Trust Me (I hate you)

by · August 2, 2014

HoC

BY TROY HENDERSON

We are cross posting this thoughtful post by Troy Henderson, from his blog Radical Blues, on the relationship between anti-politics and neoliberalism. 

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Alongside tackling climate change and fighting psycho-capitalism one of the challenges of modern life is keeping up with all the high-qual TV series coming out of the US.

I’d fallen badly behind on this front until a recent surge of intimacy with my laptop saw me chew off seasons 1 and 2 of House of Cards and the first season of Boardwalk Empire.

I found them both very zeitgeisty. Very post-West Wing. Post-Hope and Change. Post-GFC. Post post-9/11. (Yes, I realise Boardwalk Empire is set in the 1920s but you know the past is about the present and all that).

In House of Cards Kevin Spacey and Robin Wright play Frank and Claire Underwood, a charming, scheming, double-crossing political powercouple intent on stylishly slashing their way to the top.

Boardwalk Empire stars the ever-ill looking Steve Buscemi as Nucky Thompson, a corrupt Irish-American treasurer of Atlantic City during Prohibition. Nucky just wants to be loved while taking 10% of whatever you make – and you’d better pay up or you’re dead.

From what I’ve seen both series convey the same message: politics is a brutal bloodsport where the bad guys finish first and have much fun along the way. They show that beneath the seductive veil of political rhetoric about the public good and community values lies a naked lust for personal power supported by patronage networks that determine who rises and who falls.

The Underwoods and Nucky Thompson deploy a mix of charm, deception, favours, bullying and violence in order to achieve their ends, as circumstances require.

The realist and the cynic will say: twas ever thus. True enough, as a general statement. But it’s not always true with the same intensity or with the same visibility.

For me the themes and characters explored in House of Cards and Boardwalk Empire resonate with a growing sense that politics is a massive sham n scam in which the ruthless and the powerful play the rest of us for mugs.

I think we can see this pretty clearly in #AusPol.

On the one hand, we have the increasingly empty spectacle of official politics in which our dear leaders mouth their platitudes and perform their rituals with ever-dwindling levels of conviction (Exhibit A: 2010 federal election debates #killmenow).

On the other hand, we have ICAC and the federal budget revealing the truth about how politics is done and whom it’s for.

This increasingly visible tension between superficial farce and underlying reality creates a challenge for politicians like Abbott and Hockey. It’s easier to rule through consent than through coercion but when a critical mass of people stop drinking a particular brand of political Kool Aid it makes the business of screwing them over more difficult.

The best analysis I’ve read of the current political conjuncture is by Tadeusz Tietze. You need to spend some time reading the back catalogue of posts at Left Flank by Tietze, Elizabeth Humphrys and others to get the full ‘anti-politics’ thesis but I’ve found a few pieces particularly useful for situating the Abbott government within a broader – and deeper – context.

Tietze argues that Abbott suffers from a lack of political authority – within his party and in relation to public – that is a symptom of a “general crisis of official politics” linked to an erosion of the “social bases of the established two-party political system”.

In an August 2012 piece in Overland Tietze wrote:
It seems almost certain that he [Abbott] wants to play a similar game to that of recently elected state Liberal premiers, launching a series of attacks around a theme of deficit reduction. But he will do so in a situation where, no matter how big his parliamentary cushion, he will have little popular base to rely on and no coherent program to win consent for. The result is likely to mean more political chaos, not less. 

In December 2013 Left Flank post on a similar theme he wrote:
None of this means that Abbott can’t still do nasty things, especially to vulnerable groups like asylum seekers, and especially to try to address his lack of authority. His supporters may even demand a big bang reform package to stem the malaise, one that he will feel unable to refuse. But all this will be from a position of weakness not seen in a newly elected federal government since the Great Depression.

Pretty prescient stuff. This relationship between ‘nasty things’ and ‘weakness’ is clear in Operation Sovereign Borders, the May budget and even in Abbott’s tawdry efforts to make political capital out of the MH17 tragedy.

