catallaxy files

catallaxy in technical exile

Rudd on market fundamentalism redux

with 9 comments

The Ruddy fella is back to peddling a recycled version of the same nonsense in today’s SMH:

    In his column, Tony Abbott argues: “Why is deregulating the labour market (a process which the ALP began) ‘market fundamentalism’ but deregulating the financial market not … Rudd is trying to invest with theological significance what is, at most, only a difference of degree.”
    The fundamental difference is that an unrestrained labour market is about the commodification of human beings whereas the financial market is not. It is the intrinsic dignity of human beings that commands the centre-ground of Christian, and in particular Catholic, social teaching. That is why there is a litany of papal encyclicals ( Rerum Novarum, Laborem Exercens, Centesimus Annus) that seek to protect human beings from exploitation in the workplace. That is also why the Australian Catholic Bishops Conference has criticised Work Choices.
    The Liberal Party has been taken over by a bunch of Hayekian market fundamentalists as demonstrated by the systematic culling of small “l” Liberals or old-fashioned Fraserian conservatives with a social conscience from their ranks. It happened in Victoria in the 1990s. It is happening now in NSW. Let’s not be misty-eyed about Friedrich Hayek: he taught (and modern Liberals believe) that there is no such thing as social justice and that the only dignity to be delivered to human beings is through their emancipation by free markets untrammelled by the state. Bob Menzies and B.A. Santamaria would be turning in their graves at the sight of what has happened to the centre-right of Australian politics as under John Howard it has moved to the extreme on industrial relations.

    As for social democrats, in the robust, market-based tradition of Adam Smith, the environment is properly conceived as a public good, not a private market. That is also how we primarily see education, health and social capital. The robust protection of public goods in Smith’s order is essential for the robust functioning of private markets.

I’ve said everything I have to say about Rudd’s silly ‘market fundamentalism’ thesis here. I would only add that Hayek was among the most moderate of the libertarian thinkers and that his critique of social justice did not extend to an argument against having a social safety net of some kind. The two concepts of using the State to alleviate poverty and using the State to promote social justice in the sense of some ideal distribution of income and wealth are quite distinct.

Rudd’s attempt to attribute thinking about the environment as a public good as an exclusive preserve of social democrats is ‘not even wrong’ in the immortal words of Wolfgang Pauli. The relevant distinction here is whether decentralised individual decision making fully captures all the costs and benefits inflicted on third parties. This is something amenable to economic analysis.

Finally, on these bemoaned ‘small l’ liberals, they are not to be equated with Fraserian conservatives. Nor is there any one to one correspondence between ‘small l’ liberalism and rejection of free market economics in the Liberal party (witness John Hewson and Petro Georgiou).

Written by Admin

November 9, 2006 at 2:12 pm

Posted in Uncategorized

9 Responses

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  1. I agree Rudd’s done a pretty shallow reading of Hayek, actually I doubt he has even googled him. “Hayek safety net” will turn up the fact that he supported it. I’m sure its not the ALP’s idea on a social safety net, but its still he’s a fair way from “the only dignity to be delivered to human beings is through their emancipation by free markets untrammelled by the state”

    From the RTS:

    Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in case of sickness or accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance—where, in short, we deal with genuinely insurable risks—the case for the state’s helping to organize a comprehensive system of social insurance is very strong.

    Steve Edney

    November 9, 2006 at 2:39 pm

  2. The Australian Catholic Bishops Conference also regards IVF and embryonic stem cell research as “commodification of human beings” so Rudd must be persona non grata as a Christian by his own definition. Tony Abbott should also remind Third Way Womble to read his labour encyclicals more carefully.

    From Laborem Exercens:

    Just efforts to secure the rights of workers who are united by the same profession should always take into account the limitations imposed by the general economic situation of the country. Union demands cannot be turned into a kind of group or class “egoism”, although they can and should also aim at correcting – with a view to the common good of the whole of society – everything defective in the system of ownership of the means of production or in the way these are managed. Social and socioeconomic life is certainly like a system of “connected vessels”, and every social activity directed towards safeguarding the rights of particular groups should adapt itself to this system.

    In this sense, union activity undoubtedly enters the field of politics, understood as prudent concern for the common good. However, the role of unions is not to “play politics” in the sense that the expression is commonly understood today. Unions do not have the character of political parties struggling for power; they should not be subjected to the decision of political parties or have too close links with them. In fact, in such a situation they easily lose contact with their specific role, which is to secure the just rights of workers within the framework of the common good of the whole of society; instead they become an instrument used for other purposes.


    November 9, 2006 at 3:36 pm

  3. ‘Hayekian market fundamentalists’ wow, this is almost as good as Wayne Swan saying I was a Neanderthal who should go back to the dark ages, where I belong.

    Adam Smith had a vey sensible approach to public goods : “… though they may be in the highest degree advantageous to a great society, [they] are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals.”
    I just not convinced that health or education meets these criteria.

    Sinclair Davidson

    November 9, 2006 at 8:38 pm

  4. Am I responsible for this boldness?


    November 9, 2006 at 9:30 pm

  5. Looks like you were, CL.

    Jason Soon

    November 9, 2006 at 9:32 pm

  6. And what would a Neanderthal be doing in the Dark Ages?


    November 9, 2006 at 9:32 pm

  7. Sinclair, what was the context of that exchange?


    November 9, 2006 at 9:33 pm

  8. I hope Wayne Swan wasn’s a history teacher before he became a politician.

    Jason Soon

    November 9, 2006 at 9:34 pm

  9. I had calculated the tax shares of the top 25% of tax-payers and showed that, contrary to ALP myth, that they were paying 64% of all net income tax. This contradicted the prevaling common knowledge of the time that ‘the rich’ weren’t paying their ‘fair share’ of tax. I had been goaded into doing the claculations by a artcile Swan had written. The Canberra Times asked Swan for a comment and he produced the Neanderthal comment (including both me and the CIS).

    Anyway, we all had a good laugh with ome of my collegues saying ‘and he doesn’t even know you’, and another ‘that’s the best description we’ve ever heard of you’. 🙂 If I ever meet him, I’ll have to thank him.

    Sinclair Davidson

    November 10, 2006 at 6:44 am

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