To undo the worst of neoliberalism we need to target need, rather than race or identity
Neoliberalism has insinuated itself into every corner of contemporary life and society. In the midst of the global financial crisis, journalist Matt Taibbi gave us the eternal metaphor of Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”. No social, cultural, family or personal relationship problem or opportunity is free from the relentless search for monetisation. Entire societies have caught this virus, which leaves little independent space for love, generosity and care without someone searching for an angle. We literally have financial devices to clean Grandma out of her house and home.
This is the mutation of Adam Smith’s self-interest or self-regard into profit motive and greed. I have long been a defender of the liberal power of self-interest within Smith’s meaning. I consider it to be a natural motivation and a driver of progress; balanced with the moral sentiment of “other regard”, the liberal engine of self-interest makes for a good society. I have no objection to markets where price properly reflects value.
The problem with markets arises when we exploit nature as if it were a free good and as if pollution and loss can be prevented by market mechanisms rather than law. Markets are an efficient price mechanism, but their application, as broad as it may be, has limits.
I strongly resist the class prejudice from the advantaged left to the effect that poor people should abjure material prosperity and self-regard. This double standard from the advantaged left is deleterious to the interest of the lower classes, and highly hypocritical. I don’t retreat from my defence of self-interest on the part of poor people. It is a necessary animator of social progress.
What I have in mind about the correctness of Smith’s self-regard is, however, different from the relentless and all-consuming pursuit of profit that neoliberalism has unleashed. Is there nothing that cannot be monetised?
Consider these scenes.
State services have been turned over to the private sector, a combination of not-for-profit and for-profit organisations that has created entire industries servicing social problems. The services supposedly supporting individuals and communities actually maintain the problems that give rise to them. Who wants to work themselves out of a job and out of profit? In the past two decades, we have seen the calamitous growth in out-of-home care – the removal by the state of at-risk children from their families – and the money spent on it by governments. All of this pain is lucrative business for privately owned companies, as well as for a plethora of religious organisations and charities, such as Anglicare, Catholic Social Services Australia, UnitingCare, Mission Australia and The Smith Family.
They have made an industry out of family dysfunction and child removal. This is the case across all areas of social services. The profit motive drives the design of these services, rather than social change that will decrease the human suffering that is the income source of this business model. Former bureaucrats and politicians have inveigled themselves into these industries. They exploit their connections with government just as the big players such as Goldman Sachs do. The promise of future employment in these outsourced industries influences the tendering and procurement processes supervised by the bureaucrats.
A second scene concerns the administration of justice. So many functions of regulatory and quasi-judicial investigation – such as alleged misconduct of public officials and the operation of official corruption bodies – are farmed out to the private sector. Law firms and accounting firms are routinely undertaking functions on behalf of government regulatory bodies supervising potentially corrupt and criminal behaviour.
It is not only conflicts of interest that are a risk; private firms undertaking work for government have a clear incentive not to bite the hand that feeds them. Whereas public servants and public regulatory agencies are expected to be disinterested, outsourcing the functions of the Crown solicitor and corruption commissions to private firms means that the necessary public disinterest is compromised. Former Crown solicitors leave public service and take their files to private practice. But in the neoliberal period, who is going to complain? Who is going to raise questions about conflicts of interest and the absence of disinterest? Why would the legal and accounting professions consider this a corruption of the separation of powers and functions, when outsourcing is so lucrative?
The third scene concerns the peddling of influence. Before the neoliberal period, there was a bright line between business and labour. Politicians and office holders of the left did not carry water for business. They were aligned with unions and the social sector. It was the liberals and conservatives that were close to business. Now the lines have been completely erased. It is no surprise to find people associated with the left of the political divide working with and for business. It quickly became respectable for influential figures of the left to sell their services to the private sector. This development might be unobjectionable in principle, but one of its effects is that the counterparty surveillance that each side used to exercise over the conduct of the other in their relations with business is gone. Everyone with influence in the neoliberal period is available to work for business. The second thing that happened was that everyone with influence, whether from politics, the bureaucracy or the offices of political parties, hung out their shingle. The peddling of influence marks the neoliberal age with the monetisation of proximity to power and the debasement of democracy. No conflict of interest and brazen exploitation of access and influence is beyond profiteering.
When governments change power, behind the parliamentary representatives is an entire ecosystem, comprising thousands of people who take the spoils and peddle influence under only the nominal control of elected representatives. Power is not simply the democratically elected politicians, but an entirely opaque shadow network that feeds off access to power. Then there are the lobbyists – individuals and firms – who straddle the political divide in a way that means their influence does not wax and wane with a change of government. Get yourself partners from the other side of politics and you have influence whichever side is in power.
The fourth scene is the Future Fund. Australia’s sovereign wealth fund is currently worth $199.1 billion, originally accumulated from the proceeds of the privatisation of Telstra and other public outlays. But for what specific purpose? What did the elites in Treasury advise the federal government should be the purpose of this accumulation of public wealth? Answer: to cover the future superannuation liabilities of public officials such as themselves. Only in the neoliberal period could such a scene play out with no democratic complaint or question. Are the superannuation entitlements of the public service elite, far beyond the expectations of ordinary workers relying on the universal compulsory scheme, really Australia’s most pressing liability? And ought public assets owned by all Australians be set aside for one group who would serve themselves first from future government outlays? The sheer self-interest of this policy is only exceeded by its dreariness. And not one word of protest from the rest of us.
