THE RUSH TO REGULATE: THE SHIFT IN AUSTRALIA FROM THE RULE OF MARKETS TO THE RULE OF CAPITAL

Dick Bryan

There has been a significant shift in the momentum of national economic policy in Australia, from the market as an end in itself towards a regulated policy agenda that asserts the social, cultural and economic rule of capital. This 'new' policy is what neo-liberalism really involves. Arguments about 'free markets' and 'economic rationalism' fail to recognise the shift and are thus not germane to current policy analysis. It is a great mistake to think that that all Conservatives have to offer is solutions based on free markets. If we think that then we would have little to say about our public services where there are limits to the role of the free market. British Conservative Party leader William Hague, in a speech celebrating the 20th anniversary of the election of the first Thatcher Government.

Introduction
It's almost official. The ideology of free markets and the level playing field is no longer driving economic policy in Australia. Just as, internationally, the IMF and a raft of policy advisors and commentators are suddenly advocating the regulation of short-term capital flows (e.g. Roubini 2000), and Milton Friedman's long prevailing view that speculation will move a market more rapidly towards equilibrium is being disowned, so in Australia the urge to regulate is overwhelming. The ALP, whose governments initiated so much of what is called
Dick Bryan is Associate Professor of Poiiticai Economy at the University of Sydney. Dick Bryan: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule of Capital 333

'deregulation', approached the 1998 election as a born-again interventionist party. Labor leader Kim Beazley described his party's (and his own) pro-market 1980s arguments as 'stultifying', saying instead that 'the public demands an interventionist government' (Australian Financial Review 30.9.98: 14). Even the cuiTent government, more 'free market' in its rhetoric than most, is steadily backing off its earlier views. On the world scene. Prime Minister Howard now wants to be seen as a leading advocate of global financial regulation to ensure stability, offering Australia's services to the cause for instance telling the 10th International Conference of Banking Supervisors of the need for better monitoring and supervision of short-term financial fiows and derivatives transactions and of the need for measures to better manage future financial crises (Howard 1998a). But it is in the domestic context that the Howard Administration's shift from free market ideology has been most significant. In this paper I want to examine that shift and explain the alternative policy framework now emerging and to do so from what is these days the unfashionable perspective of the left. The thrust of my argument is as follows. While the Australian debate about free markets, on the part of both advocates and critics, has always been largely rhetorical about the direction of policy movement rather than absolute policy packages there has been a notable move away from even formal adherence to the ideology of free markets. The reason for this is, at base, that 'free market' economics, although depicting a sympathetic ideology of individualism, private property and competition, no longer meets the overall needs of capital, particularly in a period of economic volatility.' It has long been understood (but recently largely forgotten) that capital requires the state not only to 'set the rules of the game', but to actively regulate social and economic processes. As Polanyi (1944) pointed out decades ago, the market was, and must be, planned. The Howard Government's shift away from 'free markets' has to be understood in this context. A range of regulatory interventions and a culture of regulation are essential to capital in periods of economic volatility in order to secure conditions of profitability. Critiques of 'economic rationalism' miss this point and have served to deflect attention from the real underlying trends.

Free markets as a social philosophy

First, a brief comment on terminology. I use the term 'free market' in relation to the Howard Government's original ideology, and as it remains widely depicted today. Behind that ideology lies the formal weight of neo-classical economics, whose theoretical focus is the conditions under which individuals interacting in suitably organised markets can make optimising decisions for themselves and, in the process, generate 'efficiency'. That theory also proposes a significant role for the state. Not only is it held responsible for monetary and fiscal policy; it also has a more precise

