The number of people that have enough money to benefit from ‘neoliberalism’ is vanishingly small, compared with the number that don’t.
So how has neoliberalism come to dominate politics - almost universally throughout the world over the last 40 years - when it benefits so few of us?
The answer to this question points to a fundamental social divide, based on ‘focus’: Basically, neoliberalism rules, because the vast number of people who are “losing out” are ‘factionised’; too distracted, arguing amongst themselves, about technicalities or ideological differences, to see neoliberalism for what it is.
If we are going to remove this fundamental dominance of neoliberalism across the world, we will need to find a way to unify all the ‘concerns’ and ‘causes’ of all the various factions within the 99.999% of people who are losing out under neoliberalism.
The single best way to do that is to unite everyone behind a common ‘cause’ - the cause of “economic reform”...
… but economics is just so bloody BORING.
Or is it?
At first glance, it is fair to say, economics is bloody boring stuff. But, if you are prepared to take a little journey with me, to move that ‘focus’ a bit, you might find that there are elements of economics that really capture the public imagination, at all points along the political spectrum - from left to right.
An exciting journey into modern economics
The right-wing focus
Anyone who is on the right-wing or conservative end of the political spectrum will agree passionately with these economic statements:
Unemployment is high because we allow too many foreign workers to come in on 457 visas
If we allow refugees to come to the country they will take jobs that would otherwise go to existing Australian citizens
Unemployed people are lazy and could get a job if they applied themselves
Single parents should work so that they contribute economically and pay taxes
People who are poor shouldn’t have children they can’t afford to pay for
Chinese ownership of farm land and real estate is inflating prices, shutting down Aussie industry and making The Australian Dream unaffordable for young people
We should return to the gold standard because our currency is worthless without gold backing it
Government deficit spending is leaving a debt that will need to be repaid by our grand children
My taxes are paying for people to sit around on the dole and take drugs
We can’t just print money or we will end up like Zimbabwe or Venezuela
Forcing people to save money for retirement will ensure we don’t run out of money to pay pensions for our ageing population
If taxes and wages are too high businesses won’t invest in capital or hire people, and our economy won’t grow
The left-wing focus
Anyone who is on the left-wing or progressive end of the political spectrum will agree passionately with these economic statements:
We could afford to spend more on social services if we closed corporate tax loopholes
We can’t stand by while our Indigenous population suffers horrific health, social and economic outcomes
Why should churches, which bring in such a high revenue, pay no tax?
We should cut funding to private schools
We should not be subsidising polluting industries and should instead tax pollution
A universal basic income would ensure no one falls into poverty
We have a finance system that allows the 1% to profit while the 99% go deeper into debt
Politicians have been corrupted by donations and are beholden to corporate sponsors
Bailing out banks when they caused the financial crisis is unfair
No-one should need to pay for healthcare, it should be universally available
We should have paid for a real Fibre to the Premises NBN rather than the multi-technology mix
We should increase, rather than decrease newstart and other social security payments
Politicians get paid too much and shouldn’t have such generous pensions, especially if they’re going to cut spending on essential services
The factional punch up
People will argue about these things with PASSION.
They will defend these positions vehemently and aggressively.
So we can get people really fired up about economics. It’s just that we need to be speaking about it in terms of things they care about.
The good news is that we have a whole host of economic theories at our disposal that assuage all these concerns for people, regardless of where they sit politically.
The bad news is that even these economic theorists are debating each other, unable to form a unified opposition to neoliberalism.
Modern Monetary theorists (MMT) vs Positive Money vs Universal Basic Income (UBI) vs Money Circuit Theorists (MCT)
Modern Monetary theorists (MMT economists) despise the fact that “Positive Money” reject “the state theory of money”.
The “old school” Keynesians have always said, since the introduction of MMT, that MMT economists ignore inflation.
The “Universal Basic Income” (UBI) advocates, want to simplify the social security system by providing a universal basic income to all.
MMT economists claim this won’t solve unemployment, and will be hyper-inflationary, and are concerned that few advocates realise the monetarist roots of the UBI policy.
The Money Circuit theorists (MCT economists) and Positive Money advocates argue that bank credit creation is the dominant economic force and that government fiscal policy is an inadequate tool for dealing with a private credit bubble and debt deflation (although Steve Keen has done great work in reconciling MCT and MMT).
