ʻactually existing neoliberalismʼ

298 ‘Actually Existing Neoliberalism’ 20:3 April (2010) pp. 298–316

ʻACTUALLY EXISTING NEOLIBERALISMʼAND THE GLOBAL ECONOMIC CRISIS

DAMIEN CAHILL*

This article assesses claims that the global economic crisis heralds the end of neoliberalism as the dominant logic of policy-making. It does so by examining three major competing conceptions of neoliberalism – ‘neoliberalism as laissez faire’; ‘regulatory capitalism’; and ‘actually existing neoliberalism’ – and uses these to identify the core components of the neoliberal shift in state-economy relations. The article then assesses the extent to which the core components of neoliberalism have been eroded in the wake of the global economic crisis, with a specifi c focus upon Australia, in particular the sphere of industrial relations.

THE LAST THREE DECADES constitute a period of profound reorganization of state-economy relationships. Throughout the capitalist world, policies of privatisation, marketisation and deregulation have opened up the state to profi t making activities, enabled competition between public and private sector providers in the provision of social services, and lifted restrictions on businesses operating within and across national borders. ‘Neoliberalism’ is the word often used to describe this process (George 1999; Harvey 2005; Saad-Filho and Johnston 2005).

The onset of the global economic crisis since 2007 has led a number of commentators to pronounce the end of neoliberalism as a globally dominant policy framework (e.g., Hutton 2008; Rudd 2009). According to this argument, neoliberalism has been dealt a fatal blow on two fronts. First, the crisis demonstrates fundamental fl aws in the neoliberal model of deregulation because it exposed society to the risks taken on by unchecked fi nancial speculation. Second, policy responses to the crisis, in the form of new restrictions upon the fi nancial sector of the economy and the nationalization of fi nancial intermediaries, mark an irreversible retreat from the neoliberal model.

This article examines such claims with a particular focus upon Australia. In doing so it contributes to an emerging discussion about the implications of

* Lecturer, Department of Political Economy, University of Sydney. Correspondence to: [email protected]

L&I 20-3 pages.indd 298L&I 20-3 pages.indd 298 15/4/10 8:35:18 AM15/4/10 8:35:18 AM

Labour and Industry 299

the global economic crisis for the social and economic relations of work (see, for example, Littler 2009). The argument is developed through an examination of some of the major competing conceptions of the nature of neoliberalism, which are used to identify neoliberalism’s constituent components. The extent to which such components have been undermined by the current economic crisis and the rise of new forms of economic regulation in Australia is then determined with particular reference to the sphere of industrial relations. The fi rst conception of neoliberalism considered is that of neoliberalism as laissez faire capitalism. Focus then shifts to the concept of ‘regulatory capitalism’. The concept of ‘actually existing neoliberalism’ is then introduced as the most useful way of understanding neoliberalism.

Competing Conceptions of Neoliberalism

Neoliberalism as ʻLaissez FaireʼLate in 2008, French President Nicolas Sarkozy is reported to have said that ‘Laissez faire is fi nished’ (The Economist 16 October 2008). This statement refl ects a common perception that the global fi nancial crisis heralds the end of neoliberalism. Such a perception is based upon the assumption that neoliberalism is constituted by a retreat of the state from regulation of the economy – hence laissez faire – and that the return of regulation, in the form of bank nationalizations, for example, necessitated by the global fi nancial crisis, marks the end of neoliberalism.

In Australia, one of the most prominent proponents of this argument has been Prime Minister Kevin Rudd. In an essay published in The Monthly, that achieved international exposure when condensed and republished in the French newspaper, Le Monde, Rudd (2009, 20) argues that the current global fi nancial crisis exposes the failings of neoliberalism, which he also refers to as ‘free-market fundamentalism, extreme capitalism and excessive greed’. ‘In the past year’, writes Rudd, ‘we have seen how unchecked market forces have brought capitalism to the precipice’ (Rudd 2009: 22). As a consequence, the ‘ideological legitimacy’ of neoliberalism is now destroyed (Rudd 2009: 29). Rudd shares with other commentators an understanding of neoliberalism as the triumph of the free market, or unregulated capitalism, underpinned by a slimmed-down version of the state. Therefore, as Rudd (2009: 25) argues, ‘With the demise of neoliberalism, the role of the state has once more been recognized as fundamental’.

This is similar to the argument put by British intellectual Will Hutton (The Observer 19 November 2008). Hutton contended that policy responses to the fi nancial crisis marked a return to Keynesian-style ‘managed capitalism’ – implying that, in the previous neoliberal era, the state had less of a role in managing capitalism. Numerous scholars described neoliberalism in this fashion,


300 ‘Actually Existing Neoliberalism’

even prior to the fi nancial crisis. Terms such as the ‘withering away of the state’ (Fairbrother, Teicher and Svensen, 1997), the ‘retreat of the state’ (Quiggin, 1996: 26) and ‘small government’ (Argy, 1998: 80-87) have become synonymous with neoliberalism. This understanding of neoliberalism is also similar to many prominent views regarding globalisation (Strange 1996, Friedman 1999, Ohmae 1991).

Arguments such as these treat neoliberal theory, and the policy practices of neoliberal governments, as synonymous. That is, they tend to accept the normative vision of the state and economy, proffered by neoliberal polemicists such as Milton Friedman and Friedrich von Hayek, as the actual state of affairs that prevailed in most capitalist countries during the last two to three decades. Such a normative vision is expressed by Friedman (1982: 34) as a government limited such that it only

maintained law and order, defi ned property rights, served as a means whereby we could modify property rights and other rules of the economic game, adjudicated disputes about the interpretation of the rules, enforced contracts, promoted competition, provided a monetary framework, engaged in activities to counter technical monopolies and to overcome neighborhood effects widely regarded as suffi ciently important to justify government intervention, and … supplemented private charity and the private family in protecting the irresponsible, whether madman or child.

