Norton vs. Aly on ‘neoliberalism’

The latest Quarterly Essay has responses to Waleed Aly’s What’s Right?: The Future of Conservatism in Australia, and his reply to them. The response of mine that QE published is copied in below.

I wrote it because responding to writers on ‘neoliberalism’ on blogs or in right-of-centre magazines is ineffective, since reading the views of the people who might be the real-world ‘neoliberals’ has not typically been deemed necessary by their critics. By getting something into the QE I thought Aly at least would read it.

The gist of my argument was to be of any political consequence, characterisations of ‘neoliberalism’ must be based on established beliefs or statements of plausible candidates for being ‘neoliberals’ (I didn’t fully go into this, but I took these candidates as people whose views have family resemblances to the claims about neoliberal beliefs made by academics – this is complicated by the fact that the term if not the idea of ‘neoliberalism’ is a left-wing academic one, with very few self-described ‘neoliberals’).

On this basis, I disputed some of Aly’s claims about ‘neoliberalism’ on the grounds that nobody believed them, or that significant ‘neoliberals’ believed otherwise (eg Thatcher, Milton Friedman). I also used results from my online survey from last year.

Aly responded: ‘The label someone uses to describe themselves in a online survey does not necessarily have any relationship to the terms used in my essay. …. My arguments on climate change were focused on the impact of neo-liberal ideas on politics, not on business people or survey respondents.’

But my argument was that ideas can’t have influence if they don’t exist or don’t have advocates; he has to show that they do before he can move on to the more tricky exercise of working out if there is any actual link between beliefs and policies. I don’t think he successfully does any of these things in the Australian context.

He makes a more plausible case for the Czech Republic, citing the views of its President, Vaclav Klaus. But Klaus does not speak for all ‘neoliberals’ or Australian ‘neoliberals’.

I fear this debate is pointless. It is hard to discuss things with people when there is so little common methodological ground on how to identify and assess evidence.

——-
Early in his essay on the future of Australian conservatism, Waleed Aly remarks that it wasn’t clear what right-wing critics of Kevin Rudd’s Monthly essay on ‘neo-liberalism’ thought the term actually meant. A few of us had been watching the word ‘neoliberal’ spread through left-wing analysis of the free-market movement, but Aly has a point to which he should have paid more attention. If most candidates for being Australian neo-liberals aren’t sure what neo-liberalism is, can it be a useful concept for analysing Australian politics?
I think the answer to that question is no. As Aly and many others use ‘neo-liberalism,’ it is associated with beliefs that few or no people hold. Who believes, as Aly suggests that neo-liberalism maintains, that nothing is valuable unless the market assigns it a value? He cites no sources on this, and even within the individualist framework Aly attributes to neo-liberalism it cannot be correct. Markets assign exchange values, the prices on which buyers and sellers can agree. But prior to this must be the values set by individuals. Culture, sentiment and ethics can all give things a value above money, blocking any exchange. There is a big difference between permitting exchange of goods or services for money, and believing that the market price reflects their only value.
Aly claims that ‘neo-liberalism easily collapses into a theory of pure individualism that risks doing away with society altogether.’ Here Aly quotes Margaret Thatcher’s famous ‘there is no such thing as society’ interview. The point Thatcher was trying to make—admittedly not always clearly expressed—was that there is no abstract ‘society’ responsible for taking care of every problem. Real people pay for any entitlements coming from the state. She talks about families, neighbours, charities, and responsibilities to others, part of what ‘society’ means in ordinary language. It is a long way from Aly’s later claim that neo-liberal politics has almost nothing to do with consideration for others.
For Aly’s essay, the bigger problem is that this line of criticism doesn’t fit with his later analysis of Australian politics. When he turns to the Howard years, his complaint isn’t that the Howard government lacked a concept of society, but that it had too much of one. He accuses it of wanting to foster ‘monoculturalism,’ and engaging in an ‘extensive and often belligerent “Australian values” campaign.’ If the Howard government didn’t engage in a neo-liberal attempt to do away with society, and Aly cannot nominate any Australian intellectual as believing such a thing would be desirable, does this idea belong in an essay on Australian politics?
Aly says neo-liberals believe that markets cannot have negative consequences, leading them to deny climate change rather than admit corrective action is required. But again we have dubious intellectual history and a lack of Australian evidence. If the idea of ‘negative externalities’—as economists call costs like environmental damage—isn’t part of neo-liberal thinking we have to exclude the vast majority of economists from neo-liberalism, since this idea is a standard one in the neo-classical economics taught at most Australian universities. The late Milton Friedman, perhaps the single most important figure in the revival of free-market thinking, argued half a century ago that there are environmental consequences from market activity that governments may need to remedy. The example he gave was pollution in a stream. If Friedman can’t be called a ‘neo-liberal’, who can? While some generally pro-market intellectuals and politicians in Australia are climate change sceptics, Aly offers no evidence that this is because they believe, in principle, that no market corrections are ever required.

