A big thanks to Social Policy Connections for this invitation to speak at your AGM.
For several years now, SPC has developed into a vital forum for church and community-based activists seeking to generate a society-centred economic and social policy agenda in the best traditions of Christian social values. I was asked to speak in particular about the challenge social policy activists face in getting purchase on a social policy agenda monopolised for a couple of decades by a brand of economics generally hostile to social intervention. My takeaway message tonight is that this monopoly is now broken. As Labor MP with responsibilities for social policy, Jenny Macklin said recently: ‘social policy is no longer the poor cousin’. It is time for church and community activists to come in from the cold. As we know from our own national rugby team, this can be a challenge. Years of defeat can engender a culture of losing. A team can forget how to win. As of 2014 I believe the terms of social policy contest have changed fundamentally. A new policy window is open and it is time for the sector to switch from defence to attack.
Neoliberalism: subordinating society to the economy?
As someone who finished his PhD on economic thought and social policy in 1991 (Australian Social Policy the Keynesian Chapter, UNSW Press, 1994), I have experienced several transitions in this sometimes fraught relationship. It is important to recall that in the early 1980s church and community agencies were very much parties of initiative. On the back of three decades of Keynesian full employment, the expansion of social services and community sector had become the way to convert the economic largesse of the long post-war boom to the creation of the ‘Great’ or ‘Good’ Society.
By the end of that decade, however, the social reform horizon had shrunk as we experienced what was dubbed ‘the fiscal crisis of the welfare state’. Economic rationalism picked up the political pace with social welfare being cast as a ‘wasteful spender’ needing to be reined in in the interests of economic efficiency. Nevertheless Labor governments of the period managed to maintain a commitment to social justice and hold something of a social policy bottom line below which they were not prepared to go. In its own way the Howard Government’s ‘social conservatism’ also recognised these moral limits and an odd Lib-Lab consensus prevailed. The pro-market economic agenda appeared justified by the economy’s improved efficiency while the welfare functions of the state remained tolerated if not encouraged. The Fair Go simply would not go away.
By any historical reckoning the 1990s was a gruesome time for the social sectors. It was an odd combination of an economics in which markets had been reborn as the failure-free template for reform (hence ‘neo-liberalism’) with a set of social policies and institutions increasingly resembling baggage left over from the ideological contests of the mid twentieth century. In this compromise economic policy was absolutely bullet proof against welfare activists seeking a restoration of full employment and the welfare state even while it accepted a politically necessary residue of the welfare system as a price to be paid for political legitimacy.
But then the new century brought a reversal of fortunes between economic and social policy. The direction of economic policy became radically uncertain. While the Global Financial Crisis ripped away neoliberalism’s mantle of infallibility, no clear theoretical successor appeared in the wings as had been the case with Keynes in the 1930s and Hayek in the 1980s. Pragmatism, not one-size-fits-all grand theory, has become the counsel of the day. Social policy’s renewal began with the transition from a ‘welfare state’ to a ‘social investment state’ leading on to a new integration with economic policy in ‘Inclusive Growth’.
In Australia this social policy trajectory became well advanced during the years of Labor government and had apparently become bipartisan in the election promises of the 2013 federal election. Once in government, however, the Abbott team appeared – in Ross Gittins’s phrase – to ‘lurch to the right’. It may represent a ‘Radical Liberal’ attempt to reinvigorate economic rationalism while taking care of the unfinished business of eliminating the residues of the Fair Go. As such it appears to be in stark contrast to Inclusive Growth.
Thus as we look forward to the policy New Year of 2015 it is appropriate to counsel church and community activists to initiative not resistance, attack not defence. It has taken more than a decade to transform ourselves from the left-over baggage of the welfare state to a sector with a vision of an economy harnessed to the creation of the Good Society. Neoliberalism on the other hand resembles less an invigorating agenda for economic reform and more a conservative clinging to an economic model incubated in the 1980s which simply failed to appreciate the social dimension of economic success.