A thousand such scenes play out every day, making disinterested public service and ethical constraint on profit-seeking a mere legend of the past. In the neoliberal period, the separation of functions and powers is blurred, conflicts are normalised and mutual interest in turning a blind eye or failing to ask a question is de rigueur.
When I originally read John Ralston Saul, I did not fully appreciate what he meant by distinguishing the proper mechanism of capitalism – investment and reinvestment of capital that enables the production and employment that is the purpose of capitalistic endeavour – from the profit motive. He argued that profits are incidental to the process of production, not their principal and overriding motive, as the neoliberal ideologues would have it. Decades later, I now understand clearly Saul’s distinction between the profit motive and productive capitalism. How could any of the profit-seeking scenes described above truly be called capitalism?
We need to be more aggressive and unrelenting in demanding equality of opportunity and ensuring that social and economic provisioning by our government gives equality to all who stand in need. In the past, we have allowed the rhetoric of equal opportunity to flourish without actually holding government to account to ensure everyone has equality of opportunity. Unequal employment policies are applied to the lowest class in Australia. The same can be said of school education: these same poor people receive the worst education. And across the range of social and economic opportunities, disadvantaged Australians don’t have the same chances as other Australians.
But we’ve also failed to realise that there is another part to the equity equation: personal agency and responsibility. In Cape York, we say opportunity plus responsibility equals capability. This is how we convert equality of opportunity to equity of outcome. It is an iterative process that takes time to work out, but it is the only way individual and social progress happens. We can have a surfeit of opportunity, which without agency through responsibility will not yield progress. We can have a surfeit of agency and responsibility, which without opportunity will also not yield progress. We need both equality of opportunity and the necessary individual and social responsibility.
Policy needs to be colourblind and class-conscious. Conscious to ensure that lower-class people have equality of opportunity with the rest of society. This was clearly enunciated by the American civil rights leaders under Dr Martin Luther King Jr in the three years before his death, following the achievement of civil rights legislation by the United States Congress. Together with A. Philip Randolph and Bayard Rustin, King published the Freedom Budget, which called for social and economic equality for all Americans, regardless of race. In his foreword to it, King wrote:
"After many years of intense struggle in the courts, in legislative halls, and on the streets, we have achieved a number of important victories. We have come far in our quest for respect and dignity. But we have far to go.
The long journey ahead requires that we emphasize the needs of all America’s poor, for there is no way merely to find work, or adequate housing, or quality integrated schools for Negroes alone. We shall eliminate slums for Negroes when we destroy ghettos and build new cities for all. We shall eliminate unemployment for Negroes when we demand full and fair employment for all. We shall produce an educated and skilled Negro mass when we achieve a twentieth century educational system for all.
This human rights emphasis is an integral part of the Freedom Budget and sets, I believe, a new and creative tone for the great challenge we yet face.
… It is not enough to project the Freedom Budget. We must dedicate ourselves to the legislative task to see that it is immediately and fully achieved. I pledge myself to this task and will urge all others to do likewise. The Freedom Budget is essential if the Negro people are to make further progress. It is essential if we are to maintain social peace. It is a political necessity. It is a moral commitment to the fundamental principles on which this nation was founded."
Universal programs must be the first policy. African Americans, Australian Aboriginals and Torres Strait Islanders, and lower-class people generally, will benefit from universal programs.
Targeted programs must be aimed at need, not race or identity. This will mean that programs targeted at Indigenous disadvantage will need to be replaced by programs aimed at all disadvantage. This will not penalise Indigenous people, as their needs will be the basis for program entitlement.
There will be a place for affirmative action programs. These need to be premised on the basis of need, rather than race or identity. Indeed, affirmative action on need will ensure that the lower classes have greater access to opportunities enjoyed by the mainstream. Affirmative action has proven to work in providing access and opportunity to groups that have not had the same opportunities historically. Participation gaps have been narrowed and sometimes closed through affirmative action. The downside of affirmative action – resentment and accusations of reverse discrimination – will be eradicated with need-based affirmative action.
African-American and Australian-Indigenous people will be wary of replacing race-based programs with need-based programs. Discrimination in access to and enjoyment of universal programs in the past is fresh in the memories of these communities. Racism is an ever-present risk, and its insinuation into government-program service delivery is not just an accusation about “systemic racism”: it is real. I have been a witness long enough to how it plays out in real life. However, as long as effective protections against discrimination are put in place, the benefits of moving from race-based policies and programs to need-based policies and programs will far outweigh these risks. It will produce better policy as well, because it will have to focus on socio-economic advancement rather than being diverted by race and identity ephemera.
This is an edited extract from Mission: Essays, Speeches & Ideas by Noel Pearson, published by Black Inc.