Defining contemporary neoliberalism: An Australian case study

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Defining contemporary neoliberalism: An Australian case study Matthew Ryan

A thesis submitted in partial requirement for the degree of Bachelor of International Studies (Honours) at the University of New England, 2014.

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Table of Contents

Acknowledgements .............................................................................................................................. 3

Declaration ............................................................................................................................................ 4

Introduction .......................................................................................................................................... 5

Chapter One Neoliberal theory and practice: An empirical approach ...................................................................... 14

Chapter Two Neoliberal variation: Against universal conceptions ........................................................................... 37

Chapter Three Neoliberalism as power: The political implications of ‘actually existing neoliberalism’ .................... 54

Conclusion .......................................................................................................................................... 63

Appendix ............................................................................................................................................. 66

References ........................................................................................................................................... 72

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Acknowledgements

Just as Polanyi asserted that the economy does not exist in isolation from its social and political context, the writing of this thesis did not occur in isolation. There is no doubt that I would not have reached this point without the guidance, inspiration and support of many others. First and foremost, I would like to thank my supervisor, Dr Tim Battin. Tim has a wonderful ability to guide, without simply providing answers. He encouraged me to find my own answers – a gentle supervision style which brings out the best in people. For his guidance, encouragement, and the occasional coffee in ‘Bool’, I thank him. Tim, you are an incredible asset at this university. Many other staff at the university have supported and encouraged me along the way. I am grateful to each and every one of my teachers, but thanks go especially to Dr Amanda Kennedy and Dr Tony Lynch whom I also count as friends. Thanks also go to all the men and women whose names appear in my reference list. Many of these scholars – Chang, Stilwell, Cahill, Blyth, Mirowski, Klein, Peck, and others – I have been reading for years. While I haven’t met them all, I certainly could not have written this thesis without their years of work. I would also like to thank my family: my father, who impressed on me the values of academia and public service from a young age; my mother, who has listened, encouraged, but never pushed me; and even my over-achieving brother, who keeps me modest.

Finally, I would like to thank Earle Page College, and the many friends I have here. ‘Page’ has been my home for four years, and the myriad of experiences I’ve had here have made me who I am today.

Matthew Ryan

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Declaration

I certify that this work does not incorporate without acknowledgement any material previously submitted for a degree at any University, College of Advanced Education, or other educational institution, and that to the best of my knowledge and belief it does not contain any material previously published or written by any other person except where due reference is made in the text.

Matthew Ryan

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Introduction

The mainstream conceptualisation of ‘neoliberalism’ is centred on ‘free markets’ and ‘small states’: The neoliberal approach stresses the efficacy of the free market, and insists on the inefficiency and/or counter-productiveness of state intervention… and its prescriptions for most economic problems consist largely of deregulation and reducing the economic role of the state to that of a ‘night-watchman’ (Chang, 2003: 36).

This understanding of neoliberalism – ‘free market neoliberalism’ – is widespread, within both academic and popular circles.1 An example of this definition of neoliberalism in a less academic setting is provided by Kevin Rudd, in an article published in The Monthly: … neo-liberalism – that particular brand of free-market fundamentalism, extreme capitalism and excessive greed which became the economic orthodoxy of our time (Rudd, 2009: 1).

This quotation from Rudd holds particular significance. Not only have academics characterised neoliberalism as a ‘free market’ doctrine, but, more importantly, so too have the ostensible political opponents of the neoliberal project. A keenly contested concept, however, this is not the only definition of neoliberalism. Against these mainstream definitions of ‘free market’ neoliberalism this thesis falls within the broad and interdisciplinary – yet heterodox – body of literature, one which notes the significant ‘disjuncture’ between neoliberal ‘theory’ and ‘practice’. While theoretical projections of neoliberalism may present the normative ideals of free markets and small states, neoliberal practice is something else entirely. And so here we look to provide a more satisfactory definition of neoliberalism.

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For popular examples, see: Bowen (2009); Rudd (2009); Orr (2013); Large (2014); Monbiot (2013); and Monbiot (2014). For academic examples, see: Nozick (1977); Haggard and Kaufman (1992); Calhoun (2002); Jessop (2002); Hart-Landsberg (2006); Overbeek and van Apeldoorn (2012); and Steger and Roy (2010).

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This approach to conceptualising neoliberalism emphasises that ‘neoliberalism’ is not a singular or monolithic doctrine or practice. Its nature is better understood as a shifting, multifaceted, amorphous and overwhelmingly contradictory form of economic, social, cultural and institutional restructuring – one which is defined by ‘variegated’ spatial, temporal and spatio-temporal geographies of praxis. Many of these analyses emphasise a ‘disjuncture’ between neoliberal ‘theory’ and neoliberal ‘practice’ (Peck and Theodore, 2002; Harvey 2005; Cahill 2010). In this approach, the above characterisations exemplified by Chang (2003) and Rudd (2009) are seen to be engaging – albeit critically – with neoliberal theory.2 These neoliberal ideas are taken as representative of the policies introduced in their name by successive neoliberal governments Rather than assuming that neoliberal ideas and practices are synonymous, the approach here sees these theoretical expressions as distinct from neoliberal ‘practice’ – or, as some scholars describe it, ‘actually existing neoliberalism’ (Brenner and Theodore, 2002; Cahill, 2010):

Contrary to popular opinion, the free-market doctrine has never guided the policies and practices of neoliberal supporters. State interventionism in favour of capital has been the driving force behind the perpetuation of [neoliberal capitalism] (Porfilo, 2007, online).

Disjuncture is compounded by the spatial and temporal variations associated with the process of neoliberalisation.3 All of this contributes to a simple reality: defining neoliberalism is incredibly difficult. Regardless of how this disjuncture – a ‘cleavage between theory and practice’ (Dunn, 2012, p. 233) – is understood, it is a significant feature. Any accurate analysis of our contemporary political economy rests on an appropriate understanding of what neoliberalism is or is not. Even the seemingly simple question, ‘can our national political economy be described as neoliberal’, must rest on such conceptualisations. In the 2

Discussed further in Chapter One, neoliberal ‘theory’ is taken to imply the theoretical writings of neoliberal ideologues such as Friedrich Hayek (1973; 1978) Milton Friedman (1962; 1980), Robert Nozick (1977), and members of the ideationally-formative institution of the Mont Pelerin Society (Mirowski, 2009; 2013). 3 This will be discussed further in Chapter Two

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context of ‘the strange non-death of neoliberalism’ during the tumult of the global financial crisis (Crouch, 2011; Dunn, 2012), an adequate understanding of the concept is necessary before research can hope to answer the question of how neoliberalism survived a crisis which ostensibly invalidated it as a theory and practice. And so the purpose of this thesis is twofold: first, differing conceptions of neoliberalism will be considered; second, these theoretical understandings will be considered within the scope of a specific case study. Thus there will be a two-directional relationship between theoretical conceptualisation and the empirical case study, with each informing a deeper understanding of the other. Finally, this thesis will develop a characterisation of the contemporary Australian political economy as a neoliberal one, which will lend weight to those scholars who emphasise ‘actually existing neoliberalism’ as an appropriate way to understand neoliberalism.

A Case Study

The rise of neoliberalism in practice within the Australian political economy has been associated – by some – with Malcolm Fraser’s ‘campaign to put an end to Keynesian-style ‘big government’’ (Steger and Roy, 2010: 21). Others would suggest that the beginning of the Australian neoliberal era should be associated with the Hawke-Keating governments (Quiggin, 1996; Bell, 1997; Stretton, 1993). While arguments concerning its genesis in Australia can be made either way, the key point is that Australia’s political economy has been dominated by hegemonic neoliberalism for more than three decades (Cahill, 2007). It is with this history of neoliberal dominance in mind that we turn to consider recent characterisations of Australia’s current government, led by Tony Abbott; these

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characterisations see Abbott’s government as the continuation – and even the entrenchment – of this neoliberal norm:

The Hockey budget betrays an ideological drive toward US-style small government (Swan, 2014). The Abbott government has a plan to have no plan and it’s really committed to it. That’s the point of neoliberalism. It sees the world as a market and solves every problem through it (Aly, 2014).

These claims are controversial, and – as outlined above – they rest on a certain definition of what ‘neoliberalism’ is. The purpose of this thesis is to take those political characterisations, and test them in an academic context. The ambiguous meaning of ‘neoliberalism’ makes these labels of Abbott being a ‘neoliberal’ all the more contentious. In testing the nature or extent of the neoliberalism of the Abbott government many of these implications will need to be isolated and considered. The application of contesting conceptualisations of ‘neoliberalism’ to the case study of contemporary Australian politics presents an opportunity to improve our theoretical understandings. As such, the task at hand can be summarised with two questions: which theoretical understanding of neoliberalism, if any, provides a useful analysis of the Abbott government? And what implications – if any – can be drawn from this case study to enrich the broader critical literature surrounding ‘neoliberalism’?

As mentioned above, this thesis does fall into a broader context; these bodies of literature directly inform another key political economic issue – the durability of neoliberalism in the face of crisis. One’s understanding of ‘what neoliberalism actually is’ is key in explaining the ‘strange non-death of neoliberalism’ (Crouch, 2011). Some suggest that the division between theory and practice is itself a mechanism which allows the survival of neoliberalism in the face of ongoing crises (Baker, 2009; Mirowski, 2013). This question, so

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far, is one without a satisfactory answer, and is much outside of the scope of this thesis to answer. The discussion of neoliberalism, within the case-study of contemporary Australia, will, however, offer a modest contribution to that ongoing debate, suggesting that while ‘actually existing neoliberalism’ is the most useful way to conceptualise neoliberal practice, this does not diminish the importance of ideas. This is due to the role that ideas play in creating and re-enforcing hegemony.

Methodology

Here the consideration is whether the current Australian federal government can be characterised as neoliberal; or, perhaps more importantly, ‘which conceptualisation of neoliberalism is most useful in understanding this case study’. Thus one key task at hand is to consider contrasting explanations of neoliberal inconsistency between ideas and practice within the frame of the Australian national case study. More generally, mainstream understandings of ‘free-market’ neoliberalism will also be tested against the Abbott government’s policies. Considering the controversial nature of this subject matter, however, questions of bias and objectivity arise. Consequently, it is important, within the introduction of this thesis, to establish an epistemological and methodological basis which accommodates these realities. While the purpose of this thesis is not to criticise the policies or the politics of the Abbott government, political evaluation is inevitable – this study cannot be divorced from values. This speaks to broader disciplinary concerns, such as the ‘positivist’ revolution in (particularly American) political science, and with the methodological prescriptions that accompanied the rise of neoclassical economics as the dominant school within that discipline.

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Perhaps more broadly defined as the trend of ‘scientism’ within the social sciences, there have been various pushes at different points in time to achieve objectivism and ‘scientificness’ in our methodologies and epistemologies (Crick, 1954; Stretton, 1969; de Shalit, 2009; King, 2014). Adherents to such methodologies would dismiss research which encompassed judgement of current political actors as inherently flawed, ridden with subjectivity, bias and value-judgements, and empirically un-verifiable. In the present study such criticisms are to be rejected. Consider the following rejection of scientism in the social sciences:

Social evils can survive without excuses, whether by apathy, honest mistake or selfish intent... Scientistic selection avoids the radical imagination or discovery of poor men's chances for social choice or change or conservation (Stretton, 1969: 431).

Or, simply take Grant’s question:

Can we know what is worth knowing about politics through scientific research methods alone? … Is research in political theory worth doing, or can politics be adequately understood without it? (Grant, 2002: 578).

The answer to both of these questions is surely ‘no’. Fundamentally, if we, in our discipline, limit those questions which we allow ourselves to consider by particular methodological boundaries, it will lead to the poverty of the discipline, and to the diminution of our societal relevance. Subjectivism should be accepted, made explicit, and then worked around.

The implication of this for this thesis is that claims of complete objectivity cannot be made. The simple task at hand is to consider an established literature of critical neoliberal scholarship within the scope of the contemporary Australian political landscape. The aim here is to achieve an appropriate mix between objectivity and subjectivity. Allowing subjective evaluations to frame research questions does not itself exclude empiricism from the methodology to be employed – that which can be measured or proven with empirical 10

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methods will be.4 The key point of this methodological framework is simply that a desire for the legitimacy accorded to scientific research will not limit this inquiry – the legitimacy of this approach is grounded in a deeper social science epistemology.

