From economic rationalism to global neoliberalism? Marking 25 years since Economic Rationalism in Canberra

Neoliberalism’s stubborn persistence continues to fuel debate within sociology and across the social sciences more broadly. According to an earlier script, neoliberalism was supposed to be killed off by the Global Financial Crisis (GFC) and its aftermath. Then-Australian Prime Minister Kevin Rudd claimed that the GFC was the time ‘to proclaim that the great neo-liberal experiment of the past 30 years has failed’ (Rudd, 2009).

But neoliberalism proved to be sufficiently ideologically, socially and institutionally embedded to survive the deepest global economic crisis since the 1930s (Cahill, 2014; Kelsey, 2014). Indeed, the lack of political and regulatory change in response to the crisis in Europe and North America was arguably a major factor in the global Occupy protests that emerged in 2011. In Spain and Greece, the failure to move away from neoliberalism contributed to large social and political movements seeking alternatives. The slogan of the Indignados movement in Spain – ‘no nos representan’ (they don’t represent us) – highlighted the failing legitimacy of political society, with an estimated 8 million people (or 20% of the population) active in that movement at its peak (Feenstra et al., 2017). In Australia, political debates continue about the legacy of social democracy in either facilitating or challenging neoliberalism (Badham, 2017; Swan, 2017).

Public debate about the role of neoliberalism in Australia was arguably ushered in with the publication of Michael Pusey’s Economic Rationalism in Canberra in 1991. This book was published just a few weeks prior to Paul Keating’s takeover as prime minister from Bob Hawke. Economic Rationalism in Canberra (hereafter ERIC) portrayed the evolution of policy thinking and policy making in federal state institutions, including during the Hawke–Keating years, as the driving force behind the emergence of what is now known as neoliberalism (Pusey, 1991).

In 2003, members of The Australian Sociological Association (TASA) nominated Pusey’s work as among the 10 most influential books in the previous 40 years of Australian sociology. ERIC sits alongside other critically important works in the history of Australian sociology like Ruling Class: Ruling Culture, Masculinities and Gender at Work to name just three others from the top 10 list (see Skrbis and Germov, 2004, for full details). In 2003, Pusey published a second volume that detailed the impacts of economic rationalism on the lived experience and quality of life of the broad Australian middle class. For this second volume, titled The Experience of Middle Australia: The Dark Side of Economic Reform, TASA awarded Pusey the Stephen Crook Memorial Prize for the best authored book in Australian Sociology for 2002/03 (see Pusey, 2003).

As a detailed analysis of top bureaucrats in Canberra, ERIC represented a landmark project empirically as well as conceptually. Interviews were conducted with about half of the senior policymakers across 12 federal government departments. It is entirely possible that the neoliberal transformation of policymaking documented in ERIC, including the possible impact on democratic openness and accountability in state institutions, would make a similar endeavour much more difficult – if not impossible – today. ERIC turned ‘economic rationalism’ into a household term for neoliberalism in Australia and, in the significant debate that issued from its publication, the book drew strong praise as well as strong criticism from many sources, including this journal (see the symposium in Journal of Sociology 29(3) 1993).

This special section of the Journal of Sociology has been compiled to mark the quarter of a century since the publication of this seminal text. Over the last 25 years, the term ‘economic rationalism’, popularised in Australia by Pusey’s work, has been gradually superseded by ‘neoliberalism’ as Anglophone critics’ label-of-choice. Neoliberalism continues to provide fertile ground for conceptual and empirical research, including from emerging sociologists. For this reason, TASA’s Sociology of Economic Life thematic group has compiled this special section to showcase a snapshot of recent research by early-career researchers in Australia.

As the contributions to this special section suggest, the significance and meaning of neoliberalism is far from settled. The articles deal with overlapping definitions, including whether or not neoliberalism is best understood as a mode of regulation, a political or class-based project, an ideological doctrine, a state form or mode of governmentality, a form of everyday practice or an historical epoch. Some contributors explore the extent to which neoliberalism is geographically particular, including the extent to which the term can be applied in Australia. Some recent critical scholarship has questioned whether the concept can be applied to Australia at all (Weller and O’Neill, 2014) or whether the concept is useful in any context (Dunn, 2016).