334

Australian Journal of Social Issues Vol. 35 No. 4 November 2000

role in terms both of the minimal regulations required to maintain the association between markets and efficiency, and specifically of 'extemalities': costs and benefits that flow from production and are not captured by market prices. In practice, those extemalities are extensive. Specifically, I choose 'free market' over two other widely used terms that are often applied in this context: economic rationalism and neo-liberalism. The term 'economic rationalism", as it has been applied in Australia (e.g. Pusey 1991), signals the rule of neo-classically trained economists in policy formation, and the imposition of neoclassical economic calculation into all facets of policy. My concem about the term is that, although depicting a real policy influence, it isolates economic calculation from its social context. Exaggerating the importance of particular policy advisers, it thereby exaggerates the possibility of policy alternatives that would result from simply overtuming the political hegemony of a certain sort of economics (see Bryan & Rafferty 1999: chs 4 & 5). Hence govemment intervention as such is presented as the alternative to economic rationalism, in the belief that intervention is inherently social democratic.^ As I argue below, there is indeed a renewed 'interventionism' but of a particular kind that is definitely not social democratic. I therefore prefer to avoid the confusions that would arise by use of the term 'economic rationalism' to depict the prevailing policy agenda. As for the concept of 'neo-liberalism'. my misgivings are more fundamental. For while the term is of critical importance in understanding current policy, it is widely misused as a synonym for free markets or economic rationalism. I contend that we are indeed seeing neo-liberal policies in Australia but not simply those of free markets or economic rationalism. Neo-liberalism is more than a free market program. It rests critically on two elements that are not always consistent: a belief in markets and individual responsibility but also a social conservatism (see Overbeek & van der Pilj 1993). This latter is inherently 'interventionist' and regulatory, but the regulatory agenda involves consolidating social structures that might be over-run by the anarchy of market processes. Within this tension between the anarchy of markets and the codes of conservatism there is a range of forms, but the important general point is that the neo-liberal agenda is to be explained by its political purpose, not its system of economic calculation. Policy, of course, is formed by complex and often chaotic processes processes that generate policy inconsistencies and compromise. The Howard Govemment, while using freely the language of 'free markets', has nonetheless maintained, and in many areas even strengthened, the system of state regulation. If critics of current economic and social policy remain preoccupied with critiques of the 'free market' (as in the debates about economic rationalism), the regulatory shift towards a more substantial

Dick Bryati: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule of Capital

335

'neo-liberalism', asserting the prerogatives of capital, will be missed, or even be interpreted as an interventionist slide to the political centre. It is this broader agenda on behalf of capital, not the temporary flirtation with 'free markets', that needs to be the focus of critical evaluation. What, then, does the 'rush to regulate' mean?

The Howard Government's philosophical shift

To identify and explain the broader agenda of its recent policy shifts, it is necessary first to locate the earlier affinity of the Howard Government with the ideology of free markets. Its initial advocacy of deregulation, privatisation and corporatisation of public sector activities, along with the eradication of fiscal deficits, demonstrated a firm commitment to the language and framework of the free market. Yet a basic social philosophy, not just an opportunistic mechanism for economic regulation, underlay this policy agenda. This was the philosophy of individual responsibility articulated particularly at the level of the family unit self-reliance and the primacy of entrepreneurship as the dynamic social force, with the state enforcing the (selectively) libertarian values underlying each of these aspects. That philosophy has not changed, although, with changing circumstances, the policies required to support it certainly have. In this context, Howard's views on 'Politics and Patriotism' (the title of one of his 1995 'Headland' speeches as opposition leader [Howard 1995]) are critical. These views were set against the former Keating Government's 'intrusive' nation-building agenda, arguing opposition to the state's role in building national identity. Alongside its own 'free market' program, the Keating Government presented an agenda of nationbuilding via republicanism. Aboriginal reconciliation and multiculturalism (see Johnson 1996). Howard's essential argument, in response to this nationalist program, was that the state should have no role in nation-building. National identity is not the stuff of government action it grows up spontaneously, from historical experience. Clearly, he expressed here not just a particular stand on racial and republican issues (which later came to haunt him), but a deep social belief in an abstract notion of individual responsibility and the inappropriateness of state-imposed agendas about the 'good society'. Conservative individualism, more than the techniques of free market economics, was at the core of Howard's social vision. In certain policy areas, free markets were thought to be the economic mechanism to articulate that philosophy, but they were never ends in themselves. The Government's shift away from free market rhetoric has been neither rapid nor uniform, but it has been consistent. In this shift, Howard's personal political difficulties

