Chairman of the UK Press Holdings Group, Andrew Neil1 has been in Australia. Press Holdings Group has as two of its titles The Spectator and The Daily Telegraph, both of which are generally supportive of the Conservative Party2. Neil appeared on the Australian Broadcasting Commission’s (ABC) Q &A program on Monday night (September 17; 35 mins 35 seconds in3) and answered a question from an audience member who asked: “Neoliberalism is nothing new; it was an economic revolution in the 1980s; a cross-party love affair with the markets in the 1990s; and now it’s an old and tired orthodoxy resented by working and middle class people who feel like they’re going backwards. Has the failure of the neoliberal experiment pushed voters to the extremes of Brexit, Trump, right-wing populism and, in Australia, undermined the legitimacy of several prime ministers; and if so, what comes after neoliberalism?” In response Neil said: ‘Neoliberalism, of course, is a loaded word. I think what you mean is the market economy….”3. This conflation of neoliberalism with the market economy either portrays ignorance, or is a deflection of the question demonstrating an unwillingness to acknowledge the problems caused by neoliberalism.
A market economy is a system where the ‘laws’ of supply and demand direct the production of goods and services. Supply includes natural resources, capital and labour. Demand includes purchases by consumers, businesses and the government. Businesses sell their wares at the highest price consumers will pay. At the same time, shoppers look for the lowest prices for the goods and services they want. Workers provide their services for the highest wages that their skills allow. Employers seek to get the best employees at the lowest possible price. A market economy is the system under which capitalism operates. Market economies range from minimally regulated laissez-faire systems where state activity is restricted to providing public goods and services to interventionist types where the government plays an active role in correcting market failures and promoting social welfare4.
Neoliberalism is an ideology that emphasises the value of competition as the only guiding economic principle and is most commonly associated with laissez-faire economics. It is particularly characterised by its belief in sustained economic growth as the means to achieve human progress, its belief in free markets as the most efficient way to allocate resources, its emphasis on minimal state intervention in economic and social affairs, and its commitment to the freedom of trade and the free movement of capital5.
It is unsurprising that an organisation that supports the Conservative Party would wish to conflate the market economy with neoliberalism, as the ethos of that party is a neoliberal one, ever since Thatcher’s Prime Ministership (1979-1990). Her ‘Thatcherism’ represented the rejection of the post-war Keynesian consensus of the welfare state, nationalised industry and regulation of the economy6and that rejection is the essence of neoliberalism. Thatcherism led to an increase in the Gini coefficient of the UK, going from 0.25 in 1979 to 0.34 in 1990, where it has more or less remained subsequently. The Gini coefficient is a measure of income and wealth inequality. The higher the number, the greater the inequality7.
Neoliberalism, specifically the deregulation it championed, set the scene for the 2008 Global Financial Crisis. Australia came out of the GFC better than most other nations because the Labor government used a well designed stimulus package which worked astonishingly well8; it was a very Keynesian approach in that it did not spread its largesse to corporations, but to the poor, and it invested in infrastructure.
One of the things I bumped into while chasing up sources for this essay was the fact that the most dynamic period of postwar growth in western nations was the period between the end of the war and the early 1970s, the era of the welfare state and Keynesianism, when the growth rate was twice that of the neoliberal period from 1980 to the present9. Neoliberalism has to go.