This special section opens with an edited transcript of Michael Pusey’s speech at the TASA conference, given at the Australian Catholic University (ACU) in Melbourne on 1 December 2016. Framing economic rationalism and neoliberalism as interchangeable concepts, Pusey defines neoliberalism as the more or less standard bundle of neoliberal free market ideas that have been used to drive the interests and aspirations of international institutions, Australian big business organisations and ‘New Right’ opinion leaders in various well-known and, often, well-organised domestic think-tanks.

Part of neoliberalism’s successful takeover of policymaking, according to Pusey, has been its expedient usefulness in reducing complex social and economic problems to pseudo-universal statements about individualistic human behaviour. Economic modellers market their capacity to solve complex problems by using computable models – usually known as computable general equilibrium (CGE) models – which have alleged predictive power. These models entice policymakers through their elegant presentation, apparent parsimony and pseudo-scientific status within the academy to the point where they become functionally indispensable for ministers and public servants alike.

As suggested by Pusey in 1991, there is thus a special place for understanding the role of marginalist economics education and research, and its generational influence over social as well as economic policies. The role of economics in driving assumptions about methodological individualism and the normative demarcation of states and markets into the heart of social policymaking is an important part of neoliberalism’s backstory (Cahill et al., 2012).

A quick glance at the work of Australia’s Productivity Commission’s policy provides a good example of the universalist remit claimed in neoliberal policy modelling. From previous guises as an advocate focused solely on international trade liberalisation in the 1970s and 1980s, the commission has morphed into a body that claims expertise in fields as diverse as finance, labour laws, regional economies, water reform, the National Disability Insurance Scheme, migration, childcare and energy, to name the topics of some of its most recent inquiries. This is evidence of the claim that modern neoliberal economics offers ‘one best way’ to solve complex problems without taking account of significant social context or specialist knowledge of other fields of research (see special issue of Economic and Labour Relations Review, 27(2), June 2016, for critique of the commission’s policy role in Australia).

Pusey also frames neoliberalism as a sharp historical rupture in policy thinking and policy making – as the subtitle of ERIC suggests, the Australian state ‘changed its mind’. This framing brings to mind other possible ruptures in recent history. On an international scale, Britain’s popular vote to leave the European Union in June 2016 or Donald Trump’s victory in the US presidential election in November 2016 are moments in which radical alternatives or pathways, albeit not necessarily progressive ones, are posed.

But the pathways opened up by such turning points are extremely difficult to predict. Confusion about the extent to which Donald Trump presides over a ‘neoliberal’ administration is only the latest, if most spectacular, example of this problem. While rhetorically suggesting that executive government would function more efficiently if run like a business enterprise, Trump has also consistently rallied against free trade and invoked the spectre of import substitution with promises to implement a ‘border tax’ on corporations that offshore production.

Without downplaying the significance of world-historic events like Brexit or Trump’s victory, it seems important to emphasise neoliberalism’s historical durability and adaptability. Neoliberalism was able to survive events on the scale of the GFC in 2007–10, Europe’s sovereign debt crisis of 2009–14 and, in Australia, the recent demise of the mining and natural resource prices boom. Such durability has inspired some important recent scholarship and debate.

Modifying the Polanyian notion of ‘always embedded markets’, Cahill (2014) has argued that neoliberalism’s resilience can be explained by its ‘embeddedness’ in institutions and class relations as well as ideology. According to this logic, neoliberalism is more than just a policy regime based on market imperatives. It also represents a transformative ‘social structure’ or ‘social order’ which state and corporate interests have been able to impose mainly in western countries, albeit unevenly, following the unravelling of the institutions of post-war compromise and the defeats of militant labour movements in the 1970s and 1980s.

Although part of this process was the unfurling of a new, discursive political ‘common sense’ to legitimise neoliberal policies, Cahill’s argument frames neoliberalism as far more encompassing and, thus, durable than ideational approaches which emphasise the power of ideas and thought collectives over policymakers as the driving force for neoliberalism (Klein, 2007; Mirowski and Plehwe, 2009). This argument ultimately views neoliberalism as a ‘class-based project’ which reflects, in multifaceted ways, the imposition of capital’s interests over those of workers. According to this view, the neoliberal transformation of policies, regulatory bodies and institutions creates greater flexibility for capital, especially financial capital, and also restricts the scope for progressive and redistributive alternatives (Duménil and Lévy, 2004; Harvey, 2007).