In a post-budget piece this year Tietze characterised the Abbott government’s “especially destructive attacks on a series of highly disadvantaged social groups” as an attempt to address the “malaise, the aimlessness, and the loss of authority” of its first eight months in office by picking “some ugly fights to prove they are still a force to be reckoned with”.

He argued that the budget should not be seen as a “consistent neoliberal austerity program” or an example of “über-Thatcherism designed to reshape society” but rather as a “pragmatic attempt to keep the economy sputtering along while renovating government balance sheets…enough for ‘future-proofing’ operations ahead; i.e. for throwing money at another financial crisis”.

While I agree with the general thrust of this analysis I disagree on a couple of particulars. I think if Abbott managed to implement the budget in full (unlikely) it would qualify as “über-Thatcherism” and that consistency (ie actually slashing the deficit if you say it’s such an urgent issue) is far less important than the “restructuring” the “budget emergency” rhetoric is used to justify.

What matters here is how widely the need for restructuring (further retrenchment of the welfare state, deregulation, privatisation etc) and the justification for it (the debt and deficit disaster) are accepted as legitimate by both the public and the political class. Evidence cited by Tietze, Richard Cooke, and others, suggests that public support on both counts is on the wane, a factor that clearly exacerbates the political class’s crisis of authority that Tietze identifies.

But while politicians are on the nose and few people believe that more privatisation, deregulation, ‘tax reform’ and ‘flexible labour markets’ will make them better off this does not mean that neoliberalism is dead.

Despite the many obituaries written since the GFC neoliberalism has proved resilient. Political economist Damien Cahill argues that “progressive commentators failed to appreciate the durability of neoliberalism in the face of crisis because of their idealist, or ideas-centred, understanding of neoliberalism”. This approach, according to Cahill, led the likes of Joseph Stiglitz and Kevin Rudd, among others, to assume that because the GFC showed that neoliberal ideas were ‘wrong’ the neoliberal project would be abandoned.

Cahill contrasts an ideas-centred understanding with the concept of “embedded neoliberalism” that emphasises the “ways in which neoliberal policies have become deeply embedded within a growing bureaucratic apparatus of rules that commit states to further neoliberalisation”. These policies are “embedded within a set of class relations which favours the owners of capital”. “Such features”, Cahill argues, “lend considerable inertia and resilience to neoliberal policy”.

This doesn’t mean dismissing the importance of neoliberal ideology altogether. But rather, as Cahill puts it, that “neoliberal doctrines” should be seen as “a malleable set of discursive weapons that can be selectively appropriated to justify all kinds of neoliberal policies, and which have worked in combination with class forces and institutional biases to ensure that neoliberal policies have been the ‘go to’ form of economic crisis management since the onset of the global economic downturn”.

While I agree with Tietze’s characterisation of the budget as an attempt by Abbott to “stem the malaise” and “address his lack of authority”, I also see it as a good example of the “considerable inertia and resilience” of neoliberal policy identified by Cahill.

The big lies about the ‘debt and deficit disaster’ and ‘unsustainable spending’ are examples of the selective use of “discursive weapons” deployed to justify policies that are “embedded within a growing bureaucratic apparatus of rules” that serve specific class interests.

Three examples serve to illustrate this point.

Firstly, ‘small government’ rhetoric is a familiar part of neoliberal patois and we’ve heard plenty from Abbott and Hockey about the need to ‘end of the age of entitlement’ and rein in ‘unsustainable’ spending that will ‘mortgage our children’s future’, and so on.

But the claim that government spending is ‘out of control’ or ‘unsustainable’ is rubbish. As this Australia Institute report shows, after a sharp increase under Whitlam and (early) Hawke, “government spending has tended to hover around 25 per cent of GDP”. However, with about 60% of the $400 billion federal budget going on social security and welfare (34.7%), health (16.2%) and education (7.5%) you can see what the Right’s target is here.

Part of the budget’s solution to the non-problem of runaway spending is to place a medium-term cap on government spending of 23.9% of GDP and to cut $80 billion in health and education payments to the states over the next decade.