336

Australian Journal of Social Issues Vol. 35 No. 4 November 2000

early in his first term, and the backlash resulting from them, played a profound part: in particular his hostile anti-Aboriginal stance, his refusal to engage openly in the republican debate, and his failure to denounce Pauline Hanson's alleged racism (for details see Abbott et al. 1998). In social policy, it appeared, the agenda of the unobtrusive state left no means for the government to manage social division. The same problem has arisen in economic policy, particularly in a context of generally high domestic unemployment and international economic volatility, especially in financial markets. The nub of the problem is straightforward. The popular social response to such difficulties is to look to govemment policy to 'fix things up'. Where the free market does not deliver stable (and in some sense socially legitimate) outcomes, governments advocating 'free markets' are left without effective policy tools. Free market ideology is based on the assumption that markets work efficiently; problems are self-rectifying via price adjustments, only requiring minimal supervision by the state. When, in reality, markets fail to deliver that outcome, the free market policy direction is to further lift restrictions on market participants to facilitate the required price adjustments. This policy framework has frequently (and predictably) failed to generate socially accepted solutions. The effect, however, is that the state is popularly seen to be retreating from the problem. Politically, there has to be a change of policy: a change of regulatory practices.

The policy retreat from free markets

In Australian economic policy there has been a notable move from reliance on free markets as the rationale for policy development. This move can be traced from 1997, accentuated since the re-election of the Howard Govemment in October 1998. Consider the following specific changes since 1997: The appointment of a committee to review state assistance to industry (Mortimer 1997), inquiring into the need for a systematic program of incentives to encourage investment and growth. This committee, chaired by a representative of struggling big business,' predictably presented a broad package of subsidies and regulations to aid business. The Howard Government's response was the Plan for Australian Industry, released in December 1997. By the standards of European social democracies, the level of expenditure in this program is trivial. But in the culture of 1990s Australia it signalled a significant shift in policy priorities. The industry policy, though far from constituting a 'plan' in any serious sense, announced a program of expenditure of $1.4 billion over four years including: t subsidies for research and development;

Dick Bryan: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule tif Capital

337

subsidies to attract foreign investment to Australia and the appointment of a Strategic Investment Coordinator to negotiate specific packages of incentives with particular potential investors; the continuation of existing subsidies to exporters; taxation incentives to attract global financial institutions to locate their regional headquarters in Australia; assistance to TNCs that import to and then re-export from Australia.

t t t

Although the program rejects 'highly interventionist strategies' (Commonwealth of Australia 1997b: ix), the Prime Minister nonetheless affirmed his Government's 'preparedness to strategically intervene in industry to offset distortions and remove impediments to expansion' (Howard 1997b: 5). The criteria of 'distortions' and 'impediments' provide the preconditions for ad hoc policy, contrary to 'free markets', and rationalised by the 'national interest'. The appointment of an information industries task force (Goldsworthy 1997) to consider tax and other incentives to encourage the development of information industries in Australia. Like the Mortimer Report, the Goldsworthy Report recommended extensive subsidies to promote the development of information technology. The decision in June and September 1997 not to cut tariffs in the automotive and textile industries, contrary to the advice of the Industry Commission. In rationalising these decisions, the Prime Minister said (Howard 1997a): 'I will reduce protection and open up trade opportunities where it is in Australia's interest. Where it is not in Australia's interest I won't do so.' While that rationale also permits ad hoc policy, it has not stopped the Prime Minister's staunch advocacy of free trade at international forums such as APEC (Howard 1998c). The provision by the Federal Government, in combination with the NSW State Government, of adjustment assistance in response to the closure of BHP's Newcastle steel works. This policy was extended to address the wage entitlements of workers formerly employed in companies in liquidation through the Employee Entitlement Support Scheme, established in early 2000 with an estimated budget of $100 million (Reith 2000).^ The goods and services tax, introduced in July 2000, which included an acrossthe-board 10% subsidy to exporters, by dint of their exclusion from the tax. After all the battles against tariffs on some imports on the free-market rationale that they distort trade, it is significant that the Government considered that the price of all exports from Australia would be 'distorted' by this tax exemption. Indeed, the exclusion of exports from the GST is often not seen as an industry

