike, indeed!
Otherwise, we may as well not bother with contemplation of the phenomena of "history", or move beyond the unconsidered life, to the extent that any effort at all is inputted into the drawing of conclusions from ongoing events.
The multi- trillion dollar global bailouts alone represent such a blatant, egregious ransacking of the common wealth. Only a fool or poltroon could remain ignorant of the injustices committed by the few on the many, and the real consequences have not yet even begun, to flow through (or "trickle down", as some might be tempted to wryly observe ).
It's only "over" if you are some mega rich sociopath off somewhere digesting your ill-gotten gains.
Politician but no statesman
I too liked Rudd's essay, and thought it a very clear enunciation of the third way.
My big criticism of it is that he snidely attacks the Liberal party too liberally (sorry, just couldn't help myself). He is now the prime minister of all Australia, which includes the opposition parties. He does Australian political standards no good by decending into gutter politics.
Hopefully, he will grow into his new job.
I dunno Jay
On a personal note I'd happily see the end of the Lib/Nat coalition forever. These were the people who wanted to force me to fight in Vietnam. No thanks then and now. I guess you hadda' be there to really understand.
The recession is already correcting itself
Okay. I'll stick my neck out. I think the United States economy has passed the epicentre of the recession.
Three things:
None of this had anything to do with government. It is old fashioned supply and demand.
There'll still be lots of huff and puff about 'obscene executive salaries' and 'moral decay' and other meaningless ranting by our, ha, ha, 'leaders'.
But the recession is passing.
Having nothing whatsoever to do with this, Kevin Rudd will claim credit for it. In about a year, once it's beyond doubt that the correction has rolled through.
Then, he'll "save us from ocean level rise". Perhaps by legislating against it. Or the pink batts will have done it.
Remember, you heard it here first.
This is not a recession but a full blown Depression!
I wish you were right, Eliot, I admire your optimism. The above extract from an email I received today from Bill Bonner of Daily Reckoning Australia.
The massive global debt will be like a ball and chain around the economy for years to come.
Courage
Eliot, I've made a note in my diary.
Noted
So have I.
Broke ass states or freedom?
Anthony Nolan: "Paul Morrella's view is the global economy is a system subject to bust and boom cycles."
My view has been right in the past, and it will be again in the future. I already know this.
Socialism is akin to going back and living with the parents. People do so in times of need (selfish reasons). The don't plan on, and rarely do, stay there forever onward.
People will change when the next load of bills (borrowing binge) fall due. The people offering the way out of paying those bills, will be your next elected officials. That's simply understanding human nature.
It never could. Another meaningless boogie man.
We have never had truly free markets. Markets have always undergone regulations. The number of current court appearances should attest to that fact. Regulations were already there. Murder is regulated, yet it still happens. We call murder a crime. We also call fraud a crime.
Rudd doesn't offer any new regulations. What both he and Obama offer is an illusion of protection. Something of course neither can guarantee, and both will do themselves long-term damage at the expense of short-term gain for pretending they ever could.
Economic declines merely provide the platform for an economic realignment. It wont be the state that comes out on top after this realignment. That's something I also already know.
Clowns and their troupe of political opportunists
Anthony Nolan: "Yes, neo-liberalism caused the problem because of intransigent refusal to regulate the activities of banks and financial markets. See the World Bank and IMF for examples. Rudd cites the references. No, he won't personally fix the problem. Social democracy is the only feasible solution after the laissez-faire excesses of the last thirty years."
Actually, no. The problem was caused by a boom-bust cycle. This cycle was directly caused by the Fractional Banking System. The central banks of the world beat the drum, we all then dance to the tune.
Strangely enough, everybody is out and about recovering from this particular bust by attempting to create another boom. I guess knowing this is why my particular investments always seem to be ahead of the curve, and why I don't see that changing any time soon.
Apart from a mob of second rate market illiterates (politicians) wanting to be seen doing something, and preaching to large swaths of other market illiterates, banning short-selling (utterly ridiculous and laughable), not much in the way of "regulation" has been achieved. Apart from uttering the term "regulation" on every conceivable occasion, that is.
The problem with economics
Paul Morrella's response above is intriguing. The problem as he sees it is that:
I guess I could look up "fractional banking" to find out what it means but it really feels unnecessary because the idea that the problem was caused by a system failure derived from a technocratic practice illustrates exactly what is wrong with economics as a social science.
Economics that adopts a strictly "scientific" approach to understanding human economic behaviour at either an individual or social level buys into what is known as the "naturalist fallacy". In brief this is the mistaken assumption that human social life can be studied in the same way as a natural process. It is always tempting to find natural analogies by which to understand human social organisation: ant nests, herd behaviour, collective animal behaviour of all sorts appears to reflect something of ourselves back to us as a species; we see elements of our own sociality in the behaviour of other species.
The problem with this, however obviously the analogy might appear to apply, is that humans exercise agency so far removed in complexity and sophistication from any that we might think we observe in nature that analogy misleads us and false conclusions are drawn. We forget that humans have agency which we exercise through planning and forethought and then by excution of action. No other species can exercise to such agency.