The cap is a classic example of Cahill’s “bureaucratic apparatus of rules” that aims at removing important political decisions (ie how much government should spend) from the sphere of democratic deliberation.

The $80 billion cuts are meant to force the states to ‘work it out’ through some combination of spending cuts and tax hikes (ie raise the GST) that would introduce an element of ‘policy competition’ between state governments that opens up the space for business to play off one jurisdiction against another.

Because their target is spending on health, education and welfare both the cap and cuts clearly serve particular class interests by attempting to reduce the genuinely redistributive and (somewhat) universal elements of the welfare state.

Second, the budget asks the public to ‘share the burden’ of ‘fixing the budget’ and getting spending ‘under control’ by accepting a host of changes that will make most people worse off while entrenching the principle of ‘loser pays’. These include the changes to family payments, pension indexation and unemployment benefits, the Medicare co-payment, cuts to Aboriginal services and the further deregulation of higher education.

By ‘loser pays’ I mean that the budget asks those on lower incomes to pay more (in absolute terms) than those on higher incomes to fix the budget emergency that doesn’t exist (see NATSEM graphic below and this paper by Whiteford and Nethery) while further extending the principle of ‘user pays’ to GP visits and all higher education. In the longer term, ‘loser pays’ implies that society owes nothing to ‘losers’ who are unemployed, don’t have private health insurance and can’t afford to pay for their higher education fees upfront. These proposed changes are technocratic, incremental and make use of the existing institutional framework (ie retaining HECs but charging up to 6% interest) to deepen inequality and heighten class distinctions.

NATSEM

Third, the budget aims to lighten the burden on corporations (cutting company tax, abolishing mining and carbon taxes) and to open up new sites of capital accumulation on the principle of ‘heads I win, tails you lose’. On the one hand, Abbott wants to sell off public assets that will provide easy economic rents to private owners (ie the Royal Mint, Defence Housing Australia, the ASIC register and Australian Hearing) and encourage state governments to do the same through the $5 billion Asset Recycling Fund. On the other hand, the state will act as an intermediary between corporations and service users where there might be more risk involved for private operators (ie the $3.7 billion allocated to roads funding and allowing private education providers access to public funding). Again, we have examples of the use of technocratic means within the existing institutional framework to achieve ends favourable to corporations and the wealthy.

The detail is all pretty boring but the consequences of this stuff are hella crap for most people.

We’re at an interesting moment in Australian where the balance of forces between the “crisis of authority” and “anti-political mood” identified by Tietze and the resilience of “embedded neoliberalism” highlighted by Cahill is far from clear.

In his famous 1944 book The Great Transformation about the transition from feudalism to capitalism Karl Polanyi wrote: “to allow the market mechanism to be the sole director of the fate human beings and their natural environment…would result in the demolition of society” and “human society would have been annihilated but for protective counter-moves which blunted the action of this self-destructive mechanism”.

From this vantage point, it’s difficult to discern clear evidence of the “protective counter-moves” that might begin the process of disembedding neoliberalism (although the strong public opposition to the budget could be a sign that such moves are desired). The stark absence of any attractive and coherent alternative being offered by the Left compounds the situation.

But perhaps the current anti-political mood will morph into something generative? If not, at least we have HBO and Netflix to help remove our blinkers and dull our pain.

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Discussion6 Comments

  1. The post is useful because it brings out the central conflict between the argument that the political class (left and right) is grappling with an erosion of authority, branding and direction – and the term neoliberalism that implies it’s not.

    The key para for me is this:

    “But the claim that government spending is ‘out of control’ or ‘unsustainable’ is rubbish. As this Australia Institute report shows, after a sharp increase under Whitlam and (early) Hawke, “government spending has tended to hover around 25 per cent of GDP”. However, with about 60% of the $400 billion federal budget going on social security and welfare (34.7%), health (16.2%) and education (7.5%) you can see what the Right’s target is here.”