338

Australian Journal of Social Issues Vol. 35 No. 4 November 2000

policy. Yet the Govemment itself has consistently described the exclusion as a stimulus to Australian exports (e.g. Howard 2000c). The Government's forthright advocacy of tighter prudential supervision of financial institutions. In response to a recommendation of the Wallis Committee (1996) the Govemment introduced in July 1998 a 'super regulator' of the financial sector the Australian Prudential Regulation Authority, described by Treasurer Costello (1998) as a 'world leader with best practice financial sector regulation'. (There are now more people employed in Australia's new financial regulatory institutions than there were before 'financial sector deregulation' in 1983.) Associated with this image the Govemment has been actively promoting Australia as a prospective centre for Asian finance. The Corporate Law Economic Reform Program (CLERP). The objective of this program, which commenced in March 1997, is to regulate corporate practices, especially in the area of financing of investment and takeovers. The Corporate Law Economic Reform Program Bill (1998) covers arrangements for fundraising, takeovers, the setting of Australian accounting standards, directors' duties and corporate govemance (Australian Treasury 1999). A key component of CLERP is the Corporations and Securities Panel, operating from 2000. The Panel is a 'peer review body, with members appointed from the active members of Australia's takeovers and business communities', its job to resolve disputes about corporate takeover bids (Corporations and Securities Panel 2000). Note here the role of the state in securing the 'self regulation' of capital.

The above are illustrations of a departure from free market ideology. It could, of course, be argued that they are simply a case of moderation in the context of real world complexities. That may well be the case; but it is also possible that there is a deeper agenda: a systematic pattern of regulation that promotes the long-term interests of capital a process that constitutes 'neo-liberalism'. I shall illustrate this second possibility by looking at two related phenomena that may be said to comprise a shift to a culture of 'rule by capital': the cases of mutual obligation in social welfare policy, and general employment and wages policy.

Case One: Welfare and mutual obligation

In a speech to the ACOSS National Congress in Adelaide in November 1998, Prime Minister Howard addressed corporate donations to cultural and charitable causes. The speech was tightly scripted (recall that Howard's election policy launch was delivered without notes), and so must be understood as a position statement of significance and precision. On the surface, it represented a significant departure from a free market agenda, constructing the notions of community and mutual obligation as central pillars of social and economic order:

Dick Bryan: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule of Capital

339

It is only through a partnership between individuals, business, government and the community with each one playing their proper role that a free, fair and united society can be strengthened and maintained ... Robust communities, cohesive families and responsible individuals are fundamental for building a strong economy. And without a strong economy a caring community becomes much harder to achieve. (Howard 1998b.) Although it is difficult here to unscramble the relationship between 'strong economies', 'proper roles' and 'caring communities', there is a clear sense that the market is not the independent arbiter of all three. 'Mutual obligation' and 'the moral obligation and duty of citizens' inherently non-free-market notions feature prominently. But this is not the sort of regulation associated with social democracy: it is 'real' neoliberalism. In particular, Howard spoke of the principle of mutual obligation between the business sector and the community, even castigating large companies for their lack of philanthropy, and going so far as to say that 'the spirit of corporate citizenship suggests that a company that derives profits from the community has an obligation to contribute to its development'. Some commentators saw this as an attack on 'the big end of town', questioning, subtly, the legitimacy of profits as a right of successful business. Howard was depicting profits not as a return to entrepreneurial skill, but in some sense as booty extracted from society, for which there must be a reciprocal social contribution. The free market, which generated in Australia an increase in profit share of national income from 12% in the early 1980s to 19% in the late 1990s, was being contested. Indeed, Howard could even have been seen as contesting the 'free market' itself, but from a conservative, not a social democratic perspective. Three issues are important in interpreting this apparent attack on capital. First, the context. There was no mention by the Prime Minister of three issues of context: Governments in Australia already give companies over $20 billion per year in 'business welfare'. (The figure is for 1994/5, the most recent financial year for which there is complete calculation, including budget outlays and tax exemptions from federal, state and local governments [Bryan & Rafferty 1999: 72-74].) The Government's inquiry into business taxation, chaired by John Ralph (1999), was expected to (and did) recommend a cut in corporate tax rates from 36% to 30% when it reported in June 1999. (Canada, France, Germany, Italy, Japan and the United States have corporate tax rates at or above 40% [KPMG 2000].)

340

Australian Journal of Social Issues Vol. 35 No. 4 November 2000

Just a week before the Prime Minister's speech the Federal Court had rejected the Australian Taxation Office claim of $260 million against Kerry Packer and his Consolidated Press group, affirming Packer's 'right' to pay no taxation between 1990 and 1993 {Australian Financial Review 1.11.98: 1).

Second, the 'intervention'. The policy proposed by Howard in his ACOSS speech was not a means to expand the provision of social welfare, but a regulatory attack on the established welfare system. Howard's agenda was not one of encouraging noblesse oblige to supplement the state's welfare budget but of pushing an argument for capital to facilitate a withdrawal of the state from responsibility for welfare: in effect, to assert a cultural rule for capital itself. Naturally, the ACOSS address was immediately rejected by the captains of industry as an attack on their viability; the argument being that donations would only increase if funded by tax concessions {Australian Financial Review 6.11.98: 1). And within three months, their call was met by the announcement of a package of taxation incentives, estimated to be worth $51 million, to encourage business donations to cultural and charitable causes (Howard 1999). The culture of obligation was to be extended by the state's creation of new Community Business Partnership Board. Announcing the initiative, Mr Howard contended that: Companies and industries that are trusted and respected in the community for doing the right thing are likely to find themselves less constrained by government pressures or regulatory intervention or pressure from interest groups and the community generally. (Howard 1999.) Third, the outcome. Despite the apparent meaning of the Prime Minister's ACOSS speech, the agenda of 'mutual obligation' has emerged as a major policy framework without any significant obligations on business. Instead, the obligations involved in 'mutual obligation' have been imposed exclusively on unemployed labour, exemplified by the Work for the Dole scheme and work for welfare proposals found in the McClure Report on social welfare (McClure 2000). The reference group that produced the McClure Report adopted the slogan, 'Community, business and government working together'; and the report itself was entitled Participation Support for a Mote Equitable Society. But the report contains no proposals for obligations on business. These were diverted to a separate report under the auspices of the Prime Minister's Community Business Partnership Board and funded, like the McClure Report, by the Department of Family and Community Services. This report. Corporate Commtmiry Involvement (Centre for Corporate Public Affairs 2000) was prepared by the Allen Consulting Group and the Business Council of Australia, both recognised voices of the business community. Comprising a survey of Australia's 115 largest corporations, it did little more than extol the virtues and

Dick Bryan: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule of Capital

341

benefits of these companies' expenditure on community projects, while recommending no formal obligations on the corporate sector for expenditure or job creation to parallel the employment obligations recommended for welfare recipients in the McClure Report. In other words, what apparently started in the address to ACOSS as a challenge to corporate greed under free markets has given way to a range of state interventions, the effect of which is to assert the cultural rule of capital and further subordinate labour to the state.

