It’s funny how people keep talking about The Land of Plenty as if it’s a book about the Howard era when in fact the ‘big idea’ at the heart of the book is that we’re at the end of two thirty year cycles, the first based around economic protectionism and the centrality of governments, the second based around deregulation and the centrality of markets. It seemed a novel idea when I was writing late last year and earlier this year, albeit one that’s since been realised in ways I’d never wish for.
The basis of my thinking wasn’t to do with any particular government (the vast majority of the book was written in the belief that Rudd would win, then in the first few months of the government), so much as the whole political and economic system, which I believed then and believe now to be unsustainable. We seemed to be living in an ‘economic fool’s paradise’, as I put it, where a decade and a half of economic growth had been fueled by consumer spending funded by easy credit, and then a commodities boom. The whole thing was a house of cards. A Very Public Sociologist has since put together a convincing summation that points out how the whole edifice was balanced rather precariously on rising housing prices. John Quiggin’s recent posts have also been excellent. And an erudite summary of last week’s events can be found at LP. Howard? Rudd? It wasn’t going to make much difference.
But the thing that amazes me, speaking as a non-economist, is the idea that the collapse should be a surprise. It seemed obvious to me, as I was writing six months ago, that it was coming, even if, in a moment of trepidation, I took out a line about how when the next crunch comes, it will be a ‘big one’. Things simply didn’t add up. And they still don’t.
As I’ve said in another post, the crash doesn’t mean the ‘death of neoliberalism’. There’s too much invested in neoliberal assumptions about the primacy of markets for that. But it does mean there’s some thinking to be done. One of the things I call for in the book is a new social compact that ‘brings government back in’. Well the nationalisation of finance institutions being mooted in the US and UK certainly does that. But I meant something else: a system that shifted risk back to where it belongs, away from the shoulders of punters where is has been disproportionately carried for the last decade or three, and back onto the shoulders of government and business. I’m not quite sure that we’re seeing that, given that the banks and other finance sector operators are being protected.
But we are seeing the beginning, I think, of a new public conversation about how national and global economies should be organised. How do we work towards adding some progressive voices to that conversation? It seems to me that we need to sketch out a new economics. Not just the fiddling at the edges being proposed in the wake of the crash, but an economics that reconfigures our obsession with economic growth, and that questions the neoclassical assumptions (critiqued at length in the book, an aspect on which commentators have been silent), which remain a bulwark of the official responses to the crisis. If only we can get the regulation right, they say, then the whole machine can click back into gear and will function properly again. Really?
