Of murderers, bastards and inequality: neo-liberalism's failure

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Cometh the hour, cometh the third murderer. So now inequality is in the spotlight and is being booed off the stage. It is blamed for the rise of populist politics, and more fundamentally for economic stagnation. The economic neo-liberal orthodoxy that so implausibly claimed that economic competition, unfettered by government regulation, would benefit all of the citizens has produced the gross inequality that hinders economic growth.

xxxxxThe bastard child is strangling its father. Denial of inequality of wealth and the defence of the economic framework that spawned it—once conventional wisdom—now seems as desperate as the denial of global warming. Addressing inequality is also becoming a political necessity.           This is to be welcomed, as are political proposals to address it. But they need to be harnessed to a vision of society that the economy will serve. Otherwise, they will simply serve the competitive individual economic ideology that has bred inequality.

This failure is patent in the Labor Party’s presentation of the commendable proposal to reform the use of family trusts as a means of addressing inequality. Trusts have been used as an engine for the concentration of wealth.

The move to reform their use, however, has been portrayed by its proponents, as well as its opponents, as part of a competition between rich and poor, in which the protagonists see each other as inspired by greed and envy. This reinforces the view of economics as based on competition between individuals. This lies at the root of inequality

The goal of the exercise, too, is defined in purely economic terms: to repay the heavy levels of debt that Australia has incurred. That may be no bad thing, but it leaves out of the account the broader social goals that repaying debt will serve. They are subordinated to the management of the economy, instead of controlling it.

The same dynamic was evident in the conflict between Cricket Australia and the cricketers’ union. The dispute was about two interlocking matters: the distribution of money and the part of the cricketers in the government of the game.

In the treatment of the dispute, the larger issue of common responsibility for a common goal receded from view and it was viewed as the competitive economic struggle between greedy players and a self-interested Board. The final settlement was seen simply as the victory of the players. That cricket is primarily a cooperative, in which players and Board are partners with shared responsibility for shaping the game, was forgotten.

Lacking in the discussion, both of inequality and of the relationship between the cricket Board and players, was a larger vision of what gives importance to equality, justifies cutting benefits to pay off debts, and makes the game of cricket worth playing, watching and administering. This larger vision is usually described as the common good.

 

"Inequality is not measured by the difference between the very wealthy and ordinary workers, but by the difference between the wealthy and the vulnerable trying to live off social security."

 

It describes a world in which everyone, especially the most disadvantaged, have a seat and are fed, and in which everyone shares responsibility for ensuring that the table is more richly supplied for the benefit of present and future diners. Economic settings should also promote cooperation, so that competition is tempered by shared responsibility for securing the common good.

From this perspective, individual wealth has a social bond attached—it is accompanied by responsibility to contribute to the common good. The role of governments is to ensure that the economic settings of taxation and regulation implement this responsibility.

In modern societies they must provide the funding to enable all people to live decently, and to build resources for the benefit of future generations. This means ensuring that the physical infrastructure is built, that the environment is protected, that education and personal support will enable young people to develop humanly and contribute to society, and that people have access to reliable health care, especially through preventative medicine. These form the engine for growth in a humane and productive society.

In Australia, all these things are inadequately resourced and valued, so that vast private wealth coexists with public neglect. The social bond attached to wealth should be drawn upon, both by the rectifying of socially irresponsible settings such as the tax structure of family trusts and of negative gearing, and by wealth and inheritance taxes.

These are simply an expression of the responsibility of all people, and so of governments, for the common good; of the use of wealth so that everyone has a share at the table. Inequality is not measured by the difference between the very wealthy and ordinary workers, but by the difference between the wealthy and the vulnerable trying to live off social security.

The economic system must enable the lowest to live decently and with respect. It must provide the conditions under which people can flourish and contribute to society. It should ensure that our grandchildren inherit a living and healthy environment. The making and keeping of money should be shaped to those large goals.

That means shaping an economic and social order that privileges partnership over competition, inclusion over exclusion, community over individual gain, and people over efficiency and profit. It means seeing cricketers and other craftsmen and workers as responsible to the other people who make the game enjoyable and profitable, and sharing in the responsibility for the decisions that shape it.