While Aly’s neo-liberal framework again doesn’t explain what is going on in Australian right-of-centre politics, he is undoubtedly right that climate change has ‘driven a wedge through conservative politics.’ It is rare for Liberal leaders to lose office on a specific policy rather than general performance issue, but Malcolm Turnbull’s support for an ETS last year cost him his job in a close vote. This division is consistent with the results of an online survey I conducted in early 2009. Among the people identifying as classical liberal or libertarian (tellingly, nobody called themselves a ‘neoliberal’), 9% thought climate change wasn’t happening, 32% thought it was happening due to natural causes, and 42% thought it was happening due to human causes. Policy responses were even more divided. Of those choosing one of the alternatives offered in this question, a small majority favoured action but were split between a carbon tax (33%) and an ETS (24%). Those against action were split between opposing it because the costs of action exceeded the benefits (27%) and because there was not a problem to be fixed (17%).
Aly thinks that a conservatism freed of neo-liberal influences would help conservatives deal with the climate change issue. He may be right that conservatives along would have less internal difficulty with climate change politics without the influence of free-market supporters, but not in the policy direction he anticipates. Of the people who chose conservative labels in my survey, 20% thought that climate change wasn’t happening and 51% thought it was happening but due to natural causes. Pro-climate action arguments come mainly from people on the free-market side, and conservatives would be more united—though probably not closer to the best policy response—if they flew solo on climate change.
The idea of ‘neo-liberalism’ gets in the way of good analysis of Australia’s last quarter century. While markets have replaced bureaucratic control in some areas of the economy since the early 1980s, the often outlandlish beliefs Aly and others associate with neo-liberalism cannot explain this fact. I believe analysing the push for free market policy change needs to start by seeing it an issue movement rather than as a single ideology. As with other issue movements like environmentalism or feminism, the unifying feature is a broad cause and policy direction, and not a common orthodoxy. The intellectual revival of classical liberal and libertarian ideas and intellectually confident neo-classical economists helped put market ideas on the policy agenda. But the actual implementation was largely carried out by self-described social democrats and conservatives, with each group having their own pragmatic rather than ideological reasons for needing to reform particular industries or improve Australia’s economic performance. Good history requires looking at why people acted they way they did from their own perspective.
Waleed Aly, and the many other academics offering similar accounts of Australian politics, should throw out any material relying on ‘neo-liberalism,’ and start again with the actual words of the many Australians who, over the last 40 years, have called for free-market reforms.

Andrew Norton is editor of Policy, published by the Centre for Independent Studies. He has been following left-wing critiques of free-market thinking since the 1980s, and co-edited A Defence of Economic Rationalism (Allen & Unwin, 1993). More results from his survey of ideological political opinion were published in the Spring 2009 issue of Policy, available at www.policymagazine.com.

14 Responses to “Norton vs. Aly on ‘neoliberalism’

  • 1
    Joseph Clark
    June 6th, 2010 19:14

    Good article, but you’re right, it probably won’t make much difference.

  • 2
    Jeremy
    June 6th, 2010 20:27

    All perfectly correct and sensibly argued.

    However, I suspect the only way to make an impression on Aly et al is to grab a megaphone and repeat ‘Where’s the evidence?’ over and over. After one thousand repetitions you might start getting through.