Paleo-liberalism: no such thing as society
The differences between the economic liberalism of the 1990s and today are so stark that I suggest we no longer use the term neoliberalism. In the first phase economic reform was less about radical social change and more about making the existing arrangements more efficient. It was a high tide in the fortunes of the economic profession with university enrolments overflowing, distinguished economists at the centre of the policy stage and with an agenda which was carrying all before it internationally. Ideological extremes were studiously avoided.
Today however, as Ross Garnaut laments, the profession has lost its policy clout, while university economics departments struggle to attract students and the international policy communities seem hopelessly divided between proponents of austerity and intervention. In these circumstances the case for liberalism rests less on economics than social values and in this case the kind of mid-nineteenth century values of extreme individualism with no such thing as society and the role of government restricted to that of a Nightwatchman ensuring that the Law of Competition is everywhere observed. Hence my preferred term, Paleo-liberalism.
Given that its true colours only began to emerge with the Commission of Audit and the first budget, it may be too early to label the Abbott Government ‘paleo’. After all the Howard government quickly learned the necessity of avoiding ideological extremes. But if we want to see a working model of radical liberalism then we need only review the record of the Conservative Cameron Government in the UK.
In The Double Crisis of the Welfare State and what we can do about it (2013, Palgrave, Basingstoke), Peter Taylor Goobie documents that government’s ‘profound program of structural change’ to state social spending. This will shrink from the middle order of European welfare states to less than that of the United States by 2016\7– being the first time this has happened since records have been kept. He sees this as ‘a project to embed cuts permanently and shift political values in support of a new radical liberalism’. Ending the idea of citizenship entitlement and the institutions of welfare such as the National Health Service are seen as vital steps to reinvigorating that individual responsibility and risk-taking which are thought crucial to solving Britain’s economic difficulties. For social policy it has meant huge cuts to welfare spending, especially targeted at poorer minorities and the privatisation of social services. The economic reforms were packaged and sold in terms of creating a Big Society, but these across the board social cuts and decimation of the community sector represent rather the view that their is No Such Thing as Society.
While the Abbott social agenda is yet to take full shape it must be said that the ‘Unfair Budget’ displayed key features of the Paleo-liberal approach. Thus there were the otherwise mystifying attacks on the unemployed at a time when nearly every segment of Australian society was on the record demanding more support for them, not less. More broadly, the aspiration to privatise social services and with that also radically to reduce the number of community sector agencies, has been evident across the policy board of education, health, welfare and public broadcasting.
From Paleo-liberalism to environmentally sustainable Inclusive Growth
While the overall direction of the new government’s social policy is still to be confirmed, what is clear is that it simply cannot be justified on economic grounds in the manner of neoliberalism. Economics has moved on, and in the international arena the most important development of the last decade was the emergence of the Inclusive Growth at the World Bank, IMF and OECD. This development is increasingly matched by public opinion, as evident in the views of people like Pope Francis, Janet Yellen and Thomas Pichetty. Here I quickly note the key features of the policy framework:
Firstly it marks the end of the growth-first, ‘trickle down’ approach to economic and social policy which characterised economic rationalism and the Washington Consensus. GDP growth is not sufficient; but must be economically, socially and environmentally sustainable.
Secondly the State needs to manage markets to strengthen the social dimension of economic policy:
- invest in human capital across the life course
- ‘more and better jobs’ through a broad based, employment-centred pattern of growth
- more progressive tax-transfer systems
- efficient public services ensuring opportunities for all across the life course (education, skills, health and welfare).
The choice is one of social values, not ‘Economic Science’
Today then we have to build a political strategy which assumes that economic thought is in a state of flux. Similar partings of the way occurred in the 1930s and 1980s. Under these conditions the relationship between economic and social policy comes up for public renegotiation and it is much more about the kind of society we want than it is about economics. This is a complex issue but the point was neatly expressed in 1952 by Melbourne University’s Professor of Economics, D B Copland as Australia debated its post-World War II policy settlement.
Economics, he said, cannot be regarded as scientific like the natural sciences because ultimately it has to be based on a set of policy objectives which reflect the kind of society people want:
Unless we are prepared to regard ourselves as merely a company of irresponsible idiots dancing in the void, we must frame for ourselves, if only as a working hypothesis, some sort of view of the kind of cosmos which we inhabit and the manner of its governance.
