Rudd and the death of neo-liberalism

Rudd sees death of neo-liberalism | The Australian

KEVIN Rudd has put his ideological spin on the global crisis - arguing the great neo-liberal experiment of the past 30 years represented by Thatcher, Reagan, Greenspan and John Howard has failed.

Rudd has defined himself, his Government and his re-election strategy by declaring that only social democrats and the Labor Party can recruit state power to save capitalism.

He has thrown the Liberal Party on to the trash heap of history, saying it is "the political home of neo-liberalism in Australia" and that the former Howard government aimed to reduce state power "as much as possible".

Declaring that a failed 30-year epoch in world history has come to a conclusion, Rudd says the crisis means "one orthodoxy is overthrown and another takes its place".

The new epoch is about using state power "to save capitalism from itself". Rudd's aim is to hold global neo-liberal policies responsible for the catastrophe and the Howard government as local upholder of these fatal ideas. His game plan is to position Labor as the long-run political and ideological winner from the crisis.

In his latest essay for The Monthly, to be published next week, Rudd turns the global crisis into a decisive ideological event. The resort to government intervention demanded by the crisis fits perfectly with Rudd's philosophy. He presents Malcolm Turnbull with an ideological challenge by insisting the Liberals stand on the wrong side of history.

The significance of Rudd's essay is that Labor will become the party of ideological attack and neo-liberalism and its backers will become the targets. This is a device to keep Labor united during the coming recession and the Liberal Party on the defensive.

He sees the crisis not just in policy terms, but as a turning point in the history of ideas. He wants to bury the Howard legacy and the Liberal Party in the failures of American laissez-faire.

Rudd declares the current crisis "is the culmination of a 30-year domination of economic policy by a free-market ideology that has been variously called neo-liberalism, economic liberalism, economic fundamentalism, Thatcherism or the Washington consensus".

He says this philosophy was anti-tax, anti-regulation, anti-government. It believed in unregulated financial markets, self-correcting markets, complete labour market deregulation and opposed investment in public goods.

Rudd dates the neo-liberal ascendancy from 1978-2008 and speculates with breathtaking hubris that the post-2008 epoch might be called "social capitalism" or "social democratic capitalism". He says it will be defined by an activist state and open markets.

In Rudd's view, social democrats must use a resurrected state power to regulate markets, strike a better balance between public and private interests, embrace Keynesian economics, correct for market failure from the financial system to climate change and invest more in education, health, unemployment insurance and retirement incomes - while supporting open markets and withstanding attacks from the extreme Left and nationalist Right.

He shuns any embrace of old-fashioned socialism. For Rudd, Labor's task is to hold the middle ground - between state socialism and free-market fundamentalism. He argues the failure of neo-liberalism has made the state the primary actor; it must save the financial system, stimulate the economy and impose a new global regulatory regime.

Rudd has put Turnbull on notice. His plan is to convert the global crisis into a historic failure of Liberal Party philosophy and its pro-market ideas.