  • 3
    Andrew Elder
    June 6th, 2010 21:50

    I agree that neoliberalism can be a slippery concept, but I thought it was defined most concretely in foreign policy, following the teachings of Leo Strauss among others – referring to the role that the United States does and should play in world affairs, particularly with regard to the support of regimes that share its values (however loosely) and the nature of opposition toward those regimes that threaten those values.
    -
    To that end, the Howard government’s policies on Afghanistan and Iraq can be fairly judged in neoliberal terms: they are real policies, they had advocates and they have consequences. I’m still reading Aly’s essay and make no comment on how well or badly he discusses those issues, but in terms of defining neoliberalism and applying it to real actions of government, foreign policy seems to be the surest basis on which to do so.

  • 4
    JC
    June 6th, 2010 22:02

    I think it’s pointless debating these people, Andrew. They have preconceived ideas that they won’t let go of for many reasons.

  • 5
    Andrew Norton
    June 7th, 2010 04:35

    Andrew E – I think you mean ‘neoconservatism’. Beyond free trade, I don’t think there is a ‘neoliberal’ view on foreign policy. While individual people who otherwise have ‘neoliberal’ views on economic policy presumably mostly have some views on international relations also, isolationalism is so strong in American libertarian circles that it precludes any kind of clear neoliberal position. That bastard child of liberalism and egalitarianism, the human rights movement, does have univeraalist views with implications for foreign policy.

    And I think the case for ‘neoconservatism’ as a causal factor is again weak in the case of Australia’s involvement in Iraq and Afghanistan. This was conventional alliance politics. And after 9/11, any US government would have attacked Afghanistan. Iraq is the only plausible candidate for neoconservative intellectuals and advocates playing a non-trivial role in the decision to go to war.

  • 6
    Jack Strocchi
    June 7th, 2010 08:57

    Andrew Elder @ #3

    I agree that neoliberalism can be a slippery concept, but I thought it was defined most concretely in foreign policy, following the teachings of Leo Strauss among others – referring to the role that the United States does and should play in world affairs, particularly with regard to the support of regimes that share its values (however loosely) and the nature of opposition toward those regimes that threaten those values.

    Andrew E. you are confusing “neo-liberal” – which mainly deals with economic policy – with “neo-conservative” – which deals with strategic policy. Both neo-liberalism and neo-conservatism – flagship ideologies of the US Right – have taken a hit in recent years.

    (Although the original first generation neo-conservatives v.1 were actually “liberals mugged by reality” – Moynihan, Glazer, Kristol – interested in rebuilding social policy in the aftermath of Great Society Civil Rights.)

    Neo-liberals want free trade and free investment in the global arena and privatisation and deregulation in the national arena. These policies do not look like such winners now, especially given the incredible success of the PRC and the disaster of the GFC.

    The so-called “neo-conservatives” (Krauthammer, Weekly Standard, Wolfowitz) emerged in the post-Cold War and then post-911 era, demanding that the US to re-shape the world power stystem to establish the US as global hegemon. The so-called “unipolar moment”.

    Evidently this is move is a bridge too far – beyond the US’s strategic resources going by the disaster of Iraq and the unappealing example of Afghanistan and the wild-goose chase after Bin Laden.

    Not to mention endless snubs to the US by Chavez, Kim Ill Sung and the guy who looks like Gilligan who runs Iran.

    Neither “neo-liberalism” nor “neo-conservatism” v.2 have ant relevance to AUS politics in the post-Howard era. Howard was a Billy Hughes style nationalist-imperialist, with a bee in his bonnet about unions.

  • 7
    Jack Strocchi
    June 7th, 2010 09:17

    Andrew Norton said:

    The intellectual revival of classical liberal and libertarian ideas and intellectually confident neo-classical economists helped put market ideas on the policy agenda. But the actual implementation was largely carried out by self-described social democrats and conservatives, with each group having their own pragmatic rather than ideological reasons for needing to reform particular industries or improve Australia’s economic performance. Good history requires looking at why people acted they way they did from their own perspective.

    Aly’s thinking about the relationship between ideological theory and institutional practice is all over the place like a mad-womans underclothes.

    Most of the economic liberalisation of the past generation or so was done at the behest of liberal nationalists and social democrats trying to shore up the welfare state. Which was in danger of overload and backlash after the policy and political excesses of the Whitlam era. User-pays schemes like Medicare part-payments and HECS helped to undergird the welfare state.

    The biggest victory for AUS’s economic liberals was the reduction in tariffs. Protectionism drove them up the wall.