A potential problem in this radical tradition of scholarship is the heavy burden of justification that reaches far beyond the sphere of domestic policy. The problem of delimiting neoliberalism, and debates over which aspects of the neoliberal leviathan deserve the most analytical attention, is reflected in the themes raised by contributors to this special section. All contributors raise questions about the meaning, operation and durability of neoliberalism.

Patrick O’Keeffe critically explores the ongoing extension of neoliberalism through the embedding of ‘efficiency’ into the language and rhetoric of Australian policymaking. Through an analysis of National Competition Policy in Australia, as epitomised by the Hilmer Report in 1993 and, more recently, the Harper Report in 2015, he suggests that the language of competition policy has provided a vehicle to extend the political and economic power of large privately run businesses operating in Australia. In O’Keeffe’s framing, the Hilmer and Harper reports are viewed as neoliberal interventions by policy agents who, if perhaps not representing capital directly, campaign for interests that arguably benefit these powerful sections of business.

One of the key questions of neoliberalism is its geographical specificity and the extent to which Anglo-American traditions of neoliberalism can be applied to ‘trajectories of liberalisation’ in different countries (Thelen, 2012). Ben Gook grounds this problem in his historical analysis of contrasting neoliberalisms in Germany following political unification in 1990. A peculiar aspect of neoliberalism in this case is the contrast between the rollout of Anglo-American style neoliberal ‘shock therapy’ in the former German Democratic Republic (GDR) in the East and the ‘coordinated market’ tradition (Hall and Soskice, 2001) of the post-Second World War Federal Republic of Germany (FRG) in the West.

Gook suggests that the West German model of ‘Ordoliberalism’, based on a welfarist, semi-corporatist ‘enabling state’ that oversees a capitalist market economy, provided a protective buffer – although perhaps a thin one – to populations in the West against the worst effects of capitalist instability post-unification. This experience contrasted markedly with the disastrous impacts of shock therapy in the East, particularly in the early 1990s. At the same time, the eastern and global experience also influenced the Ordoliberal tradition. Among other historical examples, Gook takes us through Chancellor Helmut Kohl’s short-lived experiment with Anglo-American style neoliberal policies and Gerhard Schröder’s Blairite refashioning of market liberalism within the Social Democratic Party of Germany (SPD).

Neoliberalism’s uneven and ‘variegated’ rollout across different ‘institutional landscapes’ (Brenner et al., 2010) continues to be a major challenge for researchers. As well as in Europe, which combines multiple varieties of capitalism within a meta-institutional territory, this is also a problem for Australia, where major debates have taken place about the nature and operation of domestic neoliberalism. Much of this debate concerns the relationship between social democracy and neoliberalism. In a major contribution to this ongoing debate, Elizabeth Humphry’s article in this special section frames the Australian Labor Party’s Prices and Incomes Accord with the trade union movement (1983–96) as central to neoliberalism’s emergence as a political project in Australia.

While many critics have seen Labor as playing some role in acquiescing to neoliberal ideas in its policies, Humphrys goes significantly further in analysing the accord as a means to advance core aims of the neoliberal project through a corporatist framework – and one that was central to the disorganisation of labour in Australia. Her analysis stands in contrast to those who have framed neoliberalism as an external framework, or as primarily the policy child of conservative forces on Australia’s political right. She is not alone, however, with John Krinsky (2011) also arguing that one of neoliberalism’s seminal moments – New York City council’s fiscal crisis of the mid-1970s – highlights how long-established corporatist structures of trade union cooperation were deepened at the same time as the neoliberal project was driven through.

From state transitions to questions of social movement agency and behaviour, Claire Parfitt’s article explores the impact of neoliberal ideas and structures on social activism. Parfitt focuses on ethical investment strategies and private pension funds, bringing important literature on the financialisation of social and commercial relations together with this special section’s analysis of neoliberalism. As she suggests, financialisation creates ethical and political dilemmas for activists. Parfitt critiques the reduction of social movement choices to investment-oriented ‘checkboxes’ that placate ethical concerns without generating the agency needed to challenge power structures or systematically address problems of human rights, labour standards or environmental protection.