In failing to grasp that humans are a very distinct element of nature economics set about mobilising the methodology of the so called hard or natural sciences to observe what appear to be facts. The problem with borrowing the empirical methods of say, biology or mechanics or physics, is that it forces the observer, in this case the economist, into the role of an objective observer who can only see facts that are valid within the framework of the field of expertise.
The a serious error here is that economists see the economy as a system with laws that are distinctive to the system and which are akin to the unchangeable and immutable laws of nature. It is as if these systems of economc activity are not subject to agential human decision making.
It is tempting to see human social systems like global economic activity as akin to an ecology and one with its own inherent logic. But we are always separate from the laws of nature in so far as only humans exercise a rational capacity. Mike Cooley, years ago, drew a distinction between architects and bees when he said that what distinguished the best of bees from the worst of architects is that architects plan their construction whereas bees are compelled to construct.
The point therefore is that the reduction of the current global crisis to a system error stemming from something called the "Fractional Banking System" (and heavens only knows why it must be capitalised) suggests a technical error rather than the consequences of human behaviour. I recall Rudd offering an explanatory role to greed in his paper for the current situation.
This economic situation is not akin to a storm, a typhoon, a bushfire, a flood or a tidal wave. Nor an earthquake nor any event of nature. It is no accident. It was predictable and as it was caused by human action then it will be remediable by the right kinds of human action. What we think and do counts. The crisis could be made worse as well by human action.
It could have been averted in the first instance by human planning and by regulation of economic activity. In particular the regulation of lending and financial markets. Hayek was wrong in his empiricism and wrong to imagine economic systems as self righting, self correcting balance seeking systems.
Paul Morrella's view is the global economy is a system subject to bust and boom cycles. This mystical understanding of economic activity draws heavily on notions of tidal influx and egress and on our embodied knowledge of the cycle of seasons to imply that economies have a cyclical structure. It may be that a cycle can be found but even the existence of a cycle is no argument for subjecting ourselves to it. The economy is not like the weather.
Social democracy's remarkable resurgence offers to regulate economic activity in order to contain the excesses of economic activity. It has no role in preventing economic activity but a very legitimate right to set the boundaries so as to narrow the cost and damage that can be done when there is too little consideration given to the social consequences of, for example, a greedy class of people or those who give not a fig for the consequences of their actions on the lives of others.
The pursuit of private benefit cannot be undertaken at any social cost. There are limits. Economics has a fatal tendency to present our economic conditions as a given, as a fact of nature, and therefore to present economic activity as beyond human agency. Neo-liberalism defended laissez-faire economic activity as if it were a delicate ecological system that needed protection from the bulldozers and tape measure of the state. It isn't an ecology. It is human activity that needs regulating.
US deficit very bad. Australian deficit very good. Repeat.
Kathy Farrelly: "I do note however, that you have a lean toward Labor, whilst Eliot is a diehard Liberal."
Which explains my support for Barack Obama.
What worries me about Rudd (and indeed Obama) is his blithe confidence that running big deficits is okay.
Oddly, this approach is cheered on by the same sort of people who until very recently at least were arguing that the US were fools for doing the same thing:
Strange, no?
Neo-liberals appear
There are many conspiracy theories current on this WWW. One of the oldest has never been denied by the main organizers: Rockefellers. The aim is logical: one world government. Neo-liberals appear to decry even national government. But they work profitably, to destroy the capitalist system by bubble. And yet again, it has occurred. Not all need be aware of their role to fuction in this conspiracy. Most economists were aware of what Rudd has said but chose not to point it out. They were complicit. But the bubble was obvious, only the time of its pricking was not but the consequences are also known: greater governement. FDR was a member of the establishment in the US and greatly increased US federal power. As Obama will now.
Fascists are only dangerous if they are opposed. Few actually promise fascism, but are placed into power by frightened democrats who have to have been shaken out of their certainties. Greater security from terror, Sir? Sure, we can employ more police and security at airports!
Rudd is a paid up member and is part of the many who drive implementation of this policy. I agree with it, as people are cattle and need a strong herdsman. I disagree with it as inevitably those who panic will be hurt. But everything has a cost.
There are manifest benefits of this move to a NWO. If people become mega rich, so what? They generally don't take it with them when they leave, do they? The third generation have all spent it anyway, even if they have a perpetual charitable foundation to suck milk from. Greed is just a way to motivate and to break down the barriers to a NWO. Squeeze from the right? Then from the left! Always towards the one goal.
We can now destroy 1,000,000,000 people with one nuclear warhead: explode it in the Sea of Japan, copying Aceh. Tsunami will take care of the so called useless mouths. CSIRO engineered the smallpox virus from DNA information. Another 1,000,000,000 dead, and many customers for plastic surgery. But we restrain ourselves and move towards the only security that will prevent these things from happening: NWO.