Case Two: Employment and wages

Alongside these ideasof community responsibility has come a renewed argument for state intervention in the labour market to cut wages and increase profits as a means of job creation. Despite the fact that there is widespread reference to 'deregulation' of the labour market, for which the Government claims great credit, there is in fact a systematic regulatory program. Industrial relations legislation on youth wages, work for the dole, unfair dismissal, allowable matters in enterprise agreements and union rights have all seen the state involved in regulation of the labour market. But regulatory developments in the labour market are not about simply bringing political realism and 'balance'. There is a systematic agenda of reforming labour market regulation to the advantage of capital. Central to this agenda has been the Reserve Bank of Australia. The Reserve Bank maintains as one of its monetary policy objectives the pursuit of full employment. As such, it has taken an increasingly strong position in debates over labour market policy. Virtually every speech by the Governor of the Reserve Bank on the topic of the Australian economy mentions the benefits of 'labour market deregulation'. But neither the Reserve Bank nor the Government is indifferent to the outcomes of 'free market' labour market negotiations both want wages to stay low. For example, the Bank contends: There are limits to the extent to which growth alone can permanently reduce the unemployment rate. Unemployment in Australia currently has a sizable structural component... Specific policies are needed to reduce this structural component... Research by Debelle and Vickery [two Reserve Bank economists] suggests that moderate, but sustained, wage restraint can deliver sizable reductions in the structural unemployment rate. (Reserve Bank of Australia 1998: 9.) While that sounds a somewhat vague proposition about the state regulation of wages. Reserve Bank economist Guy Debelle, speaking at the 1998 Conference of Economists 342 Australian Journal of Social Issues Vol. 35 No. 4 November 2000

at the University of Sydney, was unequivocal in arguing the case for targeting award wages. His proposal was to hold the rate of growth in award wages below the rate of infiation in the hope that this intervention would flow through to enterprise bargains. Such an employment strategy might itself be cause for concem, but the point here is that the Bank is advocating direct government intervention in the labour market (not free markets or 'economic rationalism') as a means of achieving accepted macroeconomic objectives. Indeed, the Bank could be said to be more adamant than the Government on this point. Contrast the following two statements made six weeks apart; the first by the Prime Minister, the second by the Reserve Bank Govemor: The industrial relations reforms, which have played such a cmcial role in bringing about higher productivity, have provided the basis for significant income gains by so many millions of Australian workers. (Howard 2000b.) A big increase in productivity growth has a beneficial effect on many areas of the economy. A lot of it is passed through to consumers and, in the process, this makes it easier to maintain low inflation. Some of it can also make business more profitable which is, after all, the incentive that drives much of the efforts [sic] towards improving productivity in the first place. (Macfarlane 2000.) The operative point here is not so much the emphasis Howard's on the gains to labour, Macfarlane's on higher profits and lower infiation as the fact that growing productivity results not from the operation of 'free markets' as from a sequence of labour and industrial relations policies that constitute intervention to assert the dominance of capital.

Implications
Two important issues associated with this overall policy shift warrant consideration. First, in many of the changes outlined above, the state has only a minimal capacity to legally regulate the 'interventionist' policy changes it desires. In the labour market, for example, cutting low wages depends entirely on a residual of workers reliant on awards; if all employment had followed the shift to enterprise bargaining, there would be no mechanism for the state to intervene directly in wage determination. Even in the broader industrial relations agenda the Govemment lacks capacities. In the 1998 waterfront dispute, for example, the Government's agenda of taking on union monopolies had to be implemented via a private sector company, Patricks, with the Govemment acting simply as advisor and subsidiser; not as an active legal party.
Dick Bryan: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule of Capital 343

