Is neoliberalism starting to collapse?

When the once all-conquering defenders of the one true faith feel the need to start anxiously defending it, a serious competitive threat has probably emerged

Photo by Alexandre Trouvé on Unsplash

It’s become fashionable to disparage the market economy to justify a bigger role for government in allocating resources and picking winners. These days, even Labor’s dynamic duo of Bob Hawke and Paul Keating are seen by some politicians and commentators on the left as misguided “neoliberals”.
John Kehoe, Australian Financial Review, (20/9/23)

Remember, the high productivity rates that kept this country out of recession for 30 years before the pandemic were built on Keating’s cut of top income tax from 61 to 49 per cent and company tax from 49 to 39 per cent in 1988 and to 33 per cent in 1993. With the help of ACTU secretary Bill Kelty, Hawke and Keating also reformed and decentralised the wages system, building a less cosseted, more ambitious workplace culture. Now the media consensus apart from here and the AFR is that “fairer” IR rules and bigger taxes are the path to prosperity. Wrong.
Chris Mitchell, long-time editor-in-chief of The Australian (24/9/23)

In recent weeks we’ve seen before our eyes the worst of the economy that several decades of “neoliberalism” – the doctrine that what’s good for big business is best for the rest of us – has brought to us. The rise of the nation’s chief executives as commercial Brahman castes, taking shortcuts to higher profits by chiselling customers and mistreating employees, and seeing themselves as above the law, has left a sour taste. Treasurer Jim Chalmers and his colleagues want to move from an economy centred on what the bosses want, to one centred on what’s best for the workers. It’s a shift from managing the economy for the few, rather than the many.
Ross Gittens, economic commentator doyen (27/9/23)

The labor revival has the support not just of the Biden Administration, but of the American people; unions are more popular than they’ve been in decades… With disasters like the Great Recession and Covid behind us and wage competition from China much reduced, a pushback is now possible against high inequality and corporations’ increasing share of the economic pie. And the tight labor market of the post-pandemic period provides a perfect opportunity for unions to flex their muscle. Even some economists are cheering for labor now. In many industries – especially local service industries where the threat of foreign competition is low – I expect this movement to make some real gains.
Noah Smith at

Noah Smith

(29/9/23)   

I gather citizens of the Soviet Union used to read Pravda not so much to find out what was happening – much like today’s Western media consumers, Soviet citizens were used to getting fed bullshit by the powers-that-be – but to attempt to discern what might be actually going on by reading between the lines.

For instance, a Russian reading in late 1984 that Comrade Chernenko was in excellent health and engaging in days-long bear hunts near his dacha could reasonably assume that Chernenko was on his deathbed and that they should prepare for the post-Chernenko era. (Little could they realise just how different the post-Chernenko era would be, but that’s a whole other article.)

Those on the Right often claim – semi-humorously, I assume – that they read publications such as the New York Times (NYT) in a similar spirit. They don’t necessarily believe what the NYT is telling them, but they find it helpful to understand what the American ruling elite is obsessing about at any given time.

The point of this interminable preamble is that you can often tell what’s going on in a society simply by what stories appear in its media.

You don’t need to worry too much about the angle different media outlets are taking on the story, but if it’s getting a run in left-wing, centrist and right-wing media and being thought about by left-wing, centrist and right-wing journalists and voters, that story is likely important.

(Pro tip: If the right-wing or left-wing media starts covering a story it’s previously felt it could completely ignore, or at least brush away, that’s a sign that something is up. The Guardian has, I presume, been decrying neoliberalism since the late 1970s. So, yet another article running in that publication lamenting CEO pay, wealth inequality, worker exploitation, the gig economy etc, doesn’t mean a whole lot. In contrast, when papers such as the AFR and Australian feel they must comprehensively explain that neoliberalism has been good for everyone – even those too stupid to realise it – you can bet the sands are shifting underfoot.)     

Increasingly, one of the big stories in the Anglosphere media is that neoliberalism is crumbling after being hegemonic for around four decades. At this point, it would still be ridiculously overblown to say we are living through a “pre-revolutionary period”. But it would no longer be grandiose to suggest we are inexorably moving from the neoliberal to the post-neoliberal era.

The case for neoliberalism
You can find Kehoe’s article here and Mitchell’s here, but you won’t be able to read them unless you have the relevant subscriptions. So, I’ll attempt to summarise their pro-neoliberalism arguments below before providing an alternative viewpoint.

