catallaxy files

catallaxy in technical exile

Rudd and the market fundamentalism bogeyman

with 58 comments

Between the two of them, Don Arthur and Andrew Norton have taken apart Kevin Rudd’s latest attempt in The Monthly (excerpted here) to be Labor’s leading public intellectual.

Don exposes Rudd’s misreading of Hayek which can probably be explained by Rudd’s not going back to the primary source. Whereas Rudd paints the strawman of Hayek as someone who thought that human beings are ‘almost exclusively self-regarding’, Don notes that in fact Hayek thought that our ‘other regarding’ instincts were so powerful that it could be a concern if they were expressed in counterproductive ways (e.g. the flip side of solidarity with one’s closest neighbours may be xenophobia) and that like Rudd in his article, Hayek essentially expressed the importance of an appropriate balance between the self-regarding and other-regarding instincts.

Andrew’s critique of Rudd, focuses on the political strategy that is really behind Rudd’s latest blaze of faux-intellectualism:

Rudd is asserting here that there is fundamental contradiction in the Liberal Party, and it is the conservatives who are being dudded in this alliance – with of course the implicit (and perhaps explicit, in the full article) argument that the conservative working and lower-middle class voters who have kept Howard in power should switch to Labor, the true conservative party.

Rudd seems to have read a lot of David McKnight and, as Andrew notes, is basically running McKnight’s argument that the so-called ‘free market fundamentalism’ of the Howard goverment is leading to a corrosion of true conservative values. Andrew’s argument is that Rudd has got things ass backwards – if anyone in the Liberal party alliance of conservatives and free market liberals is getting a raw deal, it’s the free marketeers.

It’s worth noting here the un-reality of Rudd’s claims. Here are some of the pertinent parts of his article where he outlines this thesis:

    … it is critical that social democrats recognise that the culture war is not just a diversion. It is a fraud. There are no more corrosive agents at work today, on the so-called conservative institutions of family, community, church and country than the unforgiving forces of neo-liberalism, materialism and consumerism, which lay waste to anything in their way. This deep split within the Right provides new opportunities for the Labor Party to argue for a comprehensive set of values that intelligently harnesses the importance of the market and the importance of the family, community and society that markets ultimately serve …
    Given that Howard’s neo-liberal experiment has reached the extreme, the time has come to restore the balance in Australian politics. The time has come to recapture the Centre. The time has come to forge a new coalition of political forces across the Australian community, uniting those who are disturbed by market fundamentalism in all its dimensions and who believe that this country is entitled to a greater vision than one that simply aggregates individual greed and self-interest.

Hyperbole will get you nothing, Mr Rudd, except the applause of a smattering of literati who don’t like markets unless they’re comprised of outdoor stalls in Glebe. Let’s see some evidence for this ‘market fundamentalism’ Sasquatch.

It’s also worth pointing out this poor piece of reasoning in Rudd’s article on labour markets:

When, in his Quadrant speech, Howard referred to Margaret Thatcher (and behind her the entire intellectual and policy architecture of Friedrich Hayek) as one of the three dominant forces of the late 20th century, he meant it. Howard has never accepted that labour is different from any other commodity: it, too, is something whose value should be determined on a free market. Such commodification of human beings would not have been accepted by previous generations of centre-right leaders. The Howard Government’s industrial relations legislation would have deeply offended the responsible conservatism and social liberalism of Robert Menzies, for instance.

Rudd’s point about labour as a commodity is simply a non-sequitur. Of course to the extent that the provision of labour inputs is qualitatively different from the provision of other inputs, this will be relevant, even to economic analysis which will nonethelessultimately still treats the provision of labour services as a commodity. It is a commodity in the sense that it has a price which is primarily determined by demand and supply and it has a demand which can be constrained by setting too high a legislatively-dictated price floor. Anyone who grasps the essential intuition that setting minimum wages at, say, $1000 an hour would lead not to greater wealth in the community but higher unemployment should accept that labour should be primarily determined by a free market. The question that such people have to answer is really whether the tradeoff in terms of reduced employment opportunities is worth it in terms of the higher income to the beneficiaries of whatever minimum wage they wish to set.

