Thirty-nine years is a long time in politics

The National Economic Summit saw neoliberalism – sorry, economic rationalism* – unleashed upon Australia. The ‘Jobs and Skills’ jamboree won't prove as consequential

Photo by CHUTTERSNAP on Unsplash

I’ve sunk the boot into neoliberalism many a time, but the free-market revolution didn’t drop out of a clear blue sky. Around the mid-1970s, the Keynesian settlement that facilitated solid economic growth throughout the 1950s and 1960s, and propelled hundreds of millions of people in the Anglosphere and Western Europe into a state of relaxed and comfortable, home-owning, middle-class affluence, stopped working.

Initially, this unfortunate turn of events was blamed on the inability of the incumbent prime minister or president to manage the economy. The likes of Gough Whitlam, Malcolm Fraser, Jimmy Carter and James Callaghan had the misfortune to be running the show when their nation’s economy stopped humming along. Their reputations suffer – not entirely fairly – to this day.

By the time Bob Hawke was elected in March 1983, it was evident to all the relevant stakeholders – the business lobby, the union movement, the major political parties, the media, the churches and, most importantly of all, voters – that wide-ranging reform would be required if double-digit unemployment and inflation weren’t going to become permanently entrenched in Australia. It was widely accepted that if bold action wasn’t taken, Australia was destined to become a banana republic and Australians the  “poor white trash of Asia”, as Lee Kwan Yew so memorably warned in 1980.

By the time of the National Economic Summit, Reagan and Thatcher had shown that applying the Friedmanite defibrillator – tax cuts for businesses and well-heeled ‘wealth creators’, swingeing reductions in government spending, privatisation of state-owned enterprises, tariff cuts, financialisation, getting tough with unions – could revive a comatose economy.    

Photo by Ian Sanderson on Unsplash

There is no alternative      

Back in the mid-1980s, plenty of those on the Left, including a youthful socialist firebrand called Anthony Albanese, opposed the ALP’s enthusiastic embrace of neoliberalism. But, to borrow a phrase, most of the media and political establishment believed there was no alternative other than to shift the balance of power from Labour to Capital. Remarkably, even the union establishment was OK with this, so long as the working man – and, more rarely back in those days, working woman – got thrown the odd ‘social wage’ bone, such as Medicare.     

It's no simple matter determining to what extent voters in Australia bought into the free-market revolution and, if they did once support it, exactly when they started to sour on it.

As noted, by the end of the 1970s there was a consensus in countries such as Australia, New Zealand, Canada, the UK and the US that reform was required. Throughout the 1980s and 1990s, even many union members voted for union-busting centre-right leaders such as Thatcher, Reagan and Howard. Baby boomer homeowners who got into the property market in the 1980s and 1990s, especially those Brits who bought their council flats, have no doubt been delighted to see their properties soar in value over recent decades thanks, in no small part, to neoliberal policies.

Voters have come to believe governments went overboard with privatisation (see below). But few of those old enough to have dealt with, for instance, a truculent phone company employee with little fear of ever being reprimanded, let alone sacked, yearn to return to an era where governments owned telecommunication companies, national airlines and even automotive conglomerates.

Neoliberalism hasn’t been kind to certain demographics (e.g. British coal miners, as well as many blue-collar men throughout the Anglosphere who once were, or who once could have looked forward to becoming, well-paid manufacturing workers). Nonetheless, it would be churlish not to admit that a lot of boats were lifted by the rising economic tide neoliberalism enabled. For three decades now, Australia has been able to escape the bust part of the boom-bust economic cycle. That has meant, since the mid-1990s, pretty much any Australian who wanted a job could usually find one. If they were open to working on a remote mining site, they could often find one paying six figures.

And, as always, the counterfactual must be considered. What if the ALP and Coalition had continued with the Whitlamite and Fraserite policies they pursued from 1972-1983? As economists never tire of pointing out, had Australia not changed course it would likely have ended up an economic basket case, like its South American doppelgänger Argentina.    