This normative vision is also evident in Milton and Rose Friedman’s Free to Choose:

Our society is what we make it. We can shape our institutions. Physical and human characteristics limit the alternatives available to us. But none prevents us, if we will, from building a society that relies primarily upon voluntary cooperation to organize both economic and other activity, a society that preserves and expands human freedom, that keeps government in its place, keeping it our servant and not letting it become our master. (Friedman and Friedman 1980: 58).

How well does this description of neoliberalism accord with the experience of neoliberalism in Australia?

In one sense there is a clear correlation. It is certainly the case that a ‘freeing’, of sorts, has occurred with respect to economic activity. Since the 1970s, and gaining pace in the 1980s and 1990s, federal and state governments in Australia have engaged in widespread market deregulation, for example of telecommunication markets, fi nancial markets and airlines (Quiggin 1996: 26-29). This entailed a removal of restrictions governing the operation of businesses within Australian markets, thus conferring greater freedom upon certain economic agents. Neoliberal policies of privatization and marketisation also contributed to this process of ‘freeing’. Both of these processes freed private sector capital to undertake activities from which it was previously either excluded,



or signifi cantly constrained. Privatisation achieved this through transferring ownership of enterprises from the state to the private sector, for example, at the national level through the privatization of QANTAS, the Commonwealth Bank and Telstra and, at the state level, the privatization of electricity, state-owned banks and insurance companies (Fairbrother, Svensen and Teicher 1997). Marketisation achieved this by allowing the private sector to compete with the state for the provision of services (such as in healthcare, childcare, and the contracting out of state services) and through the subsidization by the state of such activities – for example, in childcare, health insurance and education.

However, there is another sense in which the description of neoliberalism as a system of free market capitalism characterized by a retreat of the state signifi cantly misrepresents the political economic history of the last three decades. This has to do with the behaviour of the state under neoliberalism. The description is inaccurate on at least two counts. First, it misrepresents trends with respect to the size of the state, and second, it misrepresents the trend with respect to the scope of the state.

With respect to the size of the state, the trend has been the opposite of that implied by the ‘withering away of the state’ metaphor. Rather than contracting in size, the state has grown. State expenditure, when considered as a proportion of GDP, has increased in Australia at the federal level from the early 1970s to the present. In 1973-74, Commonwealth expenditure under the Whitlam Labor government, often assumed to be the apogee of the big-spending, Keynesian state, reached 18.3 percent of GDP. In 2007-08, the fi nal budget of the Howard Coalition government, generally considered to be the most hard-line adherent to neoliberal ideology, Commonwealth expenditure is estimated to have reached 24.4 percent of GDP (Australian Government 2008). This corresponds with the experience of neoliberalism elsewhere. Between 1980 and 1996, total government expenditure as a proportion of GDP in the 17 major industrial capitalist economies grew from 43.1 percent to 45.6 percent (Tanzi and Schuknecht 2000: 6-7). That the state grew under governments ostensibly committed to withdrawing the state from interference in the economy was recognized, somewhat belatedly, by some neoliberals (Berg 2008).

With respect to the scope of the state, the trend has also been contrary to what is implied by the ‘withering away of the state’ metaphor. During the last three decades, the state has played an active, indeed activist, role in the introduction, implementation and reproduction of neoliberalism. This activist role of the state was evident from the very fi rst instance of neoliberalism in practice: Chile under the Pinochet dictatorship. As Naomi Klein (2007: 75-97) demonstrates so powerfully in The Shock Doctrine, after deposing the elected President Salvador Allende through a coup in 1973, the new military government led by General Augusto Pinochet engaged in a process of privatisation, the dismantling of protectionist barriers, and cuts to social expenditure. Concurrently, the coercive



powers of the state were employed to suppress organised labour and other dissenters through the imprisonment, torture and murder of left-wing activists. Neoliberalism was enabled by state coercion.

While the case of Chile is an extreme one, it highlights the centrality of the state to the project of neoliberalism and the contrast between neoliberal theory and practice (see Harvey 2005: 64-86). Other path breaking neoliberal governments have also used authoritarian political strategies to enforce market prerogatives. When federal air traffi c controllers in the United States of America (USA) took strike action in 1981, the Reagan government confronted their union, the Professional Air Traffi c Controllers Organization, sacking striking workers and gaoling its activists (Arnesen 2007: 1123-1126). In the mid 1980s the Thatcher government in Britain used the coercive powers of the state, including the police and secret services, to undermine the powerful National Union of Miners (NUM). Not only did this pave the way for the privatisation of coal mines, but, by defeating the NUM, Thatcher also weakened the broader labour movement, paving the way for further neoliberal measures (Harvey 2005: 59).

These trends were continued by later neoliberal governments. In Australia, for example, the Howard Coalition government enacted its WorkChoices legislation in 2005 – a radical package of changes to industrial relations that placed severe restrictions upon the ability of unions to organise, increased the discretionary powers of government to intervene in industrial disputes and increased the range of industrial actions for which fi nes and gaol terms apply (Teicher, Lambert and O’Rourke 2006: 5-7). This neoliberalisation of industrial relations was achieved through a centralization of power in the hands of the federal government, as Ellem (2006: 216) argues:

as this Government sets out to individualise the employment relationship, it does so through centralising power over the Australian states, and indeed the citizen. It seeks a so-called national system … not through unifying the traditional industrial laws but by subordinating them to corporation laws.

Such regulatory changes have not simply been neutral responses to policy problems. Rather they are the outcome of confl ict and compromise, mediated by the unique institutional architecture of each nation state. While neoliberal ideas had been promoted by the likes of Hayek and Friedman since the 1940s through forums such as the Mont Pelerin Society, it wasn’t until the 1970s that they began to gain currency among policy makers (Cockett 1995). This was at a time when global capitalism faced an economic and political crisis. Profi t rates were in decline and the power and prerogatives of capital were threatened by a number of social movements (Gordon, Weisskopf and Bowles: 44-50). Transformations to the regulatory apparatus of states (through privatization, deregulation and marketisation) facilitated changes within processes of capital accumulation, which in turn led to a number of developments, including:



a weakening of the power of organised labour and a strengthening of the • power of capital at both the level of the fi rm and the level of state policy making; a freeing of capital from many of the restraints imposed upon it as a result • of the post-world war two ‘class compromise’ in many advanced capitalist economies; and an expansion of the sphere of commodifi cation, by deregulation and • the opening up of former state-monopolised services to profi t making enterprises.