The model that best embodies this ideal is the cooperative, in which people share ownership of the organisation where they make their living and share responsibility for their common wellbeing, and that of those to whom it is related. One of the most interesting forms of this was Mondragon.

Inequality is currently the flavour of the month, as it ought be. It is the codeword for the uncovering of the defects of liberal economic theory. Gross inequality is the predictable result.  

 

 


Andrew HamiltonAndrew Hamilton is consulting editor of Eureka Street.

Topic tags: Andrew Hamilton, poverty


 

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Neo-liberalism to me is a philosophy, which, when put into unfettered practice, leads to Monopoly Capitalism: something the Catholic Church was always strongly against for a number of very valid reasons. Australia has had a strong history of cooperatives, particularly in agriculture. Sadly, these have often become either fully commercialised as ordinary companies or encouraged to 'think and go big' thus losing a great deal of money. We do need a genuine social net and a great deal more social investment in infrastructure. Perhaps savings could be made by reducing the wages and perks of our vastly overrenumerated politicians; top bureaucrats and similar on the public purse? We also need to cut down on unnecessary middle class welfare. There are many who use family trusts to pay them a low wage so they can access every welfare subsidy available. That phrase 'a fair go for all' rings rather hollow these days. We seem to be becoming more like the USA whose public education; public health and social safety net are execrable. That sort of society, with its vast iniquities, is what, ultimately, neo-liberalism leads to. We need intelligent, compassionate leaders with economic smarts.
Edward Fido | 17 August 2017


Clare Condon writes an article in 'The Good Oil' entitled 'A world desperate for constructive positive leadership'. Clare speaks about the leadership of Pope Francis and writes, 'I wonder, does Pope Francis offer an alternative model of leadership in a troubled world? He lives a simple lifestyle based on the Gospel of Jesus Christ – as far as is possible for the leader of the Catholic Church, situated in the Vatican. He proclaims a message consistent with his lifestyle. He has visited refugees at Lampedusa, washed the feet of a young female Muslim prisoner and set up a commission to attend to child sexual abuse in the church. This world leader travels in a simple Fiat and builds showers for Rome’s homeless people. Like Jesus, he seeks to lead a community, the church, which reaches out to the poor.' Sadly, Pope Francis has, like the prophets of old, sadly been maligned even by some Church hierarchy and his example effectively ignored by numerous clergy. The Australian 2020 Plenary Council is a chance for Australian Catholics to ensure our Australian Catholic Church follows the example of Pope Francis, resulting in a more equitable 'Poor Church for the Poor'. Start planning now!
Grant Allen | 17 August 2017


Great article! If only the wisdom here was embodied in Government policy. I'm not sure if any Australian political party can get their minds around this because we live in a world where those engaging in paid employment (including politicians) think " I'm OK, bugger everybody else". If there is another GGFC on a scale equilavent to the Great Depression of 1930's, the stimulus may see a resurrection of co-operatives, labour camps and kibbituzs.
Cam BEAR | 17 August 2017


What a fantastic article, I could not agree more. Thank you for expressing it so clearly.
Christian Townsend | 17 August 2017


Thanks for a highly insightful article which makes some great points, except perhaps for the bit about cooperatives: their history is, to say the least, of mixed success. You do not mention the movement towards a state-guaranteed universal living wage, nor that the equitable and progressive taxation of wealth (wealth which is vital) should supersede current over-taxation of income (which no longer accurately reflects wealth but puts a huge penalty against reward for effort and ability among the majority of ordinary workers). Labour is just fiddling at the edges with no real prospect of daring the level of change that is urgently needed in Australia. Shorten is just a manipulative power-hungry populist. We need someone of real vision and courage; where is John Monash when we need him?
Eugene | 17 August 2017


Are the comments viewable these days? I must have missed how to see them. Thank you for your consistent good efforts to provide a variety of reading and opinions. Des Hornsby fms
Desmond Hornsby | 17 August 2017


