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| Neo-libs in wheelie bin of history, The Australian, 13 April 2009 |
| by Dennis Glover, Research Fellow, Per Capita | |
In his article in The Monthly in February, Kevin Rudd called for an end to the neo-liberal ascendancy and its replacement by a new world order based on the principles of social democracy. Now his many critics have been delivered the ultimate reply: the adoption of his broad thesis at the Group of 20 summit.
Led by the heads of the world's three oldest social-democratic parties - Barack Obama, Gordon Brown and Rudd - the international progressive movement has triumphed over neo-liberalism, dispatching it to the big green wheelie bin labelled history.
As Brown said at the conclusion of the summit, "the Washington consensus is over" and globalisation will be regulated so that working people are its beneficiaries, not its victims.
This is not the end of capitalism or even of the idea of an international free market; far from it.
Mature social democracy recognises the enormous wealth-creating power of the market.
But as Amartya Sen has written recently in an essay in The New York Review of Books, while the market may be necessary for the creation of a wealthier and even better society, it is not sufficient.
There needs to be a moral dimension to political economy as well as a monetary one.
Social democracy has stepped in not to replace the market but to save it once again from its own destructive excesses.
It has done this by getting the G20 to adopt a substantial stimulus package to augment the efforts of individual economies and by promoting the adoption of improved international economic regulation. New regulation will check the over-reliance on risk by banks and shadow banking institutions; place new restrictions on the pay and bonuses of executives; and bring about the naming and shaming of tax havens that rob the world's treasuries and, through them, the most disadvantaged people on the planet.
Importantly, the G20 also will continue to progress the Doha Round of trade liberalisation to ensure there is no repeat of the disastrous protectionism of the 1930s. This will give the poorest people in developing economies the opportunity to trade their way to prosperity.
And by widening the circle of key decision-making nations, particularly through a greater role for China, the G20 has begun to democratise the world's economic decision-making architecture.
Individually, these ideas may not sound particularly radical, and they still have to make it from paper to implementation. But consider the extraordinary philosophical change they represent.
Only a year ago it would have been considered laughable to suggest that the world's leaders could buck the idea of small government, shame the self-styled masters of the universe into cringing mea culpas, propose nationalisation of the financial sector (even as an interim measure) and regulate international capitalism in the name of a wider morality. Yet they've done just that.
It is easy to forget, but for the past few decades economics has been considered all but exempt from the sorts of moral judgments to which other aspects of the world are routinely subjected. Morality, we were told, was restricted to the sphere of private behaviour.
Now our leaders are openly debating how the market and morality must be conjoined, led by none other than a black US president nominated by the liberal wing of the Democratic Party and endorsed by the world's pre-eminent economic laureate, Paul Krugman.
I'm reminded of the title of my favourite undergraduate history book, Christopher Hill's The World Turned Upside Down: Radical Ideas During the English Revolution.
Perhaps the world hasn't quite been inverted yet, and the fight against change continues, led in Australia by, ironically, several former social-democratic politicians turned commentators.
But a new, more progressive, social-democratic world order is rapidly emerging. Certainly, as Rudd argued in The Monthly, the era of neo-liberal extreme capitalism is over.
The challenge for progressives is to realise the extent to which they have succeeded through the organs of mainstream parliamentary democracy.
Social democracy, not the siren call of the balaclava-wearing and banker-threatening anti-globalisation movement, represents the best way forward for the creation of a wealthier and fairer world.
Now that it has dispatched neo-liberalism, the next step is to consider how the new social-democratic world order can begin to redress the extreme poverty that afflicts so many of the world's people and the climate crisis that threatens the planet on which all, rich and poor alike, must live. The crisis has given social democracy its chance and it appears to be taking it.
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