This is encapsulated by Mark Berger’s description of neo-liberalism as an ‘historic victory of capital over labour’ (Berger 1999: 453). The implication of this is that neoliberalism is a class-based process (Dumenil and Levy 2005: 1-2; Harvey 2005: 31-36). By this is meant a process that has reconstituted the political economy in the interests of one or more of the fractions of capital. Many of the key institutions, alliances and social truths that characterised the post World War Two capitalist order have been ‘rolled back’, while new forms of regulation to facilitate capital accumulation were also ‘rolled out’ (Peck and Tickell 2002).

ʻRegulatory Capitalismʼ: Neoliberalism as MisnomerIt was the recognition that the late twentieth century state-economy relationship did not accord with the prescriptions of neoliberal proselytisers that led to the development of the notion of ‘regulatory capitalism’, as an alternative to the descriptor ‘neoliberalism’ (Braithwaite 2008: 10-11). Building upon earlier work by Vogel (1996), Levi-Faur and Jordana, for example, have argued that:

While conventional wisdom holds that we live in a neoliberal era and under neoliberal hegemony, the reality is signifi cantly different and much more complex … Neoliberalism preaches deregulation but paradoxically seems to expand and extend regulation. If we were to judge neoliberalism by the degree of “deregulation” it attained, it would be a failure. If we were to judge it by the degree of “regulation” it promoted, it would be, on its own terms, a fi asco (Levi-Faur and Jordana 2005: 6-7).

Along with John Braithwaite (2008), Levi-Faur and Jordana identifi ed the proliferation of regulation as the defi ning feature of global capitalism during the last two to three decades. Rather than neoliberalism leading to a retreat of the state, regulation has been transformed, leading to an expansion in the regulatory functions of the state. Regulation is ‘conceived as that large subset of governance that is about steering the fl ow of events, as opposed to providing and distributing’ (Braithwaite 2008: 1). An important trend that has been evident since the 1970s is that ‘the state retains responsibility for steering, while business increasingly takes over the functions of service provision and technological innovation’ (Levi-Fair



2005: 15). While the state’s role has been transformed, and it is less involved in the direct provision of services such as telecommunications, airlines, electricity and banking, with these roles being increasingly transferred to the private sector, this has not diminished the regulatory apparatuses of the state. Thus Braithwaite writes of ‘The Neoliberal Fairytale’ (Braithwaite 2008: 4). Crucially, regulation is not undertaken solely by the state. Rather, as Levi-Faur writes:

a new division of labour between state and society (e.g. privatization) is accompanied by an increase in delegation, proliferation of new technologies of regulation, formalization of interinstitutional and intrainstitutional relations, and the proliferation of mechanisms of self-regulation in the shadow of the state’ (Levi-Faur 2005: 13).

Moreover, these scholars contend that regulation occurs in a multiplicity of spheres and is multi- rather than uni-directional:

markets in fi ts and starts have tended to become progressively more vigorous, as has investment in the regulation of market externalities. Not only have markets, states and state regulation become more formidable, so has non-state regulation by civil society, business, business associations, professions and international organizations. Specifi cations of powers within polities have become more varied, with more private-public hybridity. (Braithwaite 2008: 27).

Braithwaite argues that ‘markets themselves are regulatory mechanisms, as opposed to the neoliberal schema of markets as the antithesis of regulation’ (Braithwaite 2008, 8). Thus these theorists use the term ‘regulatory capitalism’ to capture the sense of a system or political economic totality characterised by pervasive, multi-directional regulation. In the context of debates about neoliberalism, the implication of the work of Levi-Faur, Jordana and Braithwaite, is to view the term ‘neoliberalism’ as a misnomer, and to reject the term in favour of ‘regulatory capitalism’. For these theorists, the question, ‘Does the fi nancial crisis herald the end of neoliberalism?’ is unhelpful, because it embodies a classifi cation error. It assumes that the last thirty years of political economic history were characterised by the implementation of neoliberal reforms, when, in their view, the reality is they were not. Indeed, from the perspective of the regulatory capitalism school, neoliberalism should not have been expected to result in a retreat of the state, because, as Levi Faur (2005, 19) states, ‘Regulation is a necessary condition for the functioning of the market, not only a compromise between economic imperatives and political and social values’.

ʻActually Existing NeoliberalismʼThe foregoing discussion has implications for an understanding of the relation-ship between neoliberal theory and practice and, therefore, the evaluation of the ‘death of neoliberalism thesis’. As already argued, those who posit that



neoliberalism is fi nished tend to equate neoliberalism with laissez faire, and assume that a strong and direct correlation exists between the normative prescriptions of neoliberal theory, and neoliberalism in practice. However, it has been demonstrated that the state has maintained a pervasive presence in the regulation of economic and social life during the last three decades, thus contravening a key normative prescription of neoliberal theory. The implication of this is that the rise of regulation, such as in the fi nancial sector of the economy, or state fi scal stimulus packages, in the context of the global fi nancial crisis, do not, in and of themselves, constitute suffi cient conditions for pronouncing neoliberalism dead, or even terminally ill (Panitch and Konings 2009). Thus, a central foundation of arguments by Kevin Rudd and others seems to be undermined. On the other hand, the regulatory capitalism school implies that there is little if any correspondence between neoliberal theory and practice.

Clearly there are differences between neoliberal theory and neoliberalism in practice. However, notwithstanding the arguments of the regulatory capitalism school, this paper argues that neoliberalism remains a useful description of the major transformations of capitalist economies and states during the last three decades.

