Damien Cahill
Edited version of a paper presented to the Sydney Branch of the Labour History Society, 25th July, 2004.
It is Sydney in the late 1960s1. Conscription for service in the Vietnam War has been introduced and is increasingly becoming a major, divisive issue. The anti-war movement is growing. Many social norms are being challenged by a militant, radical student movement.
A young man enrols in Agricultural Science at Sydney University, one of the centres of student rebellion and of the anti-war movement in the city. Despite the growing radicalism around him, the young man does not involve himself in demonstrations or political action of any kind, either left or right-wing. Reminiscing upon the period the man says that, at the time, he thinks ‘he supported the idea of the war’, but there is no sign that he held particularly strong political convictions of any sort.
He dropped out of Agricultural Science and instead went to Teachers College, where he came under the tutelage of movie critic Bill Collins who introduced him to the work of Ayn Rand – the right-wing libertarian author of The Fountainhead and Atlas Shrugged. For the next few years, during the early 1970s, the young man undertook a variety of jobs: taxi driver, freelance journalist and maths teacher. In the meantime – his interest in right-wing libertarianism sparked by the encounter with Rand’s books – our young man became involved in an Ayn Rand discussion group held in the Glebe flat of one Bob Howard, founder of the Workers Party and co-author with advertising executive John Singleton of Rip Van Australia – a right-wing libertarian manifesto of sorts. Through this our young man came into contact with the work of Friederich von Hayek, Ludwig von Mises and other right-wing libertarians. Although now regarded as the founding figures of ‘neo-liberalism’, at the time their ideas occupied the margins of political debate. Our young man became involved in the newly formed Workers Party and was quite active for the party in the 1975 dismissal election. Also in 1975 our young man travelled to the US and met Murray Rothbard, a leading anarcho-capitalist, and visited several right-wing think tanks and foundations. Combined with the economic crisis besetting Australia and other capitalist countries at the time, these experiences convinced our young man of the need to found his own institute to further the neo-liberal cause.
In 1976 our young man did just this. In a shed in the back yard of his Pennant Hills home he established a think tank. The man’s name was Greg Lindsay and the name of the think tank was the Centre for Independent Studies (CIS). Within a decade the CIS was to go from a backyard shed, run by the part-time mathematics teacher and sometime taxi driver to an organization with a budget of over a half-a-million dollars, an office in the business district of North Sydney, and 7 staff members2 ; from a virtually unknown political organisation to a prominent, oft quoted representative of a particularly radical and fundamentalist variety of neo-liberalism. A decade later its budget was pushing $1 million, NSW Premier Bob Carr was describing it as ‘the jewel in Sydney’s crown’3, and Governor General Bill Hayden had launched its new premises. Today the CIS is a well known advocate of the public funding of private schools, of punitive policies towards refugees and of the further deregulation of the Australian economy. We might well ask how it was that the CIS was able to grow from not only a small organization, but a fringe organization, into a major, well resourced commentator on public issues? However the question has broader relevance, for the CIS was but one part of a small group of academics, journalists, public servants and capitalists who began, from the mid 1970s onwards, to articulate a radical, neo-liberal political program and philosophy: that capitalist markets, when freed from state interference, are the most efficient and most moral way of providing and distributing most goods and services in society, and therefore that policies of deregulation, privatisation, marketisation and drastic cuts to government expenditure and taxation must be pursued. It was also at this time that they began to cohere around think tanks and similar organisations – the Institute of Public Affairs (IPA), the Australian Adam Smith Club, Crossroads and later the H. R. Nicholls Society and the Australian Institute for Public Policy (AIPP). The CIS, then, was one part of the emerging radical neo-liberal movement – what is commonly referred to as the New Right – a movement that is today is one of the most prominent ideological cheerleaders for the Coalition government.
So, the question I want to address in this paper is: How was it that a small, fringe movement was able to develop, within a relatively short period of time, into a powerful and vocal political force in Australia?
