There is an increasingly noisy argument going on among leading ideologists of the right. The conservative journal Quadrant has been running a debate on the failure of economic "rationalism", former Liberal prime minister Malcolm Fraser has warned that "radicals" of the right threaten to destroy the stability of Australian society and, to the dismay of the federal opposition, most big corporate chiefs supported Labor government spending to pull the economy out of recession. PETER BOYLE looks at the differences within the right.
Throughout the 1980s, capitalist governments all over the world pursued to one degree or another a campaign of economic deregulation, privatisation, wage cutting, union busting, smaller government and erosion of the welfare state. The theory was that if all "encumbrances" to free market operation were removed, any economy would sort itself out.
This prescription had a devastating effect on most of the Third World — the modest economic gains made in the two and a half postwar decades were wiped out. The 1980s became the "decade of reversal" for the Third World.
The developed capitalist countries whose governments most enthusiastically embraced the "free market" — the United States, Britain, New Zealand, Australia and Canada — were also the first to slip into serious recession at the end of the decade. Further, these economies show no sign of reversing their economic decline relative to Japan and Germany. Not surprisingly, the right's once-confident charge behind the banner "Let the market rip!" is faltering.
Bitter harvest
The bitter fruit of the New Right agenda followed by Australian Labor and Liberal governments alike in the 1980s, says Quadrant editor Robert Manne, includes the present deep recession, the de-industrialisation of Australia and the huge, growing and largely private $130 billion foreign debt.
A similar line was voiced recently by Paul Barratt, the new executive director of the Business Council of Australia (which groups the biggest corporations in the country): "I frankly think that the economic strategies of the last 15 years have been wrong. Some of the individual measures have been right but the background psychology is wrong.
"The general thrust has been that if we can just reduce government expenditure enough and get the economic settings right with inflation down, our trade problems will somehow miraculously disappear.
"That has been added to by a kind of cargo cult mentality that if we just lay out a level playing field, enough good will land on it."
Even Ray Evans, president of the H.R. Nicholls Society, has attacked the economic "rationalists" for being unable to discard "old he havoc they have wrought".
Sensing a change in the wind, Prime Minister Paul Keating gave his "One Nation" economic statement a slightly regulationist flavour and included a modest "pump priming" injection for the deeply recessed economy. One Nation was widely welcomed by the corporate sector, and John Hewson's very dry Fightback! package has been pushed to the margins. In desperation, Hewson railed at business leaders for looking to government for handouts.
Keating is riding the new wind for all it's worth, but how much does this represent a serious change of direction by the right?
Uncertainty
The current debate reflects a real uncertainty in the capitalist class about what to do in the context of continuing economic decline.
Some on the right are worried about the effect of financial deregulation, which fed the debt-based speculative binge of the 1980s. There is debate about the cost and benefits of making the Reserve Bank more independent of government and continued use of high interest rates to control the economy.
Others worry about the instability caused by floating exchange rates (a concern shared by the British Economist.) Many worry about the rapid de-industrialisation that is resulting from the lifting of tariff barriers, and while few support a return to the old protectionist regime there is support for a new export enhancement policy.
Some doubt the value of introducing a goods and services tax. There are even calls for effective anti-monopoly laws. Then there are disagreements about whether governments should stimulate the economy out of the recession, and about the size of stimulus needed.
But there are few disagreements in the right about certain planks of the New Right agenda. There is unanimity about cutting wages further and getting wage earners to work harder — though there is uncertainty about whether Labor's Accord with the ACTU or Hewson's plan for total war against unions will do the job better.
No-one on the right opposes privatisation of the most profitable public enterprises. Certainly no-one on the right is calling for government spending to restore and improve the education, health, public transport and public housing programs that have been butchered for more than a decade. No-one on the right is demanding that the environment be put before profit.
The rebellion against the economic "rationalist" orthodoxy is aimed more at tempering the over-zealousness of some of the right's most ardent ideologists, who are insisting that the drive towards deregulation and privatisation speed up in the face of mounting unemployment and foreign debt.
One such is the Institute of Public Affairs' Des Moore, who argues against any government spending on infrastructure projects, claiming, in the face of the historical evidence, that the job should be left to the private sector.
Another, former Treasury secretary John Stone, blames current economic problems on a failure by governments and business to go far enough in implementing the economic "rationalist" agenda. Even Margaret Thatcher and Ronald Reagan were not "genuine economic rationalists", he says — Reagan continued the huge government deficit and Thatcher didn't break the monopoly rights of the public enterprises she privatised.