Monty Python: The Life of Brian: “Splitter!” See https://www.youtube.com/watch?v=xRvCwtLLV6I
How to understand this punch up?
So what I want to do here is provide a common framework upon which everyone who is economically against the neoliberal hegemony can agree.
I want to state this in a message that appeals to traditionalists, conservatives, leftists, communists, futurists and nationalists alike, because statistically speaking the overwhelming odds are that if you are reading these words then neoliberalism is not to your benefit.
It is “all of us”’s common enemy.
We need to band together, like all the nations of Earth in the classic sci-fi action romp Independence Day against the common alien enemy that threatens to destroy us all.
Independence Day (1996) https://www.youtube.com/watch?v=xr7Zy9l13y0
We have allowed the monetarist/neoliberal school of economic thought to become too powerful. We have allowed them to corrupt our political process, to take charge of its direction, and to weaken our ability to change it.
The only way we can achieve change now is with broad consensus, opposing neoliberalism.
Anything less is doomed to fail.
Some fundamental economic truths
So here is what we all agree on:
We all agree that everyone should feel safe and supported in our community
We all agree that everyone should have access to employment opportunities and should be free from exploitation
We all agree that if people work hard they are entitled to enjoy the fruits of their labour
We all agree that the government should act in the interests of the voting public and not corporations or private interests
We all agree that banks are making too much money
We all agree that people’s mortgages are too high and that private debt levels are unsustainable
We all agree that if the government spends irresponsibly it can cause problems with inflation and price instability
We all agree that people should contribute to the wellbeing of society as much as they are able to, through work and/or the care of others
We all agree that we need to preserve our natural environment in order to survive as a species
We all agree that everyone deserves access to affordable housing
We all agree that everyone deserves access to good quality healthcare
We all agree that top quality education should be a right and not a privilege
We all agree that historically immigration has had a net positive benefit for our society and our economy
Statistically I’d say, chances are, if you’re still with me on this journey, if you’re reading these words, you probably agree on every single one of those points above.
And I’m not just saying that because I’m posting this on a left-leaning political blogging platform.
I would say that the vast majority of Australians would read the above points and agree with every single one of them, simply because of who we are, as a country -- at our core we are egalitarian.
Sure there are going to be some people who disagree with those things on selfish, individualist, defensive, or divisive grounds, but I’d say those attitudes are an outcome of decades of neoliberalism and that, in our hearts, if we really look past all the conditioning we have been subject to, that 100% of us would agree with every one of those statements.
Taking these truths further
So what economic principles exist that would allow us to fulfil those objectives, without leaving a debt to our grandchildren, giving all our jobs to foreigners, or taxing corporations and churches?
Heterodox economics has the answers:
Taxes and debt don’t finance government spending
This is mostly coming out of Keynesian and Post-Keynesian schools, and especially Modern Monetary Theory, but it is something that all Heterodox schools of economics agree on. There is disagreement on what level of fiscal discipline is required in order to prevent government spending from being inflationary, but everyone in the economic Heterodoxy agrees: taxes are not a revenue tool. They are required to ensure that government spending is not inflationary. Some people say that if we don’t finance spending through taxation or debt then we are “printing money” and that this is automatically inflationary, at least acknowledging the fact that, in reality, the government is not constrained in its ability to create dollars by the need to tax or “borrow” an amount equal to spending.
Whether or not you think that’s a good idea is another story, but anyone concerned about their taxes paying for someone else’s laziness, and anyone concerned that big corporations aren’t “paying their fair share”, can rest easy: government spending creates money and taxation destroys it. We can use taxes to improve equality, reduce inflation, or influence behaviour, but at the moment our economy is in the doldrums. We just need more spending. We can worry about tax reform later. It’s just not the big deal we all make it out to be.
Government spending is only inflationary when it competes with the private sector for resources
Everyone in the economic Heterodoxy agrees that we need a means of ensuring that spending is kept to a level that ensures price stability. We can argue about the best way to achieve that discipline, but we can also all acknowledge the fact that the difference between spending and taxation (referred to as the budget deficit) almost never needs to be zero. We don’t have to “raise revenue” or “cut spending” in order to “repair the budget”. We also don’t have to issue bonds to “raise money” in order to spend. We can just spend, and tax, and issue bonds, if we want to give people a way to save in “a safe asset” and for other reasons that are technical and boring. The bottom line is that spending can exceed taxation by some amount and it won’t necessarily be inflationary. We just need to agree on a means of determining that amount.
