The populist revolt and the crisis of neoliberalism

For Australian Options
The populist revolt and the crisis of neoliberalism
By David McKnight

In the past couple of years, I came to the painful realisation that the Australia in which I had grown up was in the process of being torn up and trashed. There were many bad things about this Old Australia -- around expectations of women, for example, and around discrimination based on race. But there were also some good things: a more equal society and one in which we had great public institutions which supported citizens regardless of income.

Today we live in a much more unequal society, a less fair society, a more selfish and competitive society. We live in a society where it doesn’t matter what the question is, the answer is always the market and the solution is always more privatisation and more deregulation.

In my book Populism Now! I investigate the results of 30 years of neoliberalism: they include growth of inequality, the many failures privatisation; the growth and power of predatory banks; the widespread avoidance of corporate tax; the erosion of wages and conditions for workers; the destruction of many of the good things about old Australia.

Yet neoliberalism is also failing even in its own terms. Even its supporters like the OECD and the International Monetary Fund now admit that the value of neo-liberal economics has been “oversold’. For example, these very conservative bodies now admit that inequality is bad for long term growth. The OECD now says that “the lion’s share of income growth” has gone to the already richest one per cent. With characteristic bluntness, Paul Keating has said that neoliberal economics has reached “a dead end” because it has no answer the current economic problems in the wake of the Global Financial Crisis.

This failure of dominant economics to benefit ordinary people has another bad outcome. It is fuelling the rise of right wing populism. It is making many people angry, And angry people look for someone to blame and many blame migrants and minorities. This is one of the reasons that Donald Trump was elected US president. Trump’s win has taken us into a new dangerous place . He will make worse two of the biggest threats the world faces: climate change and nuclear war.

Yet one of the major reasons Trump won had nothing to do with outrageous racial slurs and sexist slanders. To some extent such talk acted as a decoy because it drew media attention away from his pitch to working class voters. One of the key reasons he won was that he pointed out that many American workers were suffering because of neoliberalism and corporate globalisation. He made a whole lot of promises about bringing back steel workers’ jobs and other industrial jobs, none of which he is likely to keep.

But there was another voice in the presidential process and that was the Democrat contender, Bernie Sanders. He was also concerned about the devastation that corporate globalisation has created in the US industrial heartland. But he is a progressive populist but he lays the blame on the super-rich, not on Mexican border crossers. In fact, during this period, Bernie Sanders changed the whole agenda of the election so that it started to focus on gross inequality, on the dangers of deregulated banks and on the power of Wall Street.

Similar themes were taken up by the leader of the leader of the British Labour Party, Jeremy Corbyn. From the start of the 2017 election campaign Corbyn framed the contest in the language of progressive populism. He described the election as a battle of ‘the establishment versus the people’ and promised to overturn ‘a rigged system’ that favoured the rich and powerful. Corbyn’s manifesto broke other unspoken rules of the economic consensus of neoliberalism. He argued that the railways and water supply should return to public ownership. He promised to extend free school meals by a tax on private school fees. All of this meant he was successful in coming within a few inches of winning the election.

My book advocates for the kind of progressive populism that Bernie Sanders and Jeremy Corbyn represented.

In my view, this progressive form of populism that takes up the genuine economic grievances of everyday Australians without scapegoating migrants or minorities is the best way of defeating the racist backlash of right-wing populism because it addresses the social and economic problems which partly drive the rise of right-wing populism. As well, it asserts our common humanity, whatever sexual or racial diversity we also express.

So what is populism? A lot of people think populism is about seeking popularity but actually it comes from the Latin word Populus which means the People.

The first modern expression of this was the emergence in the US mid-west of a new political party, the People’s Party, in 1890–91. It stood for the interests of ordinary people – farmers and workers – against the ‘robber barons’ in the privately-owned banking, oil and railway industries. Friends and enemies alike described the approach of the People’s Party as Populism and its supporters as Populists.

To the Australian Labor Party, emerging in the same tumultuous decade of the 1890s, the US People’s Party was something of a model and there were early proposals to call the new Australian party the People’s Party, rather than the Labor Party. So populism is a political philosophy based on representing ordinary people. The other part of its meaning is that the interests of ordinary people are counter-posed to the interests of an elite.

In contemporary Australia this means campaigning against the ideology which has been promoted by corporate elites for several decades. That is, neoliberalism. To name just six failures of neoliberalism:

  • Thirty years of neoliberal globalization and deregulation have produced a concentration of wealth which has undermined Australia’s egalitarian ethos. The top 1 per cent of Australians own more than bottom 70%. Worse than this, the gulf between the super-rich and the rest of us is getting wider each day.
  • The ideology of small government and deregulation is impeding our response to accelerating climate change despite the clear warning signs in record high temperatures and the bleaching of the Great Barrier Reef. Whatever combination of market and state arrangements is best at fostering renewable energy, it will still need tough government action to defeat the power of the coal and oil industries -- and their backers. To demand such action we need a broad populist coalition of all the diverse forces demanding real action on climate
  • Then, there’s privatization of public assets. Privatization, changes services that used to be provided to all citizens into profit-making enterprises. But previous privatizations like seaports, airports and electricity poles and wires have simply created expensive monopolies which can gouge the public. Literally billions of dollars have also been wasted in attempting to privatize TAFE and vocational education. Despite these failures, private companies are still being encouraged to move even deeper into education, aged care and disability services.
  • Neoliberalism has undermined working conditions of many people. For those who are in work, jobs are increasingly casual, part time and less secure. And thanks to a variety of temporary overseas visa schemes a casualized, cash-in-hand underclass is spreading on farms, in shops and in the hospitality sector. Such workers are inevitably exploited and their labour conditions undermine those of local workers. The resulting job insecurity combined with low wages is one factor stoking a right-wing populist backlash based on xenophobia and hostility to overseas workers. The ACTU secretary, Sally McManus, has called for a reduction in temporary work visa numbers and I agree with her. (She has also endorsed the book along with Richard Dennis from the Australia Institute)
  • Big corporations do everything they can to avoid paying tax, a practice made easier in the deregulated world of neoliberalism. For example, in 2014, the Australian branch of the highly successful tech giant Apple paid $80 million in tax – just 1 per cent of its total Australian income of $6 billion. It did this through a totally artificial structure using tax havens which I explain in the book. Similar stories exist about BHP, Rio, Chevron and many other corporations. Meanwhile, ordinary Australians are left to pick up the tab for hospitals, roads and schools, effectively subsidizing those who refuse to pay their fair share.
  • Finally, the banking and finance sector has swollen enormously since it was deregulated and become extremely profitable. The greed of global banks has already caused one global financial crisis and they could easily do so again, That’s not to mention the list of scandals and rip offs which are now being revealed each day at the Royal Commission into the Banks. Again, many of these scandals I describe in the book.

So what is progressive populism? It’s a way of seeing the world and a style of arguing for ideas, some familiar and others new. It supports the needs of everyday Australians against those of the wealthy elite. Unlike formal political theories, it has no theory of history and it doesn’t claim to have the explanation for each and every social issue or political cause. It has no list of policy demands.

Rather, it reframes the existing ideals and values of progressives – organisations and individuals – with an emphasis on what people have in common. Drawing on ideas of equality and solidarity, progressive populism puts the interests of ordinary people first, beginning with their economic interests. A populist approach combines progressive values with a muscular, passionate way of doing politics.