Perhaps the most common explanation given is that it was the organisational form of the think tank that enabled the radical neo-liberal to emerge from relative obscurity and rise to prominence. Journalists and many on the Left tend to offer such an explanation. And it has some value.
In the mid- to late 1970s, radical neo-liberal ideology in Australia was adhered to and promoted by a disparate array of individuals and small groups. Radical neo-liberal ideas were not themselves new. In Britain and the USA intellectuals such as Friederich Hayek, Milton Friedman and James Buchanan had been developing the radical neo-liberal framework for a number of decades, and promoting it through such networks as the Mont Pelerin Society and British think tank the Institute of Economic Affairs.
What cohered these individuals and small groups into a movement was the establishment and, in the case of the IPA, reinvigoration of think tanks. Inspired by overseas examples, a small number of capitalists and academics sought to construct think tanks and networks along the lines of overseas examples. In addition to the CIS the most important of these groups were: the AIPP, founded in 1983 by former Dry Liberal MP, John Hyde; the Crossroads Group, which met secretly from 1980-1986 and brought together the core of movement activists; the H. R. Nicholls Society, founded in 1986 and dedicated to dismantling the arbitration system, eroding trade union rights and enhancing capital freedoms; and the IPA which, particularly after Rod Kemp’s appointment as Director in 1982, moved from an anti-communist Keynesian position to a conservative neo-liberal one. It was largely through the focus and organisational support afforded by these think tanks that the process described by David Kemp whereby ‘comparatively isolated intellectuals became linked in a nationwide network’4 was able to occur.
There can be little doubt that think-tanks provided the radical neo-liberal movement with its organisational backbone. However, there are many think tanks in Australia – right, left and centre. Why were radical neo-liberal think tanks able to enjoy success and publicity disproportionate to their size and intervene in public debate, when other groups were not? Organisation alone is not a guarantee of political success. Think tanks certainly provided the vehicle for the promotion of radical neo-liberal ideology, but while important, the organisational form of the think tank is itself not a sufficient explanation for the rise of the radical neo-liberal movement.
Another possible explanation for the rise of the radical neo-liberal movement is the strength of the radical neo-liberal critique – the power of radical neo-liberal ideas – whether it be the correctness of the ideas themselves, or how they are packaged. The radical neo-liberals have been quite adept at condensing their philosophy into simple propositions, slogans and dichotomies: state administered welfare creates a ‘culture of welfare dependency’; notions of social justice are but manifestations of ‘political correctness’; free markets promote freedom of choice. They also have a coherent explanation of the ills besetting society that involves an historical explanation of how they occur, who and what is to blame, why their enemies are immoral and importantly, what to do about it. The crucial question that needs to be addressed, however, is: why these ideas? Why were these ideas successful – and not others which weer packaged in a similarly coherent and emotionally potent fashion? While important, the ways in which radical neo-liberal ideas were packaged was not the crucial determinant of the movement’s success.
An alternative explanation is that, from the mid-1970s onwards, the economic crisis besetting capitalism created a favourable context in which radical neo-liberal ideas could thrive. With such an explanation we are getting closer to an adequate account of the reasons for the rise of the radical neo-liberal movement. There can be little doubt that, from the mid 1970s onwards, the ‘time was ripe’ for the promotion of radical neo-liberal ideas. Stagflation – simultaneously high unemployment and inflation – could be held up as evidence of the failure of Keynesianism and the government’s direction of the economy towards socially just ends. Neo-liberals such as Hayek and Friedman had always maintained that government ‘intervention’ in the economy was doomed to failure. The crisis of Keynesianism created a climate in which radical alternatives had some legitimacy.
Later developments also favoured the radical neo-liberal movement. The election of the Hawke Labor government in 1983 was doubly advantageous for the radical neo-liberals. On the one hand, to the radical neo-liberals, Labor’s negotiation of the Prices and Incomes Accord with the ACTU was evidence of the collusion between ‘big government’ and ‘special interests’ characteristic of a centrally planned economy. On the other hand, that the Labor government was also embarking upon a neo-liberal program of economic restructuring – such as the deregulation of the financial sector; and that some aspects of Labor’s economic agenda resembled the prescriptions being put forward by the radical neo-liberals –meant that movement think tanks and activists acquired a new legitimacy.