One way of thinking about this is to draw upon the concept of ‘actually existing neoliberalism’ (Brenner and Theodore 2002; Peck and Tickell 2002). An allusion to ‘actually existing socialism’, this term distinguishes between neoliberalism in theory and practice, yet also implies a correspondence between the two. The term:

is intended not only to underscore the contradictory, destructive character of neoliberal policies, but also to highlight ways in which neoliberal ideology systematically misrepresents the real effects of such policies upon the macroinstitutional structures and evolutionary trajectories of capitalism (Brenner and Theodore 2002: 353).

Two aspects of this misrepresentation are identifi ed:

First, neoliberal doctrine represents states and markets as if they were diametrically opposed principles of social organization, rather than recognizing the politically constructed character of all economic relations. Second, neoliberal doctrine is premised upon a “one size fi ts all” model of policy implementation that assumes identical results will follow the imposition of market-oriented reforms, rather than recognizing the extraordinary variations that arise as neoliberal reform initiatives are imposed within contextually specifi c institutional landscapes and policy approaches (Brenner and Theodore 2002: 353).

The fi rst of these two aspects of the misrepresentation identifi ed by Brenner and Theodore points to the role of the state in capitalist economies. Neoliberal theory assumes that markets and states are entirely separate spheres of human activity. Markets are generally conceived of by neoliberals as autonomous,



natural arenas of human interaction, and thus when the state regulates markets it is deemed to ‘interfere’ with or ‘intervene’ in them (Chang 2002; Jones 2003).

However, there is a long tradition of theorising that recognises the social nature of markets. Polanyi (2001[1944]), for example, argues that markets are embedded in society through the ‘fi ctitious commodities’ of labour, money and land. Similarly, scholars within the instututionalist tradition in political economy have argued that ‘the market is itself an institution’ (Hodgson 2007, 2). A similar point is made by the Regulatory Capitalism school (Levi-Faur 2005, 14-19). An historical approach reveals that states have been integral to the development and expanded reproduction of capitalism. For example, the state was instrumental in the creation of property-owning and property-less classes in England during the eighteenth and nineteenth centuries through the enclosure of common land. As Karl Polanyi (2001[1944]: 146) demonstrated even ‘laissez faire capitalism’ in England in the mid to late nineteenth century, during which time the market is presumed to have been free of the regulatory involvement of the state, entailed ‘an enormous increase in continuous, centrally organised and controlled interventionism’. Viewed in this context, while contravening the central tenets of neoliberal theory, state economic and social regulation in the neoliberal era can be understood as but the latest example of the pervasive and coercive role of the state under capitalism.

The second aspect of the misrepresentation identifi ed by Brenner and Theodore points to the ‘uneven geographical development of neoliberalism’ (Harvey 2005: 87-119). Neo-liberalism evolved historically. It is not a static phenomenon, nor was it born fully formed. We are better advised to adopt a ‘processual defi nition’ (Peck and Tickell 2002; 383), and to speak of the process of ‘neoliberalisation’ (Brenner and Theodore 2002; 349), implying an ongoing and uneven process, yet with shared features and logics across space and time. One implication of this is that national variations in neoliberalism must be taken into account – hence the focus here upon the specifi c national context of Australia.

The divergence between neoliberal theory and practice should, therefore, not be surprising. On the one hand the centrality of the state within capitalist economies means that real economies were never likely to conform to the normative ideal of neoliberal theory. On the other hand, the uneven development of ‘actually existing neoliberalism’ means that it cannot conform precisely with a universal neoliberal template derived from neoliberal theoretical postulates. One could add to this that political economic theory and practice are almost inevitably characterised by some extent of divergence, as was the case, for example, with Keynesianism during the post World War Two economic boom (Jones 1989).

This need not mean, however, that the utility of the term ‘neoliberal’ as a description of the dominant processes of economic and regulatory change and transformation during the last three decades is undermined. On the contrary, ‘actually



existing neoliberalism’, in some respects, corresponds closely with neoliberal theory, even while the normative ideal of the small state has not eventuated.

There are three aspects to this correspondence between neoliberal theory and practice.

First, and at the most superfi cial level, a striking feature of capitalist states globally during the last three decades is the proliferation of neoliberal policies of deregulation, privatisation and marketisation. It is certainly true that these have not been implemented in precise accordance with neoliberal theory. In Australia, for example, privatisations have often led to the creation of new regulations governing the privatised enterprises – such as those specifi c to Telstra in the case of telecommunications privatisation – or they have led to the creation of new regulatory bodies to oversee the newly created market for social services previously monopolised by the state – such as the National Electricity Market Management Company in the case of electricity privatisation. Marketisation of social services have often entailed an ongoing role for the state in their subsidisation. Examples are the federal government subsidies that go to private childcare providers and private schools. However, there is a broad correspondence between neoliberal theory and policy practice in so far as states have transferred many services to the private sector, or have facilitated the emergence of more private sector providers of social services in competition with the public sector. Furthermore, neoliberal theory has provided a convenient rationale and justifi cation for such policies. It has given policy makers pursuing such agendas a discursive framework within which they can be defended on economic and philosophical grounds.

Second, neoliberal policies have facilitated the growth of formal or nominal economic freedoms. That is, state policies have been transformed such that individuals are formally able to negotiate market exchanges with other individuals around a greater range of issues than previously – such as with respect to employment, health care and welfare provision. This is in keeping with the neoliberal argument that individuals should be ‘free to choose’ and exercise their preferences through markets, unconstrained by arbitrary intervention from collectivist entities such as the state. In reality, it is often the case that such formal freedoms do not translate into effective freedoms, or do so only for a minority of individuals, due the other regulations and power relations constraining the range of options open to the individuals faced with such transactions. For example, in Australia, the Howard Government’s Workplace Relations Act and its various amendments enabled the formal freedom of employees to negotiate individual workplace contracts with their employer via Australian Workplace Agreements (AWAs). However, this did not translate into an effective freedom for many workers for two reasons. First, the power imbalance inherent in the employment relationship meant that, in many cases, the employee had little real choice but to sign the AWA presented to them or lose their employment. Second, the Workplace Relations Acts that enabled AWAs also contained restrictions



upon the ability of employees to take collective action through their trade unions. A similar pattern is evident with respect to welfare services in Australia. While formally, in the marketised system of unemployment assistance, under which the federal government contracted private sector for and not-for profi t organisations to deliver services previously monopolised by the government, those in receipt of welfare payments were able to choose a Job Network provider, the reality was that this was rarely an effective freedom as the unemployed were allocated to Job Network organisations under a government administered ‘pseudo market’ (Tickell and Peck 2003: 168).

