Documenting the rise of neoclassical rhetoric
(An extract from ‘A semiotic interrogation of law & economics’, by Dr James Moylan)
‘The dominant culture contributes to the real integration of the dominant class (by facilitating the communication between all its members and by distinguishing them from other classes)…’ Bourdieu (1991).[1]
As words are coined they then become as pervasive and mutable as is the need for their employment. Therefore, a frequency analysis of the use of a word or term can be a good gauge of the concerns that are being canvassed within the formally inscribed social discussions within a specific geographical domain.
The terms ‘tax-cuts’, ‘Deregulation’ and ‘supply side’ are all specific to the discourse of the freshwater theorists and the political and social lobby organisations that champion their theories. Initially these terms were employed almost exclusively in an academic and political context, then their use became ever more commonplace as the use of ‘economically rational’ rhetoric became ever more widespread.
Thus, in concert, consideration of the frequency of use of these terms in American English provides for a rough and ready measure of the development, flowering and decline of neoclassical economic rhetoric in America over the course of the last seven decades (see Figure 2).
In Australia
[In Australia] ‘Gough understood that uplifting the working class and improving opportunities for women, migrants and the First Australians was critical to the nation’s future capacity. As he summed up perfectly in his 1969 election campaign launch. ‘Poverty is a national waste as well as individual waste. We are all diminished when any of us are denied proper education. The nation is the poorer – a poorer economy, a poorer civilisation, because of this human and national waste’.’ (Anthony Albanese, 2018) [4]
[In America] ‘In the Seventies, we still had dreams and hopes of Utopia, but by the end of the decade, the world had shifted to the right’. (Tariq Ali, 2019) [5]
The 1970s in Australia was a decade of political triumph and turmoil. In 1972, after 23 years of conservative administration, Gough Whitlam led a resurgent Australian Labor Party [ALP] into office. Then over the course of three brief years the welfare state was given a thorough makeover.[6]
The dismissal of the Whitlam Government in 1975 was widely perceived, at the time, to be a political crisis for the incipient welfare state. Yet with the benefit of hindsight it is apparent that the vast majority of the progressive gains of the Whitlam years remain.[7]
The subsequent Fraser Government did try to dismantle Medibank and some other Whitlam government programs. ‘Healthcare funding was reduced and a general rollback of Whitlam’s programs [was] set in motion’.[8] However the next Labor administration led by Bob Hawk restored the funding and the system.[9] Then the following Keating government forged much the same public/private system that persists to this day.[10]
Few of these progressive gains in Australia have ever been acknowledged as being doctrinally authorised and so valid by an identifiable group of conservative politicians[11] and business, religious and social lobby organisations.[12] Yet even so, the ambit of action available to these conservative forces in the Australian context has always been restricted by the sheer popularity of these many welfare state provisions in concert with an active labour lobby movement with an effective political voice.[13] The situation in the US is very different. [14]
In America
Kate Green has observed that ‘[a] moral awareness of the need to provide for the disadvantaged was, and remains, anchored firmly in the theoretical framework of American government’.[15] A ‘moral awareness’ that seems to have reached its highwater mark in the mid 1930s with President Franklin D. Roosevelt‘s ‘New Deal’ and provisions such as The Social Security Act of 1935.[16]
However, the concept of ‘welfare’ in the US has never been;
‘…as fundamental to national identity as the founding fathers’ claims for individualism and independence from a regulatory British empire. As a result, although some architecture of welfare provision has always existed in the U.S., these policies have never wielded the same strength as, and have often conformed to, ‘market freedom ‘ the doctrine of Western capitalism that prizes ideals of economic rationalism over those of social democracy’’.[17]
Therefore, as the grip of the great depression lifted, even as gains were being made in developing a welfare state compact elsewhere in the western world, the power of the big business lobby in the US increased from substantial to irresistible. As a result, in 1945, when the government tried to introduce a relatively comprehensive ‘Employment Act’ ‘corporate lobbying stood in its way’.[18]
The idea of full employment is anathema to many US business interests. Thus, while the Employment Act did eventually pass into law,[19] along the way most of the significant social welfare and fiscal oversight provisions had been stripped away or watered down.[20] One critic noted that ‘The failure to pass a ‘Full Employment Act’ is as significant as the decision to pass the Employment Act’.[21]
The legislation sounded terrific. It contained all the right ‘buzz words’. Yet while ‘it certainly marked the commencement of the commitment of the federal government to the macroeconomic management business’[22] the enacted bill was a far ‘weaker signal of the government’s commitment to macroeconomic management than was the initial proposal’.[23] In effect, there was a signal being sent but not to the citizenry.
