I’m a bit behind on stories to cover, so this one is from a week ago, but I think it’s still well worth your attention. It’s a piece by economist Steven Hamilton in last week’s Channel 9 papers, offering a critique of the recent essay in the Monthly, “Capitalism after the crises”, by federal treasurer Jim Chalmers.
I haven’t read the Chalmers essay so I’m not going to comment on the accuracy of Hamilton’s response. My interest is in the way he implicates that curious term “neoliberalism”, which we’ve had occasion to talk about a few times in the past. (This post from a year ago includes a handy summary).
Hamilton first introduces the term with the statement that “The neoliberal wave that swept across the world during the decades leading up to the global financial crisis in many ways overcorrected for the government overreach that preceded it.” That sounds as if he’s taking neoliberalism to be a pro-market, anti-statist movement – which is certainly one common usage, from both supporters and opponents.
So it’s a bit of a surprise when, five paragraphs later, he tells us that “The treasurer’s big new idea of government pursuing partnerships with the private sector is just about the most neoliberal thing imaginable.” Surely partnerships with government aren’t much of a correction, whether over or under, for government overreach?
Then we get this:
Among the many legacies of the neoliberal era, arguably the most corrosive was the proliferation of mixed markets, which in Australia have become dominant in critical industries. …
An enlightened liberalism recognises there are some jobs for government and others for the private sector – that the government and private enterprise holding hands frequently results in terrible services at obscene prices. Where is the thought leadership on this key failure of neoliberalism?
If you take neoliberalism to denote a sort of free-market fundamentalism, then this makes no sense. The ill effects of private-public entanglement are a leading theme of all the major pro-market writers; by no stretch of the imagination can they be described as proponents of the sort of cronyism that Hamilton is attacking.
Yet it’s true that, if we think of the 30-odd years preceding the global financial crisis as “the neoliberal era”, it was marked in many places (including Australia) by a rise in cronyism and in arrangements that lack either the discipline of real markets or the democratic accountability of government services. Hamilton’s criticism of this trend is spot on, and he is probably right to say that Chalmers avoids addressing it because that would be politically difficult.
But if that’s neoliberalism, then it’s no longer a pro-market movement: it’s a movement that uses some market-related rhetoric as a cover for funnelling public money to private interests. Alternatively, you could hold onto the pro-market meaning of the term, but say that it was subverted by a different set of interests in both private and public sectors, resulting in outcomes that are bad precisely because they are not neoliberal at all.
What all too many critics of neoliberalism want, however, is to do both at once: to be able to switch from one usage to the other without warning. One minute, neoliberals are cutting back government and promoting markets; the next minute, they’re in cahoots with big business to frustrate markets. The idea of markets as working against the interests of the ruling class – a staple of pro-market thought going back at least to Adam Smith – is simply defined out of existence.
I don’t think this is consciously Hamilton’s strategy. He seems to want markets to be allowed to work properly, although he would give government a greater role alongside them than I think is wise. But his way of framing the problem leaves the door open to confusion.
Before you talk about neoliberalism, think carefully. Do you know what you’re trying to say? Are you sticking to just one meaning? And are you letting your audience know what that is? If not, best to find a different word.
The World is Not Enough 