Neoliberal economics can’t care for the disadvantaged
Paul Jensen |  21 May 2015

My underlying concern about the recent Federal Budget and the major parties’ economic and fiscal policies is with neoliberalism.

This includes privatisation, free trade, open markets, deregulation, and reduction in government spending i order to aid the private sector. We find neoliberalism in current political rhetoric mentioning the free market, small government, service delivery, privatisation, the end of the age of entitlement, etc.

Before the recent British election, a group of prominent counsellors, psychotherapists and academics argued that austerity cuts and neoliberal thinking among policymakers were having a profoundly disturbing effect on Britons’ psychological and emotional well-being. They said:

The past five years have seen a radical shift in the kinds of issues generating distress in our clients: increasing inequality and outright poverty, families forced to move against their wishes and, perhaps most important, benefits claimants (including disabled and ill people) and those seeking work being subjected to a quite new, intimidatory kind of disciplinary regime.

Neoliberalism presents some very real practical challenges for faith based non profit organisations in Australia, even if the situation is not as stark as in Britain. In particular, neoliberalism is changing the relationship between government, civil society and the market and sector boundaries are blurring and converging.

For example, the welfare state – traditionally the preserve of the State itself – has been extended through government outsourcing to secular and faith based not for profit and for profit organisations. Outsourcing can create real ethical dilemmas for faith based organisations. The old Commonwealth Employment Service (CES) was privatised more than 20 years ago.

The corruption, inefficiency, punishment and coercion within the current iteration – Job Services Australia – were highlighted in a Four Corners report earlier this year. It showed evidence of paternalism and punitive practices, including restricting the benefits paid to clients who failed to attend consecutive interviews when it was not their fault.

Under rare conditions, sanctions may be needed to change behaviour but should it be faith based wielding the stick? Surely the role of faith based agencies is to offer the promise of the carrot. Let the State take the risk and responsibility for wielding the stick.

It is just as alarming that market economics is intruding into funding models, for example with the involvement of for profit organisations.

In What Money Can’t Buy: The Moral Limits of Markets, Harvard Professor Michael Sandel asks whether the market is equipped to promote human dignity and the common good. Are services delivered by faith based organisations measured simply by value for money and efficiency, or by the quality of the outcome?

Will clients with complex intractable problems be properly serviced by the market? I believe the answer is a clear no.

Four Corners also reported on fraudulent practices among some Jobs Service providers, including faith based organisations, in the quest for greater profit and economic efficiencies. These clearly disadvantaged and disempowered their clients.

Two other recent Four Corners reports also expose the failure of the market to provide adequate care, to those with disabilities and Indigenous Australians. The drivers of failure, and examples of poor practice, in these sectors, are very similar to those mentioned in connection with Job Services Australia. The dynamics are the same: only the names, faces and sectors change.

When confronted with these market failures, political leaders avoid questioning fundamental political and economic assumptions. Instead they maintain that these failures and the subsequent corrective action are examples of the benefits of neoliberalism. Despite these very real negative impacts, neoliberalism seems impervious to critique, and with the tacit support of both major political parties, it seems it is here to stay for the foreseeable future.

In Never Let a Serious Crisis Go to Waste, Philip Mirowksi shows how neoliberalism came to be constructed and why, despite the ignominious collapse of the system in 2008, it has proved so hard to remove.

He cites ‘group think’, ‘cognitive dissonance which doesn’t challenge fundamental assumptions’, and ‘no strong alternative to neoliberalism’ as factors which bolster the intransigence of neoliberalism. We are, according to Mirowksi – and indeed Sandel – uncritical neoliberals.

Mirowksi is neither an economic fundamentalist nor a Marxist. He was highly critical of the Occupy Wall Street movement. His position is more nuanced and, while he challenges some of the fundamental assertions of neoliberalism, he also sees a few benefits.

I concur. If managed well, client directed funding – where clients are able to determine how their funding package is to employed for their benefit – may have the potential to elevate client/consumer empowerment and efficacy, thereby greatly enhancing human dignity. It’s also incumbent on faith based agencies to practise thrift in order to achieve the greater economic efficiencies that are needed to deliver a greater benefit for the common good.

Nevertheless we need credible alternatives to ‘group think’, an economics that pursues the common good including the good of the environment. This may seem idealistic, but globally there are many think tanks and other groups wrestling with this very issue. The New Economics Foundation is pursuing such a vision – an economics that works for both people and the planet. When are we going to admit that the emperor has no clothes and acknowledge that the market cannot be our Saviour?

Paul Jensen is CEO of Centacare for South West NSW, based in Wagga Waga