Private sector debt is too high
Everyone in the economic Heterodoxy agrees banks are creating too many loans, and that people’s mortgages are too high, that the banking and finance sector is getting too much income as a percentage of GDP, and that we need better regulation of financial institutions and markets.
Spending equals income
Everyone in the economic Heterodoxy agrees that spending is the only thing that can stimulate an economy. When spending is low, then businesses try to cut costs by laying people off and fighting for lower wages. We see wage growth stagnation and that lowers spending further, leading to further layoffs, and so on and so on. When the private sector is not spending enough, the government needs to increase its spending to compensate.
Social security payments and wages are too low
Everyone in the economic Heterodoxy agrees that we need more money being given to people at the bottom end of the income spectrum. People are falling through the cracks and everyone is entitled to a level of income that allows them to participate fully in the economy. We all agree on the need to ensure that everyone has the basic income they need, and also that everyone has access to stable employment opportunities.
Healthcare and education funding are too low
Everyone in the economic Heterodoxy agrees that that the government can and should fully fund universal healthcare, without any need for private health cover, and that there is no need to cut school funding, encourage private schools, or to have people paying for University.
Privatisation of natural monopolies is not efficient
Everyone in the economic Heterodoxy agrees that privatising infrastructure, like energy, roads, water and communications, does not lead to the more efficient operation promised by neoliberalism.
Across the entire political and economic spectrum we agree on so much!
Sure we might not agree on some of the details but let’s focus on what we have in common instead.
The reasons that people disagree with these proposals are usually predicated on the fact that they feel as though they are going to be short changed. But that does not need to be the case.
In fact, I would say, we can keep all sides happy by saying that we can not only dramatically increase social security payments, supply a socially inclusive minimum wage,provide a job to anyone willing and able to work, and reduce private debt and mortgage stress, but at the same time we can also dramatically reduce taxes on earned income and instead develop taxes that focus on wealth, assets and unearned income of the mega rich.
The possibilities are endless and all in the interests of the vast majority of the voting public and their families.
People worried about refugees and foreigners taking their job don’t need to worry: they will always have a job and a basic income guaranteed by the government.
People worried about their taxes supporting drug addicts don’t need to worry: we can cut taxes on earned income and control inflation primarily through taxes on wealth, consumption, or unearned income. We don’t need taxes to pay for things. We only need to ensure we have the resources to produce what we all need.
People worried about corporations not paying their fare share don’t need to worry: we don’t need their money, and in fact we can encourage them to reinvest it by ensuring workers have a strong bargaining position, resulting in higher wages being paid to local employees. We may need to close some tax loopholes, if we want to encourage further investment, or reduce inequality, at some point, but it’s not like we have to do this before we fix our social security payments or move to a policy of full employment, for example.
People worried about a collapse in house prices ruining their retirement can relax: we can dramatically increase the aged pension and we can use direct government support of the housing loan market to ensure people are compensated for losses in assets, and have their ‘standard of living during retirement’ protected.
Moving on from here
The list goes on.
I've highlighted a few benefits but for every emotionally charged economic statement I listed above, from left to right on the political spectrum, there is broad consensus from a growing number of economists on how we can resolve those issues equitably.
Almost every major issue we hear about on a daily basis can be resolved by changing how we run the economy.
We can decide first how we want our society to look, and then set the economy up to facilitate that vision.
If we wanted a severely unequal society where we worked an increasing number of hours to service huge debts, where we had rampant unemployment, no job security, fragile family and community structures, poverty, inequality, and lack of access to healthcare and education, then I would say we’ve done a great job of setting our economy up.
Since, overwhelmingly, we in the majority do NOT want those things, I would say we have done a lousy job of setting our economy up.
In fact we have allowed an astonishingly small number of people to organise the economy so that it looks how THEY want it to look, to our collective detriment.
We can fix this all if we stop quibbling about the details and focus on getting rid of the big ugly neoliberal alien spaceship in the sky.
Let’s unite against the common enemy of neoliberalism.
Anyone interested in opening up a dialogue on how we do this should email me on firstname.lastname@example.org
I would love to hear from anyone including members and representatives of other minor political parties in Australia.
You can find out more by visiting http://www.australianemploymentparty.org/
Please also consider signing this petition: