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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

political abstraction + practical politics « Previous | |Next »
May 19, 2010

In Is That It For Neoliberalism? in New Matilda Jason Wilson, in the course of reviewing Robert Manne and David McKnight’s edited volume, Goodbye To All That?: On the Failure of Neoliberalism and the Urgency of Change, accepts an old dichotomy or duality. This is one between political abstraction (eg., the concept 'neo-liberalism') of the intellectuals and the practical or pragmatic politics based on reconciling the diverse interests of the governed of the politicians.

Wilson adds that one of the important:

truths about social democracy, especially in its Australian form [is] that it is more concerned with programs and principles than political theory; that, where intellectuals are concerned, it has most use for those engaged in specialised technical pursuits — economists, say, or lawyers — and that the boring activity of reconciling interests that is the central concern of social democratic governments is most likely to alienate intellectuals first.

He adds that what this actually means is that social democracy in practice often has an uncomfortable relationship to the intellectuals who seek to support it where powerful interests have to be contended with, although you may be guided by high principles, you might not get what you want, and you might not get it on time.

Isn't social democracy as much a political abstraction, or political theory, as neo-liberalism? An abstraction that refers to the middle way between socialism and capitalism in the form of the welfare state? Isn't neo-liberalism more concerned with programs and principles than political theory?

Didn't the economic crisis of the 1970s represented the expiry and collapse of the post-war welfare settlement, through pressure of its own contradictions? That resulted in the emergence of Thatcher in 1979, and Reagan in 1980, and the subsequent attack on working class institutions and the deregulation of the financial sector in 1980's-- ie., setting free the financial sector to operate on a global basis, and to establish itself as the dominant growth sector of the British economy.

Wouldn't it be more useful to shift to 'modes of governance' and see neoliberalism and social democracy as different modes of governing the country? This shift to governmentality allows us to think in terms of the organized practices (mentalities, rationalities, and techniques) through which subjects are governed and the ways that the conduct of subjects is shaped.

This enables us to look at the assemblage of governmentality: the process through which a form of government with specific ends (a happy and stable society),the means to these ends (“apparatuses of security” and a particular type of knowledge (“political economy”) to achieve these ends. It is a political rationality that involves thinking about the government and the practices of the government. So neo-liberalism and social democracy are different ways of thinking about government and its practices of governing.

We can then begin to explore this in terms of the economic crisis of 2009 caused by the instabilities of unregulated markets; a crisis that develops through the dysfunctions of unregulated markets (eg., climate change). Maybe we can think in terms of the breakdown of the neo-liberal regime or mode of governance. So we have the opposition by the Right (economic and political) in Australia to any reforms whatever and to a more active/interventionist role by governments in the regulation of capital flows and markets.

| Posted by Gary Sauer-Thompson at 10:52 AM | | Comments (4)


Michael Stutchbury in Goodbye to the notion neo-liberalism caused the global financial crisis in The Australian is not impressed by McKnight's and Manne's Goodbye to All That? On the Failure of Neo-Liberalism and the Urgency of Change.

Interestingly enough Stutchbury makes some important concessions in his review:

Global credit markets failed in ways that pro-market economists such as former US Federal Reserve board chairman Alan Greenspan never dreamed possible. The consequent global recession was cushioned by government guarantees not to let systemically important financial institutions fail and by massive Keynesian-style budget and monetary stimulus.The world has relearned the lesson that investors and financial markets are prone to bouts of irrational exuberance that can bust spectacularly. The newfangled securitised financial products broke the prudential checks on lending that old-fashioned banking developed across centuries.

However, he adds, this "credit market failure doesn't discredit the entire intellectual shift to pro-market economics since the 70s and herald a new epoch of government-directed growth, as Manne claims." :
Manne's account does not consider how the world's most spectacular industrial revolution channelled surplus savings generated by China's export-led growth into US government debt, in turn driving down interest rates and financing Washington's gaping budget deficit, excess American consumption and the US housing bubble. Wall Street's financial excesses were as much a symptom of the bubble as its cause. The regulatory net around the US financial system was full of holes and poorly supervised, in part due to failures in a political system that itself mandated reckless lending to sub-prime borrowers.

The reason why the regulatory net around the US financial system was full of holes and poorly supervised was because of the deregulatory roll back by Wall Street. Deregulation was a core policy of neo-liberalism.

The global financial crash has brought the era of neo-liberalism and unregulated markets to an end. The current global economic crisis resulted from the financial market system breaking down from its own contradictions - this crisis was an implosion, the bursting of a series of bubbles.

The Conservative side of politics in Australia has tended to deny that this happened ---what economic crisis? Or that markets are self-correcting and their operation does not to require the intervention of governments.

It is interesting to see Stutchbury being mugged by reality. However, his subsequent defence of continuing with the neo-liberal regime or mode of governance, is thin:

The crisis of neo-liberalism has now become the fiscal crisis of the developed nation state as private debts have simply been shifted on to public balance sheets. Generations of welfare statism have ratcheted up government spending. Now add the massive bank bailouts and budget stimulus packages from the crisis. The result is that sovereign debt in the US and Europe is rising unsustainably just as the fiscal time bomb of demographic ageing is about to lob.

The solution is more of the same: small government, competitive markets, rolling back the welfare state, budget surpluses. More market based politics are needed because the government is the problem rather than the solution.

What is being reaffirmed here is the neo-liberal faith in the superiority of the invisible hand of the market to the economic intervention of government. The myth about self-correcting markets cannot be given up.

Ah, the "s--t happens" line. All the suffering is just "collateral damage",in fact welcome as a sign that the system "works"...
I never cease to be amazed at the mental contortions; the utter prostitution on intellect that comes with creatures like Stutchbury.
if Socrates was right about people finding it harder to do wrong then right, people like Stutchbury and Abbot must be in a state of complete exhaustion.

what practical politics means is that skilled manual workers, whose loyalties play a crucial role in so many marginals – have deserted Labor in droves, particularly men. Their key complaints are about supposed welfare malingerers and new (boat) arrivals from abroad.

So will the future of centre-left politics be one that kicks the dispossessed?