An Economy is Not a Society (7 page)

It is, of course, obvious to anyone except the creative destroyers that this view has a serious flaw: it is totally lacking in moral content. Humans don't work this way. They don't give up without a fight, they don't voluntarily accept poverty, and they don't surrender their culture and traditions without a struggle. The creative destroyers, with their high salaries and indexed pensions and share portfolios and property values to protect, are asking working Australians to make sacrifices for the common good which they themselves would never contemplate. The English working class actually went backwards materially for three decades and more: their working hours increased, their diets deteriorated, they became addicted to gin, and their children, crammed into slums and deprived of fresh air and clean water, died in greater numbers than before. More than this, the
quality
of their lives deteriorated too, by which is meant their way of life, their culture and their communities.

As Thompson famously put it, we have to rescue the people who fought against economic reform from ‘the enormous condescension of posterity'. Their cause – which amounted to saving their own lives – may appear backward to us, and borderline criminal to economists, but that's not how it appeared to them at the time.

And that's the point: just like the English working class who went through the Industrial Revolution, the people who experienced the destruction of places like Doveton have something important to say to us.

Every revolution needs a revolutionary class, and this one is no exception. It was carried through by the true heirs of the political psychology that once belonged to the Marxist Left: the economic reformers, armed with their philosophy of creative destruction, which Schumpeter stole from Marx.

When I call these people the heirs of the revolutionary psychology of Marxism, in many cases I mean it quite literally. We can place the beginnings of this revolution back in the late 1970s and early 1980s, when the ideologies of neoliberalism and neoconservatism, as implemented by the governments of Margaret Thatcher and Ronald Reagan, began to influence those Australian conservatives dismayed by the lack of reforming zeal of the government of Malcolm Fraser. Some of these intellectuals – the most notable being the then editor of the
Australian Financial Review,
P. P. McGuinness, who once worked for the Brezhnev-era Moscow Narodny Bank – were actual former pseudo-Marxist left-wing fellow travellers. Another node of this thinking,
Quadrant
magazine, contained similar characters who had moved from left to right over the course of their lives.

Like all revolutionary ideologies, this one began with a concept of freedom and a Promethean quest to transform the nation. Its historical task was to unleash the power of the market, which it saw as having been placed in chains by the overly powerful post-war state. And like all revolutionary ideologies, it believed that its central conviction – in this case, that the market should be totally free – was so important that it displaced other moral considerations. Just as in Marxist thought all social relations, institutions and rights had to give way to the logic of history, for the economic reformers all things had to give way to the logic of the market. The market had the right to destroy any social relations, from subsidised industry to trade unions to the local public school, because the market relations that replaced them would by their very nature create something better. With the help of neoconservatism, economic reform even developed its own pseudo-Marxist sociological terminology to justify all this – phrases like ‘new class elite', ‘provider capture' and ‘rent-seeker' – and its own populist political strategy, which was to ignite a revolt by the people against the shadowy ‘elites', which were somehow pulling the levers of power even when out of government.

In the face of this idea, which was carried through with such conviction that it even began to influence sizeable chunks of the Labor Party, communities like Doveton, whose economic strength lay in the partial subordination of the market to the needs of society, didn't stand a chance. The idea received a massive boost when federal treasurer Paul Keating induced a panic with his exaggerated claim in 1986 that Australia was done for and on the road to becoming a banana republic. The predictable end point was that people in places like Doveton would eventually be denounced as scroungers who, because they relied on transparent public support to keep their industries strong, were stealing wealth earned by others through the operations of the free market.

Equally predictably, though, was something else important: that this new ideology of freedom for the market, like all such revolutionary ideologies, would calcify into a formula that would in fact narrow the way we see the world, limit our imaginations, take away our ability to think in moral terms and reduce our capacity to conceive of something better. Creative destruction has become an intellectual straightjacket, like Marxism became in Eastern Europe. And this calcification is exactly what has happened here in Australia. It was carried through by the managerialists, the
nomenklatura
of the neoliberal age.

On the death of Robin Williams, a friend of mine, Emily, sent me a link to a YouTube clip of the best scene from
Dead Poets Society.
I am what you would call very pro-Williams – many people aren't – and mainly because of this movie, which I saw with a girlfriend I was very fond of when it was released in 1989. At twenty-five and about to head off to Cambridge, I was still young enough to put myself in the shoes of the movie's students; arriving there still infected by Peter Weir's great story, in which the heroes are the romantic poets Whitman, Thoreau, Byron and Tennyson, I was determined not to spend all my time conducting some dry-as-dust academic research but to be the sort of student the Williams character – who was named (for us perhaps ironically) Mr Keating – would have wanted me to be. I would try to read everything – the classics, philosophy, literature, poetry – and breathe deeply the romance of the great university town. My PhD thesis would be a meal ticket and no more. If I didn't fully succeed in this, I did at least try.

I'm now older than Mr Keating was in the film, and seeing the YouTube clip affected me in a different way. The teacher's message still seemed subversive, but for different reasons. You may recall the scene. Mr Keating, who has just taken the job of English master at the exclusive male boarding school where he himself was once a student, asks his class to open their poetry textbook, written by one Dr J. Evans Pritchard, at the introduction. He tells one student, Neil, to read the opening paragraph. It says that the greatness of a poem can be determined in a relatively simple way, by gauging first how artfully the objective of the poem has been rendered (through the use of meter, rhyme and figures of speech) and then how important that objective is. And the simplest way to do this is to plot these qualities on a graph, with the poem's artistic perfection (‘P') plotted horizontally and its importance (‘I') plotted vertically: ‘Calculating the total area of the poem yields the measure of its greatness.' As Neil is reading this, Mr Keating draws such a graph on the blackboard, and next to it the formula ‘P × I = G'. He then turns to the class and says, ‘Excrement!' before instructing his pupils to take Dr J. Evans Pritchard's introductory chapter in their hands and ‘Rip it out!'

