A couple of weeks ago, American conservatives were floating the idea of bringing economist Art Laffer onto Trump’s coronavirus recovery team. Laffer is one of the guys who laid the foundations of neoliberalism, working closely with every political villain of the last few decades to promote his agenda of aggressive financial deregulation. In 1974, dining at a Washington hotel with Dick Cheney and Donald Rumsfeld, he grabbed a napkin and sketched out something called the Laffer curve, an economic principle which Reagan used to argue that his massive tax cuts would wind up generating revenue. In fact, during his presidency, the national debt more than doubled. Tax cuts don’t work as a way of reducing debt, for fairly obvious reasons - but this won’t stop them from trying it again.
We’re told tax cuts create growth. That’s been one of the basic tenets of the neoliberal consensus that’s governed us for the last forty or so years, since Reagan and Thatcher took everything over and imposed their ideology on the world. By cutting taxes you give businesses more money, which they reinvest in the economy, growing wages and creating jobs and smearing everyone with a thin layer of trickle-down prosperity. This is of course not true, and in fact just something rich people tell us so they can exploit our labour. But the fact that it’s not true was never the point. Class struggle doesn’t care about truth. The myth of the tax break is out there in the world being perpetuated by people whose interest it serves, and the rest of us have to put up with it.
But neoliberalism is over now. Possibly. Maybe. A lot of people certainly seem to be speculating that we’re entering into a new phase. The virus has forced governments around the world, even reactionary ones, into something eerily reminiscent of the kind of Keynesian economic stimulation we were supposed to be beyond. The Morrison government has doubled unemployment payments and even Trump is sending people a check with his name on it. Both the new nationalists of the right and the social democrats of the left have become more and more comfortable in recent years with the idea that the state should actually do something, and COVID-19 has forced everyone’s hand. It’s possible the pandemic could debunk some of the old Hayekian ideas and usher in a new age of conventional wisdom about how best to manage the economy.
The question is, what if it doesn’t? How do we know we won’t just go back to the same old shit?
After all, neoliberalism was never intended to actually create prosperity. It’s just something rich people believe because it benefits them. As an idea, it’s completely detached from truth: it’s visibly failed a thousand times, but it always keeps bouncing back. The people who actually make decisions are shielded from the consequences of catastrophe, so they have no reason to complain about it. The poor get fucked, but that’s what’s supposed to happen. In fact, crisis is part of the system - it provides opportunities to ramp up exploitation and siphon even more of our wealth into the hands of private enterprise, all while telling us it’s for our own benefit.
Naomi Klein’s book The Shock Doctrine lays out how every moment of capitalist failure is an opportunity for more capitalism, and in this interview she talks us through how that’s going to apply to the pandemic. The Trump administration has taken advantage of the crisis to offer American millionaires $90 billion in tax cuts, tethered to a bipartisan tax relief bill. And Morrison has made it plain that his own billion-dollar tax cuts are also going ahead, as well as some unspecified industrial-relations reform which will undoubtedly have the effect of fucking us over even more. His JobKeeper payment scheme has been designed to tip the scales further against labour, handing subsidies directly to employers so they can coerce their workers as they see fit. So far, then, we’ve seen no sign of any broader economic or philosophical realignment. The capitalists are telling us very clearly that the age of capital is not even slightly over.
And worse is to come. We’re going to emerge from the pandemic with a level of national debt unseen since WWII. It’s been suggested in recent years by the proponents of something called Modern Monetary Theory that national debt is effectively fake - it’s not a real problem and you don’t actually need to care too much about paying it back. I have no idea if this is true or not, but for the purposes of the Morrison government, it doesn’t matter. They’re not in this to reinvigorate the national economy. They’re likely to see the debt as a disciplinary tool, a reason for us to tighten our belts as the nation struggles to get back on its feet. Whether it’s a real problem or not is entirely beside the point. What matters is how they can use it to further their own interests.
Morrison has made it extremely plain that he intends to solve Australia’s incoming debt crisis, surge in unemployment and catastrophic recession using orthodox neoliberal methods. He is going to cut taxes. He is going to crack down on workers. He is going to strip away environmental regulations. He is not going to nationalise anything and he is going to undo the changes to welfare as soon as he can get away with it. If he has a huge debt to deal with, he is going to offload as much of it onto working people as he can get away with.
This will not be good for the Australian economy. Even Reagan wound up having to walk a bunch of his tax cuts back. But Scott Morrison does not care about the Australian economy. He does not actually believe that cutting taxes is a good idea. But he will continue to lie about it, abetted by his tame media, no matter how this actually plays out. He will probably try to pin everything on the Chinese, and accuse anyone who challenges his policies of being in league with fiendish Oriental masterminds. This will probably work. We have to be ready for it.
The course of history is determined by material interests, not abstract ideas. The principles by which we are governed will not change just because circumstances prove them objectively false. There’s nothing inevitable or spontaneous about our move into a post-neoliberal era. We need to prepare for capital to reassert itself as viciously as possible, and we need to get labour organised enough to fight back. History’s not going to trundle along by itself. We are going to have to get out and push it.
Matt Halton is a Brisbane-based writer who's interested in radical takes on history. You can find him on Twitter: @circusarmy
Image: Art Laffer and Ronald Reagan