Outline

The argument presented here is separated into three chapters. Chapter One contrasts neoliberal theory with neoliberal practice. This chapter challenges those conceptualisations of neoliberalism which assume that both theory and practice are dominated by free market ideas. Contrary to theoretical postulates, an empirical approach reveals that ‘actually existing neoliberalism’ – or, more simply, neoliberal practice – is better defined as a process which involves active state intervention in the economy. The ‘free market’ of neoliberal theory is substituted for the deliberate creation and recreation of market-like structures in some areas, whilst in others market discipline is repressed through tools such as corporate welfare. The overall outcome of this is upward wealth and income redistribution, directly benefiting the interests of capital. After considering this dichotomy of ideas and practice generally, Chapter One then considers this perspective within the frame of the Australian case study. The position reached is that while the rhetoric of the Coalition does conform to neoliberal theory, the state continues to play a significant role in practice – if ‘actually existing neoliberalism’ is the conceptualisation of neoliberalism adopted, then the Abbott government can indeed be characterised as neoliberal.

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See Chapter Three and the Appendix.

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Chapter Two develops the framework established in the first chapter, by expanding to encompass spatial and temporal aspects. This chapter stands against singular, universal and monolithic definitions of neoliberalism, instead stressing that neoliberal practice is marked by extensive variegation across different iterations and political economies. This variegation is driven by the interaction between the process of neoliberalisation and the unique context in which it is being ‘embedded’. Within this chapter, the Australian case study is interwoven with theoretical analysis. The ‘variegation’ approach builds upon a particular reading of Karl Polanyi which sees the economy as ‘always embedded’ rather than going through the ‘double movement’ of embedding and disembedding (Block, 2003; Cahill, 2012). The temporal facet of neoliberal variation builds on the Polanyian nature of spatially variegated neoliberalism by also incorporating the concept of ‘crisis’ as neoliberalisms historical method of entrenchment. The result of this is that neoliberalism refuses to be defined in static or universal terms. Definitions which fail to appreciate these spatial and temporal nuances leave themselves vulnerable to criticism, as they rarely correlate to empirical reality. This brings us to Chapter Three. As mentioned above, the broader context of this thesis is the apparent durability of neoliberalism in the face of crisis. When this is taken together with the empirical actuality that the neoliberal project benefits only a select few, its established hegemony raises some key political questions. Why does neoliberalism present as such a contradictory amalgam of theory and practice? How has this project managed to secure the support of many whose interests are undermined by neoliberal dominance, and how has this project avoided effective criticism? These are some of the key political economic questions of our time. While conclusive answers are far from being reached, some methodological precepts are here suggested as a starting point for further research.

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Argument

The Abbott government has been characterised by some as ‘neoliberal’. These descriptions are based on the ‘free-market’ conceptualisation of neoliberalism, and do not reflect the material realities of ‘actually existing neoliberalism’. When neoliberalism is understood more deeply, emphasising the ‘disjuncture’ between neoliberal ‘theory’ and ‘practice’, the current Australian government can indeed be described as neoliberal – albeit, an instance of neoliberalism which is variegated spatially and temporally from other established examples of neoliberalism. Thus, this case-study underscores the importance of theoretical conceptualisations of neoliberalism that emphasise the difference inherent between neoliberal theory and practice. A better way to conceptualise neoliberalism is by considering the material interests served. Neoliberalism, here, is understood as the ongoing political project to re-establish the power of capital after the brief challenge of the ‘long boom’. This conception leads, finally, to the normative implication for Australian politics, and progressive politics in general: for political opposition to be effective, it must engage with neoliberal realities, rather than neoliberal mythologies.

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Chapter One

Neoliberal theory and practice: An empirical approach

Introduction Neoliberal theory and neoliberal practice differ in many significant respects: the role of the state, the nature of the market, the universality of application, and especially in the material outcome of neoliberalism. First, consider the core, overarching contradiction between neoliberal ‘theory’ and neoliberal ‘practice’ – that contradiction lies between the theoretical ontological nature of the market, and the ontology implied by ‘actually existing neoliberalism’ (or, synonymously, neoliberal ‘practice’). Neoliberal theory presents ‘the market’ as a spontaneously occurring, natural institution (Hayek, 1973; Mirowski 2013: 69). In direct contrast to this, neoliberal practice has been defined by constant efforts by the state to create – and re-create – these theoretically spontaneous markets (Porfilo, 2007, online). Further, many of the normative prescriptions advocated by neoliberal thinkers diverge significantly from the materialist history of global neoliberal hegemony. A key example of this is the ‘size’ of the state; neoliberal doctrines largely advocate a ‘small state’, and yet an empirical appraisal of this goal shows that ‘neoliberal’ governments have often grown, rather than shrunk. These examples of issues surrounding ontology and the realisation of utopian normative visions speak to a broader issue – the distinct disjuncture between neoliberal theory and practice, not only in policy, but also in outcome. The approach in this thesis will be to emphasise the material realities of ‘actually existing neoliberalism’.

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Thus the methodological approach employed here will be materialistic – an emphasis empirical actuality (Blackburn, 2008). This stands in direct contrast to a more ‘ideas-centric approach’: [the] ideas-centred conception of reality… interprets human society as a reflection of the dominant ideas used to explain it, and views ideas as the main drivers of political and economic change. More importantly… such idealist assumptions about neoliberalism do not withstand scrutiny against empirical evidence (Cahill, 2014: viii).

As Cahill goes on to say, mainstream definitions and criticisms of neoliberalism engage primarily with the idea of neoliberalism. It will be detailed here that there is a significant disjuncture between what neoliberalism says it does, and what it actually does. This disjuncture has its root in ontological tensions and contradictions, as is emphasised in Mirowski’s analysis (2009; 2013); these theoretical contradictions are, however, further compounded by the material realities of ‘actually existing neoliberalism’ (Brenner and Theodore, 2002; Peck and Tickell, 2002). The need for this empirical approach is clearly articulated by Martijn Konings:

In order to uncover the nature of neoliberal practices we need to shift to a conceptual register not shaped by neoliberal free-market discourse – to a framework that allows us to see what such practices affect and do rather than say and project (Konings, 2012: 55).

Solidifying the case for this methodological approach, David Harvey suggests that a focus on ideas, to the exclusion of material realities, hampers the nominal opponents of neoliberalism; it is not just intellectual integrity which demands considering the ideational and material together, but also the improved possibility of political change:

The mutual development of theory and of historical and geographical reconstruction, all projected into the fires of political practice, forms the intellectual crucible out of which new strategies for the sane reconstruction of society can emerge (Harvey, 2006 [1982]: 451).

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The first task in this chapter will be to define neoliberal ‘theory’, and then neoliberal ‘practice’. Several essential neoliberal tenets will be tested, with particular emphasis on the material interests served by such a policy.5 Within this test, the ‘actually existing neoliberalism’ thesis will be either illustrated or challenged. This approach can generally be understood as ‘materialist’. Certainly, any assessment of the Abbott government, as ‘neoliberal’ or not, will rest on one’s methodological approach – ideational or materialistic. The conclusion of this chapter highlights the clear disjuncture between neoliberal ideas and practices. This ‘cleavage’ is too severe to be explained by the inevitable ‘messiness’ of translating a political philosophy into practice (Dunn, 2012: 233), instead suggesting that these neoliberal ideas play some other role – one of legitimisation, rather than normative projection. The simple reality that there is no such thing as a free market highlights the impossibility of the neoliberal utopia. Neoliberalism, in practice, is as involved in constructing markets as more progressive movements are in attempts to de-construct them. The implication of this theoretical discussion for the Australian case study is that when neoliberalism is defined as ‘actually existing neoliberalism’, the Abbott government can indeed be characterised as a neoliberal one.

Neoliberal Theory

Neoliberal theory is the collective term given to the utopic normative vision promulgated by thinkers such as Friedrich Hayek, Milton Friedman, and Robert Nozick. This theory presents

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While the key consideration is the current Coalition government led by Prime Minister Tony Abbott, this is an analytical piece, not a partisan one. Many of the comments made about neoliberal policy could also be applied to previous Labor governments as well. For the sake of brevity, this case study focuses on the Abbott government, but further research could apply the same construct to other recent Australian political experiences.

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the market as not only the most efficient way to organise society, but also as the most moral.6 Flowing on from this portrayal of the market as an omniscient information processor that will ensure an optimal distribution of goods and services is an argument to limit or remove forces that could distort this market utopia – i.e. state intervention in the spontaneous and benevolent market. First, let us consider some primary examples of neoliberal theory: Adam Smith’s flash of genius was his recognition that the prices that emerged from voluntary transactions between buyers and sellers – for short, in a free market – could coordinate the activity of millions of people, each seeking his own interest, in such a way as to make everyone better off (Friedman & Friedman, 1980, in Argyrous & Stilwell, 2011: 120).7

Here the market is portrayed as the ideal way to organise society, and this is perhaps the most defining aspect of neoliberal theory. This has been noted by critical scholars, such as David Harvey, as in his A Brief History of Neoliberalism (2005): Neoliberal [theory]… proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets and free trade (Harvey, 2005: 2).

Another tenet of the neoliberal doctrine is the assertion that, if left alone, the market will also reach a state of equilibrium. The idea of equilibrium is central to the neoclassical school of economics. Take Eugene Fama as an example typical of the neoclassical efficient markets hypothesis: In an efficient market, competition among the many intelligent participants leads to a situation where, at any point in time, actual prices of individual securities already reflect the effects of information based both on events that have already occurred and on events which, as of now, the market expects to take place in the future. In other words, in an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value (Fama, 1965: 76).

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The ‘moral’ value of the market was emphasised particularly by Friedman and Nozick. Hayek’s work was more ‘amoral’, focusing on efficiency and (negative) unintended consequences. 7 The reference to Adam Smith is a contentious one. Many argue that Smith was not the ‘free-market’ advocate he has since been made out to be. In this sense, Milton and Rose Friedman may be reading too much into The Wealth of Nations, and not focussing enough on his Theory of Moral Sentiments.

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This tenet of neoclassicism is found in almost every introductory economics textbook (e.g. Crompton, Swann, Hopkins and McEachern, 2004; Mankiw, 2014). The relationship between neoclassical economics and neoliberal theory is often one of vulgarisation – oversimplifying neoclassical theories and hypotheses, in order to support neoliberal normative prescriptions. An example of this mistreatment of neoclassicists is in the following argument by Larry Summers against the regulation of the financial sector: ‘the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies’ (Summers, 1998, online). Importantly, equilibrium is one of the ontological values attributed to the market by neoliberal ideologues, along with spontaneity and utopic distribution. Leading on from these values attributed to the market, the key normative prescription associated with neoliberal theory is the removal of the state from economic affairs, as any attempt to plan or effect outcomes will negatively affect price signals and the ability of the market to clear. As such, the role of the state is limited such:

These then are the basic roles of government in a free society: to provide a means whereby we can modify the rules, to mediate differences among us on the meaning of the rules, and to enforce compliance with the rules on the part of those few who would otherwise not play the game (Friedman and Friedman, 2002 [1962]: 25).

A complete account of the history of neoliberal thought is outside the scope of this thesis, but the above quotations serve as an outline of the theory. The policies associated with neoliberal theory – free trade, deregulation, reducing the imposition of taxation, the privatisation of state assets, etc. – are all drawn from these central premises of price signals and equilibrium resulting in a harmonious market society. As outlined in the introduction to this thesis, and in the outline above of the historical materialist approach, the vast majority of critics of neoliberalism proceed as if these neoliberal ideas reflect existing neoliberal practices. The political significance of such 18

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engagements will be developed later in this thesis. Here we will merely consider some examples of ‘free-market’ conceptions of neoliberalism, in order to contrast with neoliberal practice. Take examples of such criticisms:

neoliberals across the globe share a common belief in the power of ‘self-regulating’ free markets to create a better world (Steger and Roy, 2010: x). Neoliberalism – or the belief in the sufficiency of markets to secure human welfare – [is] the age’s default ideology (Kunkel, 2009, online). Neoliberalism advances individualism in terms of making choices and taking initiatives, the primacy of the market in laissez faire conditions, minimal state intervention in economic matters… (Zafarullah & Huque, 2012: 21).

These are examples of the orthodox understanding of neoliberalism within critical spheres. As a result, many of the criticisms levelled at neoliberal policy focus on the theoretical and material failings of, say, ‘small government’, ‘free trade’, or ‘perfect information’.