When the communist states of eastern Europe and the Soviet Union fell successively from 1989 onwards – being transformed from centrally planned to neo-liberal capitalist economies – the Thatcherite mantra that ‘there is no alternative’ to neo-liberalism seemed to be confirmed. Francis Fukuyama proclaimed that we had reached the end of history, and the radical neo-liberals began to look a lot less radical. Since 1996 neo-liberal organisations have gained added legitimacy as shock troops for the Howard government. Greg Lindsay was awarded an Order of Australia medal and the IPA was commissioned to by the federal government legitimate its attack upon progressive non-government organisations.
Clearly then, an increasingly favourable political and economic context has assisted the radical neo-liberal movement. However, while important, this is still not sufficient to account for its emergence, growth and longevity. The context was favourable, the packaging of ideas provided the movement with coherence, and think tanks provided the movement with organisational strength. This still does not explain why these radical organisations were able to emerge and increase their profile so rapidly and, importantly, to sustain their activities over time. Why was such a fundamentalist and ‘messianic’5 movement able to move into the mainstream of political debate? Why this movement in particular, which eschewed pragmatism in its policy proscriptions? And, crucially, why was the movement able to grow financially, and in terms of visibility, when its participant and support base remained small?
Ultimately, what enabled the radical neo-liberals to exploit the favourable political and economic context, and to make the most of their organisational and discursive strengths was their relationship with key fractions capital.
Investigating the relationship between the radical neo-liberal movement and the capitalist class is not unproblematic. Indeed, its relationship with capital is the issue about which the movement is most guarded. Therefore, there is a lack of transparency in public accounts by the movement of this relationship. Detailed and systematic data regarding the relationship between the radical neo-liberal movement and the capitalist class is not made public. Australian radical neo-liberal think tanks and forums rarely identify their financial supporters. Where they do so, the amounts contributed by each corporation, individual and sector are rarely made available. Furthermore, membership lists of the boards of radical neo-liberal think tanks and forums are not always published.
Nonetheless, from the published movement records that are available it is possible to make a pretty accurate approximation the movement’s relationship with capital. In particular, it is possible to identify which companies and capitalist fractions supported the movement, and in what ways. The pattern of support which emerges shows that four fractions of capital have been most important to the movement: mining, finance, the largest Australian corporations – what we might call monopoly capital – and manufacturing capital. A smattering of capitalists from other sectors – such as retail, media and construction – also supported the radical neo-liberals, but mining, finance, manufacturing and monopoly capital have been consistent and major supporters over the lifetime of the movement. From the mid-1970s onwards, these capitalist fractions mobilised – through employer associations, for example – in order to dismantle the key institutions and social truths underpinning Australia’s welfare state, tariff protections and centralised arbitration system. They mobilised in order to bring about a transfer of power from labour to capital, and the radical neo-liberals became part of this mobilisation.