The same coalition that had just overseen the gutting of the ‘full employment bill’ then set about ensuring that they would never have to fight the same battles again, leading to the passage of the ‘Taft-Hartley Act’ in 1947.[24] Which ‘sowed the seeds that eventually eviscerated the rights of American workers to form unions by undermining union power and the ability to organize’.[25]
By the time President Johnson came to introduce Medicare in 1965, the political and business lobby against ‘creeping socialism’ had become so entrenched that even talking about universal healthcare was considered unwise. [26] It was popular with the citizenry but the citizenry were no longer in charge.
Seven years later, the same year as Economic Analysis of Law appeared, the socially conservative Nixon Administration was re-elected with a huge majority. Earlier, at the Republican convention, as Nixon had been accepting his Party’s nomination for President, a wheelchair-bound Vietnam veteran by the name of Ron Kovic had interrupted his speech, chanting a declaration that would very soon reverberate in the streets of every large American city. ‘Stop the bombing!’ Kovic demanded. ‘Stop the war!’[27]
During the course of 1972 many thousands of Americans would similarly march to end the war and demonstrations would be held worldwide.[28] Yet while Australia and New Zealand quickly pulled out of Vietnam, Nixon vowed to ‘remain the course’ and ‘seek peace with honour’.[29] So even before the Watergate scandal began to unfold the country had already divided into partisan camps.
President Nixon is significant for these investigations not only for fostering a sense of hyper-partisanship (that coincides with the emergence of the ‘law and economics movement’) but also for being the first president to overtly target the already relatively meagre welfare payments provided to marginalised groups and to then justify these cuts by recourse to neo-classically inspired rhetoric.
‘Between 1935 and 1965, the numbers of African Americans migrating to northern cities increased’ which was a trend the Nixon administration disliked.[30] They proposed that it had led to a large group of ‘urban blacks’ becoming ‘dependent on welfare’.[31] In response, early in its first term, the Nixon administration began describing the problems of inner city crime and urban flight as being powered, not allayed, by the provision of welfare.
‘In 1969, to counter this trend, President Nixon and welfare policy adviser Daniel Patrick Moynihan unveiled their Family Assistance Plan, a scheme devised to replace [the current slim welfare arrangements] with federal assistance for working families, since welfare, they argued, discouraged work’.
‘Although the legislation never passed, it introduced the concept of welfare dependence into the debate – a rhetoric that implied social assistance was temporary financial aid not to be relied upon as income’.[32]
So it is at this early stage in the Nixon administration, ‘at a time when the Western post-war boom had slowed and unemployment, as a result, rebounded’,[33] that a recognisably ‘neoclassical economic rationale’ is first employed in justification for restrictions on particular government spending programs. A practice that would later be reformulated, expanded and formalised as ‘Reaganism’(or ‘Reaganomics’).[34]
That Ronald Reagan was fully aware that these economic propositions were being employed in the service of pandering to long-standing racial animus is undeniable. Long before becoming president he was well aware of the anti-welfare sentiments that were harboured by large segments of the US population. The historian Julilly Kohler-Hausmann (2015) has described how:
‘In 1970 a man wrote to [then] California governor Ronald Reagan in support of disfranchising welfare recipients. “I believe this would be one of the most important pieces of legislation that could be enacted,” he explained. The writer asserted that people receiving state benefits forfeited their citizenship rights: “They are, in my opinion, no more than second rate citizens and because they continually draw welfare, I do not believe they should have the right to have a say in our government or how our tax money is spent.” [35]
Moreover, that these anti-welfare sentiments were racially predicated is also unquestionable. During the 1970s ideas such as disenfranchising ‘undeserving’ welfare recipients ‘saturated political discourse on social and criminal policy’.[36] As ‘Americans persistently articulated a profound frustration with how recent legal and political reforms distributed resources and political voice to “undeserving” groups’.[37] Exactly who these ‘undeserving groups’ might be was never in doubt:
‘Despite the racial and social diversity of the populations subject to penal and welfare administration, Americans typically imagined welfare and crime as problems emanating from the same places: low-income African American and Latino urban communities’.[38]
Yet for right wing politicians within the US, continuing to cater to these evident bigotries was becoming problematic. Many of the more traditionally formulated, racially predicated, anti-welfare arguments were now being deemed by a growing proportion of the American populace to be unacceptable. It is observable that during the course of the 1970s and 80s, as a modern multi-media environment began to develop within America, there was also a steadily increasing tariff attaching to the use by political candidates of any overtly racialized language.