Finally, neoliberal theory is crucially and misleadingly based on a singular, monolithic vision. As much of this thesis will emphasise,8 neoliberal practice is marked by uneven spatial and temporal development. Neoliberal variegation should be seen in contrast to the way neoliberal theory is presented as universal, and as such another example of disjuncture: [N]eoliberal doctrine is premised upon a “one size fits all” model of policy implementation that assumes identical results will follow the imposition of market-oriented reforms, rather than recognizing the extraordinary variations that arise as neoliberal reform initiatives are imposed within contextually specific institutional landscapes and policy approaches (Brenner and Theodore, 2002: 353).

Neoliberal theory is entirely distinct from neoliberal practice. It is to that material reality of ‘actually existing neoliberalism’ that we now turn.

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Chapter 2, in particular

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Neoliberal Practice

Neoliberal ‘practice’ – ‘actually existing neoliberalism’ – is incredibly varied. Across its varied iterations, however, one commonality is its disjuncture from the utopic imagery of Hayek and Friedman. The term ‘actually existing neoliberalism’ originates in the work of Neil Brenner and Nik Theodore (2002) and Jamie Peck and Adam Tickell (2002). The term:

highlight[s] ways in which neoliberal ideology systematically misrepresents the real effects of such policies on macroinstitutional structures and evolutionary trajectories of capitalism (Brenner and Theodore, 2002: 353).

Put more simply, neoliberal ideology (or theory) represents something entirely different from the actual policies and institutional frameworks shaped during the ‘neoliberal period’. The most fundamental divergence from theory is in the role allocated to the state in creating and recreating neoliberal markets (Porfilo, 2007, online).

This is, however, no surprise when the development of capitalism is viewed through a historical lens – ‘an historical approach reveals that states have been integral to the development and expanded reproduction of capitalism’ (Cahill, 2010: 306). Two scholars who, at different times, have emphasised the essential role of the state in capitalist development are Karl Polanyi (2001 [1944]) and Ha-Joon Chang (2010). Polanyi’s The Great Transformation was a critique brought to the nineteenth century experience with ‘laissez faire’ capitalism. While that period is often characterised as largely free of regulatory involvement by the state, Polanyi’s empirical approach revealed ‘an enormous increase in continuous, centrally organised and controlled interventionism’ (Polanyi, 2001 [1944]: 146). A similar argument is presented by Chang, who makes the claim that ‘there is no such thing as a free market’ – ‘A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them’ (2010: 1). Many of the fundamental tasks of

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the contemporary state make the realisation of a truly ‘free market’ impossible. Even the most strident neoliberal would not argue that children should be re-introduced to the workforce. Standard controls over immigration directly influence the labour market. Even the way in which money is created and supplied shapes and influences the market – let alone the social values and relationships, which inform all market transactions, the origins of which are outside of the ‘market’. Chang, like Polanyi before him, recognises that the market is embedded in a complex social, political and institutional context which ultimately defines and shapes it. It is in this sense that neoliberal theory is utopic; it represents an unrealisable social organisation. What is surprising is the way in which this utopic imagery – the ‘free market’ – has come to so fully dominate our economic debates, both domestically and globally.

From this Polanyian perspective ‘actually existing neoliberalism’ is understood as disconnected from the impossibility that is neoliberal theory – neoliberal markets are just as ‘embedded’ as other market formations (Cahill, 2012). The task, then, is to consider what actually characterises neoliberal practice. Across variegated political economic geographies, the typical policies associated with neoliberalism are deregulation, privatisation and marketization (Cahill, 2010: 307). Crucially, however, while neoliberal practice has facilitated the expansion of markets and ‘market-like’ structures, these policies have not correlated with a reduction of the size or scope of government intervention in the economy; ‘actually existing neoliberalism’ is certainly defined by increasing the scope and frequency of market-based transactions, but the characterisation of neoliberal practice as involving ‘free markets’ is incorrect. Indeed, during the neoliberal period, the state has played a central role in redistributing income upwards. One simple way in which this is achieved by:

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increasing the supply of less-skilled workers (thereby lowering their wages), while at the same time restricting the supply of more highly educated professional employees (thereby raising their wages) (Baker, 2009: 1).

Whether through tight control over labour supply,9 or by other means, the state plays an active role in facilitating upwards redistribution of wealth. Other mechanisms ‘include corporate welfare’, and cuts to services which disproportionately affect the poor. Often it is through a combination of such measures that income (and wealth) is funnelled upward. The growth of the state can be illustrated by the rise in taxation across the OECD during the rise of hegemonic neoliberalism (Piketty, 2014: 475), coupled with rising wealth inequality during that same period (see Appendix). This correlation cannot be explained away with overall growth rates improving government revenue, as the same time period has also seen stagnation and decline of GDP growth (Piketty: 356). Although causation is difficult to prove, it is apparent that the normative prescriptions of theoretical neoliberalism fail to capture neoliberal governance. A better explanation for these empirical facts is that ‘actually existing neoliberalism’ has resulted in both high rates of state activity coupled with increasing wealth and income inequality – the effect of this has been upward redistribution of capital. This policy dynamic of upward redistribution has been apparent historically in Australia (Wilson and Turnbull, 2001) – it is worth considering if this remains the case in contemporary Australia.

First, it is necessary to consider more closely the microeconomic policies associated with neoliberalism: deregulation, privatisation and marketization. Of these, deregulation immediately seems counter to the central thesis being argued here – that neoliberalism does not, in practice, involve a retreat of the state toward a ‘freer market’. Surely, if existing 9

Particularly relevant with reference to the neoliberalisation of international trade – the clear prioritisation of capital mobility over labour mobility is a significant departure from neoliberal theory, and has a direct impact on wages and conditions (McEwan, 1999: 35).

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regulations are being rescinded, then this means a reduction of state purview? This understanding of deregulation is prevalent in those explanations of the global financial crisis that focus on ‘risky lending’ and the repeal of the Glass-Steagall Act in the US as key factors leading to the crisis (e.g. Garnaut, 2009; Krugman, 2013). However, in the US context, the process of financial deregulation ‘did not entail a withdrawal of the state’ (Cahill, 2014: 141). Those who see the repeal of a certain regulation – say, the Glass-Steagall Act – as a reduction in state purview take a narrow view of government controls. From a broader perspective, it is possible to perceive a token ‘deregulation’ of the state occurring concurrently with a permissive monetary policy which, when taken together with stagnating wage growth, forces more working-class families to rely on finance to facilitate a certain standard of living. The overall effect of this is to create a market where there was not one before – active state intervention in the economy to create a market, in order to allow further capital accumulation10. This example clearly focuses on the US example, but it also speaks to a broader experience with neoliberalism. That is to say, increases in apparent freedoms in some areas disguise the ways in which the state continues to set the ‘rules of the game’ in a way that, as Chang says, is invisible ‘because we so unconditionally accept its underlying restrictions’ (Chang, 2010: 1). The process of privatisation, too, has heavily involved states. Indeed, as privatisations take place, new regulations are often created to govern the private enterprises (Cahill, 2010: 307) – this regulation could be seen, too, as offsetting aforementioned deregulation. In a similar fashion, marketisation of social services is often accompanied by a continued role for government subsidisation. Due to these processes, individuals certainly rely more on markets for the delivery of goods and services than during the post-war era. The key point here is that 10

After all, despite the hardship forced on many families, the securitisation of ‘sub-prime’ mortgages in the US financial market has allowed a select few to make a lot of money.

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while there may be some correlation between neoliberal theory and practice, it is only on a microeconomic level. The stipulated goal of neoliberal theory – the reduction of the role of government, and the creation of ‘free markets’ – is never delivered in practice; ‘in all of these cases, state regulation has been used to secure the formal freedoms advocated by neoliberal polemicists’ (Cahill: 308).

But while deregulation, privatisation and marketisation can be broadly defined as neoliberal practices, there exists incredible variegation11 between and within particular spatial and temporal geographies in the way these processes are institutionalised. This variegation creates difficulty in these policies being used as a litmus test to identify neoliberal governments and actors. While they are important characteristics, which can be used to identify neoliberalism in practice, they are, by themselves, insufficient. It is partially due to the variation caused by the way these dynamic processes interact with existing social and political contexts that the meaning and utility of the term ‘neoliberalism’ is sometimes questioned (Norton, 2001; Berg, 2009, Costello, 2009). A simpler, common thread must be identified. It is in the material interests served by existing policy, that the ‘neoliberal-ness’ of a particular political economic geography is to be understood. The simple test is the Latin saying – qui bono? Who benefits? Here we return to a quotation from David Harvey used in the introduction of this thesis. Neoliberal practice – or ‘actually existing neoliberalism’ is a ‘political project to re-establish the conditions for capital accumulation and to restore the power of economic elites’ (Harvey, 2005: 19). Thus, one telling piece of evidence of neoliberalism at work concerns the now-famous graphs and data of Thomas Piketty (2014).12 The ‘long boom’ period of social democracy was but a brief interruption of normal rates of 11 12

‘Variegation’ will be explored further in Chapter 3. See Appendix.

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inequality within capitalism. For neoliberalism should, in practice, be understood as the process of re-establishing those conditions through the mechanism of the state. Neoliberal practice does not just differ from theory in its normative prescriptions; it also differs in effective outcome. The merits of neoliberal theory are argued by suggesting that their adoption would have preferable results: increased growth, increased employment, increased efficiency, increased prosperity, and increased freedoms. The actual material outcomes resulting from decades of neoliberal hegemony are the opposite of these promises.

With the market so much more in control of the global economy now than fifty years ago, then if [neoliberal theorists] are right, the world should be a manifestly better place: it should be growing faster, with more stability, and income should go to those who deserve it (Keen, 2001, p. 2).

When an empirical approach is embraced, not only does ‘actually existing neoliberalism’ not follow the normative blueprint established by its proponents – the outcome is dislocated from the theory as well. Indicators of this is are stagnating global growth rates, and increases in unemployment. It is not controversial to note the failure of neoliberal promises to be translated into reality, despite the way neoliberal ideas have captured the global discourse.

Australian ‘neoliberalism’

The dichotomy between neoliberal theory and practice will now be considered within the frame of a case study – the contemporary Australian political economy, and the current Abbott government. An overarching task of this thesis is to assess claims that Tony Abbott’s Coalition government should be characterised as neoliberal. In this chapter existing (and

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proposed13) policy will be analysed through the lenses of neoliberal theory and neoliberal practice; can the Abbott government be understood through neoliberal theory, neoliberal practice (‘actually existing neoliberalism’), or neither?

Neoliberal Theory?

First, let us consider some of the rhetoric employed by Tony Abbott and his ministers. A key example of the intellectual and philosophical convictions of Abbott was his Address to the World Economic Forum in January 2014. Many of the tenets of theoretical neoliberalism were articulated in this Address (Austin, 2014; Jabour, 2014). Take the idea that the market is ontologically spontaneous and the most preferable way to organise society: ‘As soon as people have economic freedom they create markets. Markets are the proven answer to the problem of scarcity’ (Abbott, 2014, online). Going further, another tenet of neoliberal doctrine – that the state should stay out of the way, and allow the omniscient market to create employment and growth – was also prominent:

The challenge, everywhere, is to promote sustainable, private sectorled growth and employment – and to avoid government-knows-best action for action’s sake… Despite the Crisis, worldwide, income per person is still up by over 60 per cent in the past decade… This progress is partly… driven by the intellectual and philosophical conviction that freer trade and smaller government will strengthen prosperity; the instinct that empowered citizens can do more for themselves than government will ever do for them (Abbott, 2014, online).

Ignoring the statistically invalid approach of averaging the entire global population’s income to indicate progress, this rhetoric clearly correlates with theoretical projections of neoliberalism. There is even a token line supporting the ‘zombie’ economic idea of ‘trickle

13

Many of the more controversial aspects of the Coalition’s 2014 budget are yet to pass through a hostile Senate. That said, while some proposed policies are not yet in force, they still speak to the political persuasions of the government that proposed them.

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down economics’ (Quiggin, 2010: 137): ‘Stronger growth requires lower, simpler and fairer taxes that don’t stifle business creativity’ (Abbott, 2014, online).14 This speech is not an isolated example. Another prominent example of Coalition rhetoric is now-Treasurer Joe Hockey’s ‘The End of The Age of Entitlement’ speech, delivered at the Institute of Economic Affairs in April of 2012. He, too, portrays the market in neoclassical terms, symmetrical power relationships and all:

The modern capitalist economy is centred around the satisfaction of personal wants and needs… it is a simple and proven formula for willing buyers to engage with willing sellers… The producer is happy and the customer satisfied (Hockey, 2012, online).

