The British prime minister, Keir Starmer, startled delegates at his party’s conference last week by calling for “an immediate ceasefire in Gaza, the return of the sausages”. They knew he meant hostages and he quickly corrected himself, but too late. The video was already on its way out for the world to see, hear and laugh at.
This misstatement by a public figure known for being cautious and deliberate was unsettling, but also oddly appropriate. The dreadful carnage of this conflict is sanitised by diplomats manoeuvring delicately around a settlement, and never mentioned by the leaders who feed off it.
Starmer’s audience expected him to present as being fully in charge, as it does all those taking on the mantle of authority. We expect our public face to be assured and certain, and it’s a shock to see the human behind the mask.
But it’s a shock we need to get used to, because the mask of authority – the pretence that all is in hand when it manifestly is not – is doing irreparable harm in a time when global order is in a heap of trouble.
Future anxiety, including but not solely about climate change, is one underlying driver of this disquiet. Another is neoclassical economics, based on the work of the Chicago-based Nobel Prize-winning economist Milton Friedman and taken on as gospel 40 years ago by most Western governments, including Australia.
Neoclassical economists argue that markets are essentially rational, that higher taxes are always bad, that wealth at the top tends to trickle down to the bottom (a seriously discredited notion still adhered to by some zealots) and that smaller government equates to more growth. This economic belief system and the debates swirling around it have heavily influenced public policy for decades.
The realisation that it was fundamentally wrong has been slow to take hold, in part because (like Middle East diplomacy) it uses language that conceals the brutal reality of the lives it’s supposed to represent. But as veteran economics journalist Ross Gittins has written, neoclassical concepts have damaged government everywhere.
In Australia, a series of outsourcing inquiries including Robodebt and financial services have exposed excessive zeal among public service economists (“econocrats”) – and revealed a dark place from which economics is only just starting to emerge. But it’s not there yet, and it’s not alone in needing a makeover. The rest of us do too.
A fortnight ago, the Cambridge University journal Global Sustainability published a research paper arguing that the world’s current economic system is a major driver of social inequality and environmental damage and therefore in dire need of reform.
Authors were physicist and sustainability expert Mark Diesendorf from UNSW Sydney, Geoff Davies of ANU’s Research School of Earth Sciences, Thomas Wiedmann from UNSW’s School of Civil & Environmental Engineering, Joachim Spangenberg from the Sustainable Europe Research Institute in Germany and economist Steven Hail from Torrens University, South Australia.
As the paper points out, human activities have crossed most of the nine planetary boundaries defined by Earth system science, thanks to the domination of government policy by mining, property, financial and other interests. We won’t reverse this calamitous course without breaking the grip of neoclassical economics.
In effectively capturing government, these vested interests employ an intellectual framework to justify and support their power and to exploit the world’s natural assets and most of its people – avoiding responsibility for the consequent stream of waste. In the process they put future life on Earth in serious danger.
Critical analysis of neoclassical economics over the years, says the paper, has had little impact on economics teaching or public discussion. Even critiques by established “conventional” economists have failed to mitigate the pernicious neoclassical influence on public policy.
Ecological economics, emerging in the 1970s with a focus on planetary and public health and social justice, was resisted by influential neoclassical economists, notes the paper. Such alternative economics approaches have been restricted to just a few Western universities, and their research has been excluded from major economics journals and kept out of the public spotlight.
A few years before he died in 2006, veteran US economist John Kenneth Galbraith wrote of “leading active members of today’s economics profession… [who] have joined together into a kind of politburo for correct economic thinking”. He would turn in his grave to know that “kind of politburo” still holds the world in thrall in 2024.
Neoclassical economics is undermining our response to humanity’s greatest threat, catastrophic climate change. It lies behind repeated approvals for coalmines and gas hubs. It rewards drivers of environmental degradation while inhibiting public action to prevent it. It’s a cancer eating away at our future.