    When well exactly will it start? “Spending out of control” may be rubbish, but so is the idea there has been a major attack on it after 30 years of “neoliberalism”. Whatever the rhetoric of the Howard years, the reality was something different – implying that there is a difference between neoliberal rhetoric and the reality. Instead of exposing of that reality gap, the left’s use of neoliberalism as a coherent political strategy just obscures it.

  2. Put it more bluntly, for the right, “neoliberalism” is a branding exercise to make a virtue of the unravelling of the post war economic/political order. In counter position, it plays exactly the same role for the left.

  3. Dr_Tad says:

    Troy, thanks for letting us repost your piece.

    I guess my problem with the idea that neoliberalism has been “resilient” is that it relies on cherry-picking certain (often pragmatic) pro-capitalist policies that you think are neoliberal and ignoring the ones that aren’t. The GFC led to centre-Right and centre-Left governments, pretty much all of whom had come over to neoliberalism in the decades before, to throw huge amounts of money and state intervention (and even nationalisations of sections of banking and finance) in response. This response had very little to do with some expansion of the market principle; quite the opposite. The state continues to be highly interventionist and regulatory and it should tell you something that the government has intentionally blown out the date of a return to surplus by years, so it can make major investments that will create jobs (whatever you may think of its priorities, like building roads).

    My view is that these moves have presented the Left with a quandary: What to do after your neoliberal enemies have carried out the state capitalist/Keynesian program you’ve been calling for as an alternative to neoliberalism? Indeed, all this statism delivered what you would expect it to: Saving capitalism from itself and not much more. Even the raison d’etre of the Commission of Audit recommendations — as admitted by Vanstone — is to get the Budget in surplus so that the government is in a better position to throw money at future crises. It’s almost as if the Left no longer has an agenda against neoliberalism because it’s been stolen by the political mainstream. So it goes on about how neoliberalism is even more powerful than we expected and can survive any crisis.

    As Piping Shrike points out, even the early phases of neoliberalism were less coherent than the Right and the Left like to make out in retrospect. I watched that NZ show Revolution — about the neoliberal reforms in the 1980s there — and you also got the sense people were just making stuff up as they went along, even if it was at least more coherent than what is happening now.

    The reality is that in the early “neoliberal” period you had governments and political classes with authority and real social bases, so they could drive through reform programs by various methods (including occasional confrontations). There were historical specificities as to whether governments of the Left or Right carried these through, and how much unions and activists went along with the shift. Obviously in Australia the Accord was very much Laborism driving through an anti working class project. The problem was that this accelerated already-existing political weaknesses and hollowed out material political institutions and their connections to social groups. This has made the detachment of politics from society more readily apparent (although in reality such a separation is a hallmark of bourgeois society). It has also caused the weakness of both sides of the political class.

    If the crisis of politics is a thing then politically neoliberalism cannot be coherent or resilient. There is no middle ground because a crisis of politics and a strong political project are axiomatically counterposed. If what people are complaining about is merely the persistence of “pro-capitalist” policies then they should say it. Except, I suspect, what lies behind their reticence to call them “pro-capitalist” is that people would like the capitalist state to implement “nicer” pro-capitalist policies and so want to distinguish “nasty’ (“neoliberal”) policies from those that represent Polanyi’s “protective counter moves”. That is, they want a capitalist political project to save us from the logic of capital.

  4. One more thing to add. I think the GFC brought out underlying trends rather than marking a sharp change (reversal) in them. This comes back to what happened in the 1980s. I don’t think it’s right to characterise it as a roll back of the state to laissez faire liberal economics, but rather a rearrangement of state intervention in the economy based on the unravelling of the post-war economic/political order. If what emerged in 2008 surprised some, it was only a lack of really getting to grips with what came before.

  5. Thanks for both your comments and sorry I’ve taken some time to reply. Plenty to think about here. I’ll reply in a numbered list in an effort not to repeat myself, miss things or confuse myself.

    1. Firstly, why does anyone on the Left use the term neoliberalism? Is it a just a family-friendly euphemism for capitalism that is a hangover from a post-Cold War pre-GFC period where talking about capitalism/capitalist class was considered impolite and old-fashioned outside some rather small circles? I think there’s truth in that.