Beyond these ontological commitments to the market, a prominent theme in Hockey’s speech is the largesse of government spending, and the need for fiscal ‘sustainability’. Targeted within the speech – foreshadowing later budgetary measures – were the current Australian retirement age, pension provision, and healthcare. Such measures, Hockey argues, are needed, as the goal of a fiscally responsible government must be balanced budgets; cuts to government spending are the only solution, as increases to taxes would slow growth:

We must rebuild fiscal discipline. Budget surpluses must be restored, ideally until the debt is repaid. This can only be achieved by cutting spending or by raising taxes. And given the general acceptance is that the increased drag from higher taxes would compromise economic growth, the clear mandate is to lower expenditure (Hockey, 2012, online).

All of these claims can be drawn back to neoliberal ‘common sense’ (Hall and O’Shea, 2013), or, rather, neoliberal theory. So, it can be said that neoliberal theory does indeed accurately characterise the rhetoric of the Abbott government. The question remains, however: do these intellectual and philosophical commitments translate into practice, or is there disjuncture within the Abbott government’s ‘neoliberalism’ as has been seen more generally? 14

For further information on this fallacy, see Quiggin (2010: 137-176).

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Neoliberal Practice?

In turning to consider the actual policies of the Abbott government, Hockey provides an interesting starting point in his claim that ending the ‘Age of Entitlement’ will improve ‘equality of opportunity’ – ‘equality of opportunity rather than equality of outcome is my preferred model for contemporary society’ (Hockey, 2012, online). Equality of opportunity is a rhetorical commitment espoused by many liberals, with its roots being in classical liberalism (Heywood, 2005: 107). When neoliberals suggest they are for equality of opportunity, however, it is a somewhat more tenuous claim; especially when the claim is made within a speech which is arguing for widespread cuts to social services. It also stands in contrast with the historical experience with ‘actually existing neoliberalism’, which is better characterised as a program which increases inequality of both outcome and opportunity (Stiglitz, 2013).

The material history of Australian ‘equality of opportunity suggests that, during the neoliberal period, it has been a ‘myth’ rather than a ‘reality’ (Agry, 2006). That is not to say that Australia is a fully immobile society. Australia has a certain level of social mobility; that mobility is not, however, without limits. And most concerning, the trajectory of the past few (neoliberal) decades has been continued reductions in that mobility. In 2006 Fred Argy wrote a paper for The Australia Institute, Equality of Opportunity in Australia: Myth and Reality, in which a variety of data and research was brought together. Interestingly, the conclusion was that while ‘Australians believe that their society generally performs well on equality of opportunity’ (ibid: 11), the reality was significantly different – ‘on most conventional international criteria, Australia does not stand out as a particularly egalitarian society’ (ibid: 11).

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One of the key reasons for this lack of social mobility was the negative effect of inequalities of income and wealth, which served to calcify mobility. 15 By this indicator, any hope that equality of opportunity might have increased since 2006 are dashed. As research by Oxfam released in 2014 shows, the wealthiest 1 per cent of Australians own the same amount of wealth as the bottom 60 per cent combined (Oxfam, 2014, online). The trajectory of wealth inequality in Australia suggests that this is in no way the ‘high water mark’; inequality of wealth will continue to increase. Analysis of the current federal budget by both the Treasury (Allard and Martin, 2014, online) and independent researchers (Phillips, 2014, online; The Australia Institute, 2014a, online) suggests that, if implemented, the 2014/2015 budget will increase that inequality of opportunity directly through its disproportionate impact on lower socio-economic groups. The bottom quintile of households will pay $2.9 billion through service cuts, while the top quintile will be $1.7 billion worse off. Not only is this disproportionate in absolute terms, but as a percentage of earnings, this impost is much greater for those poorer households. It is also structurally different, when considering social mobility. Those services being cut are the mechanisms which facilitate upward mobility, whereas taxes on the top income bracket do not push people lower in the system. Thus several key factors that influence social mobility – existing inequalities of wealth, in a system where social services are being reduced – are working together to exacerbate current inequities of opportunity.

The ‘End of the Age of Entitlement’ has seen significant cuts proposed and implemented across a broad range of the social services provided by the Australian Government. Service cuts have not only disproportionately affected poorer members of our society, as is typical of austerity programs (Blyth, 2013: 8), but cuts have been strikingly 15

For a deeper exploration of the causal relationship between inequality and calcified social mobility, see Wilkinson and Pickett (2009).

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absent across the corporate sector (Mansillo, 2014, online). Here we return to the idea of ‘actually existing neoliberalism’ as a structural system of upward redistribution – or, in Dean Baker’s terminology, the ‘conservative nanny state’ (Baker, 2009). An ‘actually existing neoliberal’ state does not just allow capital to pursue further accumulation passively. It actively works to redistribute wealth upwards. One of the key mechanisms for this is ‘corporate welfare’. Corporate welfare includes a raft of government measures which support or subsidise the cost of business16 – ‘through tax abatements, government financing of building projects, improper use of eminent domain, assumption of corporate liabilities, waiver of regulations, or other supports’ (Nader, 2011: 35). It is in understanding the quantum of corporate welfare employed by neoliberal governments that the disjuncture between theory and practice is made most stark; especially in the context of an ‘austere’ budget, which actively cuts social welfare services, the continuation of corporate welfare highlights the fact that neoliberal practice is dominated not by ideas, but by material interests. Corporate welfare has been a feature of successive neoliberal governments in Australia. ‘Government assistance to industry far exceeds monies spent in unemployment benefits, yet it is always social welfare that governments scrutinise and cut back’ (Van Dyke, 2003). Due to its amorphous, individualised nature, expenditure on corporate welfare is difficult to quantify. Some market controls that benefit capitalists – such as control of the supply of labour, which has a huge effect on profitability (Baker, 2009: 1; Chang, 2010: 2) – have significant monetary benefits for the owners of businesses, but do not represent a significant outlay of government funds. This means that state action in favour of capital is not fully visible through expenditure figures alone. Putting these quantitative methodological issues aside, research has put the total amount of corporate welfare spending in Australia in 16

This is not to say that government funding for private ventures is inherently a bad thing. Indeed, industry policy is a key facet of progressive politics. The point is simply that when this is treated as exempt from spending cuts, there is a direct implication for ‘actually existing neoliberalism’.

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2005 at 9 per cent of GDP. This is in contrast to social welfare outlays totalling roughly 14 per cent of GDP (Farnsworth, 2013:16). Social spending may be larger in absolute terms, but for roughly 40 per cent of government spending to be immune during periods of austerity, questions must be raised as to why. The ‘qui bono’ test shows quite clearly who is benefiting from ‘actually existing neoliberalism’. Let us consider this within the context of the current Australian federal budget. Treasury estimates place the current budget deficit at $29.8 billion.17 In an apparent effort to reduce spending, Joe Hockey proposed cutting many social services, and looked to increase revenue in other areas – such as through a $7 co-payment to visit a GP – totalling $36 billion of savings (ABC, 2014, online). In this context, it is telling to consider some of the larger government expenditures toward corporate welfare – taxing mineral extraction at the same rate as labour (as opposed to the current rate of 13 per cent) would increase revenue by an estimated $67.8 billion; removing the total of $11 billion dollars of subsidies awarded to the fossil fuel industry through fuel tax credits, aviation fuel, and mining exploration grants; and reworking negative gearing so that it no longer facilitates the inflation of a housing bubble through speculative and investment activities would also save the government an estimated $15 billion (Mansillo, 2014, online). These corporate welfare expenditures alone total $93.8 billion dollars annually – more than triple the current budget deficit. Other expenditures which do not benefit corporations directly, but nonetheless benefit the wealthiest individuals in our society, such as superannuation tax concessions for the rich also work to facilitate upward redistribution. That savings have been found in social spending, scientific research and foreign aid (Sydney Morning Herald, 2014, online), rather than in the area of corporate welfare, speaks to the material interests served by the political project that is neoliberalism.

17

This figure is actually greater, due to write-downs in revenue.

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Beyond the mechanism that is corporate welfare, neoliberal practice is defined by several other tools which work to create market-like18 structures. These include deregulation, privatisation and marketisation. When considering the case study of contemporary Australian political economics, these, too, are hugely relevant. To take just two examples, the promotion of ‘market-like’ logics within the spheres of higher education and healthcare are highly controversial aspects of the 2014 budget (Etherington, 2014, online; Bundey, 2014). Let us briefly consider the changes to higher education. Christopher Pyne, Minister for Education, has proposed (among other changes) to remove the current ‘cap’ on the fees that universities can charge for an undergraduate degree (Pyne, 2014, online). Whilst this reform will supposedly ‘free’ universities from burdensome red-tape – which, unremoved, will apparently cause them to ‘slip into mediocrity’ (Pyne, online) – this policy package should not be seen as a ‘small government’ proposal. Just as with US financial ‘deregulation’, the policy here is allowing more freedom with one hand, whilst also increasing state involvement in market creation with the other. Part of this package will extend government-financed student loans (HECS) to private tertiary institutions. The scope and size of government spending and subsidy is increasing in absolute terms. More importantly, this process should be seen as typical of ‘actually existing neoliberalism’ in the way deregulation is pursued with the effect of actively creating a market, where before there was none. The effect of this marketisation, as has already been experienced in the US education system, will be increased opportunities for private institutions to pursue higher profits. And with the securitisation of student debt now increasing in the financial sector, the very debt being incurred then becomes another market for further capital accumulation.

18

‘Market-like’, for, as discussed above, market discipline is only applied selectively. Socialisation of business costs does not conform to market logics – it is simply the logic of capital being applied here.

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Similar analysis could be brought to the introduction of ‘co-payments’ in healthcare, which will supposedly send a ‘price signal’ to those over consuming this particular social service. Many other aspects of proposed, effective, and historical policy in the Australian context also conform to these logics.19 With this understanding of ‘actually existing neoliberalism’ in Australia, however, the important question to ask is: ‘how’ has such an undemocratic program achieved this level of ‘success’?

Understanding Disjuncture At this point the ‘disjuncture’ between neoliberal theory and neoliberal practice has been discussed both generally, and within the frame of the Australian case study. It is evident that the contemporary Australian experience conforms to the established theoretical conceptualisation of ‘actually existing neoliberalism’. The key questions this raises are ‘why’ and, perhaps more importantly, ‘how’: why does neoliberal practice diverge so significantly from its ideational blueprint? And how is that contradiction maintained, allowing neoliberalism to maintain its hegemony? These questions are emerging as critical issues within the field of political economy. They are questions which will run throughout the remainder of this thesis, with a modest contribution to that ongoing debate being offered. An answer to the first question – ‘why’ – is apparent: neoliberalism does not conform to the logic of coherence between theory and practice, but rather presents the logic of capital. The ‘why’ of neoliberal disjuncture is explained by pointing to the clear material benefits to the capitalist class, while neoliberal theory acts as ideological20 cover, legitimising and obscuring the class-based project forwarded by ‘actually existing neoliberalism’. While some

19

As one example from a previous government, Australia’s immigration detention centres are privatised. The imprisonment of children – illegal under international law – is a for-profit enterprise, with the then-ALP government paying Serco $1.86 billion in 2013 for the provision of that service (Loewenstein, 2014: 17). 20 In the Marxist sense of the word.

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might describe out current political systems as oligarchic, the dominance of the wealthy elite is not yet complete. A prime minister announcing explicitly that the goal and effect of his policies is to redistribute wealth upwards is not (yet) politically viable. Understanding this reality, a false consensus is built up around ideas of ‘equality’ and ‘freedom’, which do not necessarily relate to actual policy or outcomes. The second question – ‘how’ – is somewhat trickier to answer. If neoliberal practice is a class-based project to re-establish the power of the capitalist class, as is argued by Marxists (and others) such as David Harvey (2005), then how do neoliberal agents exercise power so as to influence the polity to vote for governments which only serve the interests of the few? While the effect of ‘actually existing neoliberalism’ is material, material interests rely on ideational hegemony. It is in this nexus of ideas and material interests that the political implications of this thesis reside. These questions will continue to be considered throughout, and examined more closely in Chapter Three.