By supporting the movement these capitalist fractions ensured that radical neo-liberal ideas would be vigorously promoted by groups other than themselves, leaving the capitalists to pursue their interests in a more favourable intellectual and political climate. In short, these capitalists supported the movement because the movement played a crucial hegemonic role. It ensured that there were groups aggressively advocating privatisation, deregulation, marketisation, reductions in trade union power, dismantling of tariffs, dismantling of the institutions and social truths underpinning the Australian Settlement and the post-war Keynesian consensus and demonising social movements. Mining, finance and monopoly capital in Australia all had direct interests in deregulation, and in reducing in tariffs and trade union power. Those manufacturers supportive of the movement were dominated by companies which stood to lose from what I call ‘public interest regulation’ – such as environmental regulations – many of which resulted at least in part from the mobilisations of social movements. Many of the manufacturers supportive of the movement were from industries such as chemicals, pharmaceuticals, paper production, tobacco and alcohol, and well as the production of mining equipment and mining-related materials. I have suggested that this supportive relationship with key fractions of capital was the crucial determinant in the emergence, growth and longevity of the radical neo-liberal movement. There are two reasons this. First, the ongoing flow of resources – both financial and non-financial – provided by such capitalists enabled the movement to grow and to sustain its activities over time. The early history of CIS provides a good example of this. In its early years, when the CIS was still housed in the backyard shed of Greg Lindsay, Lindsay received financial support from two capitalists: Roscoe Taylor and Neville Kennards of Kennards Hire Co. This allowed Lindsay to take leave from his teaching job and concentrate on propaganda. But what enabled the CIS to take big steps towards becoming a recognised part of the political landscape was seed funding it received in 1979. Lindsay describes flying to Melbourne to meet WMC CEO and ardent neo-liberal, Hugh Morgan, to talk about furthering his think tank. Morgan said:
‘Lets not muck about on this any longer.’ He rang up some people and got seed money commitments amounting in total, once others came in, to about $40 000. This was committed per year for five years.6
This allowed the CIS, in 1980, to establish its first office in St Leonards. The money came from WMC, CRA, BHP, Santos, Shell and The Advertiser7. Five years later, in 1984, the total income of the CIS had grown to $225,273 – of which $172,514 (76 per cent) consisted of ‘donations’ – short hand for corporate money.8 By 1996, the yearly income of the CIS had increased to $971,182 of which $772,077 (79 per cent) was derived from ‘donations’.9 With only limited income derived from subscriptions, conferences and the sale of publications, corporate donations to the CIS provided the basis of its income. Thus, corporate support was crucial to the inception, growth and longevity of the Centre for Independent Studies.
Other movement organisations were in a similar situation. From the early 1980s onwards, corporations pumped millions of dollars into radical neo-liberal think tanks and projects. This funding was crucial for the growth and maintenance of the movement. Non-financial resources were equally important. Capitalist supporters of the movement performed crucial roles such as brokering funding, sitting on the governing boards of think tanks and providing in-kind support to the movement such as the use of company staff and facilities.
The second reason, I argue, why capitalist support of the movement was crucial to its emergence, growth and longevity has to do with the less tangible effects of the movement’s relationship with key capitalist fractions. This relationship meant that the movement was allied with and connected to important centres of power. That such fractions were mobilising to dismantle the ‘Australian Settlement’, the Keynesian consensus, the welfare state and the social truths which underpinned them ensured that the movement was also connected to a broader political struggle. This gave the movement a relevance and immediacy that it would not otherwise have had. Indeed, the mobilisation by capital to transform state-labour-capital relations helps to explain the changing political and economic context from the 1970s onwards that was so favourable for the radical neo-liberals.
The forgoing analysis suggests a particular relationship between radical ideas, organisations and interests in the processes of social change. It suggests that radical ideas and organisations are most effective when connected to broader interests which are themselves contesting power relationships: something those striving for a just society would do well to take note of.
Notes
- The following account is based upon Andrew Norton, ‘The CIS at Twenty: Greg Lindsay talks to Andrew Norton’, Policy, Winter 1996, pp. 16-21.
- CIS Annual Review 1986-87, CIS, St Leonards, 1987.
- Carr’s words adorn the CIS website: www.cis.org.au
- David Kemp, ‘Liberalism and Conservatism in Australia since 1944’ in Brian Head and James Walter (eds), Intellectual Movements and Australian Society, Oxford University Press, Melbourne, 1988, p. 340
- I am borrowing from Andrew Moore’s statement that ‘Much of the New Right rhetoric exhibits a messianic flavour’ (Andrew Moore, The Right Road? A History of Right-Wing Politics in Australia, Oxford University Press, Melbourne, 1995, p. 130).
- Greg Lindsay quoted in Norton, op. cit.
- Paul Kelly, The End of Certainty: Power, Politics and Business in Australia, 2nd Edition, Allen and Unwin, St Leonards, 1994, p. 47
- CIS Annual Review 1984, CIS, St Leonards, 1984
- CIS Annual Review 1996, CIS, St Leonards, 1996