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Neoliberalism: Goodbye and thanks for nothing


Across the globe and deep into the suburbs of Adelaide, the tragic evidence is mounting that neoliberal economics has failed us, writes Malcolm King.

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It took eight years after the Global Financial Crisis (GFC) for the western world to realise that neoliberalism had turned communities into strangers, pauperised the working class and created a corporate business class devoid of ethics.

Since the early 1980s, neoliberalism has been the default economic paradigm of developed nations. Neoliberals believe in free and unfettered trade, deregulation, privatisation, slashing government expenditure and restraining workers’ pay.

They believe competition is the defining characteristic of human nature. Citizens are consumers, not members of a society. The market rules all.

Now the pendulum is swinging back. Not to socialism but to a new form of communalism, as yet nebulous and indistinct.

Those who have done very well out of the neoliberal paradigm call this backlash “populism”. It’s a code word for policies they don’t like but which have the support of the people.

Some of these policies include fair trade rather than free trade, which ensures poorer, single commodity nations get full value for their exports. Another policy will ensure that a nation’s sovereign rights reside with its citizens, not mining groups or rent-seeking lobbyists.

Hardliners in the federal Liberal Party used to say that people who got angry at CEOs and bankers “earning” multimillion-dollar salaries suffered from the “politics of envy”.

It’s not envy – it’s incredulity, and it shows how deep and wide the chasm is between the rich and poor in Australia.

This rising anger and disenchantment marks a return of class in politics, a term that had almost fallen from the lexicon.

Those who supported Donald Trump, Jeremy Corbyn, Bernie Sanders and Brexit, generally came from the lower socioeconomic classes. But there was plenty of white-collar support too, especially from those who owned small businesses.

We are told we are freer to choose the course of our lives than ever before. This is a lie.

Theresa May’s Conservative Party recognised this change in the electoral mood post-Brexit and went in to the UK election stating that “we do not believe in untrammelled free markets”.

“We reject the cult of selfish individualism. We abhor social division, injustice and inequality.”

You would have to look hard to find a more staggering volte-face than that from the party of Margaret Thatcher.

The neoliberal record on economic growth gets a mixed report card. Growth in Western Europe, America and Australia has been slow.

From 1990-2007, the seven largest economies in the world grew on average by 2.3 per cent; since 2010, growth has averaged just 1.7 per cent.

In the 1980s, neoliberal economic reforms worked well but only if you ignore the 1987 stock market crash and the deepest recession Australia has had since World War Two.

There were some sunny days in the 1990s when monetary policy stimulated the Australian economy, but only if you ignore rising inequality, declining levels of infrastructure, flat wages, rising debt, falling housing affordability, the GFC and the growth of racism and xenophobia.

There are two main reasons why we have no wage growth in Australia. The first is that economic “trickle down” is a sham. Profits are locked in at the executive level and/or handed out as dividends to select shareholders.

The second is the decline of organised labour. Decades of union bashing by business lobby groups and conservative politicians, have smashed the bargaining power of the vast majority of the workforce. With labour fragmented, it’s easy to refuse pay rises.

Life-long debt has the working poor by the throat. Working and middle class families do not have the savings at call to pay for serious adverse events such as a major operation, high-end dental surgery or car repairs over $1000.

This is especially true if you’re under 35 and trying to buy a house, or facing retirement with minimal superannuation because you’re a woman and worked a string of casual jobs.

The home of a Trump supporter in Michigan – a manufacturing state hit hard by economic change. Photo: AP/Jeff Karoub

The types of economic reform advanced by business lobby groups exacerbate the anger many Australians feel. These “reforms” consisted entirely of proposals designed to improve the bottom line of large companies, rather than deliver long-term economic performance.

Business always talks about “flexibility” in industrial relations but never acknowledges that the only flexibility it is really interested in is the downward variety, which reduces pay and conditions for employees.

The privatisation of public services such as energy, water, public transport, health and prisons, has enabled corporations to charge punitively high fees on essential assets. This is spectacularly true in South Australia. Privatisation beggars future generations of public assets.

Surely the state’s role in the economy needs to be more than as an enabler of private capital?

Neoliberal hawks have excelled at pumping out propaganda, declaring this “dog eat dog” economics to be the political and economic expression of the “natural order”. Much of our media have bought in to this fantasy.

Since when has poverty and hopelessness been a part of the natural order? Society’s central aim – supported by good government – should be to combat and conquer these evils, not compound them.

Journalists test the economic weather by burying themselves in statistics and Gini coefficients. The latter seek to divine rising or falling inequality. As if equality was a tide.

Yet within a 25-kilometre radius of the Adelaide GPO, there’s a storm tearing through the lives of 100,000 unemployed and underemployed men and women, who can’t pay the bills and feed their kids. Journalists need to hit the streets and report.

The mega-rich persuade themselves that they got their wealth through merit, ignoring the advantages of inheritance, education and class.

We are told we are freer to choose the course of our lives than ever before. This is a lie. We are free to choose debt or more debt. Like communism before it, neoliberalism has failed.

The rich and entitled will learn that, in Australia, they will still get their just desserts – but not everyone else’s.

Malcolm King, an Adelaide writer, works in generational change and is a regular InDaily columnist.




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