Conclusion

The purpose of this chapter has been to outline two contrasting characterisations of neoliberalism – neoliberal ‘theory’, which is understood to be the projection of neoliberalism being an ideology of ‘free markets’ and ‘small states’; and neoliberal ‘practice’, which embraces a materialist analysis of neoliberalism. Fundamentally, the assertion that neoliberal practice is synonymous with neoliberal theory – that markets have been made ‘freer’, and that the state’s role in economic affairs has ‘shrunk’ – was challenged. In reality, neoliberal practice is defined by strong state action to create and recreate markets, and promote the structural conditions for accelerated capital accumulation. Indeed, neoliberalism not only

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creates the conditions for passive capital accumulation, but concurrently pursues an active policy of ‘upward redistribution’. This materialist analytical focus does not replace the study of ideas and ideology. Neoliberal theory – or, rather, ideology – plays an important role in the promotion and continuation of neoliberal hegemony. This will be explored further on.21 The assertion simply is that an analysis which assumes that neoliberal policy is directly influenced by neoliberal ideas is one that ignores the material reality of ‘actually existing neoliberalism’. In accordance with the materialist methodology adopted, these general observations were investigated more closely in the frame of the Australian context. Through this case study, it became clear that Abbott’s rhetoric, and that of his Ministers, conforms to many of the philosophical and ontological commitments of neoliberal theory. ‘Small state’ and ‘free market’ rhetoric does not, however, accurately represent the effective policy of the current government. Rather, the role of the state has been prominent, creating and promoting further capital accumulation and upward redistribution of wealth. This is raising inequality of both income and wealth within the country, undermining the rhetorical commitment to ‘equality of opportunity’. Thus Coalition rhetoric can be understood as a form of neoliberal theory, from which the realities of practice sharply diverge. Because of its contradictory and variegated nature, to attempt to identify various neoliberal governments by individual policies is self-defeating. Rather, the analytical test must be the simple question: who benefits? With continued corporate welfare supporting large corporations, while cuts are made to social services, the answer to this question is quite plain. The material interests served by the current Abbott government are those associated with ‘actually existing neoliberalism’. By this measure, while Coalition policy does not show

21

Chapter 3, in particular.

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commitment to the normative ideals of neoliberal theory – that is ‘small states’ and ‘free markets’ – it certainly can be characterised as a neoliberal government.

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Chapter Two Neoliberal Variegation: Against universal conceptions

Introduction

It has been argued here that ‘actually existing neoliberalism’ is an important conceptualisation of neoliberalism, in the face of distinct disjuncture between theory and practice. The purpose of this chapter is to develop that conceptualisation, again with reference to the experience of contemporary Australian political economics. This chapter will contrast itself against monolithic or universal conceptualisations of neoliberalism:

Against the monolithic conceptualizations that prevail in most popular and academic accounts, we emphasize the constitutively uneven, institutionally hybrid, and chronically unstable character of neoliberalizing forms of regulatory transformation (Peck, Theodore, and Brenner, 2012a: 17).

As Peck, Theodore and Brenner suggest, orthodox ‘free market’ conceptions of neoliberalism treat it as a universally even doctrine – not only between theory and practice, but across various iterations of practice. The root of understanding ‘actually existing neoliberalism’ is a Polanyian take on political economics – that is, neoliberalism interacts with existing social and political institutions, as the neoliberal economy is not separate from these contextual influences. This foundation results in a particular understanding: the process of ‘embedding’ neoliberalism in varied political economic geographies will result in different regulatory restructurings.

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The nature of neoliberalism as a shifting, contradictory, open-ended and variegated process has led some to criticise the utility of the term. An underlying theme throughout this chapter (and thesis as a whole) is a defence of the term ‘neoliberal’ against those who would argue that it doesn’t exist. Indeed, the way in which neoliberal practice diverges from the theoretical blueprint is one of the reasons Andrew Norton dismisses the term: “Neoliberalism” simply cannot explain the Hawke or Keating governments. While they certainly liberalised some parts of the Australian economy, they were highly interventionist in other areas… “Neoliberalism” can’t explain the Howard government either. What neoliberal would go slow on tariff reduction, tie up new forms of media in prohibitions and restrictions, or reform the tax base so as to ensure long-term growth in tax revenues?... [The term “neoliberal”] doesn’t describe an Australian reality… (Norton, 2001: 65).

Simplistic ‘free-market’ definitions of neoliberalism invite this kind of analytical dismissal.22 Herein lies the necessity of developing a conceptualisation of neoliberalism which goes beyond even the ‘theory-practice’ dichotomy, to develop the spatial and temporal nuances of ‘actually existing neoliberalism’; a robust definition will emphasise an open-ended, uneven, and ongoing process of restructuring. While some policies, as Norton points out, may not conform to the theoretical blueprint, the overall direction of this political strategy is to recreate (and advance from) pre-World War Two conditions of capital accumulation. Similar microeconomic policies of deregulation, privatisation and marketisation are often employed to that end, but the policy ‘mix’ is not always the same. This is important to understand when considering the neoliberalism of the Abbott government. Australian neoliberalism might create a different institutional and regulatory framework from, say, American neoliberalism. Similarly, temporal variation between, say, the Hawke/Keating governments, the Howard government and today’s Abbott government must be noted.

22

A later example of this is in Peter Costello’s The Costello Memoirs (2009): ‘He [Rudd, 2009] described neoliberalism as “the core theoretical belief in the superiority of unregulated markets – particularly unregulated financial markets”. Australia did not practise an unregulated financial market under the Coalition. In fact, Australia set up ARPA as a dedicated prudential regulator to apply prudential controls and supervision over all aspects of the financial system’ (p. 350).

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With an appropriately nuanced understanding of neoliberalism that is conscious of variation between iterations, these seemingly disparate political economies can be analytically grouped under the broad term ‘neoliberal’. If one assumes that the term ‘neoliberal’ is static and universal, then its application across these varied geographies might be seen to challenge its usefulness, or even its validity. The conceptualisation of neoliberalism being advanced here is not a rigid set of policy prescriptions which cannot span spatial and temporal different – rather the ‘test’ for neoliberalism is a different one. It is outcome with which we are concerned; as suggested in Chapter 1, neoliberalism is to be identified by the interests which benefit.

This chapter will consider the ways in which localised experiences of neoliberalism are spatially and temporally variegated. Spatial variegation emphasises the institutional and philosophical ‘co-existance’ of neoliberalism with ideological others, and will be explored through comparison between the Australian political economic geography and that of key international examples. Temporal variation is also significant when comparing contemporary actors with historical actors within the same national context – this variation over time will be considered with particular emphasis on the role of crisis in promoting neoliberalisation, and how this ‘crisis-driven forward momentum’ also shapes institutional change.

Here, tension between ‘uneven’ neoliberalisation and conceptual grouping will be dispelled, with the material test of ‘interests served’ re-emphasised as the key analytical tool for the identification of neoliberal projects. With this issue resolved, the characterisation of Tony Abbott and his government as ‘neoliberal’ will be more robust, and better understood. Thus, this chapter focuses not just on the empirical case study, but also emphasises the spatial

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and temporal nuances of ‘actually existing neoliberalism’ which ward against monolithic conceptualisations.

Spatial ‘Variegation’

First, let us consider the idea of ‘spatial variegation’ between and across various iterations of neoliberal policy. A comparative approach would arguably reveal that different geographies that have all been described as neoliberal23 are distinctly variegated in their institutional, regulatory and political frameworks: The uneven geographical development of neoliberalism, its frequently lop-sided and partial application from one state and social formation to another, testifies to the tentativeness of neoliberal solutions and the complex ways in which political forces, historical traditions, and existing institutional arrangements all shaped why and how the process of neoliberalization actually occurred (Harvey, 2005, p. 13).

Harvey shares this perspective on the interaction between ‘political force, historical traditions and existing institutional arrangements’ (Harvey: 13) with several other political economic geographers, including Jamie Peck, Neil Brenner and Nik Theodore (2012). The parallel between these approaches and the work of Karl Polanyi (2001 [1944]) is immediately apparent, but it suggests an alternative reading of neoliberalism in relation to ‘embeddedness’.24 An ‘always embedded’ approach leads one to consider ‘always embedded neoliberalism’ (Cahill, 2012: 116). Contrary to the ontological assertion of (some parts of) neoliberal theory, not only is the market not spontaneously occurring, but the realisation of the ‘catallaxy’ utopia is impossible – even a designed free market cannot exist separately 23

Some examples of contrasting political economies each being labelled as ‘neoliberal’ include: Chile (Klein, 2007), the US (Chomsky, 1999), the UK (Steger and Roy, 2010), China (Harvey, 2005), and Australia (Cahill, 2007). 24 The usual understanding of neoliberalism from a Polanyian perspective is that neoliberalisation is part of the ‘double movement’ – it is the process of ‘disembedding’ the economy from its social and political context (Blyth, 2002: 152; van Apeldoorn, 2009: 24; Konings, 2012: 57). This idea of economies being either ‘embedded’ or ‘disembedded’ rests on an interpretation of Polanyi which has been described as ‘embeddedness as a historical variable’ (Gemici, 2008: 25). An alternative (and more useful) interpretation of Polanyi produces the idea of the economy as ‘always embedded’ (Block, 2003: 276).

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from its institutional context. It is this ‘embedded’ nature of ‘actually existing neoliberalism’ that creates spatial variation: The uneven development of ‘actually existing neoliberalism’ means that it cannot conform precisely with a universal neoliberal template derived from neoliberal theoretical postulates (Cahill, 2010: 306).

As well as interacting with existing institutions and social structures, the praxis of neoliberalism interacts with existing philosophies and modes of politics. The argument made by Peck, Theodore, and Brenner is that rather than replacing existing political arrangements, neoliberalism coexists in a ‘parasitic’25 relationship with those structures: [neoliberalism] has only ever existed in a range of partial and ‘impure’ forms and messy hybrids… [it exists in] cohabitation with unloved ideological others… (Peck, Theodore, and Brenner, 2012a: 19).

The sum of these factors results in uneven and variegated neoliberal geographies. Each process of neoliberalisation plays out in a unique institutional context, interacting with different structures and existing ideologies, resulting in distinct iterations of neoliberalism. Through ongoing contestation and compromise with existing ideological, institutional, social and economic structures, each process of neoliberalisation creates a different instance of restructuring (Brenner and Theodore, 2002; Brenner, Peck and Theodore, 2010).

Spatial variegation and Australia

Within the scope of the Australian case study, this ideological and institutional co-existence will be illustrated. The first of these interactions to be considered will be neoliberalism and nationalism. Although the intersection of these ideologies warrants a thesis of its own, we can briefly consider how this nexus illustrates the way in which contextual variation results in

25

(Peck, Theodore, and Brenner, 2012b: 274)

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spatial variegation. Neoliberal theory ‘does not look with favour on the nation (Harvey, 2005: 105, original emphasis). In the neoliberal normative utopia, atomised entrepreneurial individuals pursue their own benevolent self-interest; collective groups such as neighbourhoods, communities, unions or nations are an ideological ‘other’ (Drache, 2008: 11-12). And yet the neoliberalism of John Howard, in particular, relied upon national identity for legitimisation. Take Howard’s Remembrance Day speech of 1997. Howard spoke about a collective Australian spirit – ‘A spirit which draws Australians together in times of need’ (Howard, 1997, online) – which runs at odds with the individualism espoused in neoliberal theory. In this way, neoliberal ideas were forced to co-exist with ‘unloved others’, for the purpose of electoral success (Maddison and Martin, 2010: 105). This illustrates the contextual ‘embeddedness’ even of neoliberal ideas. Another example of how Australia contrasts with other political economies is the institutional embeddedness of Australian neoliberalism in regard to the welfare state.

Although during the neoliberal period there have been repeated attacks on the entrenched Australian welfare state – the 2014 budget as just one example of this – the state in Australia still delivers considerably more social services to its citizens than some other neoliberal states. The welfare state in Australia is still a key institutional feature, in size and scope (Fenna and Tapper, 2012). When this is contrasted with the mammoth struggle faced by US President Obama in his attempts to introduce public healthcare provision (McCarthy, 2013, online) – ‘Obamacare’, as it has become known – these two political landscapes would seem to be significantly disparate. How then can these spatially variegated political economies be categorised as both ‘neoliberal’? It is for this reason that Peck, Theodore, and Brenner (2012a) emphasise the conceptual importance of a process of ‘neoliberalization’ rather than a static term ‘neoliberalism’.

