Neoliberalism captured Canberra in 1983

Warning: Amateur political analysis ahead. I posted this on Crooked Timber a few days ago. It isn’t as applicable to Australia. In part, I think, this is because Rudd (along with Henry and Swan) saved us from the GFC with Keynesian policies, but then failed to defend them, leaving the advocates of market liberal reform largely unchallenged.

Looking at the way politics has evolved over the past 25 years or so, in the English-speaking world and beyond, I have developed an analysis which is certainly not original, but which I haven’t seen set down in exactly the way I would like.

Here’s the shorter version:

There are three major political forces in contemporary politics in developed countries: tribalism, neoliberalism and leftism (defined in more detail below). Until recently, the party system involved competition between different versions of neoliberalism. Since the Global Financial Crisis, neoliberals have remained in power almost everywhere, but can no longer command the electoral support needed to marginalise both tribalists and leftists at the same time. So, we are seeing the emergence of a three-party system, which is inherently unstable because of the Condorcet problem and for other reasons.


First some definitions. Taking the three groups in reverse order, I’m using leftism as broadly as possible to encompass greens, feminist, social democrats, old-style US liberals, as well as those who would consciously embrace the label “Left”. Broadly speaking, this encompasses anyone critical of the current economic and social order on the grounds that is unfair, unequal and environmentally destructive.


Neoliberalism is mostly used to mean one thing in the US (former liberals who have embraced some version of Third Way politics, most notably Bill Clinton) and something related, but different, everywhere else (market liberals dedicated to dismantling the social democratic welfare state, most notably Margaret Thatcher).

Here I’m using it to cover both versions, which I’ll call soft and hard. The central theme is the inevitability and desirability of a globalised capitalism, dominated by the financial sector. The difference between the two versions turns essentially on whether this requires destruction of the welfare state or merely “reform”, along the lines undertaken by the Clinton Administration.


Finally, tribalism is politics based on affirmation of some group identity against others. While there are as many tribalisms as there are tribes, the most politically potent form, and the relevant one here is that of a formerly unchallenged dominant group facing the real or perceived prospect of becoming a politically weak minority, as with white Christians in the US.

Roughly speaking, until the Global Financial Crisis, neoliberalism was the only force that mattered. The typical setup in English-speaking countries was alternation between two neoliberal parties corresponding to the two versions of neoliberalism I mentioned above. The hard neoliberal (in the US, the Republicans) relied on the votes of (white Christian) tribalists and made symbolic gestures in their direction, but largely ignored them, particularly if their interests came into conflict with those of big business. The soft neoliberals (in the US, the New Democrats) relied on the willingness of leftists to support them as “the lesser evil”.

The GFC discredited neoliberalism in both its forms, but still left neoliberals holding all the positions of power in the political and economic system. But the erosion of support for both hard and soft neoliberalism has made the maintenance of the neoliberal duopoly more difficult. On the right, Trump has shown that the tribalist vote can be mobilised more successfully if it is unmoored from the Wall Street agenda of orthodox rightwing Republicans like Cruz. On the left, Sanders has not done quite so well, but has certainly forced Hillary Clinton to distance herself from her Wall Street backers.

Internationally, tribalism has gained ground nearly everywhere, mostly at the expense of the soft neoliberalism represented most notably by Blair. Soft neoliberals have also lost ground to the left, most obviously with the election of Jeremy Corbyn in Britain and the rise of left parties like Syriza and Podemos at the expense of PASOK and PSOE.

The ultimate outcome remains unclear. In part this reflects the Condorcet problem: with three alternatives, that can’t be neatly arrayed on a right-left spectrum, there is no stable outcome.

But the more fundamental problem is that none of the competing forces has an obviously compelling solution to the problems we face. Neoliberalism has manifestly failed to deliver the prosperity promised by triumphalists like Thomas Friedman in the 1990s. Tribalism is already a lost cause, given the massive migrations that have already taken place, and can at most be slowed in the future. The left needs to rebuild institutions and policies that have been in retreat for decades.

Condorcet problem:×501.jpg


Comment by Geoff Edwards March 3rd, 2016 at 06:57 | #1

Good Prof John. A few qualifications.

1. “…neoliberalism was the only force that mattered.” In Australia, this arguably would be only from the 1980s onwards, not before Hawke and Keating. An optional date could be even be assigned to it:the date in 1983 when the senior executive service was established in Canberra with new managerialist selection criteria; or alternatively Bastille Day in 1987 when the federal departments were restructured by Hawke and Keating so that the central agencies dominated the line agencies and economic rationalist thinking dominated the senior ranks of the public service.

2. Naomi Klein in The Shock Doctrine is a good exponent of the observation that hard neoliberalism is based upon destruction of civic institutions.

3. The public in Australia at least has never been convinced of the merits of the neoliberal project. The project has been introduced through capture of positions of influence. This is the colossal failure of the Left and the environmental movement since the mid 1980s, that they have argued causes instead of ensuring their representation in the corridors of power.

4. “…none … has an obviously compelling solution to the problems we face”. On the one hand, no, the sustainability literature, both scholarly and popular, is replete with solutions and initiatives that would lead us to a more human-friendly society. However, on the other hand I agree that this literature is inadequate for transitioning from the present situation to a more benign future without colossal unemployment and disruption. Partly this is because this literature is weak in (heterodox) economics.

5. For this reason, the best way forward is probably an incremental one. Despite the capture of both major parties by neoliberal thinking, in Australia at least the ingredients of a more leftist administration are still lying around. Thirty years of free trade policies that have wound down self-sufficiency will make a transition difficult.

6. In the USA, it is more difficult to make this argument and it seems as though their society is on the cusp of pulling itself to pieces. Not because of the recent tribalism on display, but because of long-standing inability of their system of government to govern in the public interest or even to portray a credible picture of what that might mean. Empires fall from time to time.

7. I should add that the environmental crisis (of which climate change is just one manifestation) will impose its own context for reform. Although I have argued above for an incremental change, that argument is grounded in our current institutional framework. The breakdown of natural ecological systems is accelerating and will overtake cautious reform. There isn’t a time for a gentle transition but we don’t have a roadmap for an urgent one, so the environmental changes will overtake events.

John Quiggin blog:

Please comment down below