Monday, 9 March 2009
To get an idea of the current Australian political scene, it is necessary to start where Australian political commentary almost never does – the world. For the last thirty years, since the first serious global downturn marked the redundancy of arrangements set up by the US immediately after the war, we have had a steady breakdown of the old labourist institutions that largely originated in the aftermath of the Great Depression. On the domestic front the unions’ influence over government was broken, nationalised industries privatised. On the international front the former communist bloc was opened up to market forces and national barriers to global financial markets removed.
Since the left identified with most of these institutions it is no surprise that their roll-back brought on triumphalism from the right. But there was something phoney about it, as to call such a process ‘liberalisation’ is mis-leading. Certainly market liberalisation was introduced, but the roll-back of government was not straightforward. In fact what we have seen is a new intimate relationship between government and the market that has meant government plays even a larger, albeit indirect, role in the economy than ever before. Industries may have been privatised but have become more reliant on government subsidy, financial markets may be expanded, but government plays an increasing role in supporting their stability. Therese Rein’s business may have benefited from the privatisation of the job placement industry, but so too does it’s profitability rely on the government subsidy given to the industry as a whole.
In Australia, the phoniness of calling this process a ‘right-wing agenda’ was neatly summed up by the fact that it was the centre-left that carried it out. That it took the ALP under Hawke and Keating to do what Fraser and Howard could not, is an uncomfortable truth that all the right-wing warriors which have sprung up like Topsy over the last decade can never get their heads around. This has not stopped them claiming credit for it, however, and now that those arrangements have collapsed, the right have nothing to say.
This is the main weakness of Turnbull’s response to Rudd’s attacks on neo-liberalism. It is not that it attacks the business practices of Rudd’s wife, something that neither the coalition nor the media were too worried about two years ago (nor perhaps Rudd’s own side if reports are true that it was a Labor MP who, without bothering to tell Rudd, passed on the dirt to the Howard government in the first place). Nor is it that in highlighting the glaring inconsistencies of someone who 18 months ago was claiming the only difference to Howard on budgetary spending was to be less inclined to do so, Turnbull also highlights the Liberals’ own inconsistencies.
The main problem with Turnbull’s response is that while it is largely correct on the past, it has nothing to say about what needs to be done now. The inconsistencies of Rudd’s attack are being ignored by most because his attack on neo-liberalism fits in with what everyone agrees on now – the government must do something. Just what that something is has until now been largely seen as a domestic issue, national stimulus packages rolled out, national interest rates cut.
But ultimately this is an international crisis needing an international solution. Keating is right, a new international settlement is needed on which to build a new economic order. From this it could be argued that the stimulus packages around the world have made this harder. Not only will the damage done to the global capital markets need to be repaired, they will soon have to deal with trillions of dollars of new debt, especially from the world’s largest debtor nation, the US, precisely at a time when the global economy is least capable of financing it. Everyone has worried about a return of the beggar-thy-neighbour protectionism of trade of the Great Depression but what we have seen is a fiscal beggar-thy-neighbour policy instead. To not only forge a new international settlement, but also deal with the additional pressures it will soon be under, will require strong political leadership.
But here’s the rub. The restructuring of the last thirty years has hollowed out the very political process that brought it about. On the domestic level the undermining of the old institutions with which the left identified has not only undermined them but the right that defined itself in opposition to it. Hawke and Keating called on the union movement to carry out the restructuring, but in doing so fatally wounded it.
On the international level, the introduction of market forces in the former Soviet Union and China allowed the US to claim victory, but undermined the Cold War rationale it had used to assert leadership over the rest of the West. The neo con experiment over the last eight years to restore that leadership has failed dismally, but not because the US was acting unilaterally, but because when it did, this time no-one followed.
This is the blind spot in Keating’s call for a new realignment. Not for the first time (probably because he played such a role in it) he fails to see that the political will to mobilise and undertake a restructuring is not there. On the international level, the US may recognise the neo-con cul-de-sac, but has not found a way to recover global leadership. This is summed up by the new role for the G20, an implicit recognition that the old G7 club is redundant, but too broad and amorphous to yet count as anything new.
On the domestic level, the phoney right-wing agenda of the last decade has been replaced by an equally phoney Keynesian revival. Both rested more on the failure of the alternative than the ability to mobilise to a new direction. This probably explains Labor’s timidity at the moment. It is worth noting that the coalition is extremely vulnerable. They have nothing to propose right now summed up by a leader who they don’t want but are struggling to replace. Yet Labor is barely able to go in for the kill. We saw this at the federal level and are now seeing at the state level. There is no state coalition party more vulnerable than the one in Queensland where the collapse of the state Liberal party was managed as a ‘conservative revival’. It gives the Queensland LNP least room to move of any to finesse the opposition to the stimulus package. Yet somehow Labor is still struggling to drive the point home and is allowing Springborg to get away with not only opposing public spending but still go around matching Labor’s spending promises dollar for dollar.
It is this problem, which is now becoming more pressing, that is leading to a change in the tone of the Rudd government. Until now this blog has focussed on Rudd’s technocrat side, because it was the anti-political angle to it that played such an important role in despatching Howard and dealing with the Liberals still. But giving the government a sense of ‘mission’ is becoming a growing imperative. It is why the government continues to pursue the climate change agenda despite concerns that clearly exist at the cabinet level. And from Rudd himself there is emerging more and more a moral agenda. It was seen with his Howard’s ‘Brutopia’ essay shortly after gaining the leadership but has generally run in a distant parallel to a technocratic agenda. In the last few months, however, there has been a more concerted attempt to attach a moral agenda to the workings of government.
The attacks on executive pay shows the problem with doing this. Describing pay levels as ‘obscene’ is easier than directly forcing companies to do something about it. It is partly the reason why the government wants to pursue it at the level of the G20 Summit than in the domestic arena. But it is also where political activity generally is likely to shift. Keating was right to call time on the spending stimulus packages. The period of domestic initiatives is now over and the global dimension to this crisis is now becoming unavoidable. This suggests the next phase in the crisis will be very international and at least this government has been prepared for that.
Posted by The Piping Shrike on Monday, 9 March 2009.Filed under Key posts, State of the parties