Searching for a silver bullet

Say what you will about neoliberalism, but it once seemed to be a cure for what ailed many first-world economies. Rough medicine perhaps, but medicine that would actually work.

The problem confronting the movers and shakers who will shortly be attending Albo’s summit is that, with good reason, nobody believes either the Left or the Right is in possession of the silver bullets John Maynard Keynes and Milton Friedman used to brandish so confidently. 

A few days ago, The Guardian published poll results that indicated “A majority [of the Labor, Green, Coalition, minor party and swinging voters surveyed]… see the economic system as fundamentally broken”. The poll results also showed, that for voters from across the political spectrum, “the promise of globalisation has dimmed”.

Granted, the poll showed there are some economic policies left-leaning and right-leaning voters continue to differ markedly on. But a majority of Hard Left, Centre Left, Centrist, Centre Right and Hard Right voters in Australia appear to be on a unity ticket in terms of rejecting neoliberal orthodoxy and agreeing with statements such as, “Australia’s economic system is broken and the government needs to make fundamental changes to sort it out” and “Governments should have an active role in shaping the economy”.

Before socialists break out the Champagne, it should be noted that these results don’t mean Australian voters are yearning to renationalise Telstra, Qantas and the Commonwealth Bank. Nor that they are necessarily amenable to tax-and-spend policies. Or even that they are keen to see the union movement revived. As far as I know, The Guardian hasn’t conducted a poll on the issue, but I doubt many Australians believe it’s feasible to return to a vaguely remembered post-war paradise of Keynesian economic policies and upward class mobility.  

A not-so-grand settlement

In the same way you can only float the dollar once, you can only introduce a socialised healthcare system once. And therein lies the dilemma for Anthony Albanese, Jim Chalmers, Tony Burke, Sally McManus and Jennifer Westacott.

If I were a betting man, I’d wager the long-term impact of the upcoming summit will fall somewhere between Rudd’s pointless ‘Australia 2020’ wankfest, which saw the likes of Cate Blanchett and Hugh Jackman solving the nation’s greatest challenges, and Hawke’s 1983 summit, which saw the representatives of both Labor and Capital sign off an ambitious program of economic and social reform.

I may well be proven wrong, but I suspect the ACTU’s push for a return to industry-wide pay deals (i.e. allowing unions to negotiate pay and conditions with multiple employers across whole sectors) is an ambit claim. Interestingly, the business lobby isn’t making its traditional ambit claim (i.e. insisting that the only way for wages to rise is the type of industrial relations reform that will give employers a free hand to determine what wages and conditions their staff deserve). Instead, Business Council CEO Jennifer Westacott is heading into the summit striking a Hawkean note of consensus. She is arguing businesses can generate higher profits and workers can receive higher wages if productivity increases. (True enough, but the catch is that productivity growth has long been in the toilet in first-world nations such as Australia and nobody is expecting it to improve much anytime soon.)      

In terms of concrete outcomes, I’d predict a not-so-grand bargain where Labour agrees to the simplification of the awards system and for the skilled migrant floodgates to be flung open, while Capital agrees to invest a bit more in training up local workers (rather than simply importing ones poorer nations have invested in educating) and to stop gaming the IR system by classifying as many of their workers as possible as contractors, or at best, casuals, rather than part-time employees.

Given Workplace Relations Minister Tony Burke has declared, “Gig work drives down wages and it has been spreading like a cancer through the economy,” it seems the ALP is determined to start regulating the gig economy much more heavily. That’s not necessarily bad news, especially for Menulog delivery drivers risking life and limb for $10 an hour. Then again, it’s not necessarily good news either, especially for those contractors who are doing reasonably well for themselves and don’t wish to be corralled back into wage slavery.  

But that’s something I’ll have to explore, in a future, post-summit, Substack missive.   

*To this day, Paul Keating is touchy about being portrayed as neoliberal in the mould of Pinochet, Reagan and Thatcher. He argues his ‘economic rationalist’ policies facilitated the prosperity required for the achievement of progressive goals such as the introduction of Medicare and the expansion of higher education.