    2. But I think that’s a different question from ‘does neoliberalism exist’ as some type of political project?’ and ‘if so, what is it?’ I think it’s a political project – a “branding exercise” – to provide a justification for pro-capitalist policies in a context where mass representative democracy, mass media, mass unions (1970s) and the welfare state are rude facts. So, I think it is a “branding exercise to make a virtue of the unravelling of the post war economic/political order” but that includes a “how-to guide” for getting the job done. It provides a set of policies and a political language to justify them.

    3. If we concede for a moment that there is a neoliberal project along the lines outlined above then what has it actually achieved? I’d suggest that privatisation and the associated reduction in public sector employment, corporatisation of government enterprises, commercialisation of government services, partial labour market deregulation, partial deregulation of other industries, partial financial deregulation are all solid wins.

    I’m less sure about where to put something like trade liberalisation as that really an acceleration of process started under Bretton Woods. Same goes for everything to do with work (big increase in average unemployment, fall in labour share of national income, casualisation, crash in union membership etc) which we could attribute (mostly) to massive structural economic change, exhaustion of postwar accumulation regime etc but neoliberal rhetoric around ‘flexibility’ etc played some part in legitimating these changes.

    4. The one area where neoliberalism looks like a massive failure is in shrinking the (welfare) state and reducing the overall share of government spending to GDP. I think Piping Shrike’s quite right to point this out in the comments. In an earlier draft I did make that basic point (I swear!). So, I’d probably back away from (or withdraw) that I said in the post about “further retrenchment of the welfare state” because it’s not exactly clear what (if any) retrenchment there has been. Damien and Ben S-P probably got a better handle on that that me.

    On the evidence I’ve seen I think you can usefully contrast two different types of ‘shrinking the state’ that are part of the ‘formal’ neoliberal project: 1. reducing size of public sector (success), and 2. reducing government spending/GDP (failure).

    Keating and Hawke (and state govts) managed to reduce public sector employment from 30% to 22% of all workers between 1987 and 1997 (http://www.abs.gov.au/ausstats/abs@.nsf/2f762f95845417aeca25706c00834efa/4e5ab048dbbe8203ca2570ec001971cb!OpenDocument) and on my rough calculation public sector employment is now about 16.5% (1.9 million/11.5 million). So that seems like a solid win for the neoliberal project (i.e. mass privatisations didn’t have to happen in the same way that manufacturing employment had to fall when exposed to foreign competition).

    But, as I wrote in the post, federal government spending has hovered around 25% during neoliberal period (and spending on health, pensions etc has increased).

    This Guardian piece (http://www.theguardian.com/news/datablog/2010/apr/25/uk-public-spending-1963) shows similar long-run trend for UK during neoliberal period but with a bit more variation along the way.

    When Thatcher was elected govt spending/GDP was 45%, she managed to get it down to 39% in 1990, it blew out to 43% under Major (recession) and then went down to 34.5% under neoliberal Blair in 2000 before blowing out again to 47.7% in 2009-2010. In 2012 it was 45% so what it was at the beginning of neoliberalism.

    This OECD report (see page 17) also seems to point towards an expansion of the welfare state in the form of social expenditure during the neoliberal period: “Since 1980, gross public social expenditure has increased from about 16% to 21% of GDP in 2003 on average across 28 OECD countries (Chart 4.1). Experiences differ across OECD countries, but on average public social spending-to-GDP ratios increased most significantly in the early 1980s, early 1990s and, again in the beginning of this millennium, when the average public spending-to-GDP increased by 1% of GDP from 2000 to 2003″ (http://stats.oecd.org/OECDStatDownloadFiles/OECDSOCX2007InterpretativeGuide_En.pdf).

    On my reading of data on Trading Economics site even countries that have seen savage austerity (Greece, Spain) have seen govt spending/GDP ratio increase sharply as economy collapses even faster than they cut spending. Suppose you could argue that when growth returns and unemployment falls there will be less of a welfare state in place.