Interesting too that Rudd harks back to Menzies as the ‘acceptable’ liberal for Rudd, and what is more, as a ‘social liberal’ when he was far, far from it. It seems that now ‘social liberal’ has simply become a codeword for economically interventionist rather than one who believes in personal freedom. As I noted in an old post, Menzies has also been held up for canonification by another politician – Tony Abbott.

Finally, here is another streak of name-dropping earlier in Rudd’s essay, where he identifies the thinkers who should guide Labor:

Social democrats take part of their philosophical inheritance from Adam Smith, as interpreted by John Maynard Keynes, Paul Samuelson, John Kenneth Galbraith and, in Australia’s case, Nugget Coombs.

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Written by Admin

October 30, 2006 at 8:20 am

Posted in Uncategorized

58 Responses

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  1. Can’t be that hard to be Labor’s leading public intellectual, surely? What’s the competition?

    Scott

    October 30, 2006 at 11:07 am

  2. Kruddy is really a stupid little twat isn’t he?

    Rococo Liberal

    October 30, 2006 at 11:53 am

  3. Not very ‘conservative’ language there, Mr Rococo Liberal!

    ‘Twit’ and ‘twat’ have radically different meanings …

    No doubt you are a manifestation of the corrosion in the social fabric caused by market fundamentalism.

    Jason Soon

    October 30, 2006 at 11:56 am

  4. Jason,
    Either could be correct, though.
    .
    Rudd is arguing as a “liberal” in the US sense. It was also interesting to think of Keynes and the rest as “interpreting” Smith.
    In that sence does leftwrites “interpret” catallaxy?

    Andrew Reynolds

    October 30, 2006 at 12:06 pm

  5. R.L. is safe according to WordWeb:

    twat:

    1) “A man who is a stupid incompetent fool”.

    C.L.

    October 30, 2006 at 12:18 pm

  6. Currency, my good fellow
    I am prepared to make you the token Santamaria Socialist on Catallaxy just to get you blogging again …

    Jason Soon

    October 30, 2006 at 12:30 pm

  7. Pile in guys. Ruddy mucked up the Philososphy of Economics 201 assignment and the tutor’s livid.

    Tony Healy

    October 30, 2006 at 12:35 pm

  8. Ha! Thanks Jason but I want to be free, man!

    And, anyway, that’s how libertarianism dies, y’know. What starts with a token apppointment good naturedly made ends with a full-blown Catallaxy quota system. (Larvatus Hayekeo) 😉

    C.L.

    October 30, 2006 at 12:40 pm

  9. CL, Jason is the most decent editor-in-chief you could hope for. Think about his offer. Please…:)

    skepticlawyer

    October 30, 2006 at 12:45 pm

  10. “Pile in guys. Ruddy mucked up the Philososphy of Economics 201 assignment and the tutor’s livid”

    Yes of course Tony. Spin is all that matters …

    Jason Soon

    October 30, 2006 at 12:55 pm

  11. Ruddy is being dishonest in attacking Howard from both sides of the street.
    I am bewildered how seemingly intelligent people have just found this out.

    One JW Howard did exactly the same thing in 96.
    Hansonism happened because very roughly speaking the economic conservatives saw they were sold out because Howard was as economically liberal as Keating was.
    People so forget how people didn’t like Howard until Tampa when Howard discovered he stood for something.

    Bring Back EP at LP

    October 30, 2006 at 1:11 pm

  12. What was cool about Santamaria is that mild lefty though he was he:

    1. Was fervently anti-communist.

    2. Appreciated the value of savings. And he wanted for people to have these tax-free savings accounts.

    He got the idea from the Japanese. The thing is he could have been quite wrong on nearly every other aspect of economics and foreign and domestic policies….

    But getting those two right could have easily made up for all the rest. And its likely that under his way of doing things we would now be a lot richer then we actually are.

    We need more people like this.

    Capable of thinking for themselves. Not intimidated by the alleged experts.

