Former high court judge Jim 'Diamond' McLennan once said to a community group opposing a sewage outfall proposal in NSW that their belief that environmental harm would occur did not mean that such harm would actually take place. So it is with Andrew Wear's article. His belief that "economic rationalism ....has exacerbated inequality in society, and across regions" is simply untrue. In fact, economic rationalism is one of the primary factors that has led to the world having the smallest number of its people living in poverty (in absolute and percentage terms) for many decades, meaning that more people than ever before (in China, Thailand, Korea, etc) have lifted themselves out of poverty by improving their economic well-being.

Similarly, his claim that "other pillars of economic rationalism such as free trade, privatisation, deregulation, union busting, an insistence on individual responsibility and cutting welfare have been put on hold, abandoned or reversed" is not supported by the facts. In Australia, a Kevin Rudd Labor government is likely to be as financially conservative as the one it is replacing, with free trade for example being one of the pillars in our foreign policy. And union busting will go on, not due to any action of government but by the voluntary refusal by workers to take up union membership.

Andrew is talking about a dream world that he may want to see created but the truth is that his world died several decades ago, never to be brought back to life.

Apologies for coming to this conversation late.

Firstly, I'd like to clarify the intent of my article.

It was not intended as an attack on economic rationalism or neoliberalism. That has been done extensively elsewhere, by numerous people more qualified than I, such as John Quiggin (eg http://www.uq.edu.au/economics/johnquiggin/JournalArticles97/Econrat97.html).

My article was attempting to make the simple point that the days of economic rationalism (or neoliberalism) as a grand metanarrative appear to be over.

This is not to say that governments everywhere aren't adopting a range of policies that could be characterised as 'economic rationalist'(Work Choices, toll roads etc etc) - they are.

But they are not positioning these policies in a grand economic rationalist narrative. Rather they are picking and choosing.

They are certainly adopting a range of policies that are not 'economic rationalist' (eg at the federal level, single desk wheat marketing, extensive welfare payments for the middle class).

In a policy sense, too, it is good to be picking and choosing - choosing the right instruments for the right problem, consulting the right experts for the right issue. As Rhian said, 'our challenges now are different, and will require different policy approaches'.

Sometimes governments will adopt market approaches, at other times the state itself will deliver services. Still, at other times, newer instruments such as partnerships will be most appropriate (and this encompasses a much broader range of options than PPPs).

As I mentioned in my article, todays challenges are about human capital, innovation, liveability and sustainability. Economic rationalists are simply not the right people to go to for advice on these issues. What, for example, would a an 'economic rationalist' innovation policy looks like? Or, perhaps, a neoliberal liveability policy?

Economic rationalism, will leave a legacy, sure, but its days as a coherent meta-narrative are over.

For those on the left, this represents an opportunity; one that I suspect will be best realised not through postulating an alternative metanarrative, but by working enthusiastically in the spaces that are opening up.

Thanks Andrew.
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Ed-online.

One signifcant thing that has emerged from this thread (including Faustino’s insightful contribution) is that the value-laden term ‘liberalise’ in itself signifies nothing. Industrialisation has definitely brought wealth to Asian economies where market reforms have been selectively introduced according to nationalist (and protectionist) strategies orchestrated by central governments.

The strategies vary and tend to be successful when they‘re tailored to the needs of the nation. Which reinforces Faustino’s point in that an objective, outcomes-based approach beats a polemic, one size-fits-all ideology every time. If by ‘liberalise’ you are also referring to the economic policies introduced in Chile in the ‘80’s or Mexico later on, they were a disaster.

Colonialism, the Enclosure Acts, factory system, Georgian penal code and transportation were part of a systematic process perpetrated by an authoritarian elite in a nation where voting was restricted to the propertied classes & outcomes reflected that. Historic sources indicate that the early industrial revolution brought an horrific decline in the quality of life of the poorer classes. That is not to say that feudal peasant life was ideal (far from it) but that imperial laissez –faire capitalism was appalling. For the majority, improved living standards were just as reliant on universal suffrage, trade union gains and conscientious activism as they were on economic advances.

Furthermore the freedoms won and gains made by those people in no way undermined the viability or profitability of British industry and never would have.

In the context of the draft trade laws that I was referring to, the idea that the U.S. is “imposing” anything on anyone anywhere else is an entirely false premise. If they want to bring importers more into line with the standards required of producers in their domestic market they have every right to. Most of their competitors are far more protective in any case.

Equally false is the idea that its all about cheap labour in developing economies. The exchange-rate is usually the determining factor in export competitiveness. And labour is often a relatively minor cost component in capital-intensive industries like manufacturing.

- Mr Smith

If 'liberalise' means nothing, then how is it possible to distinguish between North Korea and South Korea?

I don't know the specifics of what happened in Chile or Mexico in the 80s, but the Index of Economic Freedom (2007) shows that Chile is ranked 11 and Mexico 49 (Hong Kong 1, Australia 3). Over the five years to 2005, per capita GDP has grown by 49% in Chile and by 26% in Mexico. (Source: IMF).

You argue that the Industrial Revolution led to a reduction in the standard of living of 18C Britons in large part due to the authoritarian elite. I have conceded that conditions were certainly bad by today's standards, and I would agree that feudalistic attitudes continued for some time. Eventually conditions improved and by the early 19C were substantially better than the pre-industrial period. This was largely due to the transformation from a feudal to a more capitalist society.

But what would have happened if England had not experienced industrialisation? Surely the situation would have been much worse.

You state that the US has every right to "bring importers more into line with the standards required of producers in their domestic market." Does the US constitution authorise the imposition of its laws and regulations on other countries?

You may be correct that labour costs are a fraction of the total production costs of goods made in developing countries. But that does not justify artificially raising labour costs to the point where people lose their jobs. Many of these countries already have very high unemployment rates.

Andrew,

I think that some of us are aware that your article 'was not intended as an attack on economic rationalism or neo-liberalism'.

Its just that your reference to the 'other pillars of economic rationalism' prompted an exchange that was bound to take a certain direction.

For me the most interesting (or at least novel) thing to come out of the comment thread was the appearance of self-identifying 'rationalists' insisting that they should in no way be confused with neo-liberal ideology or market fundamentalism.

Meanwhile fundamentalists chimed-in in defence of rationalism with both of them suggesting that rationalism as you’ve described never existed that its just a caricature that you've invented etc.

It would appear on one level at least that this identity would prefer to blame its critics for the fact that it has become increasingly uncomfortable with itself.

Mr Smith

Mr Smith

Which of the statements by posters here would you identify as “fundamentalist”?

I repeat my unanswered questions – Can you name an influential Australian economist who has argued that deregulation is “always better, no matter what”, or who talks approvingly of “trickle down” effects, argues that “any form of cooperation, collaboration or government intervention is harmful as it inhibits competition”, or believes “competition alone will lead to prosperity.”?