    Looking at the Big Picture Long Term the Commonwealth is now indulging in more regulation, more taxation and more spending now than it ever was before. So if this is liberalism its a pretty lame version.

    Its true that some of these market-friendly policies appear to have been driven by commercial interests cloaking themselves in the guise of liberal ideology eg privatisation. But these policies are hardly flagship anymore.

    Financial de-regulation was bungled initially which led to massive rorting by “entrepreneurs” in the eighties. But it seems to have been reigned in by APRA.

    The most regressive policy in AUS is negative gearing and two-tiered taxes privileging capital gains. This is routinely condemned by economic rationalists in Treasury.

    Treasury also routinely issues warnings about excessive lending to finance housing. Perhaps this debt-fuelled asset inflation is imprudent. But one can hardly call it unpopular. Australians love home improvement, trading up and a spot of residential property investment.

    And Open Borders immigration policy is of course welcomed by Left-liberals as much as Right-liberals. You dont hear Aly-types screaming about “neo-liberalism” in that department.

    The problem is that academics think purely in ideological terms, without operationalising their concepts so that they can be checked against the historical record, preferably using some sophisticated statistics. Counting is too hard when its much more fun to indulge in chanting.

  • 8
    Jack Strocchi
    June 7th, 2010 09:42

    Below I offer some ideological definitions which at least make internal sense. I have listed them as binary opposites, but of course most people occupy some middling position:

    Right-wing: regressively establishing the higher-status.

    Left-wing: progressively empowering the lower-status.

    Liberal: freeing of individual autonomies

    “Corporal”: forcing by institutional authority

    Conservatism: integration of traditional identity

    Constructivism: differentiation of fashionable identities

    The liberal-corporal dimension indicates how power is organized.

    The Right-Left dimension indicates who benefits from the distribution of power.

    The conservative-constructive dimension indicates the pace of change.

    I borrow “constructivism” from Hayek.
    “Corporalism” is my own coinage. There is simply no generic term to indicate a preference for a more centralised authoritative organization of power. Or at least none that does not have negative value laden connotations. Obviously “illiberal” and “authoritarian” are tendentious.

  • 9
    Jack Strocchi
    June 7th, 2010 11:13

    Correction:
    The conservative-constructive dimension indicates the cultural identity of change. The pace and direction of change is indicated by

    - Reactionary: reversing direction towards past golden age
    - Reformatory: idling in the here and now.
    - Revolutionary: accelerating direction towards future utopia

    It would be helpful if social scientists used a multi-dimensional matrix of ideological markers, to place political agents in ideological space, so to speak.

    Uni-dimensional markers like “neo-liberal” simply do not capture enough information about the agent/

  • 10
    Jack Strocchi
    June 7th, 2010 11:29

    Or put in another less Strocchi-speak way: I am trying to re-found ideological concepts so that they more adequately reflect contemporary social life. The concepts should be operational in that one should be able to locate political agents on some part of the dimension, in a measurable way.

    Thus to address John Howard in this matrix:

    – Mostly Right-wing in that he sought to establish higher-status, whether it be property tycoons, the Queen or US military. Also Sydney-centric. A bit Left-wing with hand-outs to working families;

    – Somewhat corporal in that the was always centralising things in Canberra, and imposing more controls on guns and border. But a bit liberal, especially higher immigration rates

    - Very conservative: sought national integration along mainstream values (“white picket fence” “relaxed and comfortable”), promoted traditional identity of family, faith and flag; No constructivist tinkering at all;

    – A bit reactionary: attempting to turn back the clock on industrial relations with lockouts and replacing industrial awards with master-servant contracts.

    That is what Big Government conservatism looks like.

  • 11
    caf
    June 7th, 2010 13:58

    Jack Strocchi: I don’t think markers like “neo-liberal” are intended to be uni-dimensional; when a uni-dimensional description is intended, the old “right” and “left” are usually employed.

    Rather, descriptors like “neo-liberal” are intended to convey a region of the multi-dimensional ideo-space. For that particular example, in your taxonomy it would be a region located towards the Right, Liberal and Revolutionary but spanning the entire Conservative-Constructivist axis.

