In his much discussed, though little praised, essay in The Monthly Kevin Rudd attributes the global financial crisis to what he calls ‘neo-liberalism’, aka ‘free-market fundamentalism’, ‘extreme capitalism’, ‘economic liberalism’, ‘economic fundamentalism’, ‘Thatcherism’, and the ‘Washington Consensus’ (the PM’s political thesaurus was getting a good workout).
But how useful are ideologies in anlaysing politics? There are certainly rival explanatory theories. In journalism, as commenter Alan C complains, the focus tends to be on personalities and personal ambitions, downplaying other forces that are not so easily reduced to an easy-to-understand story. Yet if the media overplays personality as a force, it surely cannot be discounted entirely. Particular individuals do make things turn out differently, holding all other factors constant.
On both right and left, we see theories that put interests at the core of politics. Public choice theory on the right models political actors as self-interested; on this account (for example) public school teachers are not defenders of better education, but are instead just an interest group seeking higher salaries and easier working conditions.
On the left, the the substance of and differences between right-wing beliefs are deemed entirely or largely irrelevant, because these groups are seen just as defenders of corporate or other private interests. This is why Naomi Klein, for instance, can blur together neoliberalism, neoconservatism and corporatism. Norman Abjorensen is aware that liberals and conservatives differ, but on his account only on the means to their common end of the ‘protection of property interests’. Ideology is just empty rhetoric designed to make interest politics respectable.
Like personalities, interests should not be discounted as a force in politics. But there is too much in politics that cannot easily be explained by interests – or at least not without stretching that concept way beyond its material/financial meaning in Klein/Abjorensen type analysis. I have argued before that self-interest under-explains public opinion. And the ‘neoliberal’ think-tanks that are accused of being fronts for corporate interests do a lot of work that has no obvious relationship to corporate interests. While left-wing conspiracy theorists could argue that the motive for this work is to create a cover for the real task of defending privilege, this can’t account for the impact of whatever influence this work has on other people.
In analysing politics, we need to take into account people’s beliefs and stated views as well as their interests. But beliefs are not the same as ideologies; while almost everyone has beliefs that relate to politics, relatively few have beliefs that cohere in ways that neatly match the major ideologies. In the case of ‘neoliberalism’, almost nobody holds some of the the views commonly attributed to it. Advocates of neoliberalism have not sought to ‘dismantle all aspects of the social-democratic state’, for example. Hayek, one of only three actual people cited by Rudd as ‘neoliberals’, accepted the need for a social security system. The one significant figure who did call for the welfare state’s abolition, Charles Murray, eventually gave up and proposed a minimum income instead. Yet people that Rudd would describe as ‘neoliberals’ (nobody calls themselves by this term) do support market steering of investment, the major subject of his essay.
This means that even if we accept some theory of broad ideological trends, these trends have much more impact in some areas than others. Market ideas have had significant influence in industries which were largely commercially traded in any case, through removing barriers to competition and product innovation and through privatisation. But market ideas have had at best modest influence in service industries that are heavily subsidised by government. Government as a whole has continued to grow steadily, both in expenditure and regulatory reach.
In using ideology to analyse policy, there is also the problem that some policies only look like they come from a particular ideology. For example, while school choice is consistent with views attributed to ‘neoliberalism’, school choice ideas and policies in fact long predate ‘neoliberalism’. And while the central controls in higher education look like they come from a central planning ideology, I have never seen more than fragmentary and under-developed arguments for aspects of the current system, never a defence of the whole. It is just the cumulation of ad hoc decisions over many years.
Ideology is only ever likely to be part of any policy story, so an ideological blow will not necessarily change the policy dynamic in the way that some might expect. The final discrediting of socialism in the late 1980s did not wipe out socialist-looking central planning in many Western countries. And while in financial services we will see more regulation in the future than in the recent past, Rudd’s Monthly essay is itself stressing the need not to ‘throw the baby out with the bathwater’. Far from calling into question ‘neoliberal economic orthodoxy’ like reducing protection, Rudd wants to ensure protectionism does not come back (apart from ideology, it is not in Australia’s interests). He expects governments to pull back from direct involvement in owning or operating banks; so a return to the recent ‘neoliberal’ past rather than the further past interventionist era when governments owned commercial banks.
In the end, Rudd’s statement of the social democratic direction in which we are heading – ‘robust’ support for the market in a mixed economy with a role for the state as a regulator and provider of public goods – sounds exactly like the actually dominant view of the last 20 years.