One interesting result of this evolution of the contemporary social mores within the US is the birth and subsequent extemporisation of what has come to be known as ‘dog-whistle’ political rhetoric. This is largely outside the compass of the investigation at hand. However, it is interesting to note that the academic musings of the freshwater school of economics do seem to appear just in time to meet the changing rhetorical requirements of the Republican Party and their allied supporters and lobbyists. In political terms, ‘freshwater economics’ handily serves to justify, economically and theoretically, a range of pre-existing anti-welfare political propositions in a manner that is generally not perceived as being racially predicated.
Thus it is obvious that well before neoclassical economic rhetoric had ever become entrenched or commonplace in American politics, segments of the population were already predisposed to being very critical of some forms of social welfare provision to some black and Latino segments of the population. Then, following the Reagan administration, while the language of the discussion had altered, much the same groups were still arguing for much the same outcomes. But where once these arguments were perceived by the vast majority as being racially predicated, they were now being engaged in a seemingly dispassionate fashion and using language that appeared to be both academically and politically authorised. Yet nonetheless: the same rhetorical urgencies were still being serviced, towards achieving the same pragmatic outcomes, on behalf of the same segments of the community, by the same politicians.
[1] Pierre Bourdieu, Language and symbolic power (Harvard University Press, 1991), 167.
[2] Google Books, ‘‘supply side’ ‘tax cuts’ ‘deregulation’’ Google Books Ngram Viewer (web page, 15/12/18) <https://books.google.com/ngrams>.
[3] Ibid.
[4] Anthony Albanese, ‘Text of a speech presented at the Shellharbour Workers’ Club on Friday 22 June 2018. ‘Gough Whitlam and the party of the fair go” Evatt Journal, Vol.17, No. 2. June 2018 (web page, 22/01/19) [4] <https://evatt.org.au/papers/gough-whitlam-and-party-fair-go.html >.
[5] Tariq Ali, ‘Tariq Ali Quotes’ BrainyQuote.com (web page, 16/01/19) <https://www.brainyquote.com/quotes/tariq_ali_750035>.
[6] See Kate Green, ‘Welfare reform in Australia and the United States: tracing the emergence and critiques of the new paternalism and mutual obligation’ (2002) 3(1) The drawing board: an Australian review of public affairs 15-32.
[7] See for example, Damien Murphy, ‘Gough Whitlam left a long list of achievements’ 21st October 2014′ Sydney Morning Herald (web page, 9/01/19) <https://www.smh.com.au/politics/federal/gough-whitlam-left-a-long-list-of-achievements-20141021-119cpu.html>.
[8] Ibid.
[9] Ibid.
[10] This does not apply just to health care. A similar dynamic is evident regarding industrial relations, school funding, ‘mutual obligation’ provisions for welfare recipients and a range of other welfare policies. See Green (n 183).
[11] In Australia the smaller ‘right-wing’ political parties often (paradoxically) endorse economically rationalist economic propositions whilst simultaneously pledging to retain all of the significant aspects of the current welfare state. This is largely because they can afford to promise to be all things to all people simply because they do not anticipate ever being in a governing coalition. The National Party (often in coalition in government with the slightly less conservative Liberal Party to form what is known as a ‘Liberal/National Party Coalition) often espouses economically rational propositions but nonetheless is pragmatically committed to as public assistance for the farming and rural sector as it can possibly establish.
[12] The most significant conservative research institutes in Australia since the 1970s are undoubtedly the Centre for Independent Studies (CIS) and the Institute of Public Affairs (IPA) and it’s Sydney spinoff, the Sydney Institute. The Liberal Party also funds the Menzies Research Centre and the National Party the Page Research Centre. Also notable is the economically rationalist voice of (Rupert Murdoch’s) News Corporation which owns almost half of the Australian newspaper media. This media group talks with an economically rational ‘corporatist’ voice that has always been well out of step with the average views of the population at large yet which has nonetheless been significant is helping to set the political and media agenda.
[13] e.g., ‘In late 2003, the Australian Survey of Social Attitudes included this question: ‘In general who do you think is best suited to deliver the following services?’
| Table 1: Attitudes about who is best suited to delivering human services (per cent of responses) | |||
| Health Services | Care for the Elderly | Child Care | |
| Governments | 80.1 | 54.6 | 33.8 |
| Charities | 1.2 | 10.4 | 2.9 |
| Private businesses | 13.5 | 10.9 | 29.7 |
| Families and relatives | 0.3 | 18.0 | 27.0 |
| Can’t choose | 4.8 | 6.2 | 6.7 |
As per Gabrielle Meagher, ‘Do Australians want a private welfare state? Are they getting one anyway?’ ‘The Drawing Board: an Australian Review of Public Affairs’ Australian Review of Public Affairs (web page, 02/01/19) ‘Table 1’. <https://www.australianreview.net/digest/2004/05/meagher.html>. See also throughout Green (n 183).
