Economics to roll the poor

The economy is not synonymous with capitalism… time to reclaim the economy for all

Over the years, different theoretical lenses have tried to manage inequality within the capitalist system. For example, the basis of Keynesian economics is a set of policies where the state attempts to manage capital’s desire to reduce costs of labour. Neoclassical economists have assumed they “understand the system”, applying technical “remedies” and overlooking the complexity and intersectionality of social relations. With continued economic crises springing up through Australian and world history, we can see that these methods have had limited success. The peak of such failures is climate change which is accumulating the potential of our extinction[i] or what Tony Fry calls “defuturing[ii]”.

Since the 1970s, the “OPEC oil shock”, there has been a growing problem with capitalism’s orientation towards accumulation at any cost, and so governments were tasked with the challenge of postponing further collapses. Wage repression – meaning wages as a proportion of GDP remained stagnant – became a serious issue for the managers and governors of capital, as people had no more money to spend, thus throwing out the careful balance of inflation and unemployment rates.

But the machine had to be kept going, so the state absorbed some of these market malfunctions through tax benefits, income support payments and social services, as well as by introducing payment/indebtedness tools like credit cards. These measures allowed people to spend money they didn’t really have, so consuming could continue at a wieldy rate.

At a macro level, the response by governments to the cracks in the capitalist system was the opening up of economies, heeding the mighty call of globalisation, which effectively created a fantasy market of financialisation, half-solving the problem of capital at the expense of sovereign debt and the again, the global South.

The 1980s saw Ronald Reagan and Margaret Thatcher adopt a set of policies that for a long time were on the fringes of economic policy because of their absurdity to the economic intelligentsia. To put it crudely, neoliberalism can be thought of as capitalism on steroids.

The neoliberalism doctrine emphasises the efficiency of market competition, the role of individuals in determining economic outcomes and the reduction of the role of the state as a caretaker of the market economy. Yet, contrary to rhetoric around neoliberalism as “laissez faire” or free market without state intervention regulating it, actually existing neoliberalism depends on mass regulation by the state[iii]. The difference is that the government, instead of focusing on the wellbeing of the people, now focuses on the wellbeing of the market and capital[iv]. Making the rich ever richer.

Indeed, in order to quell unease as inequality grows, governments in the neoliberal era are extremely paternalistic and punitive to citizens, the vulnerable of society being dealt the harshest blows through the war on the poor through the social security system[v].

Most notable is the misguided belief that welfare creates dependency, and so policy should target vulnerable groups with conditionalities and sanctions “for failing to act in an autonomous, responsible manner”[vi]. This focus on our individual behaviours has also taken the focus off the failure of the economy to provide for all, whilst serving best the elite. The poor have been made the scape goat for structural failure[vii]. 

What this means is that many of us are “judgey” towards those that are struggling. Compassion and care have gone out the window.

An understanding of these changes in the global economy and how there just isn’t enough secure jobs to go around is absent. Or that not everyone can work. Or many people are working - but it is unpaid work.

We drank the lies of government that said poverty was all the fault of the poor. We have become complicit in their slow deaths.

This is ugly thinking.

We have got to stop fighting each other and fight the structures that, in one way or another, oppress us all.

Originally written 2019-2020 (some updates included)

[i] McBrien, "Accumulating Extinction: Planetary Catastrophism in the Necrocene."

[ii] Tony Fry, "Design Futuring in a Borderland of Postdevelopment," in Postdevelopment in Practice: Alternatives, Economies, Ontologies, ed. Elise Klein and Carlos Eduardo Morreo (Routledge, 2019).

[iii] Damien Cahill, The End of Laissez-Faire?: On the Durability of Embedded Neoliberalism (Cheltenham: Edward Elgar Publishing, 2014).

[iv]In the neoliberal era, the Australian state is constantly caught in the difficulty of making Australia more attractive and competitive to capital so capital will do business and provide jobs for voters. We see this with the rhetoric of making Australia more “business friendly”, which translates to exploitable labour (hidden behind the term “flexibility”), low company tax rates (or paying no tax), and a whole host of other benefits such as limiting the ability of Australian institutions to interfere with these relations. For example, the reach of the justice system may be curtained, best seen through trade deals like the Trans Pacific Partnership. As a result of being competitive with global markets, we see the erosion of citizen rights and the transfer of class power from the lower and middle class to the elite. See, A Brief History of Neoliberalism.

[v] Standing, A Precariat Charter : From Denizens to Citizens; David Harvey, A Brief History of Neoliberalism (Oxford: Oxford University Press, 2005).

[vi]  Rebecca Lawrence, "Governing Warlpiri Subjects: Indigenous Employment and Training Programs in the Central Australian Mining Industry," Geographical Research 43, no. 1 (2005): 41.

[vii] It is also worth noting that this dramatic shift has not been entirely the province of far-right economic rationalists and neoliberals. It has also occurred on the watch of the social democrats who have been neutral at best and complementary at worst towards the economic stream flowing fast towards the right. In an essay in the Monthly (November 2006), Kevin Rudd laid out his vision for social democracy to save Australia’s politics: “[It is] the battle between free market fundamentalism and the social democratic belief that individual reward can be balanced with social responsibility”. Yet the social democratic belief in restoring a balance within capitalism was an illusion and neglected the unequal social and ecological relations under capitalism. While the Rudd government managed to deter the brunt of the Global Financial Crisis from Australia, they only preserved business as usual, that being rising inequality and ecological destruction in the name of economic “growth”. They also oversaw the continuation of the Northern Territory Intervention (renaming it “Stronger Futures”), Work for the Dole and income management, and didn’t raise Newstart when they were in power. The unprecedented surge in inequality and the changing climate is not just evidence of the failure of neoliberalism and economic rationalism, but also of the failure of social democracy. By taking a neutral stance on the capitalism, social democrats have been swept along with the current of the right. What is needed is concerted action and strategy to forge a current in the opposite direction.