It is looking as though Australia is about to be hit with the same sort of austerity measures being imposed on countries like Greece and Spain. It is utterly bizarre given that the Australian bottom line demonstrates one of the healthiest economies in the world, measured in terms of debt to GDP ratio. Australia is the envy of the OECD. Yet just as thin anorexics look in a mirror and see only a need to diet more severely, so to do Tony Abbott see a need for severe austerity.
The real problem here is one of economic principles. The Global Financial Crisis left neoliberalism looking rather hollow. Instead of facing up to reality, neoliberals have decided that the solution to the problem was more of the same thing that engendered the crisis. So today, I thought I would recommend a couple of good books that make for a good intellectual antidote to this sort of nonsense thinking.
1. Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown
by Philip Mirowski
I thought this introduction to the book by the publisher summed up the issue with the Australian Liberal Party handling of the economy rather well:
At the onset of the Great Recession, as house prices sank and joblessness soared, many commentators concluded that the economic convictions behind the disaster would now be consigned to history. And yet, in the harsh light of a new day, we’ve awoken to a second nightmare more ghastly than the first: a political class still blaming government intervention, a global drive for austerity, stagflation, and an international sovereign debt crisis.
It is precisely the nightmare that is the Australian Commonwealth Budget about to be delivered by the Abbott government. It is a government stuck in the economic thinking of the 1980’s.
2. The Keynes Solution: The Path to Global Economic Prosperity by Paul Davidson
It is worth reading that in the era of neoliberalism how different the attitudes were after the Great Depression and the WWII including amongst the political right. Since then the right has jettisoned the Keynesian orthodoxy of the past, and adopted neoliberalism. It has been assumed that Keynes is dead and buried but there is an encouraging resurgence of interest in his thinking after the Great Recession. Of course, there is a resurgence of interest in Marxist economic analysis too, and his insights too deserve to be re-read in a fresh light (without the usual vulgar Marxist readings that lead Marx to proclaim that he was not a Marxist).
3. Capital in the Twenty-First Century by Thomas Piketty (Translated by Arthur Goldhammer)
I have left the best to last. This book has reached the bestseller list and has caught on like wildfire. It is a tremendous critique of contemporary capitalism.
An interview with the author introducing his book:
The Guardian also published an excellent review of the book that is well worth reading.
However, it is all a little too late for the Abbott government, which is taking a Tea Party style extreme neoliberalist ideological line. When in opposition, I thought it might just be theatre and grandstanding, and that once in a position of responsibility, I hoped that a certain economic pragmatism would set in, but that has proven to be far from the case. This lot are so deluded that they really do believe in their own rhetoric.
Happy reading (and I don’t mean the budget).