Third, and related to this point, ‘actually existing neoliberalism’ has facilitated a greater marketisation of everyday life. That is, individuals are much more exposed to markets for the provision of necessities of their everyday lives than was the case during the post-war era. This reality has been facilitated through deregulation, privatisation and marketisation. For example, the market for child-care has burgeoned in Australia, at least in part due to the subsidies provided by the federal government to private providers as part of its marketisation strategy. Similarly, the private education market has grown steadily as successive governments have allocated greater proportions of federal government education budgets to private providers. This is broadly in keeping with the neoliberal argument that markets are the most moral and most effi cient means of economic organisation and, apart from some public goods, should be the primary mechanism through which individuals source their wants and needs.

In all of these cases, state regulation has been used to secure the formal freedoms advocated by neoliberal polemicists. However, such correlation with neoliberal theory is contradicted by other concurrent actions by the state that enforce the freedoms of certain classes of individual over others. This highlights the ideological nature of neoliberalism. Its unrealistic portrayal of the workings of capitalist economies ignores and obscures the power relations and class dynamics inherent in this form of economic organisation.

The End of Neoliberalism?

It has been argued that actually existing neoliberalism is a historically specifi c process of state-facilitated transformations of capital accumulation that has led to greater freedoms for capital, an expansion of the sphere of commodifi cation and a shift in the balance of class forces in favour of capital. While there are clear divergences between neoliberal theory and practice, there are also correlations. These correspondences, however, are of theoretical precepts with nominal, rather than effective, freedoms, hence the appropriateness of the term ‘actually existing neoliberalism’.

To what extent, then, does the current global economic crisis herald the end of actually existing neoliberalism?



Based on the forgoing analysis, for actually existing neoliberalism to come to an end would require an end to, or the undermining of, one or more of the following processes: deregulation, privatisation or marketisation. It would require limits placed upon the freedoms of capital gained under neoliberalism. It would require social protections that quarantine individuals from market dependence, and it would require a shift in the balance of class forces in favour of labour.

There is limited evidence of a partial retreat from neoliberalism in Australia. However, this needs to be qualifi ed. It might be argued, for example, that the Rudd Government’s fi scal stimulus package is an example of Keynesianism, and therefore contravenes neoliberal principles. However, fi scal packages working on the demand side of the economy, such the Baby Bonus, family tax concessions and the fi rst home owners’ grant, were central to the Budget strategies of the Howard Government (Wilson and Turnbull 2000). Therefore, the major difference between this package and those of the Howard Government is its counter-cyclical nature, not the fact of a fi scal stimulus itself. While fi scal defi cits were uncommon in the Howard era (there was a small defi cit in 2001-02), they were a feature of the Hawke and Keating Labor governments and the Fraser Liberal government, suggesting that defi cits have more to do with the normal fl uctuations of budgets in line with prevailing macroeconomic conditions than with an anti-neoliberal position. It should also be noted that fi scal defi cits have been persistent features of neoliberal Republican governments in the USA and, therefore in and of themselves, should not be read as a retreat from actually existing neoliberalism.

Another example is the government’s bank deposit guarantee which provides a level of protection against extreme market fl uctuations for deposit holders. One could also point to the temporary ban on covered short selling that curbed some of the freedoms previously enjoyed by fi nancial speculators. Yet these departures from the neoliberal agenda seem modest rather than substantial, particularly when considered alongside the ongoing reliance upon neoliberal policy measures in major portfolio areas. Indeed, an examination of Australian political economic history since the onset of the current economic crisis suggests that, at least to date, the process of neoliberalisation is in a healthy state, despite the arguments of the Prime Minister to the contrary.

On environmental policy, for example, the Rudd Government has shown its predilection for neoliberal solutions, preferring to use market mechanisms, in the form of an emissions trading scheme, rather than mandate restrictions upon polluters, to address the issue of climate change. Consistent with actually existing neoliberalism, large private interests have received favourable treatment in this process (Beder 2009). For example, as Richard Denniss demonstrates, under the Government’s Carbon Pollution Reduction Scheme, improvements to energy effi ciency by households or state and local governments would have the effect of ‘freeing up … permits for the big polluters to increase their emissions’ (Denniss 2009). Similarly, neoliberal governance techniques of engaging the private



sector in the provision of public services have been prioritised by Infrastructure Australia, the Rudd Government’s agency responsible for facilitating the construction of social and economic infrastructure. The Infrastructure Australia website states that: ‘the Australian, State and Territory Governments will consider a Public Private Partnership for any project with a capital cost in excess of $50 million’ (Australian Government 2009a). One could also add to this the Rudd Government’s ongoing commitment to subsidising the market for private schools (Patty 2009) as further evidence of the centrality of neoliberalism to the policy agenda of the current government. In perhaps the clearest signal of its commitment to extending the neoliberal agenda of previous Australian federal governments, the Rudd Government even created a new government department, ‘The Department of Finance and Deregulation’, the relevant Ministers for which ‘have been given the task of driving reductions in the levels of business regulation’ (Australian Government 2009b).

At the level of State government as well, there is little evidence of a retreat from neoliberalism. The New South Wales (NSW) State Labor Government, for example, has, since the onset of the economic crisis, made clear its intention to use privatisation – of prisons, electricity and state-owned gambling – as a revenue raising measure, even if the implementation of such measures has proved problematic.

