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

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April 29, 2013

Stuart Hall has an interesting article on contemporary global capitalism, which he characterizes in terms of neo-liberalism, global interconnectedness, driven in part by new technologies, the dominance of a new kind of finance capitalism, the dramatic growth of inequality and a widening gap between those who run the system or are well paid as its agents, and the working poor, unemployed, under-employed or unwell.

He adds that:

Neoliberalism's victory has depended on the boldness and ambition of global capital, on its confidence that it can now govern not just the economy but the whole of social life. On the back of a revamped liberal political and economic theory, its champions have constructed a vision and a new common sense that have permeated society. Market forces have begun to model institutional life and press deeply into our private lives, as well as dominating political discourse. They have shaped a popular culture that extols celebrity and success and promotes values of private gain and possessive individualism. They have thoroughly undermined the redistributive egalitarian consensus that underpinned the welfare state, with painful consequences for socially vulnerable groups such as women, old people, the young and ethnic minorities.

In Australia the mainstream media are full of articles about budget deficits, increasing public debt and how the economy’s capacity for recovery is impaired by too much government borrowing. These escalating obligations, they claim, will be passed along to our children and grandchildren, leaving Australia a poorer country. The medicine needed is the politics of austerity.

What is always missing in this kind of rhetoric by conservative commentators and politicians is that the enlarged government deficits are the consequence of the great financial crash, (GFC) not the cause. That crash was due to private speculative debts---eg., exotic mortgage bonds financed by short-term borrowing at very high costs. It is private debt of the banks that is strangling the economies of Europe and the US through the debt trap whilst Australia's s tax base has still not recovered from the GFC, and shows no sign of repairing itself.

Debt functions as part of the politics of social class and social control. The political power of business and large financial institutions, plus the momentum of the austerity campaign---too high a "debt-to-GDP ratio" will always, necessarily, lead to economic contraction---- suggests that there will be damage to the economy and human suffering in the near future along with a significant redistribution of wealth upwards rather than downwards.

Australia, it is being argued by the austerity merchants, cannot really afford a welfare state, humane working conditions, pensions, social and economic democracy. The Gillard Labor Government has been on a binge and it will make Australia an economic basket case. Australia must tighten its belt so that it lives within its means. It'll be hard, but it's something the Coalition can and will do for the sake of the grandchildren. "Tighten its belt " means winding back the welfare state.

That's the snake oil the austerity merchants are selling with their recession making economic package. They are using the budget deficit "crisis" as an opportunity to dismantle the social safety net provided by the welfare state.

| Posted by Gary Sauer-Thompson at 1:49 PM | | Comments (7)


The austerity merchants imply that the elderly and the sick are getting too much money.They must be punished. Oh, and the unfortunate must be persecuted.

For many journalists austerity must be desirable because it is so harmful. This passes for an argument.

The usual austerity metaphor is to “medicine.” Medicine may taste terrible and cause one brief pain, but only the most childish would fail to take their medicine because it briefly makes our lips curl in distaste. We al know that the medicine is good for us.

The market's neo-liberal ideology has a cure-all for every problem: it is to slash government spending, particularly those programs that work, and make crony capitalists wealthy by selling national assets to them at fire sale prices.

See the Newman Government in Queensland for an example.

The austerity merchants do not see a “contradiction” between austerity and growth.

The link between the two is the confidence fairy. Austerity restores confidence of the business class. This stimulates economic growth. Everyone agrees this is true.

Unfortunately, the Coalition actually believes in austerity, and they gleefully support cuts in social welfare to the poor by unravelling the safety net programs.

For them inflicting austerity and beginning to unravel the safety net leads to a healthy economy.

"the elderly and the sick are getting too much money.They must be punished."

suffering is good, that they must pay a price for past sins

It's not really that complicated, or moral Marianne. Put simply, conservatives think only they can be trusted with the wealth. The poor just piss it away, so shouldn't receive any wealth. This simplistic view, together with a veiled invitation to those on the border (sneer at the poor to justify yourself as potentially one of the deserving rich) serves them well.