Strategy 1: Build the narrative of the Good Society
In developing a political strategy any group has to think what can be its most useful contribution. In locating itself in this emerging contest between Paleo-liberalism and Inclusive Growth I think the churches have a huge vested interest in reimagining and reinventing their ideals of solidarity, fellowship and the Good Society as the basis for a new reordering of our economic and social priorities. Policy terms and labels like Inclusive Growth have to be broken down and translated into ideas and practices which resonate within particular policy communities and public opinion more broadly.
One political casualty of the years of economic rationalism has been the ability to talk persuasively about the values of social justice, solidarity and Christian fellowship. Believe me in the 1980s these were empowering ideas and indeed churches and secular movements engaged in a friendly rivalry who was their most authentic champion. Today though, as we see from recent government inquiries promoting the privatisation of government and community services, social policy discourse has become absorbed into the language of markets, competition and consumerism to the complete neglect of community and social values.
This is, of course, the way the Paleo-liberals want it to continue. In the words of Treasurer Hockey:
It is a simple and proven formula for willing buyers to engage with willing sellers. If we want a product or service we go and buy it with the dividend from the fruits of our own labour. The producer is happy and the customer is satisfied. The problem arises however when there is a belief that one person has a right to a good or service that someone else will pay for. It is this sense of entitlement that afflicts not only individuals but also entire societies.
I don’t know just how Joe would square this sentiment with his Christianity. Where is the place for entitlements arising from Christian ideas of social justice? Where is the scope for that altruism (i.e. serving others for nothing in return) which ought to be the life blood of a Christian society?
Around Inclusive Growth, on the other hand, there are two big ideas with which church thinkers can most usefully engage in the challenge of bringing the Good Society back in as an organising goal of economic and social policy:
- The first is a variation on what used to be our mainstream Lib-Lab consensus around a Fair Go. This was premised on the notion that in a free market economy, governments have to intervene to ensure that all citizens have the resources for full economic and social participation in their society. Today Amartya Sen’s theory of capability is a very influential restatement of this social justice value that the State should act to ensure that every individual has access to those resources necessary for converting their capabilities into the way of living that they value.
- This perspective has been strengthened by the thinking of Roberto Unger on ‘deep freedom’. Here the pursuit of equality is seen to be not about some mean-spirited desire to pluck tall and wealthy poppies but rather to ensure that all individuals are equally free to realise their potentials. This deep freedom of the citizen contrasts with the shallow freedom to choose of the consumer in the market place.
- The second is the New Communitarianism associated among conservatives with Philip Blond and Jesse Norman, and among progressives with Maurice Glasman.
Norman’s writings on the modern-day relevance of Edmund Burke (Edmund Burke, The First Conservative, Basic Books 2013) provide a powerful critique of the narrow conception of the human being associated with ‘rational economic man’. His analysis has three dimensions:
- Individual self
- Also a Social self (importance of ‘social capital’, networks’ etc.)
- In a ‘moral community’ (wellbeing not just as an attribute of the individual but associated with the moral vision\ practice of the community – e.g. compare the mafia and the communities of a religious order).
The first strategic challenge then is to engage with the master narratives of economic and social policy, highlighting the inadequacies of Paleo-liberalism from a church perspective and creating a more attractive alternative narrative which builds on the concept of Inclusive Growth to show what it looks like when translated into the church languages of justice, fellowship and solidarity.
Strategy 2. Establishing the policy priorities
If you want the Good Society to be up there with environmental sustainability and economic growth as the triple-pronged objective of policy development, then you have to work through the key policy instruments. Here we have a mix of immediate and long-term strategies.
The immediate opportunity is to continue to expose the weaknesses of Paleo-liberal welfarism as evident in the Unfair Budget. For example,
- by exposing the Dickensian attacks on the unemployed and
- showing how the marketisation of services weakens the community as a whole.
The second immediate opportunity is to elaborate the Inclusive Growth response to reduced government revenues.
