01 Feb 09 Comrade Rudd’s new vision

In the essay submitted to The Monthly  Australian Prime Minister Kevin Rudd has branded himself a “social democrat”.  In his essay he positions himself in a sensible, humane mainstream based on the economics of John Maynard Keynes, on judicious government intervention and properly regulated markets, from which Australia and other countries have been diverted by extremists called neo-liberals, followers of free-market classical economists like the Austrian Friedrich von Hayek.  Neo-liberalism by Rudd’s definition is a combination of “free-market fundamentalism, extreme capitalism, and excessive greed”.  It is this extreme form of free market liberalism and greed, started by Margaret Thatcher and Ronald Reagan that has led to the current global financial crisis.

• Source: Sydney Morning Herald January 31, 2009

Mr Rudd proposes a new social democrat agenda, providing “such public goods as universal education, health, unemployment insurance, disabilities insurance and retirement income” along with greatly increased market regulation.  By proposing such things, he risks being called that dirtiest of all dirty words: SOCIALIST.  It might be only a matter of time before an Australian equivalent of Joe the Plumber challenges the Prime Minister on grounds that it will do untold harm to his (non existent) business prospects.

In the light of the global financial crisis, it’s difficult to disagree with Rudd’s proposals.  No one wants to endure years of economic hardship or even worse, the dreaded D word (another 1929 style depression).  However, Rudd’s ideas have at their core the assumption that capitalism can be fixed, and perhaps this is not quite such a certain proposition.  The cycle of boom and bust is an integral part of a capitalist system, and no amount of regulation is likely to do any more than minimize these effects.  Furthermore, capitalism has at it’s core fundamentally elitist principals.  The system has no interest in the greater good; it benefits those aggressive enough to grab what they can while disadvantaging the general population.  ‘Greed is good’ might be a slogan associated with the excesses of the 80s, but in actual fact it was always the motto and is alive and kicking today.

Rudd is making all the right kind of noises and it’s refreshing that he’s actually said something at least slightly interesting after months of business as usual.  I doubt Rudd’s new proposals will amount to anything more than noises.  If any such regime were seriously to be imposed, it would surely be confronted by the same difficulties that beset proposed emissions trading schemes. If Australia was to institute a regime of greatly increased market regulation and social justice how could it hope to compete with countries that choose to continue with policies of free market greed?

None the less, it has to be admitted that by making the right noises and at least doing something is a great deal better than the draconian policies of Rudd’s predecessor.  (What was his name again?).

Tags: global financial crisis, Kevin Rudd, market regulation, the monthly