A similar case applies in relation to the social obligations of large corporations. The Prime Minister's ACOSS speech was a moral exhortation to companies, but, as the study by the Centre for Corporate Public Affairs demonstrates, it was given with no powers of enforcement. The Government offers taxation incentives and makes reference to nebulous 'government pressures or regulatory intervention' against corporations that do not show social responsibility. But there are no legal mechanisms to ensure that companies (or the rich generally) pay taxation in proportion to the revenues they acquire, or that welfare expenditure be increasingly funded out of corporate profits. In relation to finance, the same problem applies. While international institutions, national governments and financial market participants may be talking about measures to restrict so-called speculative fiows (especially the 'Tobin tax'),^ there is no calculus by which 'speculative' can be disentangled from 'purposeful' flows, and there is no mechanism to ensure that any such tax would be implemented on an international scale. Global state capacity simply does not exist. Domestically, prudential supervision may impose legal mechanisms to regulate financial institutions and even financial fiows, but insofar as all the major institutions have substantial international operations, beyond the scrutiny of Australian prudential regulations, there are no mechanisms to prevent any of those institutions suffering crises of viability emanating from their operations offshore, but nonetheless generating insolvency within Australia. A second issue relating to the observed policy shift is that some of the policies that ostensibly countervail free market agendas are serving effectively to save capital from itself. This is most obviously seen in relation to finance, both on an international scale and within Australia. The increased focus on prudential supervision, and aspirations to control short-term capital flows, are designed to shift capital from a short-run, beggar-thy-neighbour approach to profitability (based on guessing price movements) to a long-term focus on profitability based on the production of new value. On a more ideological level, the objective of getting companies to return some part of their profits to the community, of seeking to take some of the infighting and market volatility out of corporate takeovers, and even of requesting banks to reconsider branch closures, represents an attempt to secure a social legitimacy to the pursuit of profits in the context of high unemployment and increasing income inequality. Indeed, many of these initiatives involve the representatives of large companies acting as agents of state regulation, thus illustrating the notion of the 'rule of capital'. It was business representatives who led the review of the finance system (Wallis 1996), industry policy (Mortimer 1997), business taxation (Ralph 1999) and business' contribution to 'mutual obligation' (Centre for Corporate Public Affairs 2000). It is business representatives who regulate disputes in corporate takeovers (CSP 2000). 344 Australian Journal of Social Issues Vol. 35 No. 4 November 2000

The critique of economic rationalism though it has become the centrepiece of a left, social democratic agenda entirely misses this point, amounting only to a technical argument against the free market agenda, predicated on the notion that state intervention in the market is required for a more moral and economically sustainable society. What we observe in recent policy changes is that there are all the elements of an emerging retreat from economic rationalism, but that this has nothing to do with a social democratic agenda indeed, it represents, more articulately than the sanitised vision of free markets, an explicit agenda to enforce the power of capital. This is the true emerging neo-liberalism. It will no doubt be dressed up as being in the national interest, but what appear from the perspective of 'economic rationalism' as a series of ad hoc market interventions will be seen to have a broadly consistent theme. The Workplace Relations Act is directly consistent with industry planning and subsidies to health insurance companies are directly consistent with declining welfare services. For a time, we may expect popular support for such policies both because the state is seen to be doing something (rather than looking to the market to fix itself), and because the ideology of the gains of efficiency (that the free market is the best way to allocate resources) will slide into the gains of profitability (that more profitable companies are beneficial for everyone). Such popular support can be expected to diminish, and is more likely to do so if there is an effectively articulated opposition. If there is going to be an effective opposition to any shift from the rule of markets to the rule of capital, there is a need for the opponents of 'economic rationalism' to rethink their stand and adopt a more profound analysis.

Acknowledgments
Various drafts of this paper have benefited from comments by Scott MacWilliam, Evan Jones, Shaun Wilson, Rick Kuhn, Gabrielle Meagher and Tim Anderson.

Endnotes
1. In a brief paper, a certain concision is inevitable. The notion of 'needs of capital' is both contentious and shorthand. Clearly, different companies have different expectations of government policy, over which they may come into confiict. Nevertheless, there are broad agendas to secure ongoing conditions of profitability: and that is what I mean by the phrase here. Specific policies will always be disputed. My focus here is more on the rhetoric of policy direction. I have argued elsewhere (Bryan & Rafferty 1999: ch. 5) that there has not been 'deregulation' but, rather, regulatory reform, making capital accumulation more internationally oriented. That argument complements this one. David Mortimer was, at the time of the review. Managing Director and Chief
345

2.

3.

Dick Biyan: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule of Capital

Executive Officer of TNT, a large international transport company of Australian origin which had been purchased by the Dutch-based postal firm KPN, with many of its assets sold off. WithTNT's likely future, it is perhaps not surprising that Mr Mortimer would see merit in state regulation of competition and subsidies to investment. 4. Because of the involvement of Mr Howard's brother, Stan, as Managing Director of National Textiles, in the original ad hoc initiative, the media focus was on issues of political propriety rather than the substantial regulatory agenda that was thereby initiated. The Tobin Tax is the popular name for a measure proposed in 1984 by Nobel Prize winning economist James Tobin for a tiny tax on turnover in foreign exchange markets as a disincentive for speculative trading.