I like the image of the table and having a seat and being fed...what makes one move from the idea of the common good to living it?
Steve Sinn | 17 August 2017


It might be that our social services are indeed just and generous but are abused at the extremes by the feckless, self-interested human being, the greedy acquisitor at the top end and the ' the world owes me a living' deceiver at the lower end with the honest recipient of services in between. Australia would be in a worse place if like the US and most Asian countries there was no welfare or comparatively poor welfare available at the lower end and obscene benefits at the upper end. Not all family trusts and negatively geared properties are bad. Both are capable of helping those who might otherwise not be able to afford the life they lead, e.g., the trust that educates a large family or the negatively geared property that provides otherwise unaffordable or unavailable housing. Incidentally, I have neither.
john frawley | 17 August 2017


Thank you Fr Andrew for a clear and insightful statement of our dilemma. Solutions from the past are almost certain to fail. Yet, the epitaph of Edward Courtenay and his wife, from about 1420 AD: "What wee gave, wee have. What wee spent, wee had. What wee kept, wee lost"; is surely ever new? The Courtenays and Pope Francis have in common the radical teachings of Jesus Christ. To me this suggests our problems are not basically economic or political, rather spiritual. When clergy and laity all get down and follow Christ among the battlers and the marginalised, we'll see improvements. Currently, most of us in the Church live a life that affirms the socially-damaging processes your article describes. Our lives rarely actualize the caring prayers we're so skilled at making in church. We can be certain God has placed young & passionate, truly Christlike women and men leaders among us. Thus, maybe the preeminent task for us today is to bring these future leaders out from the stifling ethos of unbelief, disillusionment, & materialist religious routine, into a place where they can flourish in Christ and then set Australia and the whole world on fire for justice and peace.
Dr Marty Rice | 17 August 2017


The neocon threads and shibboleths are so woven into modern society that It is easy to argue against commutative justice. And the rich have powerful means via their media and promotions of various oxymoronic think tanks like the Institute for Public Affairs. Then there is the sort of running base lie that we are an economy not a series of communities. I agree about the necessity of a new vision of equality, but how to form it? Maybe a start is to focus on what is left for the super rich after they have paid their taxes, rather than what they have to sacrifice. But as Dick Dusseldorp said, 'After your first million it is not about money'.
Michael D. Breen | 17 August 2017


"The use of wealth so that everyone has a share at the table." What a great description of how society could be! And a concise summary of the Bible's teaching about equity, justice and the common good. I wish the Christian politicians who focus solely on same sex marriage would put as much if not more of their energies into tackling inequality.
robert van zetten | 17 August 2017


I married a Forgotten Australian, which led to my family, home and career also becoming forgotten, or in fact lost to me. I had to care for him as well as our children, who were so badly affected that one no longer speaks to me and will not let me meet my only grandchild. Please stop tearing families apart so the members end up despising each other. When social workers decide to remove a child from their family, they should simultaneously take steps to preserve the relationships in that family, by whatever means necessary. If they don't, the removed children will grow up hating the State - as my husband did, over-idealising the absent parents, as he did, and developing unhealthy behaviour patterns. For example, I was blamed by him and our children for everything that went wrong. And to make matters worse, Forgotten Australians and their families are not recognized as being a disadvantaged group requiring affirmative action, unless they are also indigenous. We have been unfairly targeted by Centrelink many times, and just wish for the chance to heal and make a life for ourselves. Instead we are chased to make sure we don't earn a dollar that is not taxed doubly because of centrelink's insane income rules.
sylvia | 18 August 2017


