Explaining the age of austerity: Beyond the conjunctural, the organic crisis re-emerges

How did it come to this?

Just two years ago everything seemed so different: The GFC was crashing across the planet, provoking the largest internationally coordinated program of state intervention in human history. Prime Ministers were writing quasi-erudite essays damning “market fundamentalism” while disinterring Keynesianism and social democracy. Progressive thinkers spoke hopefully of Green New Deals and the return of the welfare state after a long “retreat”.

But now all that is gone as we are told to accept the need for an “age of austerity”, where public services are pared back, “overgenerous” benefits removed and work — very hard work — is the organising ideological principle of progressive governance. Keynesianism is put in its place as something that is for the economy and not society, while tax cuts for big corporations and the rich must remain or be extended. Minimal welfare redistribution from the middle class to sections of the poor is touted as a classic Labor manoeuvre while the BRW Rich List heaves with an extra $33 billion in wealth, accumulated by an elite that minimises its tax obligations and falls well short in the philanthropic stakes also. Bereft of any progressive socioeconomic agenda to articulate, the major parties instead focus on getting “tough” on the most vulnerable, from teenage mothers to asylum seekers — “social inclusion” is, perversely, a matter of individual responsibility.

In summary: Neoliberalism — despite its humiliation in a GFC that mutated into a deep global recession — has survived and found a new lease of life and aggressiveness.

Organic v conjunctural

To understand what is happening we would do worse than to first heed the distinction Antonio Gramsci made between “organic” and “conjunctural” crises:

A crisis occurs, sometimes lasting for decades. This exceptional duration means that incurable structural contradictions have revealed themselves (reached maturity), and that, despite this, the political forces which are struggling to conserve and defend the existing structure itself are making every effort to cure them, within certain limits, and to overcome them. These incessant and persistent efforts (since no social formation will ever admit that it has been superseded) form the terrain of the “conjunctural”, and it is upon this terrain that the forces of opposition organize. (Selections From The Prison Notebooks, 1971: 178, Q13§17)

He goes on to warn:

A common error in historico-political analysis consists in an inability to find the correct relation between what is organic and what is conjunctural. This leads to presenting causes as immediately operative which in fact only operate indirectly, or to asserting that the immediate causes are the only effective ones. In the first case there is an excess of “economism”, or doctrinaire pedantry; in the second, an excess of “ideologism”. In the first case there is an overestimation of mechanical causes, in the second an exaggeration of the voluntarist and individual element. (SPN, 1971: 178, Q13§17)

This helps us explain two erroneous responses to the GFC. The first type tends to read off the health (or otherwise) of elite hegemony from the intensity of the economic problems confronting it. In the case of commentators like Steve Keen it has meant a catastrophist view of economic contradictions finally being vindicated (or not). But there has been another variant, exemplified by John Quiggin’s serious critique of market liberal ideology, that the economic failures of the neoliberal project would inevitably lead to the end of its hold on the body politic (even if there was a lag period, or “zombie” phase). The second, best summarised in Kevin Rudd’s intervention, was to reduce the neoliberal project itself to a set of historically transient right-wing ideologies that could be replaced in short order once their political ineffectiveness was exposed.

Today in trying to explain neoliberalism’s rapid revival in official Australian politics similar problems emerge. Either the sovereign debt “crisis” is accepted uncritically as a structural crisis of the economy needing to be corrected through prolonged and systematic attacks on the working class and poor, or the nastiness is seen mainly as an ideological overhang — divorced from deeper economic realities (especially in Australia). The reason such accounts can be persuasive, if only for a time, is that they accurately present part of the picture while falling short of grasping the whole.

Neoliberalisation as response to organic crisis

To set the current conjuncture in broader context it is necessary to retail an unpopular idea — that global capitalism has been going through a long-term crisis marked by stagnation relative to the long post-war boom (which really started on the state-driven road to all-out war in the late 1930s). In the early 1970s capitalism suddenly found itself beset by deep recessions, runaway stagflation and high levels of working-class and social movement militancy. The response — from corporate interests, high-level state bureaucrats and politicians of both the centre-Right and centre-Left — was a series of political and economic policy approximations carried out in concrete historical circumstances, today retrospectively identified as “neoliberalism”.

Yet the important point is that despite the attempts to give the impression of a unitary ruling class project, neoliberalisation is better described as a “hegemonic restructuring ethos, as a dominant pattern of (incomplete and contradictory) regulatory transformation, and not as a fully coherent system or typological state form”. Furthermore, despite neoliberalism’s apparent success at shifting wealth upwards, since the early 1970s global growth rates, and those in many advanced capitalisms, have remained positively anaemic compared with the post-war Golden Age [see Graph 1]. Of course this stagnation has been unevenly shared across the globe, with Australia particularly hard-hit from the 1970s, but experiencing a prolonged period without a technical recession since the deep bust of 1990-1 [see Graph 2].

Nevertheless, Australia cannot be permanently immune from the global situation in a world that is far more internationally linked and in a situation where one of the key factors keeping Australia afloat is its ability to ride the coattails of a Chinese boom that is itself driven by massive counter-recessionary stimulus spending. Furthermore, as in several other key economies, the period of prolonged growth has been in part built on huge accumulations of private debt, most of it in the form of mortgages in an overheated housing market [see Graph 3]. With this week’s ruling class panic about a possible US double-dip and Greece’s “Lehmann Brothers moment” it should be clear that any attempt to portray Australia as decoupled from international developments would be a very brave bet indeed.

But that doesn’t stop the ruling elites falling back on neoliberal ideas and practices to resolve the crisis in capital’s favour — it’s just that the longer the underlying crisis continues to operate, the harder it is to achieve any kind of stable hegemonic outcome. The danger is that when the ruling class does achieve moments of fragile, temporary stabilisation the Left lapses into “ideologism”, unable to understand why Gillard and Swan (or O’Farrell) are going on the attack in an apparently incongruous and irrational manner. Then it becomes a matter of seeing a better set of policies or a new leadership team as capable of solving much more deeply rooted structural problems. Alternatively, some on the Left may simply accept these attacks on the working class and poor as necessary medicine, perhaps as the “inevitable” sacrifice everyone must make to win climate action through market mechanisms.The point of the economics is not, however, to lapse into “economism” of the sort Gramsci criticised but to see more recent economic, political and social developments against this background. More importantly, it is to understand the secular economic problems as creating a deeper social crisis and a crisis of hegemony for the ruling elites. Capitalism is not just an “economic” system but a social system built around the capital relation at the point of production, which then makes itself known in every sphere of social and private life. Therefore all societal relations as well as practices and institutions of the superstructures cannot but feel the effects of the organic crisis work their way through. Neoliberalism’s inability (through multiple iterations) to resolve the long-run stagnation at various conjunctures means that hegemonic projects from above continue to move in and out of crisis.

The hold of bastard neoclassical ideologies despite their culpability in the global crisis (not to mention decades of social distress produced by neoliberal restructuring) comes from Australian capitalism’s continued need to try to make the subaltern classes pay for its (unresolved) economic problems. Unfortunately, much of the Left has long surrendered to the idea that the economic rationalist reforms of the Hawke-Keating era were (a) part of a progressive project and (b) successful in restoring profitability to pre-1970s levels. Breaking from that logic is, therefore, a precondition of developing a new politics that can respond to the challenges facing us.

This is the first of three parts. The second (mainly written, like this one, before the May federal Budget) will look more closely at strategic issues for the Australian Left. The third will focus on the return of subaltern resistance on a global scale.