When even Keating is getting off the neoliberal train

Neoliberalism is having a bad time of it lately.

ACTU secretary Sally McManus, speaking at the Press Club in March, was the latest to go on the attack. “Neoliberalism, trickle-down economics. These tired ideas have delivered inequality for working people, and ordinary Australians have been the victims”, she said. “The Keating years created vast wealth for Australia, but it has not been shared, with too much ending up in offshore bank accounts or in CEOs’ back pockets.”

The fact that the ACTU is ramping up the rhetoric against pro-market ideology is hardly a sign of the collapse of the neoliberal order; it just poses the question of where the hell they have been for the last 30 years.

But when even Paul Keating starts changing his tune, you have to suspect something more fundamental is going on. Responding to McManus’ comments, Keating told Fairfax Media:

“Liberal economics has run into a dead end and has had no answer to the contemporary malaise. Since 2008, liberal economics has gone nowhere and to the extent that Sally McManus is saying this, she is right. We have a comatose world economy held together by debt and central bank money.”

This is kind of like Pope Paul V remarking, “To the extent that Galileo is just saying that the earth orbits the sun, he’s probably right”.

Keating was the most important driving force behind neoliberalism in Australia – he deregulated the banks, privatised public assets like Qantas and the Commonwealth Bank and championed free market globalisation. He handed control of monetary policy to the Reserve Bank and pioneered using the excuse of a “budget black hole” to slash spending and abandon election promises.

What made it worse was that, as a Labor leader, he was able to drag the ALP and the trade union movement in behind a policy approach that led to the most significant transfer of wealth from workers to the rich since the 1930s Depression.

The disastrous levels of class inequality in Australia today and the fact that our trade unions are weaker than they have ever been flow directly from the Keating era.

When the global financial crisis struck in 2008, many people (me included) predicted that the neoliberal order was finished. It wasn’t. In spite of the obvious and calamitous failure of “free market” economics (they weren’t really “free”, but that’s another issue), politicians from both left and right mainstream parties doubled down, bailing out the banks and implementing waves of austerity. It was socialism for the rich and capitalist savagery for the poor.

Initially, they got away with it. So weakened had the workers’ movements and the left become from decades of retreat, that resistance to austerity was either hardly existent or weak enough to be put down.

But if they thought they got away with it, they were wrong. Nearly a decade later, what Tariq Ali calls “the extreme centre” is in meltdown on both sides of the Atlantic, facing challenges from both left and right. Australia, which rode out the worst of the financial crisis, has seemed largely immune from this crisis. But maybe not forever.