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The implication of this alternative terminology is that there is no end-state for neoliberalism; there is no country that has fully realised the utopic neoliberal schema. Rather, ‘neoliberalization’ suggests that each instance of neoliberal restructuring is an ongoing, openended process. It also recognises that the context in which that process takes place will shape each process differently. In that sense we can conceptualise the US process of neoliberalisation as ‘further along’, while the social-democratic tradition – or ‘entitlement’ in the words of Hockey – in Australia is still partially resistant to privatisation and marketisation. Most importantly, this spatial variegation must not cloud our analysis – both the US and Australia should be considered neoliberal (Chomsky, 1999; Cahill, 2007).

Temporal Variation Perhaps one of the most useful conceptualisations of ‘neoliberalism’ is the temporal extrapolation of the spatial argument – neoliberalism is defined by ‘a churning and contradictory process of flawed experimentation, albeit with a failure and crisis-driven forward momentum’ (Peck, Theodore and Brenner, 2012a: 25). Paradoxically, this crisisprone nature of the neoliberal project has not challenged its hegemony; rather, it has promoted it. As detailed in Naomi Klein’s history of neoliberalism – The Shock Doctrine (2007) – the process of neoliberalization has always been defined and driven by crisis. Neoliberalism first creates its own crises, and then uses those crises as an opportunity to push through undemocratic change – or ‘reform’, as it is called. The implication of this reciprocal relationship between neoliberal reforms and increased instability for our discussion here is that this neoliberalism-crisis nexus creates ‘variegation’ through time as well as space. This is another reason that a static definition of neoliberalism is insufficient. Any adequate understanding of what neoliberalism is – while

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asking ‘can the Australian government be characterised as neoliberal’ – relies on a dynamic conceptualisation. What is more, with this understanding established, the centrality of ‘crisis’ in the Coalition’s rhetoric re-enforces the verdict reached in the first chapter: the Abbott government has pursued a neoliberal policy program, legitimised not only by neoliberal ideology, but also now framed as necessary due to an apparent ‘budgetary emergency’.

Temporal processes

The process of temporal variation compounds spatial variegation not only in the levels of ‘difference’ encompassed by the term ‘neoliberal’, but it also involves another layer of complexity. The process which creates temporal variation has even more ‘moving parts’ compared to the spatial process. As such, there is a need to establish a framework to understand this varied process more fully. First, consider ‘crisis’. In the school of Marxist political economy a central concept is that capitalism is prone to crises that will increase in volatility and frequency over time.26 There are many factors that influence this tendency, but one key factor is seen to be the over-accumulation of capital (Stilwell, 2012: 103). That is to say that there is an inherent contradiction within capitalism in its exploitation of labour: to increase profit, wages are depressed; depressed wages result in a lack of demand. Thus capital over-accumulates, stagnates, and the only solution is a process of devaluing excess value; crisis is that process of devaluation (Harvey, 2006 [1982]: 191). It is, of course, not only wage-demand contradictions that create crisis. The essential point is that a contradictory dialectic will always (re)produce crisis:

26

The contradictions of capitalism are generally maintained, but periodically – and increasingly – come to the fore during periods of crisis. Thus crises, and the management of those same crises, are points of flux during which the internal contradictions of capitalism are relocated or bypassed (Harvey 1982 [2006]; Jessop, 2006; Harvey, 2014; Streeck, 2014).

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220086769 Crises are essential to the reproduction of capitalism. It is in the course of crises that the instabilities of capitalism are confronted, reshaped and re-engineered to create a new version of what capitalism is about (Harvey, 2014: ix).

This tenet of the theoretical perspective of Marxist analysis is now taken as our starting point. Although Marxist analysis often speaks of ‘capitalism’ in general, rather than particular formations of capitalism – such as neoliberalism – the theoretical lens of Marxism is an invaluable one when considering questions of crisis and temporal variation.

Take the idea of capitalism (and thus neoliberalism) as crisis-prone. There is also a significant tension between both neoliberal ideas and practices, and democracy (MacEwan, 1999). Neoliberal ideologues were – and are – wary of the dangers of government for the people, by the people. As such, Hayek grappled with the philosophical possibility that his normative program could be totalitarian and liberal: ‘it is possible … that a democratic government may be totalitarian and that an authoritarian government may act on [neo]liberal principles’ (Hayek, 1978: 161). This awareness of the fundamentally unpopular nature of neoliberal reforms has even been conceeded by the Australian Treasurer, Joe Hockey: ‘it is not popular to take entitlements away from millions of voters in countries with frequent elections…ultimately the fiscal impact of popular programs must be brought to account no matter… how popular a spending program may be’ (Hockey, 2012, online). Although cloaked in the rhetoric of fiscal responsibility, this quotation must be read as essentially antidemocratic: for ‘no matter how popular’, we might as well say ‘with no concern for democratic values’. Neoliberal reforms are, in practice, fundamentally undemocratic; even as the material interests gaining through the process are obscured through ideological devices, the nature of the reform makes them politically unpalatable.

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When this anti-democratic nature is taken together with a tendency toward more-andmore frequent crises, we reach an understanding of the role crisis plays in promoting neoliberalisation:

Particularly during periods of crisis, inherited frameworks of capitalist territorial organization may be destabilised as capital seeks to transcend sociospatial infrastructures and systems of class relations that no longer provide a secure basis for sustained accumulation (Brenner and Theodore, 2002: 355-356).

Or, put in plainer terms:

[T]he idea of exploiting crisis and disaster has been the modus operandi of Milton Friedman’s movement from the very beginning – this fundamentalist form of capitalism [neoliberalism] has always needed disasters to advance (Klein, 2007: 11).

These then are the mechanisms through which neoliberal governments enact a fundamentally un-democratic program. Crisis is inherent in such a contradictory system as capitalism, and those crises will tend to increase in frequency and intensity. It should be noted, however, that crises need not be simply financial or economic in nature – natural disasters, military conflicts, or even fictitious emergencies have all been prevalent in the history of neoliberal development. Periods of crisis are simply exploited to push contentious reform through while people are in ‘shock’ – hence Naomi Klein’s term ‘the shock doctrine’ (2007).

Temporal Outcomes Crucially, this contradictory ‘crisis-driven forward momentum’ (Peck, Theodore and Brenner, 2012a: 25) is the process that creates temporal variation in ‘actually existing neoliberalism’. This can be considered through a ‘micro’ lens – individual, localised crises, and the direct institutional restructuring achieved during the management of that crisis – but for our

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purposes here we will consider the ‘macro’ crises – those crises that were global (or at least regional) in their scope, which prompted similarly-large institutional responses. The first of these pivotal points in the temporal development of neoliberalism was late in the 1970’s, as neoliberalism shifted from abstract intellectualism to political practice, with the election of Margaret Thatcher in the UK, and Ronald Reagan in the US. These separate stages in the chronological development of neoliberalism have been labelled ‘proto-’ and ‘roll-back’ neoliberalism: from neoliberalism as an intellectual program, restoring the centrality of ‘free-market discourses’ to the discipline of economics, to actual policies of ‘deregulation’ and marketization, aimed at breaking up the Keynesian consensus. Importantly,

The backdrop to this shift was provided by the macroeconomic crisis conditions of the 1970s, the blame for which was unambiguously laid at the door of Keynesian financial regulation, unions, corporatist planning, state ownership, and ‘overregulated’ labour markets (Peck and Tickell, 2002: 388).

Thus this temporal variation in what the term ‘neoliberal’ implies – from ideas to extant practice – took place in the context of macroeconomic crisis. A second significant shift occurred in the early 1990s, when social democratic forces started to push back against the ‘economic consequences and pronounced social externalities’ (Peck and Tickell, 2002: 388) of Thatcher and Reagan’s ‘first-wave’ of neoliberalism. However this socialised crisis did not result in a challenge to the increasing dominance of neoliberalism. Rather more ‘humanised’ forms of neoliberal restructuring replaced their harsher predecessors, in the form of Clinton and Blair’s ‘Third-Way’ governance (Galbraith, 2008: 112; Steger and Roy, 2010: 50-51). This shift should not be interpreted as a departure from neoliberal goals or strategies. By labelling themselves as a ‘middle-of-the-road’ compromise between old-style Keynesianism and the new Right that was Thatcher and Reagan, these ‘second wave’ neoliberals incorporated many nominally left progressives into

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their movement. A crisis of legitimacy was exploited to co-opt those in opposition to neoliberalism into neoliberalism. Many would argue that in the post-global financial crisis context we are going through another of these ‘macro’ temporal changes to what constitutes ‘neoliberalism’. ‘Austerity’ has been the orthodox response to the GFC, and yet far from representing a departure from neoliberal forms of restructuring, the austerity movement – and the institutional restructuring that has accompanied it – has seen these logics further entrenched (Blyth, 2013): neoliberalism has been used as a form of crisis management, whereby the power and scope of neoliberal institutions and class relations have been entrenched and extended (Cahill, 2014: 141).

Certainly, there has been significant ideational and policy change over the past forty years of ‘neoliberalism’. What is meant by ‘contemporary neoliberalism’ (or, perhaps ‘austerity neoliberalism’) is different from the neoliberalism of Thatcher and Reagan – this is what is meant by the idea of ‘temporal variation’. As mentioned earlier, some critics see the difference between individual governments – all labelled as neoliberal – and see that difference as a reason to doubt the validity of the term in analysing political economies (Norton, 2001; Berg, 2009). When one understands the fundamental role played by crisis in the development of this political program, however, varied instances in different temporal contexts cannot be analytically separated. Ideas and institutional restructurings will certainly change as the ongoing, open-ended process rolls on. It is the purpose that defines neoliberalism as a ‘political project’, as it has been defined by David Harvey. Indeed, Harvey places this dynamic at the core of his definition of neoliberalism:

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220086769 Crisis creation, management, and manipulation on the world stage has evolved into the fine art of deliberative redistribution of wealth from poor countries to the rich… One of the prime functions of state interventions… is to control crises and devaluations in ways that permit accumulation by dispossession to occur without sparking a general collapse or popular revolt (Harvey, 2005: 163).

And so, with this working understanding of the way crisis creates and allows temporal variation within the ongoing neoliberal project, we can turn to consider how this trend is illustrated within the contemporary Australian experience.

Temporal Variation in Australia

The Australian case study illustrates both of these dynamics – the exploitation of crisis to entrench neoliberalisation, and the temporal variation that results from an ongoing, openended program. First, consider the way crisis is used to create the conditions for unpopular ‘reform’. There are several points of flux over the course of Australian neoliberal hegemony which conform to this method of development, but the example that will be the focus here is that of the current government, and the ‘budget emergency’ to which their social service cuts are supposedly a reaction. The Abbott government’s 2014 budget contained proposals to make many radical cuts to social expenditure, including: imposing a six month waiting-period for those needing to receive welfare payments, which has since been questioned on the grounds of basic human rights (Woodley and Henderson, 2014, online); increasing the age at which one can receive the age pension to 70; reducing spending on foreign aid by $7.9 billion over five years, criticised by many aid groups and commentators (Barlow, 2014); introducing a $7 copayment to healthcare services, seen as the first step to undermining the universality of Australia’s public healthcare system (Bundley, 2014: 58); and reducing the size of the public sector by 16 500 jobs. By the government’s own modelling, these cuts will result in a $36

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billion dollar ‘saving’ for the government27

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(Hockey, 2014, online). These budgetary

measures have already been considered in the context of ‘actually existing neoliberalism’ in the first chapter. Here the focus will be on the way crisis has played a significant role in the justification of these cuts. As detailed by Klein (2007), the history of neoliberal advance has been marked by the exploitation of crisis to bring about undemocratic reform. This dynamic can be seen at work in the context of the Abbott government’s 2014 budget – the case for this budget has been made on the grounds that Australia faces a ‘budget emergency’. At the conclusion of Hockey’s budget speech in May, 2014, the justification was that ‘unless we fix the Budget together, we will leave the next generation a legacy of debt, not opportunity’ (Hockey, 2014, online). Claims of a budget emergency have been widely rebuked, with one of the most damning responses being a statement co-signed by 63 leading Australian economists. The Economists’ Statement on Commonwealth Budgetary and Economic Priorities insists ‘Australia does not face any present or imminent debt crisis… current debt in Australia is equivalent to 13.8 percent of GDP – less than one-fifth the average debt burden carried by other industrial economies’ (The Australia Institute (TAI), 2014b, online). They conclude with a warning against cuts like those seen in the 2014 budget: ‘past policies of austerity in other countries have had large negative effects on growth and employment. Australia should not make the same mistake’ (TAI, 2014b, online). ‘Austerity’ is certainly an accurate way to describe Hockey’s budget, though cuts have not yet been as deep as in Europe. Most importantly, the budget is framed by the rhetoric of crisis – this is absolutely necessary, as it is quite realistic to assume that such a budget would be dismissed immediately in a stable, prosperous context. And yet, as detailed earlier, despite

27

The impact of this figure on the overall deficit has already been eroded by write-downs of government expenditure.