Fabian Cannizzo examines the seeping of neoliberal agency into everyday life decisions in the context of the Australian academic work environment. In contrast to other contributions to this special section, Cannizzo focuses on individual behaviour at the micro-institutional level through an examination of ‘everyday neoliberalism’ in academic career-making (Mirowski, 2014). He suggests that the spread of neoliberalism in the academy has combined with increasingly managerialist university adminstrations to generate individual academic practices of the ‘neoliberal self’. The self-framing of academics as entrepreneurs is a key manifestation of this transformation. In this structured mindset, the challenges of career-building are framed as tasks of individual calculation and resilience, not as collective or occupation-building processes.

Finally, Cameron Smith brings the state back in with an analysis of race relations and the role of anti-terrorism rhetoric in Australian policymaking. Exploring Marxian theories of state power and Foucauldian notions of governmentality, Smith follows the logic of Wacquant (2014), who has emphasised neoliberalism as a process filtered through the repressive functions of states as well as the capacity of state institutions to legitimise these functions. Emphasising the centrality of the state, Smith also brings in Bruff’’s (2013) recent scholarship on ‘authoritarian neoliberalism’.

In Smith’s argument, the rhetoric and policy logic of fighting (Islamic) ‘radicalisation’ is part of a social process which reinforces the neoliberal transformation of society. These arguments are an important reminder that neoliberalism has not meant the rolling back of state functions and capacities but their re-foundation (Levi-Faur, 2005), including a sharpening of some of the state’s more repressive institutional roles.

Despite the breadth of scholarship demonstrated in this special section, it is, of course, not possible to cover every aspect of neoliberalism’s far-reaching impact. Three examples missing from this special section are climate change, work and employment – although Humphrys’ article discusses the incorporation of labour movements into the accord as a neoliberal project – and the perspective of the ‘global South’. On climate change, the role of the market as a price signaller has been used both to justify ongoing public and private investment in fossil fuels, and to frame policy responses via emissions trading schemes as the most cost-effective method of climate change mitigation (Garnaut, 2011; Pearse, 2016).

On work and employment, the rise of precarious and more employer-friendly forms of flexible work has been strongly shaped by neoliberal-driven globalisation and the neoliberal transformation of policy making. These political and regulatory changes have formalised the transfer of financial and institutional risks onto workers and jobseekers. As well as trade- and technology-induced manufacturing decline, and the privatisation of state-owned assets, decentralised and more individualistic forms of wage fixing have also undermined the bargaining capacity and social weight of trade unions (Kalleberg, 2009; Standing, 2011). Standing has gone so far as to say that the global labour market flexibility generated by neoliberalism has created a ‘more fragmented global class structure’ (Standing, 2011: 14).

On the ‘global South’, a recent key intervention has been made by Connell and Dados (2014) who argue that the core theories of neoliberalism, including many outlined in this special section, systematically neglect the practical, developmental and theoretical experiences of poor and developing regions and countries. While this section does not directly address these concerns, this snapshot of research among emerging scholars in Australia is offered in the spirit of ongoing critical dialogue in this important area of sociological enquiry.

This special section had its genesis as an idea to mark the significance and impact of Economic Rationalism in Canberra a quarter of a century after its appearance. Collectively, we felt the most effective way to do this was to provide an opportunity for emerging and early-career researchers to showcase their distinctive conceptual and empirical agendas on neoliberalism. We hope this section provides a glimpse of the expansion of scholarly and public debate about neoliberalism in the last 25 years. In our view, the basis for an ongoing dialogue, of the kind set off by Pusey’s seminal work, is more viable – and more necessary – than ever.

The articles in this special section began as papers presented at a workshop organised by the TASA Sociology of Economic Life thematic group. The workshop, held at RMIT on 2 December 2016, was based on papers and comments from discussants and peers. As well as all authors and presenters in the workshop, we would like to acknowledge and thank RMIT’s Centre for Applied Social Research and Anoushka Benbow-Buitenhuis for hosting the workshop and the workshop discussants including Professors Jack Barbalet, Michael Gilding and Gabrielle Meagher for their extremely valuable feedback. We would like to thank TASA for hosting Michael Pusey’s speech at ACU in November 2016, as well as Professor Meagher and Dr Ben Spies-Butcher for additional comments during this address. Finally, we would like to thank the anonymous referees for their role in helping the contributors to this journal with their comments and critical suggestions as well as the Journal of Sociology editors (immediate past and current) for their assistance and encouragement.