    And if each one of these eccentrics is wrong on a bunch of stuff when they get together to iron out their disputes, because they are going where it is they think the chips fall, the differences are likely to be ironed out in the right direction.
    >>>>>>>>>>>>>>>>>>>

    Contrast this to Kevin Rudd. Now its good that folks are analysing what Kevvy says. Because sooner or later they’ll figure out he’s a male version of one of the Stepford Wives sent to us from the bowels of the U(nited) fucking N(azis).

    GMB

    October 30, 2006 at 2:04 pm

  13. Aye, Bird.

    Thanks for reminding folks of Santa’s emphasis on savings and the superiorty of a self-bankrolled populace over a nincompoop nanny state. He had some great ideas and I think it’s a shame they get overlooked because of the historical emphasis on the Movement, commies, Dr Mannix etc. Not that this emphasis is itself wrong, of course, because he was 100 per cent right to go to war against the traitors in the communist trade unions.

    C.L.

    October 30, 2006 at 2:17 pm

  14. I said “twat”, rhyming with “hat”, meaning useless idiot who’s a wee bit culpable for his own idiocy; not “twat” rhyming with “what”, meaning female pudenda, or complete arsehole. In any case if I had meant to dignify Kruddy with such a strong term of abuse I would have used “Berk” which is actually a diminuitive of the rhyming slang phrase Berkley Hunt.

    Let’s face, nearly all Social Democrats are really twats, as they are not important or interesting enough to be berks and aren’t clever enough to be Tories

    Rococo Liberal

    October 30, 2006 at 2:19 pm

  15. “Howard has never accepted that labour is different from any other commodity: it, too, is something whose value should be determined on a free market. Such commodification of human beings would not have been accepted by previous generations of centre-right leaders. ”

    Rudd is a complete idiot. What a friggen fool The pipsqeak doesn’t even know the difference between commodities and services. This the labor front bench, people. Rud passes for an intellectual in that pathetic group.

    Rudd should try to explain wht happens when labor is priced too high. He needs to tell us if he would call that unemployment?

    Someone take him out the back.

    jc

    October 30, 2006 at 2:30 pm

  16. See he gets two BIG things right.

    And supposing we had adopted those savings accounts.

    We would be running a trade surplus every year. We would not experience any ‘hollowing out’ of the economy..

    Ergo there wouldn’t be that pressure for either trade barriers or more welfare and all the other stuff might likely have fallen into place.

    GMB

    October 30, 2006 at 2:31 pm

  17. GMB

    The tax exempt savings is a good idea but why are you so concerned with running a trade surplus?

    Jason Soon

    October 30, 2006 at 2:35 pm

  18. BTW I thought the savings idea came from the Singapore providential fund system.

    Jason Soon

    October 30, 2006 at 2:36 pm

  19. “GMB
    The tax exempt savings is a good idea but why are you so concerned with running a trade surplus?”

    Third parties check this out. This is a failing of the economics proffession.

    This is part of my general thesis of bullshit-momentum.

    Because a good economist will always downplay a trade surplus because the traditional ‘CURES’ for a trade deficit are the most inefficient, hateful, anti-economic and pointless measures that you are ever likely to see or be subject to.

    So much so that you are likely to see Quiggin or Gruen advocating such measures.

    Now thats all well and good when it comes to A SINGLE RIGHTEOUS ECONOMIST.

    But what if you get 1000 good economists in a bullshit-momentum-network.

    Well they spend so much time having to explain why it is that the measures usually put forward by the laity to improve the balance of trade are usually so very very hateful that they slip over into that thinking…..

    The thought-momentum gets so strong in one direction they slip over into that thinking that TRADE DEFICITS DON’T MATTER.

    Well sometimes Trade Deficits are good.
    And sometimes they are neutral and neither here nor there. It depends on the context.

    But for Australia to be running these trade deficits in 2006 is really quite disgraceful.

    But by the way any really really righteous economic reform is likely to “worsen” the trade deficit in the early years on the grounds that it makes Australia an even better place to invest……..

    But good policy would see us in trade surplus in a decade or so.

    GMB

    October 30, 2006 at 2:53 pm

  20. Santa’s big idea was that as many people as possible could have little family farms where one could indulge in community based society.

    He got it from some radical catholics ( indeed socialists in Spain).

    He was an economic goose.