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the rhetoric of emergency and cuts, the budget can best be described as ‘actually existing neoliberalism’ in that spending is not significantly reduced: The budget attempts to introduce to Australia a ‘politics of austerity’ that has become familiar in debt-laden European nations. It has all the hallmarks of a neoliberal agenda, blending rhetoric about the need to reverse irresponsible public spending with policies that shift the burden of adjustment onto vulnerable sections of society while seeking to increase opportunities for capital accumulation by the wealthy (Stilwell, 2014, online).

Globally, this shift to ‘austerity politics’ has occurred in the post-global financial crisis context. As Stilwell suggests, a more resonant interpretation of Australian austerity is to see it as an attempt to transplant a model of regulatory, institutional and class-relationship restructuring pioneered in the European context. This perspective allows a clearer perception of how this process interacts with the concept of ‘temporal variation’ in the neoliberal project. Indeed, the return of ‘austerity’ politics – which would seem more at home in a Great Depression context – might be interpreted as the next macro-shift in neoliberalism:

'[The global financial crisis] has been ideologically reworked... a reworking that has focused on the unwieldy and expensive welfare state and public sector, rather than high risk strategies of banks, as the root cause of the crisis. This... is the result of intensive ideological work... the triumph being a new neo-liberal settlement' (Clarke & Newman, 2012: 300).

Returning to consider the Australian example, temporal variation can be seen when the austerity politics of Tony Abbott and Joe Hockey is contrasted with the ‘populist’ neoliberalism of John Howard’s government (Wilson and Turnbull, 2001), or even the ‘Third Way’ neoliberalism of the Hawke-Keating governments (Spies-Butcher, 2012). A static definition of neoliberalism would not be able to span these disparate governments, of both the Liberal and Labor persuasions. That is why any useful definition must emphasise the openended, amorphous and contradictory nature ‘neoliberalism’.

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Conclusion

In this chapter the focus has been variegation within neoliberalism in spatial and temporal terms. The most fundamental assertion here is that any analysis of neoliberalism – whatever its focus – must reject singular, monolithic or universal conceptualisations. A static or universal conceptualisation cannot explain the variegated phenomenon that is neoliberalism, and as such is vulnerable to criticisms such as that of Norton (2001). Such spurious defences and deflections should not be suffered. ‘Actually existing neoliberalism’, as established by Brenner and Theodore (2002), and Peck and Tickell (2002), is one such conceptualisation that is aware of difference. Building on the framework provided by these researchers, difference was considered here in spatial and temporal terms. Spatially, neoliberalism is shaped by its ‘embedded’ nature – that is to say through co-existence and compromise, each localised instance of neoliberalisation is shaped by the social, political, and economic institutions relevant to that context. From this perspective, it is possible to conceptually group global iterations of neoliberalism that might otherwise be seen as distinct: for example, the social democratic tradition in Australia has meant that the form of its neoliberal political economy is one with greater social service provision than in the United States; despite this, both can be characterised as neoliberal. Temporal variation is driven by the interaction of capitalism’s inherently unstable nature, and the undemocratic nature of neoliberal ideas and practices. This dynamic process of crisis-driven (and crisis-legitimated) neoliberal reform has defined the history of neoliberalism (Klein, 2007; Harvey, 2005). This process then results in temporal variation: from ‘first-wave’ neoliberalism, to the ‘Third-Way’ humanisation, through to today’s ‘austerity neoliberalism’. Although these shifts have seen dramatic differences in the size and shape of neoliberal restructurings – as with spatial variegation – it is important that these

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different periods all be defined together as ‘neoliberal’. Both the dynamic of the exploitation of (in this case, imagined) crisis and in the resulting temporal variation, the Australian case study again illustrated this theoretical conceptualisation.

The first chapter of this thesis characterised the current Australian government as an example of ‘actually existing neoliberalism’; that position has been supported and developed through the course of this second chapter. However two questions raised in the first chapter still stand un-answered: if neoliberalism is defined by disjuncture and contradiction between ideas and practices, across space and time, why does this disjuncture exist? And how has neoliberal hegemony succeeded, despite these defining contradictions between rhetoric and reality, in both prescribed method and promised outcome? These are the political questions raised by the first and second chapters. A partial answer has been tentatively suggested for the first of those questions: disjuncture exists to ideologically legitimise a political project which benefits a select minority. How that legitimation is achieved is more difficult to answer. The third and final chapter of this thesis will consider the political implications of ‘actually existing neoliberalism’, and flowing from that, the normative necessities for progressive practice.

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Chapter Three Neoliberalism as power: The political implications of ‘actually existing neoliberalism’

Introduction

The aim of the neoliberal project is to re-establish the pre-World War Two conditions of capital accumulation which were eroded by the social democratic consensus of the ‘long boom’ period. Throughout this theoretical discussion, empirical evidence has been provided, with a particular emphasis on the current Australian government; although distinct from other political economic geographies, the ‘actually existing’ conceptualisation of neoliberalism would seem to characterise quite accurately the Abbott government. This third chapter will take the discussion one step further, (briefly) considering the political implications of this analysis, and posing some key open-ended questions – the answers to which remain elusive. When considering neoliberalism in terms of ‘power’, however, Gramsci’s concept of hegemony will provide a useful starting point.

These questions a working definition of ‘power’ – with that sketched, the second task will be to sketch the interests at work, and what exactly is gained through neoliberal dominance. Finally, and most importantly, we will consider how neoliberal hegemony is created – ideologically, avoiding criticism through temporal change, and finally in the permeation of common sense. Above all else, the practices associated with neoliberalism must be seen as the exercise of power – one group achieving its own interests over the interests of others, with a direct distributive outcome. Neoliberal theory is essentially a set of ideas which provide 54

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ideological cover for these material interests. That these ideas are widely criticised, despite their disjuncture from actual policy, is telling of how successful neoliberal ideology is. That this disjuncture is compounded by heterogeneous instances of spatial and temporal variation underlines the disingenuous nature of this inherently political project. Only when neoliberalism is understood in these terms will political change be possible.

Politics and Power

The central concern of politics – the discipline and the practice – is contested. One of the most well-known definitions of ‘politics’, however, is in the title of Harold Laswell’s book, Politics: Who Gets What, When, How (1936). In answering the question ‘how’, the concept of ‘power’ must be considered.28 ‘Power’ is the ability to achieve one’s interests above the interests of other individuals or groups – or, in other words, ‘politics is about power, the ability to achieve a desired outcome, through whatever means’ (Heywood, 2005: 60). ‘Power’ is the ‘how’ of politics. As argued earlier, the distributive outcome of ‘actually existing neoliberalism’ is that a very small group of individuals and corporations benefit, whilst the vast majority are worse off. Understanding ‘how’ the consent of these masses is captured without threat of violence or coercion is the political question implied by this analysis. When the ‘how’ of power is considered in the case of neoliberalism, there is no immediate answer. But an attempt to understand the ways in which neoliberalism exerts power is absolutely necessary:

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It is questions such as these that set politics and political economy apart from (neoclassical) economics. As typified in Robbin’s ‘scarcity definition’ (Robbins, 1932: 15), economics largely describes distribution, whereas political economy is more concerned with analysing why and how certain structures of distribution prevail. Indeed, a criticism of Piketty (2014) is that his analysis fails to follow through with political implications (Kunkel, 2014).

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220086769 ‘[There is an] extraordinary diffusion across the globe of neo-liberal ideas and assumptions. If this constitutes a mega-instance of ‘hegemony’, an adequate understanding of its impact would seem to require… an appropriate way of thinking about power’ (Lukes, 2004: 10).

This quotation from Lukes is from an ongoing debate about what does and does not constitute power – the ‘three faces’ of power. Between Dahl (1957), Bachrach and Baratz (1962; 1970), and Lukes himself, different conceptions of ‘power’ have been put forward, ranging from shallow to radical. Bypassing that debate somewhat, the point being made by Lukes is that a ‘radical’ view of power goes further than simply observing political decision-making to incorporate power through shaping the very values which people bring to a discussion: ‘is it not the supreme exercise of power to get another or others to have the desires you want them to have – that is, to secure their compliance by controlling their thoughts and desires’ (Lukes, 2004: 27)? Lukes was influenced in this conception by the work of Antonio Gramsci, and his concept of ‘hegemony’: ‘when one social class exerts power over others, beyond that accounted for by coercion or law… power dependant on the permeation by bourgeois values of all organs of society’ (Jones, 2009, online). The hegemonic class (or project) relies on creating consent through shaping the values of society itself: The ideological superstructure – politics, education, culture, religion – shaped the framework of perception, understanding, and knowledge. The result of this socialization process was that the governed actively consented to their oppression. Class domination was preserved by the veneer of social harmony – bourgeois relations were internalized and consequently the possibility of revolutionary activity receded (Lievesley, 2009, online).

These are just some explanations of politics and power from a very broad literature dealing with these questions – a comprehensive analysis is beyond the scope of this thesis. But with this brief sketch of ‘power’ and ‘hegemony’ provided, we can go on to consider that neoliberalism achieves its dominance through more subtle and insidious means; ‘manipulation’ rather than ‘force’ or ‘authority’ (Allison, 2009, online). 56

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There are two reasons why ‘hegemony’ and Lukes’ ‘third face of power’ have been emphasised here. First, neoliberal theory has become so widely accepted so that it functions as ideological cover, obscuring the material interests which gain through the dominance of these ideas: ‘[there is a] global acceptance of neoliberalism… that such policies29 seem ‘natural’ and ‘common-sense’ is an indication of the hegemonic power of neoliberalism’ (Hobden and Jones, 2011: 139). But the second is found in a deeper reading of Gramsci himself. The criticism of broad definitions of power is that they become more and more difficult to verify through empirical means; it has proved difficult to clarify ‘what such beliefs mean or what would constitute proof or disproof of them’ (Allison, 2009, online). But Gramsci provides a useful test for identifying genuine consensus, or hegemonic exploitation. Evidence of a ‘dis-juncture’ between rhetoric and reality, for Gramsci, is evidence of hegemonic forces in action: ‘… thought and action, i.e. the coexistence of two conceptions of the world, one affirmed in words and the other displayed in effective action (Gramsci, 1971: 326). This is why ‘actually existing neoliberalism’ must be understood as the exercise of power, and why the disjuncture between neoliberal theory and practice must be seen as a deliberate political action. The divergence between the two goes far beyond that which can be explained by the inevitable difference between a philosophy and its practice. When the central theoretical tenet of the ideology is directly contradicted in practice, we must look more critically at the purpose of this divergence. Through a Gramscian lens, the only possible way to interpret neoliberal disjuncture is the deliberate masking of material outcomes to secure legitimisation.

29

This is a mainstream ‘free market’ understanding of neoliberalism, which doesn’t differentiate between theory and practice.

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Cui bono?

Neoliberalism, encapsulating both theory and practice, is a political project to facilitate capital accumulation by the capitalist class. The disjuncture between theory and practice can be understood through the lens of ideology and hegemony. Neoliberal theory is the set of ideas which dominates the public discourse, legitimising neoliberal practice, despite the fact that practice is distinctly different from theory. All of this is in service of specific material interests. But what is the material outcome of neoliberal hegemony? Several examples have been provided during the course of this thesis, but here we will return to consider the empirical case for the contention that power is at work. For evidence of the increasingly inequitably distribution of income and wealth in the developed world – and, of course, Australia – refer to the Figures in the Appendix. First are two graphs from the work of the now-famous Thomas Piketty (Figures 1.1 and 1.2), which are particularly useful in illustrating an historical perspective on now-growing inequalities. Following Piketty are his colleagues, Saez and Zucman (Figure 1.3), who provide more detail on the composition of US inequality30. This trend of growing inequality over the neoliberal period is then seen in the Australian context, as evidenced by the work of several researchers: Stillwell and Jordan (Figures 1.4 and 1.5); Grieg, Lewins and White (Figures 1.6 and 1.7); and finally Fletcher and Guttmann (Figures 1.8 and 1.9). Detailed discussion of these Figures will not be included here – the purpose of these graphs is simply to illustrate the assertion that capital accumulation was undermined by the World Wars, and the Long Boom that followed, and that the neoliberal period has seen these conditions re-established.