All this seems a far cry from Kevin Rudd’s polemic against ‘unchecked market forces’ (Rudd 2009, 22). Indeed, a close reading of Rudd’s Monthly essay suggests an ongoing commitment to neoliberalism, even as he rails against it. Rudd’s essay makes it clear that markets are at the centre of his social democratic vision. He wrote:

social democrats maintain robust support for the market economy but posit that markets can only work in a mixed economy, with a role for the state as regulator and provider of public goods. Transparency and competitive neutrality, ensured by a regime of competition and consumer protection law, are essential (Rudd 2009: 25).

There is little to differentiate this ideal from the reality of actually existing neoliberalism as it has been implemented in Australia over the last three decades, during which time the state continued to have a role in providing public goods. Indeed, taking a narrow defi nition of public goods as those that are non-rivalrous and non-excludable, there may be little to distinguish Rudd’s vision from that of Milton Friedman (1982: 22-36), who also saw a role for the state in providing public goods and a framework of rules within which markets could operate. This is particularly the case when the signifi cance of Rudd’s commitment to ‘competitive neutrality’ is considered. Competitive neutrality is one of the principles underpinning National Competition Policy in Australia. It holds that the public sector should not enjoy a competitive advantage over the private sector



in the provision of services simply by virtue of public sector services being operated by the state. The implication is that restrictions upon the private sector competitors to public services should be removed. This can be achieved through a range of measures including corporatisation, deregulation and the contracting out of government services: hallmarks of the neoliberal shift in policy making. While Rudd’s statement that government should offset ‘the inevitable inequalities of the market with a commitment to fairness for all’ clearly repudiated some of the more extreme pronouncements of neoliberal fundamentalists, there is some evidence that, under the Howard government – probably the most ideologically neoliberal federal government Australia has experienced – the state did play a role in offsetting market-based inequalities (Mendes 2008).

Neoliberalism and Industrial Relations

These arguments also apply to the sphere of industrial relations in Australia. During the last two decades, this sphere has been a key site of ongoing contestation over the gradual neoliberalisation of regulations governing the employment relationship. With the election of the Rudd Labor Government in 2007, on the back of the anti-WorkChoices campaign, many had hoped for a winding back of the infl uence of neoliberalism on industrial relations. It is therefore worth paying close attention to developments within this arena.

The regulatory and class-based elements of neoliberalism have been evident in the sphere of industrial relations since the shift under Labor to ‘enterprise bargaining’ in the 1990s. Enterprise bargaining on the one hand entailed the beginning of the ‘roll back’ of Australia’s historic institutions of arbitration through the devolution of bargaining from the industry to the enterprise level. The crucial role of the state in this process is captured by the phrase commonly used to describe it: ‘managed decentralism’. Part of the ‘roll out’ of new regulations to facilitate enterprise bargaining was the codifi cation of the right to strike via the Industrial Relations Reform Act 1993. However, as White (2005) noted, this also had the effect of limiting legitimate industrial action to periods of enterprise bargaining, therefore restricting the ability of organised labour to pursue industrial action. The Howard Government’s Workplace Relations Act 1996, placed further restrictions upon organised labour and extended the roll-back of the Australia’s historical system of centralised arbitration as embodied in the Australian Industrial Relations Commission. The latter was achieved, as Teicher, Lambert and O’Rourke (2006: 4) argued, by ‘restricting its arbitral powers to 20 allowable matters’ and through the roll out of the new institutions of the Offi ce of the Employment Advocate and Australian Workplace Agreements, which enabled individual employment contracts outside of collective agreements and which ‘marginalised’ the Australian Industrial Relations Commission (AIRC). In 2005 the apogee of this process arrived in the form of the Workplace Relations



Amendment (WorkChoices)Act 2005. The WorkChoices legislation curtailed the legitimate activities of unions even further, introduced a broader range of penalties to be applied against unions, gave the relevant Minister greater discretionary power to intervene in industrial disputes, and introduced a range of ‘prohibited content’ provisions relating to trade unions. It also removed restrictions upon employers by reducing the number of allowable award matters and introducing fi ve minimum conditions to which Australian Workplace Agreements (AWAs) had to adhere. Such across the board changes to the regulations governing the employment relationship occurred alongside interventions by the state against the power of unions within specifi c industries, including construction, stevedoring and higher education.

Several scholars have noted the centrality of the state to the neoliberalisation of the Australian industrial relations system and therefore the unhelpful nature of the term ‘deregulation’ as a description of such processes. As Ellem argued in the context of WorkChoices, ‘Governments in Australia talk of the free market, deregulation, and now choice, but they act in highly interventionist and prescriptive ways’ (Ellem 2006: 216). For that reason, there is strong support for Anderson’s assertion that:

Deregulation really means a market re-regulation to guarantee new and profi table markets to large corporations, and a social re-regulation to restrict the meaning of citizenship, where this confl icts with the delivery of profi table markets to large corporations (Anderson 1999: 18).

The upshot of this is that a roll-back of neoliberalism in the sphere of industrial relations would not simply entail a return to regulation, rather it would involve regulations of a specifi c type that dismantled ‘managerial control over external regulation and collective forms of employee representation’ (Ellem 2006: 214) that was privileged under neoliberalism.

To date, such a roll back of neoliberalism has occurred only to a very limited extent under the Rudd Labor Government. While some aspects of the Howard Government’s WorkChoices legislation have been revoked (most notably with respect to Australian Workplace Agreements), others remain in place, such as restrictions on trade union activities and industrial action. For example, the Rudd Government’s regulation of industrial relations, as administered by Fair Work Australia, retains the stipulation that protected industrial action can only be taken by employees if a secret ballot of all union members in the enterprise is conducted, and at least fi fty percent of members vote, and more than fi fty percent of those vote yes for the proposed action (Australian Government 2009c). Protected action can only be taken after an existing agreement has passed its expiry date and only if it is in relation to bargaining for a new agreement (Australian Government 2009d). In this context, Keith Hancock’s comments, prior to the inception of Fair Work Australia, seem appropriate:



WorkChoices and (to a lesser degree) earlier legislation of the Howard Government shifted the balance of industrial power in favour of employers by (1) restricting union power, (2) limiting the role of arbitral tribunals, (3) elevating individual agreements to a status above that of collective agreements and awards and (4) reducing employees’ protections against dismissal…

Should the [Rudd Government’s] ‘package’ of industrial relations reforms have, as an objective, a revival of union power? The Labor Government’s proposals do not seem to envisage this, though they do include a requirement for employers to negotiate in good faith with unions where a majority of the affected workers desires union representation (Hancock 2008: 8-9).