    Bring Back EP at LP

    October 30, 2006 at 2:54 pm

  21. But what matters is what he would be willing to DO to get to that side of things.

    If he was like Mugabe or Allende and it was a matter of thieving the land off people…… well thats no good.

    If it was some sort of minor tax-break that encouraged the smaller farms…

    Well yes thats anti-economic but nonetheless it isn’t likely to do a great deal of harm.

    And notice that his inclinations are always to preserve that space between the individual and blood-sucker-central.

    GMB

    October 30, 2006 at 2:59 pm

  22. “blood-sucker-central”

    Another good coinage, Graeme. Can I steal that off you?

    Jason Soon

    October 30, 2006 at 3:03 pm

  23. it woudn’t hit the Quiggler that a large deficit is caused by monetary mismanagment. I think it’s beyond the goose.

    jc

    October 30, 2006 at 3:04 pm

  24. Santa did often refer to Singaporean, Taiwanese and Japanese policy on this, Jason. Probably less appealing to libertarians was his belief that such a savings regime should exist within a strictly regulated financial system. He saw this as a necessary element of national sovereignty – and in this regard he often praised the unity of cultural purpose he saw in the policy of the government and banking system of Japan.

    I suppose eco rats would see this as a kind of financial autarky, though, would that be right?

    A more thoroughly urban intellectual you’d be hard pressed to find. An urban intellectual with a more long-standing sympathy for people on the land you’d also be hard-pressed to find. Homer should travel Queensland some time – he’d meet some very rich and successful people whose fathers and mothers left the cities and built successful communities and lives on the land. Such a shame Paul Keating and friends didn’t do something similar vis-a-vis more recent immigrants (lately in the news). Lakemba needs a Santamaria to encourage Muslims to hit the road for the mines of the West, to build something new and authentically Muslim/Australian for themselves. Instead geniuses Keating and McLeay gave them Sheik Hillali.

    C.L.

    October 30, 2006 at 3:28 pm

  25. actually CL,

    I outlined what happened then on one of Steve Edwards old sites.

    You are way behind the times.

    Bring Back EP at LP

    October 30, 2006 at 3:30 pm

  26. I must have missed that somehow.

    C.L.

    October 30, 2006 at 3:36 pm

  27. Ah CL.

    You see Santamaria is looking at the cultural angle. And he’s perceiving that things are amiss.

    And things ARE IN FACT amiss.

    But had he been introduced to the concept of 100% backing in banking he would likely have seen that it covers most of his concerns….. and that fractional reserve accounts for most of the anomalies that he was seeing.

    Supposing that agricultural production was income tax free.

    Now suppose there was a land value tax (in the context of less and less taxes)…. but with a threshold high enough to leave the average family farm untouced.

    Then Santamaria could acheive his goals incrementally over a (lets say) 50 year period without violating libertarian concerns and without therefore creating some massive unintended consequences.

    GMB

    October 30, 2006 at 4:16 pm

  28. Jason

    I find Rudd’s turn at Australia’s first Holy Roman Emperor to be more than a little ikky.

    1. It was the bourgeois left who started the so-called “culture wars” as part of their long march through the institutions. Jenny MacKlin is being disingenuous when she decries the existence of Maoists in the AEU;

    2. Howard an extreme market fundamentalist? Puhleez. I have never encountered somebody who distorts the market so much with all his discriminatory tax payback schemes. And isn’t this the same Howard who the Emperor vilifies as the most high-taxing gov’t ever?

    3. Menzies? Is that the same dude who tried to ban the Communist Party, who begged, borrowed and stole to get us into Vietnam, and on and on?

    4. I think the market is a far more profound nourisher of civil society and social capital than the limp-wristed beauracratic socialism offered by the current Labor mob.

    Neokommie

    October 30, 2006 at 5:02 pm

  29. Interesting, Bird. This is yet another example of why I need to understand the history and theory of 100% backing in banking!

    C.L.

    October 30, 2006 at 6:57 pm

  30. Jason it is full of interest!!

    Bring Back EP at LP

    October 30, 2006 at 7:05 pm

  31. You will see that Santamarias cultural vision is in keeping with new findings of the beginnings of Western culture in ancient Greece.