5.

References
Abbott, T. et al. (1998) Two Nations: The Causes and Effects of the Rise of the One Nation Party, Melbourne, Bookman Press. Australian Treasury (1999) Annual Report 1998-99, Canberra, Australian Treasury. Australian Treasury (2000) 'Unit labour costs', http://www.treasury.gov.au. Bryan, D. & Rafferty, M. (1999) The Global Economy in Australia, Sydney, Allen & Unwin. Centre for Corporate Public Affairs (2000) Corporate Community Involvement: Establishing a Business Case, Melbourne, Centre for Corporate Public Affairs. Commonwealth of Australia (1997) Investing for Growth: The Howard Government's Plan for Australian Industry, Canberra, AGPS. Corporations and Securities Panel (2000) http://www.takeovers.gov.au. Costello, P (1998) Press release 017, 17 March. Goldsworthy, A. (1997) The Global Information Economy: The Way Ahead, A report from the Information Industries Taskforce (A. Goldsworthy, Chairperson) to the Minister for Industry, Science and Tourism, Canberra, AGPS. Howard, J. (1995) 'Politics and patriotism: A refiection on the national identity debate'. Speech at the Grand Hyatt Hotel, Melbourne, 13 December.

346

Australian Journal of Social Issues Vol. 35 No. 4 November 2000

Howard, J. (1997a) Interview, Alan Jones Show, Radio 2UE, 11 September. Howard, J. (1997b) 'Investing for growth'. Address to the National Press Club, Canberra, 8 December. Howard, J. (1998a) 'Retuming the region to sustainable growth'. Address to the 10th Intemational Conference of Banking Supervisors, Sydney 22 October. Howard, J. (1998b) Keynote address to the ACOSS National Congress, Adelaide, 5 November. Howard, J. (1998c) Address to the APEC Business Summit, Putra World Trade Center, Kuala Lumpur, 16 November. Howard, J. (1999) Address to the Centre for Corporate Public Affairs, Melboume, 26 March. Johnson, C. (1996) 'Shaping the social: Keating's integration of social and economic policy'. Just Policy 5. KPMG (2000) 'KPMG Corporate tax rate survey January 2000', http:// www.tax.kpmg.net. Macfarlane, I. (1998) 'Recent international developments in perspective'. Speech to the AGM dinner. Committee for the Economic Development of Australia, Melboume, 25 November. Macfarlane, I. (2000) Talk to Australian business in Europe, London 26 May. Mortimer, D. (1997) Going for Growth: Business Programs for Investment, Innovation and Export, Canberra, AGPS. Overbeek, H. & van der Pitj, K. (1993) 'Restructuring capital and restructuring hegemony: Neo-liberalism and the unmaking of the post-war order'. In H. Overbeek (ed.) Restructuring Hegemony in the Global Political Economy: The Rise of Transnational Neo-liberalism in the 1980s, London, Routledge. Polanyi, K. (1944) The Great Transformation, New York, Octagon Books. Pusey, M. (1991) Economic Rationalism in Canberra: A Nation-Building State Changes its Mind, Cambridge, Cambridge University Press.
Dick Bryan: The Rush to Regulate: The Shift in Australia from the Rule of Markets to the Rule of Capital 347

Ralph, J. (1999) Review of Business Taxation: A Tax System Redesigned, Canberra, Australian Treasury. Reserve Bank of Australia (1998) 'Unemployment and the Australian labour market', Reserve Bank Bulletin, September. Roubini, N. (2000), Website of the Senior Economist, White House Council of Economic Advisors, http://www.stem.nyu.edu/~nroubini. Wallis, S. (1996) Financial System Inquiry', Final Report, Report of the Financial System Inquiry, Canberra, AGPS.

348

Australian Journal of Social Issues Vol. 35 No. 4 November 2000