Hancock’s comments suggest that Labor’s new industrial relations framework does not substantially wind back the shift in the balance of power in favour of employers that resulted from neoliberal labour market ‘deregulation’.

Conclusion

This paper has argued that many of the pronouncements that neoliberalism is dead are based upon an unhelpful confl ation of neoliberal theory with neoliberalism in practice. Such a confl ation has meant that the last three decades have often been identifi ed as an era of small-government and laissez faire. However, as is demonstrated by the ‘regulatory capitalism’ approach, regulation by both state and non-state institutions burgeoned during the neoliberal era. One implication of this is to demonstrate the lack of a strict match between neoliberal theory and practice. This leads some scholars to reject ‘neoliberalism’ as a useful description of recent trends in global capitalist political economies. While agreeing with the regulatory capitalism approach, that economic regulation has not withered away during the last three decades, this paper has taken the view that neoliberalism is, nonetheless, a useful descriptor of contemporary capitalism. This paper has argued that the concept of ‘actually existing neoliberalism’ provides the most useful framework for thinking through the relationships between neoliberal theory and practice, as it enables the recognition of both correlations and discrepancies between neoliberal ideas and the economic and political transformations that have often been justifi ed through reference to such ideas. By employing the lens of ‘actually existing neoliberalism’ it has been argued that neoliberalism in practice has entailed uneven global reorganizations (rather than retrenchment) of the state that have facilitated a weakening of the power of organised labour, a freeing of capital from post-world war two economic constraints, and an expansion of the sphere of commodifi cation. On this basis it has been argued that the mere presence of regulation, in and of itself, is not suffi cient to undermine the viability of neoliberalism. Rather, such regulations need to be assessed for the extent to which they ‘roll back’ the core features of neoliberalism.



While Kevin Rudd is surely right that the ideological legitimacy of neoliberalism has been severely weakened, it is also the case, as has been demonstrated, that his government continues to adhere to the logic of neoliberal policy, even as it institutionalizes new supports for markets. Similarly, at the international level, beyond the nationalisation of some banks, the part-ownership of General Motors by a union health benefi ts fund, and some modest restrictions upon fi nancial capital, there is little to indicate a signifi cant policy shift away from neoliberalism in the advanced capitalist economies. While it is possible that the global fi nancial crisis will herald a new non-neoliberal era of policy making, it does seem that the judgment that neoliberalism is dead is, at best, premature.

For industrial relations, this means a likely continuation of neoliberal forms of labour market regulation, at least in the short-term, even if these are tempered somewhat by the rescission of some of the more extreme neoliberal changes of the Howard era of government. This is not to claim that the forward march of neoliberalism is inevitable. Rather, as has been suggested in this paper, the future of neoliberalism, and of alternative forms of labour market regulation, is signifi cantly contingent on the outcome of confl icts between social forces, and the way these are mediated by the nationally and historically specifi c institutional architectures of labour market regulation in particular nation-states – in this case, Australia.

References

Anderson, T (1999) ‘The Meaning of Deregulation.’ Journal of Australian Political Economy, 44: 5-21.

Argy, F (1998) Australia at the Crossroads: Radical Free Market or a Progressive Liberalism? St Leonards: Allen and Unwin.

Arnesen, E, ed., (2007) Encyclopedia of U.S. Labor and Working Class History Volume 1. New York: Routledge.

Australian Government (2008) Budget 2008-09, Budget Paper No.1: Strategy and Outlook 2008-09.

Australian Government (2009a) ‘Infrastructure Australia: PPP and Infrastructure Project Pipeline’ URL: http://www.infrastructureaustralia.gov.au/project_pipeline/index.aspx, consulted 31 August 2009.

Australian Government (2009b) ‘The Deregulation Agenda’ URL: http://www.fi nance.gov.au/deregulation/index.html), consulted 26 March 2009.

Australian Government (2009c) ‘Fair Work Australia: Protected Action Ballots’ URL: http://www.fwa.gov.au/index.cfm?pagename=industrialballots, consulted 31 August 2009.

Australian Government (2009d) ‘Fair Work Australia: Taking Suspending and Stopping Industrial Action’ URL: http://www.fwa.gov.au/index.cfm?pagename=industrialstop, consulted 31 August 2009.

Beder, S (2009) ‘Token Environmental Policy Continues in Australia.’ Pacifi c Ecologist, 18(Winter): 45-48.



Berg, C (2008) The Growth of Australia’s Regulatory State: Ideology, Accountability, and the Mega-Regulators. Melbourne: Institute of Public Affairs.

Berger, M (1999) ‘Up from Neoliberalism: Free-Market Mythologies and the Coming Crisis of Global Capitalism.’ Third World Quarterly. 20(2): 453-463.

Brenner, N and Theodore, N (2002) ‘Cities and the Geographies of “Actually Existing Neoliberalism”.’ Antipode 34(3): 349-379.

Braithwaite, J (2008) Regulatory Capitalism. How it Works, Ideas for Making it Better. Cheltenham: Edward Elgar.

Chang, H (2002) ‘Breaking the Mould: An Institutionalist Political Economy Alternative to the Neo-liberal Theory of the Market and the State.’ Cambridge Journal of Economics, 26(5): 539-60.