- An Inclusive Growth agenda would avoid the rigid austerity policies which have crippled much of the European Union, and would allow more fiscal flexibility so that governments do not pull back from investments especially in human capital – which are essential for future growth.
- Many policy areas show lack of resources for the poor alongside over-investment in the rich. Policy should ensure that the available resources (both public and private) are used to maximise benefit across the community (as in schools and health)
For the longer term, most of the hard work on ‘welfare reform’ has already been done and can be found in the transition from the welfare estate to the social investment state and on into Inclusive Growth. Thus,
- The idea of ‘social investment across the life course’ is well embedded internationally and already practised by the previous government. (It is NOT of course a product of New Zealand as our current government seems to think).
- Much has already been accomplished in Australia to reform wage and families policy from the old wage-earner welfare state to a dual-income household model.
- The concept of ‘transitional labour markets’ shows how policy needs to affirm other life-worlds of family, education and retirement which articulate with the economy but are not subsumed by it. Good policy promotes good transitions between the different spheres.
The churches are major stakeholders in all the social services which are both vital for the economy and also for the larger task of building the Good Society. The different sectors should showcase how these contributions can be made in a way which reflects the broader principles of a Christian Economics.
Strategy 3. The Good Society and community action
The first two strategies necessarily involve concerted research and policy development, typically done by larger agencies and peak bodies. But it is equally important to be able to put the Good Society into action. However, sorting out the community or voluntary sector for this task will be a major challenge because of the ways in which two decades of neoliberal governance regimes (competitive tendering / quasi markets etc) have confused its role. For example, I hear today numerous stories of:
- Government negotiators flatly rejecting the proposition that community groups offer a different kind of value to the for-profits
- Sector peak bodies hosting community-based members alongside what Kevin Andrews calls ‘quasi government’ mega agencies funded almost entirely by government (at first these were ‘not for profit’, but now for-profits lining up like sharks for the ‘community $’ with the encouragement of governments).
As the New Communitarians have pointed out, policy makers today have largely forgotten that alongside the State and the market, a robust policy regime will ensure a strong role for the community sector. The Shergold and Harper approach to sector reform has shown no appreciation of its distinctive contribution which neither bureaucrats nor for-profits can ever make. Twiggy Forrest’s report on indigenous welfare also fans the flames by resurrecting old-time rhetoric about self-serving ‘welfare industries’ and the need to rationalise the small players.
Their philosophy is exemplified by the work of UK economist, Julian Le Grand, recently hosted by the Competition Policy Review, who denies that the public services and community sectors operate out of an altruism which is different from the egoism of the market economy. Treat the sector as self-interested ‘knaves’, he urges, and marketise them to keep them in check, while leaving the Invisible Hand to produce Community.
Because of their longevity, immersion in their founding missions, and links to the wider life of their churches, the faith-based welfare agencies typically appreciate this as a crap account of what they do. Their whole experience of church is about fostering altruism as both the distinctive organising principle of community-based organisations and the source of their unique contribution to building the Good Society. When working for the Jesuits and for the Anglicans I was always well aware of the immense esteem in which those agencies were held by their support bases, an esteem based on their shared moral values and belief that the agencies were an extension of their own aspiration for a more altruistic and just society. The Paleoliberal idea that these roles can be contracted out to the self-interested knaves of Le Grand’s quasi-market place is not only a ridiculous idea but one proven to be socially harmful in practice.
On that platform your third strategy must focus immediately on pushing back the marketisation of the sector, while for the longer term recreating the voluntary sector on its true foundation through a community development strategy aimed at building the Good Society community by community.
C Deeming and P Smyth, (2014) ‘Social Investment after Neoliberalism: Policy Paradigms and Political Platforms’, Journal Social Policy, Available on Cambridge Journals Online at CJO 2014 doi:10.1017/S0047279414000828
A McClelland and P Smyth (eds) (2014) Australian Social Policy Understanding for Action, 3rd Edition, Oxford University Press, Melbourne.
P Smyth and J Buchanan (eds) (2013) Inclusive Growth in Australia, Allen & Unwin, Sydney.