[14] ‘In Australia during the 1980s there was a rise both in income inequalities and in unemployment rates. Australian governments persisted with the targeting of benefits to particular groups, and the most needy recipients of social security were those who experienced real increases in benefits. [Whereas] In the United States there has been a strong focus on reducing dependence on the welfare state’. Clive Bean and Elim Papadakis, ‘A comparison of mass attitudes towards the welfare state in different institutional regimes, 1985-1990’ (1998) 10(3) International Journal of Public Opinion Research 211-236, 216.
[15] Ibid 20.
[16] The Social Security Act of 1935, Pub.L. 74-271, 49 Stat. 620, enacted August 14, 1935, codified as 42 U.S.C. ch. 7. ‘It introduced social insurance in the form of ‘Social Security’, a mandatory contributory scheme for employees; Aid to Dependent Children (ADC)’. ‘Other New Deal initiatives included emergency relief programs such as the Federal Emergency Relief Act (FERA), an emergency jobs creation program, and the Works Progress Administration (WPA), a public works project’. Ibid 20-21.
[17] Ibid 20. Quoting Charles Noble, Welfare as we knew it: A political history of the American welfare state. (Oxford University Press, 1997).
[18] Ibid 21.
[19] The Employment Act of 1946, ch. 33, section 2, 60 Stat. 23, codified as 15 U.S.C. § 1021.
[20] See J. Bradford De Long, ‘Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946’ (1996) 10(3) Journal of Economic Perspectives 41-53, 41-45.
[21] Herbert Stein, The fiscal revolution in America. (Vol. 14. University of Chicago Press, 1969),197.
[22] J. Bradford De Long, ‘Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946’ (1996) 10(3) Journal of Economic Perspectives 42.
[23] Ibid.
[24] Labor Management Relations Act of 1947 [‘Taft-Hartley Act’] Pub.L. 80-101, 61 Stat. 136, codified as 29 U.S.C. ch. 7.
[25] Thomas Palley, ‘From Keynesianism to neoliberalism: Shifting paradigms in economics’ (2005) Neoliberalism: A critical reader, 21-2.
[26] ‘Having been excluded from the SSA, healthcare became, during the 1940s and 50s, the role of private health insurance providers in the U.S.. Although this system left huge numbers of unemployed, poor, and aged Americans without coverage, no government alternative existed. It was not until 1965, after much advocating from the left and eventual concessions from the American Medical Association (AMA) and private insurers, that President Johnson established Medicare, a federal hospital reimbursement program for the elderly; and Medicaid, its counterpart for the poor’. ‘The AMA: has historically been an incredibly powerful lobbying group, advocating for the primacy of doctors’ decision-making with regard to medical costs. Once Medicare was passed, the AMA insisted doctors be able to charge Medicare patients more than would be reimbursed by government, forcing patients to still pay some out-of-pocket fees’. Green (n 183) 21.
[27] Howard Zinn, A People’s History of the United States (HarperCollins Publishers, 2003) 483-501.
[28] Ibid.
[29] A famous phrase that was first used in a speech by Nixon on January 23, 1973 when he was describing the Paris Peace Accord.
[30] The propositions was that ‘Because blacks faced discrimination, fewer job opportunities, and economic disadvantage, the result was that many became dependent on [welfare]’ Green (n 320) 22.
[31] Ibid.
[32] Ibid 22.
[33] Ibid.
[34] ‘Under the Reagan administration, a decline in social spending and a reinvigorated focus on the middle class paralleled the tenets of Thatcherism in the U.K., in that welfare programs that suited deserving citizens were seen as beneficial, while the needs of poor, black single mothers – for instance – were often demonised… Both Reagan and Thatcher advocated strict residualism; and although both lauded the ability of trickle-down economics to take care of poverty, many scholars argue this ideology only served to considerably widen the gap between rich and poor. With Reagan’s 1988 Family Support Act, an attempt to reform welfare by legislating a social contract requiring recipients to work in return for assistance, many see Reagan as the American president who started ‘changing welfare into workfare’. Ibid.
[35] The same researcher also describes a petitioner writing to the New York Governor, Nelson Rockefeller in 1973, commenting that: ‘It seems like the law abiding citizens have no rights whatsoever, except the responsibility and obligation ‘to work in order to support and care for the parasites of society, the common and habitual criminal’.’ Plus another, ‘describing herself as ‘a law abiding citizen’’ quoted as feeling ‘discriminated against in favor of dope addicts and welfare cheats’. Julilly Kohler-Hausmann, ‘Guns and butter: The welfare state, the carceral state, and the politics of exclusion in the postwar United States’ (2015) 102(1) The Journal of American History 87-99, 87.
[36] Ibid 88.
[37] Ibid 87-8.
[38] Ibid 88.
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