    Victor Davis Hanson has written a book called “The Other Greeks” which has revolutionised the field.

    He finds that the Greek city states started as service centres for all these family farms. And for peculiar reasons there was this great level of equality in the size of farm holdings in Attica.

    And Hanson explains pretty well how this setup lead to the very strange culture that became Western culture.

    GMB

    October 30, 2006 at 7:12 pm

  32. Birdy, have a good look at Sparta

    Bring Back EP at LP

    October 30, 2006 at 7:20 pm

  33. Bird

    You are a very interesting individual. You know people look around for your stuff. They may not agree with you but you sure are interesting. Keep it up.

    jc

    October 30, 2006 at 7:35 pm

  34. I agree with JC. That was an interesting reference you brought up. I’ve heard of Hanson of course, but not that particular book.

    If you can convince a serious minded clean mouthed Catholic gentleman like CL to overlook your locker room language and take you seriously, then that’s quite an achievement.

    Jason Soon

    October 30, 2006 at 7:43 pm

  35. Hanson was a chip off the old block!

    Bring Back EP at LP

    October 30, 2006 at 8:02 pm

  36. I second (or third) that. Very interesting reference and I’ll be having that VDH book ASAP.

    It’s actually a shame Santa didn’t synthesise his ideas into a single philosophical treatise that became a kind of Grouper’s Road To Surfdom. He wasn’t an economist and never pretended to be one but I agree with Bird that his general diagnosis of what ailed the culture of the state (and the state of the culture, for that matter) was very solid. He was not entirely comfortable being seen as a guru, though, and would always say he was “chary of proposing models”.

    What do you mean re Sparta, Homer?

    C.L.

    October 30, 2006 at 8:02 pm

  37. I’m guessing that Homer is implying that Sparta had the same set up and ended up with a communist society. I don’t know whether that’s true or not.

    Jason Soon

    October 30, 2006 at 8:14 pm

  38. VDH is very good – don’t know that one though. The Americans, however, are obsessed with ancient Greece as the font of democracy and western civilisation. Yet that ignores the British contributions such as the Magna Carta and the like.

    Sinclair Davidson

    October 30, 2006 at 8:19 pm

  39. CL – 100% backed money is snake-oil. Commodity-money is bad news. While otherwise sensible people promoted the gold-standard and the like, fiat money works well.

    Sinclair Davidson

    October 30, 2006 at 8:21 pm

  40. Just shows your ignorance Sinclair.

    100% works better whether its fiat of fractional reserve.

    Back to the drawing board for you sucker.

    GMB

    October 30, 2006 at 8:31 pm

  41. Damn.

    I meant 100% backing works better whether its commodity or fiat.

    Thats just Sinclair being an idiot.

    Doesn’t have a clue. If he did he’d be over on the money thread setting me straight.

    GMB

    October 30, 2006 at 8:33 pm

  42. Greece and Rome had a comparatively small effect on the common law, for one. Our law is very, very ‘English’ in origin (even more than British). Arguably the common law was England’s peculiar gift to humanity.

    skepticlawyer

    October 30, 2006 at 8:37 pm

  43. The common law is English – not British. There is a huge economic literature on the importance of the common law (associated with Andrei Shleifer).

    Sinclair Davidson

    October 30, 2006 at 9:14 pm

  44. GMB – I’ve come too late to the debate to enter the threads of doom. CL, my boy, trust me I’m an economist. (Hmm, yes, well … just trust me then. Snake oil).

    Sinclair Davidson

    October 30, 2006 at 9:16 pm

  45. It’s not too late, Sinks. If you want to prove that 100% backed currency is snake oil, just go on over the new ‘fractional reserve banking’ thread
    http://catallaxyfiles.com/?p=13

    I’m sure GMB would appreciate debating someone other than Fyodor all the time.

    Jason Soon

    October 30, 2006 at 9:23 pm

  46. Sorry, Jason. I read as far as post 20 (with 340 to go) and realised already the debate was so incomprehensible and entwined in the lost posts thread that I could make no sense of it. My life expectancy is only another 35 – 40 years, and perhaps I should that time more wisely.