Yet it is a fact that the Reagan and Thatcher governments were the chief inspiration of the New Right offensive in the 1980s. These were the practical examples the ideologists pointed to.
Inconsistency
This ideological inconsistency is a source of embarrassment most of all to the right-wing ideologists whose task in the New Right offensive was to scream loudly about the magical properties of markets.
They had the temporary glory of being seen to lead the charge while the corporate chiefs picked up the fruits of what was essentially a program of wealth redistribution in favour of big business and the rich. There was never a break with the mentality that big business should get as much as it can out of the state (its own creature, in any case) but simply a change in the way the state was asked to pay out.
During the 1980s, the state in countries like Australia and the US paid out to big business and the rich largely through tax cuts, real wage cuts and privatisation. With the recession keeping profits down, the ruling class is now saying that it wouldn't mind getting some cash in the form of an old-fashioned handout as well.
John Stone impotently rails against those conservatives "who still hanker after their own variety of State socialism — the kind which, as someone once said of the old Country Party, results in 'capitalising the profits and socialising the losses'". But that, he is reluctant to admit, has always been the name of the capitalist game despite declamations about the virtues of free enterprise.
The ideological inconsistency of the capitalist class is chronic. Their interest lies as much in their freedom to achieve monopoly over their competitors as in their freedom to trade and make a profit. In this drive, the state has been an important tool not just to "socialise the losses", but also to ameliorate the economic boom and bust cycles endemic to the system.
Further, because competitive new ventures require larger and larger amounts of capital to establish, the capitalists seek guarantees from the state that their investment will be recouped. Wage control, moderation of the economic cycle and government bail-outs, if necessary, are essential.
Privileged sectors
Robert Manne says that the current divisions in the right cannot be explained by the differences between manufacturing and mining capital, the former the main beneficiary of the old protectionist regime.
When economic "rationalism" was in the ascendancy, the job of its proponents was made easier because it could point to sectors of industry which were specially privileged by government policy. But over the last few years, numerous tax concessions to the mining lobby have made that sector as much a privileged sector. When Keating did his rounds in corporate boardrooms before delivering his recent mini-budget, the message was the same from all sectors.
Manne seeks the source of the division in a philosophical debate between true conservatives and radical reformers like the economic "rationalists". True conservatives shudder at the simplistic assumptions of the dry economists about the behaviour of supposedly "rational man". Conservatism, he says, is "pragmatic, experimental and, ultimately, skeptical about the role of theory in human affairs".
Veteran anticommunist B.A. Santamaria has also protested in his column in the Australian that total marketisation and privatisation would endanger the family, that bastion of conservatism.
The new regulationists
Two sources of the split in the right can be identified: first, the uncertainty about what policies to follow given the continued decline of the English-speaking developed economies; second, a concern that free market slogans may not be the best ideological weapon to control working people in the face of high unemployment and falling living standards.
The unspoken project behind the philosophical debate is an attempt to forge a new social consensus in the context of economic decline and social upheaval. But the root of this decline — the increasing competition between capitalist trading blocs and relatively lower productivity levels of the English-speaking capitalist economies — rules out the rehabilitation of the old welfare state under capitalist rule. So the new "regulationist" push from within the right carries much of the wage- and cost-cutting agenda of the economic "rationalists".
The new regulationist move has excited old Keynesians, like Jim Cairns (treasurer under the Whitlam Labor government), and consistent public opponents of economic "rationalism" like Age economics editor Kenneth Davidson. They claim that a more regulationist approach would serve Australian capitalism better in a world shaped by worsening trade wars. Their rallying cry is, "There is no such thing as a level playing field".
But the alternative policies they advance are justified by little else than the observation that economic "rationalism" hasn't worked and that the most productive and fastest growing economies (Germany, Japan and the East Asian "Tigers") employed interventionist policies. The assumption is that following their example will make Australian capital competitive.
But this is no more true than the old developmentalist myth that any Third World country could make it by copying the policies of Singapore or Taiwan. Can every country be a winner in a global capitalist
Is it in the interests of the trade union movement, workers in general, women, migrants, pensioners, Aborigines and young people to come behind the "regulationists'" appeal to help Australian capital against its competitors?
John Stone boasts that Labor governments and many trade unionists have been won over to parts of the New Right agenda. He is referring to the fact that, through the '80s, the official trade union movement has more and more openly given it loyalty to the interests of Australian capital. Until that situation is reversed, quarrels within the New Right won't provide much opportunity for progressive change.