Gordon, D, Weisskopf, T and Bowles, S (1987) ‘Power, Accumulation, and Crisis: The Rise and Demise of the Postwar Social Structure of Accumulation.’ In Cherry, Robert; et. al. eds (1987) The Imperlled Economy. Macroeconomics from a Left Perspective. Book I. New York: Union for Radical Political Economics: 43-57.

Cockett, R (1995) Thinking the Unthinkable: Think-Tanks and the Economic Counter-Revolution 1931-1983. London: Harper Collins.

Denniss, R (2009) ‘Making Life Easier for Emitters.’ Inside Story 2 February, available at: http://inside.org.au/making-life-easier-for-emitters/.

Dumenil, G and Levy, D (2004) Capital Resurgent: Roots of the Neoliberal Revolution. Cambridge: Harvard University Press.

Editorial (2008) ‘Capitalism at Bay’ The Economist, 16 October, at: http://www.economist.com/opinion/displaystory.cfm?story_id=12429544, accessed November 19, 2008.

Ellem, B (2006) ‘Beyond Industrial Relations: Workchoices and the Reshaping of Labour, Class and the Commonwealth.’ Labour History, 90(May): 211-220.

Fairbrother, P, Svensen, S and Teicher, J (1997) ‘The Withering Away of the Australian State: Privatisation and its Implications for Labour.’ Labour and Industry, 8(2): 1-29.

Friedman, M (1982) Capitalism and Freedom. Chicago: University of Chicago Press.Friedman, T (1999) The Lexus and the Olive Tree. London: Harper Collins.Friedman, M and Friedman, R (1980) Free to Choose. Harmondsworth: Penguin.George, S (1999) ‘A Short History of Neoliberalism’, Transnational Institute, URL:

http://www.tni.org/es/node/66533, Last accessed: 8 March 2010. Hancock, K (2008) ‘The Future of Industrial Relations in Australia.’ The Economic and

Labour Relations Review, 18(2): 7-14.Harvey, D (2005) A Brief History of Neoliberalism. Oxford: Oxford University Press.Hodgson, G (2007). ‘Introduction’ in G Hodgson (ed.) The Evolution of Economic

Institutions: A Critical Reader, Cheltenham: Edward Elgar: 1-15.Hutton, W (2008) ‘A Short History of Capitalism’s Rise And Fall’ The Observer, 5 October,

http://www.guardian.co.uk/business/2008/oct/05/creditcrunch.marketturmoil1/print>, consulted 19 November 2008.

Jones, E (1989) Was the Post-War Boom Keynesian? Working Papers in Economics, no. 131, University of Sydney, Department of Economics.

Jones, E (2003) ‘Government Intervention’ in G Argyrous and F Stilwell, eds. Economics as a Social Science: Readings in Political Economy. 2nd Edition, Annandale: Pluto Press: 42-45.

Klein, N (2007) The Shock Doctrine: The Rise of Disaster Capitalism. Camberwell: Penguin.Levi-Faur, D (2005) ‘The Global Diffusion of Regulatory Capitalism.’ The ANNALS of the

American Academy of Political and Social Science, 598(21), pp. 12-32.



Levi-Faur, D and Jacint Jordana (2005) ‘The Making of a New Regulatory Order.’ The ANNALS of the American Academy of Political and Social Science, 598(4): 6-9.

Littler, C (2009) ‘The Current Global Financial Crisis as a Context for Labour and Industry in the Twenty-First Century’, Labour and Industry, 19(3): 5-28.

Mendes, P (2008) ‘Retrenching or Renovating the Australian Welfare State: The Paradox of The Howard Government’s Neo-Liberalism.’ International Journal of Social Welfare, 18(1): 102-110.

Ohmae, K (1991) The Borderless World: Power and Strategy in the Interlinked Economy. London: Fontana.

Panitch, L and Konings, M (2009) ‘Myths of Neoliberal Deregulation.’ New Left Review, 57: 67-83.

Patty, A (2009) ‘Rudd’s $26b Funding Gift to Private Schools.’ Sydney Morning Herald, 24 August, p. 1.

Peck, J and Tickell, A (2002) ‘Neoliberalizing Space.’ Antipode, 34(3): 380-404.Polanyi, K (2001)[1944] The Great Transformation: The Political and Economic Origins of

Our Time. Boston: Beacon Press.Quiggin, J (1996) Great Expectations: Microeconomic Reform and Australia. St. Leonards:

Allen and Unwin.Rudd, K (2009) ‘The Global Financial Crisis.’ The Monthly, February: 20-29.Saad-Filho, A and Johnston, D, eds., (2005) Neoliberalism: A Critical Reader. London:

Pluto Press. Strange, S (1996) The Retreat of the State: The Diffusion of Power in the World Economy.

Cambridge: Cambridge University Press.Tanzi, V and Schuknecht, L (2000) Public Spending in the 20th Century. Cambridge:

Cambridge University Press.Teicher, J, Lambert, R and O’Rourke, A (2006) ‘Introduction: The Workchoices Act as the

Triumph of Neoliberalism.’ in J Teicher, R Lambert and A O’Rourke, eds. The New Industrial Relations Agenda. Frenchs Forest: Pearson Education Australia: 1-9.

Tickell, A and Peck, J (2003) ‘Making global rules: globalization or neoliberalization?’, in J. Peck and H. Wai-Chung Yeung (eds), Remaking the Global Economy: Economic-Geographical Perspectives. London: Sage: 163-181.

Vogel, S (1996) Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries. Ithaca: Cornell University Press.

White, C (2005) ‘Workchoices: Removing the Right to Strike?’ Journal of Australian Political Economy, 56: 66-80.

Wilson, S and Turnbull, N (2000) ‘Australia’s Secret Keynesianism’ Australian Review of Public Affairs Digest, 11 August, URL: <http://www.australianreview.net/digest/2000/08/wilson_turnbull.html>, consulted 30 September 2009.


Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

ʻactually existing neoliberalismʼ

Documents

advanced capitalist economies

australian workplace agreements

major competing conceptions

global nancial crisis

unchecked market forces

regulatory capitalism approach

regulatory capitalism school

global economic crisis