    Sinclair Davidson

    October 31, 2006 at 9:08 am

  47. Very disappointing, Sinclair. What better use could be made of your time? 🙂

    Jason Soon

    October 31, 2006 at 10:06 am

  48. actually quite the opposite Jason in terms of Sparta

    Bring Back EP at LP

    October 31, 2006 at 11:00 am

  49. Homer is doing a Sparta fishing!

    C.L.

    October 31, 2006 at 11:50 am

  50. and you are bludging!!!

    Get back and write something boyo or I will come up to Brisbane and terrorise you

    Bring Back EP at LP

    October 31, 2006 at 11:57 am

  51. That’s a very Spartan explanation, Homer. Perhaps you could elaborate on it?

    Jason Soon

    October 31, 2006 at 2:04 pm

  52. ‘Very disappointing, Sinclair. What better use could be made of your time?’

    Now sir Nick has knocked ten years off my life, I have less time. I’m waiting for CL to start blogging. 🙂

    More seriously, Jason, you should be collecting our comments and oputting them to Rudd at the CIS function. We expect a full report back. We expect the lions to consume him. The ALP lacks direction because it is Rudderless.

    Sinclair Davidson

    October 31, 2006 at 3:39 pm

  53. Hear hear, Sinclair. Ask some tough questions, Jason, and report back to us on the Womblean reax.

    C.L.

    October 31, 2006 at 3:44 pm

  54. “GMB – I’ve come too late to the debate to enter the threads of doom. CL, my boy, trust me I’m an economist. (Hmm, yes, well … just trust me then. Snake oil).”

    No no. Don’t pussy out on us now.

    You made the claim. Lets see you argue it out. And what would be good is if you told Jason…. I’ll argue it out just so long is thread-wrecker-Fyodor is gone…

    That way we get rid of him and we get to have a decent debate without that lunatic derailing it.

    But don’t be sissying out on us now. You’ve made the bluff. Now make the case.

    We could use your input because this is a most important topic.

    GMB

    October 31, 2006 at 3:49 pm

  55. Told Jason what?

    This is not an important topic. Fiat money works well, is consistent with markets and floating exchange rates. Money facilitates exchange and as an institution should have little other effect in the economy. Fiat money serves that purpose well. Commodity money, or 100% backed (same thing really) money becomes the focus of economic activity itself, and then the tail wags the dog.

    Sinclair Davidson

    October 31, 2006 at 4:14 pm

  56. I fundamentally agree with Sinclair, Graeme, which is why I don’t understand your reason for investing so much emotional and mental energy over this topic that you get so obsessed with Fyodor.

    Jason Soon

    October 31, 2006 at 4:17 pm

  57. Well if YOU could get taken in by him others can also.

    We have 60+pages of his malign effects.

    Why are you being such a pussy?

    Why not throw him off?

    HIs shabby attempts to slander Jackson ought to have torn it.

    JC’s about the only person thats ever appeared on these threads who hasn’t been taken in by Fyodor.

    We have that many pages. Its the thread of doom. Thats my empirical evidence that Fyodor is getting in the way.
    >>>>>>>>>>>>>>
    “Fiat money works well.”

    Fractional fiat does not work well. Its a disgrace. It requires enourmous amounts of compulsion.

    “…is consistent with markets and floating exchange rates.”

    1. 100% backing is consistent with markets and floating exchange rates so whats your point.

    2. What is so important about floating exchange rates in the first place?

    “Money facilitates exchange and as an institution should have little other effect in the economy.”

    Well you are wrong about that. It effects everything. It effects history itself.

    “Fiat money serves that purpose well.”

    No it doesn’t. Not fiat fractional reserve anyhow. Its got a disgraceful track record. We’ve just been talking about Allende for goodness sakes.

    “Commodity money, or 100% backed (same thing really)…”

    No its NOT the same thing.

    “… money becomes the focus of economic activity itself, and then the tail wags the dog.”

    No it doesn’t. There is no reason why this ought to be the case if the commodity monies are 100% backed.

    GMB

    October 31, 2006 at 4:32 pm

  58. Mark Bahnisch

    November 6, 2006 at 11:47 pm


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