The cogniscent neo liberals are aware of this and now so are you. If we do not achieve it this time, then we will need another bubble, perhaps in thirty years, to get there. In the meantime work harder, it will set you free!
I do so hope you are wrong
I feel a bit alarmed by what you write Pat. In particular:
I guess you must have been hangin' with the nice ones?
I think you are suggesting that Rudd is part of an international consipracy somehow associated with the Rockefeller family which is intent on establishing a new world order. This cabal intends to control the globe by terrorising us with threats of biological and other forms of mass destruction.
Then you suggest:
I definitely do think that this agricultural approach to others might be the consequence of the company you've been keeping.
Moo.
Economic futures?
Neo-liberalism (a very broad church) deals extensively with the boom-bust cycle. The above statement is clearly wrong.
Mr Rudd should learn from the Obama mistake. He should (or be advised to) understand that what's spoken to the "voter" is also heard by "investor".
"Social democracy" may well mean many different things to many different people. Mr Rudd should hope the "right' people hear the "right" meaning. Then again, they're evil capitalists. Or are they?
Australia needs people investing, it doesn't need to be scaring them off.
A work of incomparable genius...
So, let me get this right:
And this is a work of genius?
By the guy who reckoned China was going to save us?
Yes Eliot
Hi Eliot - I'll take your four dot points as four questions the answers to which are:
i) Yes, neo-liberalism caused the problem because of intransigent refusal to regulate the activities of banks and financial markets. See the World Bank and IMF for examples. Rudd cites the references. No, he won't personally fix the problem. Social democracy is the only feasible solution after the laissez-faire excesses of the last thirty years.
ii) Not necessarily "fix it" but it is indeed the opposite reaction to what occurred at the commencement of the 1929 depression in which citizens were left to fend for themselves and the banks foreclosed on anything that didn't move. Learn from history or repeat it. Social democracy is gonn' give it a go.
iii) Hurricane metaphor does not compute.
iv) The surplus "accumulated" was $ garnered from taxes which Howard refused to spend on health, education, infrastructure and so on which is why we pay taxes in the first instance. It was no act of economic brilliance to refuse to return taxes to citizens.
The "bonus" is being paid to people who vote labor (among others) which I think is rather clever, don't you? Usually the only people who get government handouts are the whingers of the middle classes (see education funding formula for example).
Social democracy in action
Anthony Nolan: "Social democracy is the only feasible solution after the laissez-faire excesses of the last thirty years."
Apparently social democracy includes cutting back on immigration.
And a good thing too Eliot
They have also decided to get rid of the appalling s 245 Visa system for "guest" workers. The last thing we want is to import the unemployed of any other economy.
He's a pragmatist
Sorry, Anthony, don't see any thing long lasting and positive coming out of the "bonus" for the economy.
I do note however, that you have a lean toward Labor, whilst Eliot is a diehard Liberal.
In my opinion Rudd is just a weaker version of Howard. Both tarred with the same brush. Yep, do whatever possible to ensure (political) survival.
Jobs are going down the gurgler. Do you really think that there is going to be a viable emissions trading scheme Lrom labor for example? (in your dreams) Rudd knows that people are now more worried about keeping their jobs rather than saving the environment, when the chips are down. It's called self preservation.
He will act accordingly. He will not risk political suicide by placing a heavy (monetary) burden on Australians.
The more things change the more they stay the same!
Transition politics
Kathy- it seems to me that his pragmatism is necessary. Australia is very conservative and doesn't really support bold political moves. As for emission trading ... I think it a joke. A "market" solution by making a trading scheme out of untradeables like carbon (pollution) will fail. Better a carbon tax with an incremental creep up so that the real environmental costs are factored in at price point.
But I do think the big difference between KR and JWH is the possibility of meaningful dialogue between citizenry and policy makers. Howard just stone walled and people mistook stubbornness and ignorance for leadership because he reflected such tendencies with Australian culture.
At least now there is a purpose in arguing for what we want. But we do have to make the case.
Let's hope it is heeded
G'day Anthony and John, excellent article and response.
The end of laissez-faire government
Great thread Anthony. For too long the free market has been seen as the answer to all our problems. In fact it is only government regulation that has controlled the free market. Government has an important role to play in determining social outcomes. The free market does not care for the environment or the welfare of the sick and disabled.
The free market has caused the twin problems of the global economy and climate change. Let us hope we have seen the end of laissez faire economics.
In fact there has never been a laissez faire government - there has always been government interference. Usually it favours the rich and powerful at the expense of the poor.
Let us hope that the lessons of the 20th century have been learnt and governments realise it up to them to ensure a fair and just society. They are the enablers of a free market, and without good government the free market will always fail.
Indeed
Thanks Ernest and John. I also noted with pleasure the way that Rudd steered a course through the perilous ideological rocks of what he describes as left or right extremism:
He is not arguing, and nor should he, for the abolition of markets and their replacement with centralised or command economies. They were a disaster in terms of both the provision of goods and services as well as ecological outcomes. China is attempting a transition but the ecological costs are monumental.