Spot on Andrew.
JIm Coghlan | 18 August 2017


Noam Chomsky has identified 2 key threats to this world at this time in history ... we know what they are: nuclear war and environmental destruction. Alongside these 2 overwhelming challenges, Noam also argues that socio-economic challenges exist. His recent presentation at Durham University clearly demonstrates that we live in a plutocracy, not a democracy, and that the State & Corporations do not put people first in any of their policy deliberations or decisions (and haven't done so for many years - he cites many examples of this behaviour). When asked what each individual can do to improve our chances in securing a future for our yet-to-be-born children, Chomsky said that history has taught us to mobilise in solidarity ... that no individual can do much at all. He suggested that the working class and immigrants need to find a common purpose ... that socio-economic grounds offers us this opportunity ... and that it is necessary to educate them all on the history of how to fight for a better life (through literature, the arts, workshops etc), as well as to mobilise in solidarity for socio-economic change that benefits us all. Who has the energy for this? Part of the strategy of plutocracy is to keep everyone distracted from the choice to take a stand and fight (e.g. endless paperwork for Centrelink and prospective employers), long working hours, keep front of mind the distractions of sport and popular culture etc etc). Plutocracy reminds me of a grand casino, where money flows to ... from people who can least afford it. One example: taxpayers pay Universities to bring innovations into being, so that corporations can buy the rights to make money from that product or service, without contributing back to society for the common good. We all know this is unsustainable. We need to mobilise.....
mary tehan | 18 August 2017


Have you ever wondered what might happen to (say) the AFL if unfettered capitalist principles were allowed to run the ompetition? Imagine no salary caps, no regulated draft processes, no central support for clubs in difficulty... where the strong would get stronger, the rich richer, and there would be no more competition from relatively evenly matched clubs. Welcome to the neo-liberal version of football.
Ginger Meggs | 21 August 2017


Thanks Mary Tehan for your post showing real concern and a passionate determination to respond to the enslaving trick that has been surreptitiously imposed on us all. The idol WATIC (Western Aggressive Techno-Industrial Commerce) has become the de facto 'god' of the world. May God help us! How to escape the spider's-web? First, we need sincere commitment to the God of Jesus Christ, taught and demonstrated to be perfectly self-giving Love & the great Holy Spirit. This eternal supra-universal mother and father and source of all that is can be well encountered in The New Testament. There, we are recommended to 1: UNYOKE from the spirit of this world; 2: pertinaciously SEEK for the Realm of God that is close and within; 3. listen to and OBEY Christ's commands. If we think of WATIC as today's aggressively pagan Roman Empire, then the unyoked life the early Church lived in obedience to Jesus (see Acts of the Apostles) has many lessons for us. To me that includes faith-filled women and men ministering in domestic communities (e.g. Romans 16:1-16). God has richly educated us. The only question is: Will we together seize that advantage and live mutual lives of peace and provision?
Dr Marty Rice | 21 August 2017


"...and in which everyone shares responsibility for ensuring that the table is more richly supplied ..." I think that's where the uphill climb begins, Fr H. The fact is that people intensely disagree about how the table can be better supplied - as my no doubt tedious sparring with E.S. companions over the years has instanced. If, say, Thomas Sowell and Bernie Sanders are at this table, urging their ideas for a better supply for the diners, what hope is there of arriving a plan, mutually acceptable to both of them, before the end of the world? What is delicious meat to one is potent poison to the other; yet we have no reason to doubt the benevolent intentions of either.
HH | 21 August 2017


As you illustrated so well HH: economic and political opinions about improving this world are legion and often irreconcilable. Our stubborn ignorance, selfish sectarianism and, let's be frank, mindless sins, are set to repeatedly destroy peace & harmony until God's Realm takes over. Every day, the national and international ramifications of this are pushed right up our noses; and, it looks like worse is to come. In contrast: The Church has inherited the divinely-appointed role of "The Light For The Nations". Amidst the irresolvable conflicts of pride & materialism, She is to teach and demonstrate The Way, The Truth, and The LIFE. To the extent that the Church is yoked with the world, she will never be able to exercise Her role properly. Being Christian is not an 'add-on' or part-time second job! 13.7 billion years of cosmogenesis has been invested in evolving ethically-choosing beings capable of responding to God's call in Jesus Christ. There is nothing more real or serious than witnessing Christ to the world/universe. As The Lamb said: "Only one thing is necessary." Again, as you implied: when Catholic Christians get yoked to the world's passions, they lose their precious unity in Christ. Too high a price!
Dr Marty Rice | 22 August 2017


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