    So, it seems the main thing neoliberals have achieved in relation to welfare state is to insert the private sector (i.e. CES to Job Network) between government funder and welfare recipient so business gets a cut of the action, as well as increasing surveillance and monitoring people on welfare.

    You could say then this is the main area of unfinished business for neoliberal project. But I also wonder if the persistence and expansion of the social transfer system cushioned the blow of all the other changes of the last 35 years making this a particularly difficult area to attack directly as Abbott/Hockey are now trying to do.

    5. On this point: “If the crisis of politics is a thing then politically neoliberalism cannot be coherent or resilient. There is no middle ground because a crisis of politics and a strong political project are axiomatically counterposed.” I’m not arguing neoliberalism is a “strong political project” in a stand-alone sense but even a degenerating project remains a project and if there is no political project opposing it (if anti-politics is too diffuse) doesn’t it retain a ‘default strength’ partly due to the embeddedness and inertia highlighted by Damien?

    6. On the GFC response stuff. I think Rudd’s stimulus package was Keynesian in terms of its design (the cheques to those with higher marginal propsensity to consumer to flood economy with cash and then longer-term BER and home insulation stuff to keep things ticking over) and I’d be very interested to read a detailed account of how it was all put together, who was involved etc.

    But that’s a long way away from saying that the crisis response (fiscal stimulus, QE, bailouts, privatisations) was Keynesian overall or that it showed neoliberals doing what the (soft) Left wants in terms of a progressive use of the state. The crisis response was saving capitalism from itself but not one country in the world tried to boost aggregate demand to a level consistent with achieving full employment which is key Keynesian goal.

    The capitalist class used the state to save the system and to bail themselves out and showed in the process that they’d learned from history. They didn’t let hundreds or thousands of banks collapse and the big countries didn’t go on massive austerity drive in the depths of the crisis as was the case after 1929. So, I’ll be a smart-arse and call it neoliberal Keynesianism or we could just call it ‘pragmatic’ as you have Dr Tad.

    7. Vanstone may believe that’s a great strategy to salt away money for the next crisis but I really don’t think it makes the slightest bit of difference to any future crisis response whether Australia’s government debt is 5%, 15% or 25%. We saw in the GFC response to the crisis that what mattered most was whether you controlled your own currency and not what your levels of government debt were. Countries that didn’t control their own currencies got massively screwed. The UK is perhaps a bit of an anomaly as you have massive quantitative easing, bailouts etc but then austerity that tips you back into recession.

    8. Coming back to neoliberalism as a “branding exercise”; that’s where I see the ‘budget emergency’ and ‘spending it out of control’ rhetoric being so important to any further ‘wins’ for the neoliberal project. Without them you just have to justify the pro-capitalist class policies directly and I think that’s what Abbott/Hockey and Co are finding quite difficult at the moment. In the last couple of days Hockey has really been using Romney-style ‘rich pay all the tax’ arguments in public.

    9. On the roads funding as new accumulation strategy argument, well that might be the case but seems pretty puny compared to mining boom investment. That doesn’t mean it’s not the strategy, just might be a very inadequate one.

    10. Haven’t read Polanyi for awhile (will re-read for Hayek/Polanyi conference) but I took “protective counter-moves” to mean people (society) acting to protect themselves (itself) from effects of extension of markets/intensification of capitalism. There was clearly an enormous variety of forms of resistance in 19th century Britain that had different aims and became more or less institutionalised. Part of the reaction to this resistance was action by the state in the form of Factory Acts, 10-hour day etc. Some of the resistance then was aimed at social transformation and some at meliorative reform. I’ve no idea in which direction the current anti-political mood is trending.

    Alright, a lot of this is very underdeveloped but I have to go to work.

    Thanks again for the cross post.

  6. troycharles says:

    One other point. I think the best thing that could happen for Abbott/Hockey would be blow-out in the deficit they could squarely blame on Labor/Greens/PUP. Senate was doing a good job on this front until PPL. A growing deficit that is clearly ‘someone else’s’ fault might give them something to work with.