Kehoe’s argument can be encapsulated in the following paragraph:

The market-based economic reforms of the 1980s, 90s and early 2000s – such as to workplace enterprise bargaining, free trade, competition and financial deregulation – delivered high productivity, fast-growing real incomes, improving living standards and 28 years of continuous economic growth.

The bigger economic pie generated the government more tax revenue to pay for Australia’s egalitarian social safety net such as Medicare, family tax benefits and the age pension.

There are more – and more debatable claims – about how neoliberalism has resulted in capital being allocated efficiently and has kept inflation and consumer prices low, as well as the usual business press guff about how neoliberalism can never fail, only be failed by pusillanimous politicians unwilling to stand up to crony capitalists. But that’s the elevator pitch – however poorly paid, insecure and humiliating their work might be, and however remote their chances of owning a home and starting a family might be, the ordinary people should be grateful they get free(ish) healthcare, an old age pension and some modest support if they find themselves unemployed.

(According to Kehoe, average workers have also enjoyed “fast-growing real incomes” thanks to neoliberalism. I’d argue that claim is, well, debatable, especially when you consider the multiples of average household income now required to purchase a home.)

Mitchell’s article is more convoluted. Not unreasonably, he points out that attitudes towards neoliberalism broadly break along generational lines. The boomers are warmly inclined to an ideology that has, on average, massively benefitted them. Post-boomers are rather less upbeat about an ideology that hasn’t delivered the goods for most of them.

Mitchell’s argument appears to be that boomers don’t really have it so good and post-boomers either don’t have it so bad, or would have it much worse without neoliberalism. Inevitably, there’s a dire warning about Australia ending up like its South American doppelganger Argentina if it too had given into the temptation of populist economic policy.

Mitchell somewhat undercuts his argument by regularly referring to Paddy McGuinness’s rants about what grasping, selfish bastards the boomers are. And Mitchell himself even begrudgingly concedes, “The economic and taxation reforms of the Hawke, Keating and Howard governments helped the boomers amass more wealth than their predecessors.”

But his takeaway is that boomers have had to look after their parents and that they sometimes lend their kids money towards a home deposit, so their struggle is real, too. He ends his article on a Kehoesque note, calling for a more Singaporean rather than Scandinavian approach to capitalism:

Post-Hawke Australia earned the income to sustain the national superannuation scheme, Medicare, family tax benefits and the aged pension. We did this without European high taxes or a US laissez-faire attitude to welfare. This is the sort of bold policy agenda young Australians need from a government.  

The dogs bark, but the caravan moves on
For what it’s worth, I’m willing to concede many of the points made by the likes of Kehoe and Mitchell. Australians are fortunate to have access to a reasonable social safety net. That social safety net undoubtedly does need a healthy economy to fund it.

But I’d argue – and here we get back to the topic of what is and isn’t left out of narratives – neither really addresses the core issue those in the bottom four quintiles of the income distribution have with neoliberalism.

I would argue the main issue with neoliberalism is that it has concentrated wealth and power at the top of societies. It’s now become such a cliché that I hesitate to repeat it here but, yes, the US is now back to gilded-age levels of inequality. And if the kind of policies the likes of Kehoe, Mitchell and their likeminded colleagues have spent their careers advocating for – ever-lower taxes on businesses and high-income earners, ever-more-generous remuneration packages for C-suiters, ever-more globalised and Darwinian labour markets, an ever-smaller role for organised labour and the State, an ever-greater focus on maximising shareholder value, ever-more mass migration and an ever-more-rapidly-spinning-door between the worlds of politics and business – had taken root as deeply in Australia as they did in the US, Australia would likely have gilded-era levels of inequality too.   

Inequality probably doesn’t seem too pressing an issue if you’re near the top of a society. Which I guess you are if you report directly to Rupert Murdoch, or (most unusually for a print journo nowadays) can earn decent coin telling Masters and Mistresses of the Universe what they want to hear.

It’s more of a pebble in your shoe if you’re one of those Australians, especially younger Australians, who’ve spent decades watching wealth and power gush upwards rather than trickle down.

Those people are growing ever-more angry. It would appear they are increasingly inclined to engage in industrial action and vote in ‘populist’ politicians offering more than simply the reheated leftovers of Thatcherism and Reaganism.