  • 12
    Alexander
    June 7th, 2010 17:07

    Jack Strocchi, John Howard gave money to working families not because he was “left”, but because he was “right”: He was trying to establish the higher-status supporters of the Liberal party as the government. Contrast with Labor, who give money to working families because they want to take money for themselves—a clearly leftist justification in your scale—and the Greens, who would probably do it to establish their own credentials as compassionate, and thereby are trying to establish themselves as the new higher status group. I’m not sure if this is a left or right-wing justification in your classification.

  • 13
    Jack Strocchi
    June 7th, 2010 20:54

    caf @ #11 said:

    For that particular example, in your taxonomy it would be a region located towards the Right, Liberal and Revolutionary but spanning the entire Conservative-Constructivist axis.

    Yes, you’ve got it.

    Neo-liberal is largely Right-wing since it regressively establishes the higher-status position of successful businessmen.

    It is self-evidently liberal, in that it allows capitalistic individual autonomies.

    It is generally reformatory, with a tendency towards revolutionary, since it accelerates the pace of change, and is future oriented.

    It is also constructivism rather than conservatism since it tends to profanity rather than sanctity when it comes to appreciating traditional identity.

    Of course you are correct, any ideological principle or individual person, can more or less be given an “address” on the multi-dimensional conceptual axes.

    Its just that no one much bothers because its far easier to gain attention by chanting a one-line slogan “neo-liberal” x N, which may on its own have adverse connotations.

    I try and avoid ideological thinking. At bottom its just an easy way out for the lazy and stupid.

  • 14
    jack strocchi
    June 8th, 2010 10:51

    Alexander @ #12 said:

    Jack Strocchi, John Howard gave money to working families not because he was “left”, but because he was “right”: He was trying to establish the higher-status supporters of the Liberal party as the government.

    Alexander,

    You have spotted the great paradox in modern politics: the Culture War – which is a form of Right-wing populist. But how, you may ask, can one be a Right-wing populist. Surely thats a contradiction in terms as the Right-wing appeals to the higher-staus elite whilst the Left-wing appeals to the lower-status populus.

    Its complicated.

    Obviously Howard’s political stance is broadly Right-wing in that he aims to develop a social system which establishes the higher-status groups. But some of his policies may have to be populist in both Left-wing and Right-wing sense. Because he has to buy his support where he can.

    Which in a democracy means dealing with the lower-status because that is where the votes are. Obviously “working families” battlers are of modest, even lower-status.

    Howard obviously wanted the votes of the bogan populus. He couldn’t give them everything they wanted without annoying the Masters of the Universe elite. But he could give the bogan populus something. Statist bribes and nationalist boosts to working families.

    That is the essence of “Big Government conservatism”.

    Howard did this by artful use of the populist wedge, combining

    – Left-wing class populism (progressive statism)bribing “battlers” with lots of statist hand-outs
    with
    – Right-wing cultural populism (conservative nationalism), boosting “bogans” with nationalistic programs.

    How are “bogans” higher-status? Everyone I know looks down on the whitebread, red-neck, petrol-heads emitting loads of carbon in their outer-suburban McMansion.

    True enough. But this is the paradox of the Culture War. Both Right-wing bogans and Left-wing luvvies are mostly composed of white people. But they are locked in a conflict about what cultural identity is higher-status: traditional conservative or fashionable constructive.

    Populist bogans want to conserve traditional higher-status identity: Caucasian in family, Christian in faith and aggressively “Australian” in flag. Obviously this culture is Right-wing in that it is more exclusive towards diverse people.

    Elitist luvvies want to construct fashionable higher-status identities: multicultural families, secular faithlessness and global citizen anti-flag waving. This culture is more Left-wing in that it is more inclusive towards diverse people.

    The bogans need a political leader to define their traditional culture as higher-status, at least in respect to diverse foreigners. Otherwise the definition of higher-status cultural identity will default to luvvie elites and we know where they stand.

    In both cases, diverse people are mostly pawns in the status-struggle between the bogan populus and the luvvie elites.

    In short, bogan populists cling to traditional conservative cultural identity in order to status-stymie the luvvie elites above them and the diversity people below them.

    The bogan populists annoy alot of people by “clinging to their guns and religion”. That is why they attract so much vitriolic rhetoric – crackers, red-necks, racists…bogans – all meant to denigrate their status.

    Like I said, no one really comes clean about the ideology of the culture war as it would require coming clean about the dirty under-belly of anthropological status-conflicts.