30

By illustrating that growing inequality has largely been driven by the top 0.1 (and even 0.001) percentiles, Saez and Zucman show why more traditional measures of inequality, such as the GINI coefficient, are diluted in neoliberal wealth distribution. By averaging the wealth of the top 20 percent, the GINI coefficient diminishes the wealth of the rich, by including what are largely ‘middle class’ individuals. While this does not render GINI useless, it should be understood in this way.

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These graphs (Appendix) are just some indicators of what the material impact of neoliberalism is. Most importantly, they suggest an answer to the question ‘who benefits’. In addition conceptions of neoliberalism relying on particular policies (or lack thereof), identification of neoliberal political economies must also rest on the material outcome of the policies. While it is true that the US financial sector was subject to new regulations in the wake of the global financial crisis, the altered situation should not be seen as a departure from neoliberal logics, because neoliberalism is a project. If that project is still succeeding – and the distribution of post-GFC gains shows that it is – then it is inaccurate to suggest that those policy changes represent a departure from neoliberalism. As has been emphasised many times throughout this thesis, the crucial question to ask when identifying neoliberalism is ‘cui bono’.

In Australia, the top 1 percent of individuals own more than the poorest 60 per cent (Oxfam, 2014a: 1). As is illustrated by Figures 1 and 3 in particular, this inequality has increased over the neoliberal period.31 This comparative graph also works to illustrate the earlier spatial variegation thesis – Australia is nominally more egalitarian than many other neoliberal political economies. And yet, the same trajectory is being traced. Further, the debate around the necessity for inequality to promote growth cannot be properly considered here, but many economists now recognise that while some inequality is needed, too much becomes a drag on growth, due to the consequent drop in demand (Stiglitz, 2013). But this is a peripheral issue to the key consideration here, which is simply to illustrate that there is a clear distributive outcome associated with neoliberal hegemony, and that that outcome is counter to the interests of the majority. 31

The author is aware that this comparison is between total wealth and income share. Wealth follows a parallel trajectory to income, as is illustrated by The World Top Incomes Database (http://topincomes.parisschoolofeconomics.eu/).

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The Mechanisms of Hegemony

Neoliberalism, in its disjuncture, variation, and material outcome is quite clearly an example of power and hegemony. ‘Why’ would neoliberalism present contradictory characteristics of disjuncture between theory and practice, as well as spatial and temporal variation? Quite simply, because there is a great deal to be gained, as the previous section illustrates. Here we will go deeper into ‘how’ this feat is achieved. Neoliberal disjuncture is not only illustrative of the deliberately hegemonic nature of the project, but it is itself a mechanism which allows its continuation. We have spoken briefly of legitimisation, but this should be developed further. At the very introduction of this thesis we considered some ‘mainstream’ understandings of neoliberalism. A key example of this conceptualisation was in the words of Kevin Rudd: … neo-liberalism – that particular brand of free-market fundamentalism, extreme capitalism and excessive greed which became the economic orthodoxy of our time (Rudd, 2009: 1).

The issue here is that too much critical ‘left’ discourse engages with neoliberal theory. This allows easy deflection by proponents of the neoliberal movement to point to actually existing policy as a way of avoiding criticism. While critics engage with the way neoliberalism is projected, they cease to engage with the actually existing. Criticisms will continue to be ineffectual while they engage with an illusion. The political implications of this discoursecapture are explained by James Galbraith:

For while the right wing in power has abandoned the deeper philosophical foundations of its cause [theoretical neoliberalism], liberals [the left] remain largely mesmerized by those foundations… Until they break the spell, they will not be able to think or talk about the world in terms that relate effectively to its actual condition. Nor will they be able to advance a policy program that might actually work (Galbraith, 2008: 11-12).

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A similar message is presented concisely by Dean Baker: ‘Unless the debate is reframed in a way that more closely corresponds to reality, [neoliberals] will continue to be successful in their agenda of using government intervention to distribute income upward’ (Baker, 2009: 4). Compounding this inability to reframe the debate in terms that reflect material realities, temporal variation through crisis also works to further embed neoliberalism and defuse effective criticism. Neoliberalism ‘changes its stripes’ through temporal variation. This allows current neoliberals to join in the chorus disparaging its earlier iterations, whilst identifying itself as ‘something else’. Tony Blair differentiated himself from earlier neoliberalisms, labelling his politics as a ‘Third Way’, while still forwarding a central neoliberal goal of the state creating markets and entrenching the conditions for capital accumulation. Or, speaking more generally, Real-world experiments with neoliberalization routinely – indeed, predictably – fail. But they typically fail in such a way as to engender new rounds of experimentation, generally oriented toward the same market-disciplinary agendas that underpinned earlier forms of policy reform – and associated policy failure(s) (Peck, Theodore and Brenner, 2012a: 19).

It is in this way that we can understand the paradox of neoliberalism both causing the GFC, and then also being applied as the primary logic of crisis management after the GFC.

Conclusion

The purpose of this final chapter has been to consider neoliberalism in political terms. It is important to understand neoliberalism beyond simply reconceptualising it in ‘actually existing terms’. This conceptualisation is enhanced when considered through a Gramscian lens; not only does this help to explain neoliberal disjuncture, but hegemony is a powerful way to

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understand the role of neoliberal ideas, and their durability. This opens up ground for further research, which is far outside the scope of this thesis. While comprehensive answers cannot be provided in this brief discussion, that limitation has not been allowed to exclude these considerations from this analysis completely. Simply by considering a potential starting point in the search for these answers, the implications of the first two chapters are better understood. While much is contested and uncertain – especially the idea of ‘power’, which has been the centre of ongoing debate since the time of the classical political thinkers – it can be said that neoliberalism is fundamentally an example of power, as it is a project that enables specific groups to benefit over others in distributive terms. Hegemony also provides a useful perspective, in the sense that neoliberal ideology can be seen as legitimising ‘actually existing’ neoliberal policy. And in the cases where neoliberalism is challenged, disjuncture and temporal change provide mechanisms through which neoliberal hegemony is maintained. Until critics start to engage with what neoliberalism does, rather than what it says, or what it says it does, there will be no possibility of progressive change.

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Conclusion

The mainstream conception of ‘neoliberalism’ sees it as being about ‘free markets’ and ‘small states’. This simplistic understanding led to many premature proclamations of its demise in the wake of the Global Financial Crisis:

Neoliberalism has self-destructed. The thirty year long global march of free market ideology has come to an end (Birch and Mykhnenko, 2010: 255). The fall of Wall Street is to neo-liberalism what the fall of the Berlin Wall was to communism (Grusenbauer, 2008, online).

More perceptive thinkers have instead labelled the crisis ‘the strange non-death of neoliberalism’ (Crouch, 2010; Dunn, 2012). This ‘strange non-death’ is not the first such death-defying act in the history of neoliberalism, but simply the first crisis which drew the attention of the developed world. The crisis-driven forward momentum of neoliberalisation has been felt most keenly in the developing world for more than three decades: first through debt, then through structural adjustment, then again through contagion in financial markets. The GFC simply brought neoliberalism into question more broadly. This is the context into which this thesis falls: the growing body of literature which grapples with the incredible durability of the neoliberal project in the face of crisis. This thesis does not provide an answer to that paradox. But any answer to that question rests on an appropriate understanding of what neoliberalism actually is.

The task of this thesis has been to conduct a critical overview of several different conceptualisations of ‘neoliberalism’. This was considered both theoretically, and within the scope of an Australian case study. One finding of this investigation is that there is a distinct

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disjuncture between neoliberal ideas and the reality of neoliberal practice. Neoliberal practice does not follow the blueprint laid out by neoliberal theory; rather it is better understood as ‘actually existing neoliberalism’. ‘Actually existing neoliberalism’ is defined by active state involvement in the creation and re-creation of market-like structures in some areas, and active suppression of market discipline in others, all working to re-create the conditions for capital accumulation, and even effecting upward redistribution of wealth through the mechanism of corporate welfare. Understanding neoliberalism has been made more difficult by spatial and temporal variegation, and an analytical tendency to rely on static, universal definitions. The tendency has been to theorise singular, universal and monolithic definitions of neoliberalism. These definitions have been subject to much criticism. An appropriately nuanced understanding of neoliberalism is conscious of both the spatial and temporal variations apparent between different political economic geographies. Spatial variegation is driven by the ‘embedded’ nature of neoliberalism; that is to say, neoliberalism in practice exists in a unique context of institutions, societies, cultures, ideas and philosophies. Neoliberalism co-exists with contradictory currents of thought and practice, creating spatially variegated iterations. Similarly, temporal variation is driven by embeddeness interacting with the dynamic of crisisdriven neoliberalisation. In periods of crisis (often of its own making), neoliberalism is remade into a new variation. It is this crisis-driven process of reform that allows neoliberalism to bypass the often-undemocratic nature of its policies.

Each of these facets of the conceptualisation of ‘actually existing neoliberalism’ is evident in the contemporary Australian political economy. It is this basis in empirical reality that makes this conceptualisation so important in the ongoing debate surrounding the term. In its free-market rhetoric, active state creation of markets, and upward redistribution through

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corporate welfare, the Abbott government can quite accurately be described as ‘neoliberal’, if neoliberalism is understood as ‘actually existing’. The way in which ‘free market neoliberalism’ fails to describe accurately both current and past Australian governments shows the analytical weakness of that particular conceptualisation.

This leads us to the third and final chapter of this thesis. Others have labelled Abbott as a neoliberal, but too often they have done so implying the ‘free-market’ definition of the term. Two examples of this come from Wayne Swan and Waleed Aly:

The Hockey budget betrays an ideological drive toward US-style small government (Swan, 2014). The Abbott government has a plan to have no plan and it’s really committed to it. That’s the point of neoliberalism. It sees the world as a market and solves every problem through it (Aly, 2014).

These two indicative examples speak to a much broader problem; neoliberal hegemony through ideological legitimisation and control of discourse. Neoliberal ideas now permeate society to the point they are accepted as ‘common sense’ (Hall and Oshea, 2013). As such they not only legitimise neoliberalism for many people whose interests are actively diminished by its hegemony; these ideas also shape the debate surrounding neoliberalism – even its opponents criticise neoliberalism on (and with) its own terms. The political implication of this ‘thought capture’ is that the debate becomes focused on something that, in practice, does not exist. Meanwhile the interests of the few are being preferenced over the interests of the many. It is for this reason that the overarching understanding of neoliberalism adopted here is that of David Harvey – neoliberalism is best seen as a political project, which seeks to re-establish the pre-World War conditions of capital accumulation. Or put more simply, it re-establishes the briefly-eroded power of capital itself.

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Appendix

Figure 1: The top 0.1% income share in Anglo-Saxon countries, 1910-2010 SOURCE: Piketty, 2014: 319, ‘Figure 9.5’.

Figure 2: Wealth inequality: Europe and the U.S., 1810 – 2010 SOURCE: Piketty, 2014: 349, ‘Figure 10.6’.

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Figure 3: Top 0.1% wealth share in the United States, 1913-2012, and Top wealth shares: decomposing the top 1% SOURCE: Saez and Zucman, 2014: 49, ‘Figure 1’.

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Figure 4: Wages share of total income in Australia, 1960-1 to 2005-6 SOURCE: Stilwell and Jordan, 2007: 22, ‘Figure 2.1’.

Figure 5: Profits share of total income in Australia, 1960-1 to 2005-6 SOURCE: Stilwell and Jordan, 2007: 22, ‘Figure 2.2’.

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Figure 6: Distribution of wealth in Australia SOURCE: Greig, Lewins and White, 2003: 97, ‘Table 5.1’.

Figure 7: Distribution of income in Australia SOURCE: Greig, Lewins and White, 2003: 97, ‘Table 5.2’.

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Figure 8: Income share of top 1, 0.5 and 0.1 per cent in Australia from 1921-2010 SOURCE: Fletcher and Guttmann, 2013: 46, ‘Chart 8’.

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Figure 9: GINI coefficient of OECD nations, 1995 and 2010 SOURCE: Fletcher and Guttmann, 2013: 46, ‘Chart 9’ and ‘Chart 10’.

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