In 1989 the culture wars were just beginning, and this scene became one of its early battles. It fitted the template perfectly: Keating's instruction to his class to rip out the text as a metaphor for the corrupting of the young, who were being incited by their irresponsible teachers to reject authority and take up a romantic variant of nihilism. Writing in 1990, the Australian sociologist John Carroll – whose work I admire, even though I suspect our political views might be diametrically opposed – shrewdly observed in an essay in Robert Manne's
Quadrant
that although
Dead Poets Society
is set in 1959, it is ‘the most persuasive presentation of 1960s ideology there has ever been'. To Carroll, the 1960s, far from being unique, was a ritual playing out of the sort of romantic revolt that periodically convulses the West ‘every time the middle-class order, stipulated on family, vocation, duty and civil society, swings into its own decadence ruled by snobbery and greed', the French Revolution and the Romantic movement being the most recent cases. From this perspective, Carroll continues,
Dead Poets Society
‘is evidence that a new bout of profane materialism has indeed emerged in the 1980s'.

I think Carroll is on to something important, although his political target is the wrong one. To Carroll, ripping out the introduction to the poetry textbook, with its reassuring sense of order triumphing over romantic rebellion, was an act of mindless, anti-intellectual destruction. But to me, removing its philistine formulas seems the first step towards understanding poetry's true meaning, and by extension the true meaning of any intellectual endeavour. In the field of public policy, if human feeling cannot trump mathematical calculation, we are in danger of becoming a mere economy rather than a society, digits on some economist's spreadsheet rather than human beings living in actual communities.

Exhibit one for this position also came to me from Emily. Recently, attending a policy seminar put on by one of Australia's better-funded think tanks, she was shown a PowerPoint graph titled ‘Figure A.1: Framework for prioritising economic reform'. In the same way Dr J. Evans Pritchard asks students to plot the greatness of Byron's odes and Shakespeare's sonnets on a graph, the think-tank asks us to determine the greatness of policy ideas two-dimensionally. On the vertical axis, one plots the estimated additional gross domestic product in the year 2022 created by any proposed reform. And on the horizontal, one plots the degree of confidence we have that the government can intervene successfully to achieve the expected gains. In shorthand, we might write something like:
Expected GDP × Confidence of Success = A Better World,
or GDP × C = B.

In the spirit of Mr Keating, we might say, for instance, that a reform like the Rudd/Gillard mining tax might score high on the vertical but low on the horizontal, and therefore is not worth contemplating. But a tax reform to reward savings by superannuants might score high both horizontally and vertically, yielding a massive total area and therefore revealing the reform to be truly great (even if also highly regressive). Also following Mr Keating, we might respond with a single word: ‘Excrement.'

The most worrying thing about this graph is that it actually does represent how many of our policymakers think and talk. It's a sort of Zen representation of the policy world: on the one axis GDP, on the other political calculation. But where are the people? Isn't reform supposed to be about them? Their absence explains all you need to know. If the little people won't accept economic reform, it's because when they hear policymakers argue for reform using reasoning like this, they know their interests don't count. They are right to reject it.

It's easy, especially for those on the Left, to blame neoliberalism. The people may very well be rejecting neoliberal economic reform, but the issue is actually a broader one that is shared by all political parties in Australia: the democratic inadequacy of managerialism. Economic reform may have started out as a political philosophy of freedom in the courts of Thatcher and Reagan, but it has hardened into a process formulated by Australia's managerial class across all parties, and led intellectually by the theorists who inspire the great management consultancy firms.

Twenty years of being up-close to policymakers has convinced me that many have been wholly captured by the concerns and methodologies of the management consulting industry. McKinsey, Bain, Boston and so on have become the training grounds for the new policy elite of economists and other assorted ‘wonks', who, wielding their favoured weapons of the spreadsheet and the PowerPoint deck, now inhabit the ministerial offices, policy units, departmental policy taskforces, think-tanks, industry associations and lobby groups that together determine what goes before parliament in the budget and in the most important social legislation.

The Productivity Commission functions as the Great Sanhedrin at the head of this new totalising economic reform religion. Its priorities are only those that can be represented by the use of data, and its idol is that elusive and occasionally nonsensical construct ‘productivity'. And the language in which its priorities and schemes are expressed is abstract, symbolic, often indecipherable and invariably devoid of the one quality that separates people from computer processors: human feeling. As in
Dead Poets Society,
there is no room in its reasoning for the poetry of human feelings, just maths.

It's hardly an exaggeration to say that productivity has become
the
guiding principle of government in Australia today. Of the three Ps emphasised by the
Intergenerational Report
(the nation's premier long-term planning statement), productivity clearly outstrips participation and population in the centrality of its importance. This obsession – for that is what it is – was started by the Coalition, which set up the Productivity Commission in 1998, but has been advanced with some fervour by Labor, most noticeably the Rudd government. Looking to head off criticisms that its reforms were too statist and anti-market, but at the same time not wanting to appear neoliberal, Labor policymakers got into the habit of defending their reforms not on moral or free-market grounds but on the grounds that they lifted national productivity.