When Egypt attacked Israel unexpectedly in 1973, President Richard Nixon responded by providing a $2.5 billion arms package to Israel. Saudi Arabia, ostensibly an American ally, reacted with an embargo on oil exports to the United States, and most other Arab oil exporters quickly followed. Although the embargo was lifted in 1974, the price of oil did not fall back to its earlier level, but remained at around twice its pre-1973 level. It was called an ‘energy shock’ and an ‘energy crisis’, and the world was told the good times were over. What the United States did was to use this ‘crisis’ to remake the world in its own image (the Swiss-Italian economist Christian Marazzi has drawn attention to this in character-ising Reaganite neo-liberalism as ‘a nationalist ideology within a world economy still structured along imperialistic lines’).

In 1975 a powerful organisation called the Trilateral Commission, set up by American banking interests, comprising representatives of big business and government from the United States, western Europe and Japan, published a report commissioned by three eminent political scientists, titled The Crisis of Democracy. Its key theme was that democracies had become ungovernable; governments were suffering from an overload of both decision-making and expectation. In short, there was too much democracy, there was too much regulation, there was too much welfare. Government had to give way to business. This was the thinking, helped along by radical economists such as Friedrich Hayek and Milton Friedman, that was seized on by Ronald Reagan and Margaret Thatcher and used to dismantle much of the postwar Keynesian safety net. (John Howard in Australia was a later and no less ardent disciple.) The object of the exercise was to create a global market, an American global market which we now call globalisation.

While they do not challenge these myths, Robert Manne and David McKnight are correct in the introduction to their valuable and timely discussion when they equate the rise of neo-liberalism with government abandonment of policy tools to ‘unstable and profit-driven forces of the market’. This is not only a case of government failing the people, it is also effective capture of the machinery of government by vested interests which have, in Foucault’s words, entrenched ‘a permanent political criticism of political and govern-mental action … the cynicism of a market criticism opposed to the action of public authorities’.

Jean Curthoys makes a strong case against the coercive excesses of neo-liberalism and notes the damage done to the liberal tradition by a retreat from a primary identification with democratic institutions and traditions to identification with the capitalist market. Kevin Rudd’s essay from The Monthly is reproduced here. The editors laud ‘Social Democracy and the Global Financial Crisis’ for its ‘direct assault on the sacred cow of free-market economics’, but the essay’s rhetoric has yet to be translated into policy. David McKnight, while welcoming Rudd’s criticism of neo-liberalism, raises pertinent questions about the direction of his policies, which, in effect, enshrine many aspects of the neo-liberal creed, such as the institutionalisation of individualism and self-interest as a basis for service delivery.

John Quiggin is his usual clear-minded self in a discussion on how a new global accord might work to prevent a recurring financial crisis, and points to the crucial need for a sharp distinction to be made between publicly guaranteed institutions such as banks and unprotected financial institutions such as hedge funds, finance companies, stockbroking firms and mutual funds. The problems of interlocking ownership pose grave and unacceptable risks to the public purse.

Michael Pusey, who has done more than any Australian commentator to chart the advancing neo-liberal assault on democracy, has succinctly described how the neo-liberal revolution has never enjoyed popular support and has been foisted on the people by major international business groups, including the Trilateral Commission; local peak business groups such as the Business Council of Australia; neo-liberal economists in the Canberra policy apparatus; the major accounting firms; and the ‘business-funded hired guns and attack dogs’ in the New Right think-tanks: the Centre for Independent Studies, the H.R. Nicholls Society, the Sydney Institute and the Institute of Public Affairs.

Anne Manne’s chapter, ‘The Question of Care’, raises profound and disturbing concerns in its detailed and thoughtful examination of the corrosive and destructive impact of neo-liberal policies on those among the most vulnerable in society – those in need of care, be they young children, the disabled, the chronically ill or the elderly who fall outside the frame of a profit-driven social picture. She reveals the corporate logic for what it is: ‘A mother breast-feeding or caring for a baby does not add to GDP; but formula milk and corporate childcare do.’   Ian Lowe, another tireless campaigner against the ravages of the economic barbarians, illuminates the tactics of the neo-liberals, especially in regard to climate change, in his account of the detailed 1972 report of the Club of Rome, which questioned whether permanent economic growth was either feasible or even justified, given the rate of population increase and limited resources.

Instead of provoking serious study and reflection, if not revision of the standard development assumptions, it was simply attacked and belittled, usually by people who showed little sign of having actually read it, and for whom the very notion of limited growth was deeply offensive. Guy Pearse picks up on this theme, striking a note of ominous despair in regard to an effective Australian greenhouse policy in the currency of the political myth that economic growth and deep cuts are inevitably incompatible.

Problems abound, but few solutions are provided, despite this volume’s offering much to ponder. Certainly, if we are unable to replace capitalism with any viable alternative, a doubt shared by several contributors, we need to look even more critically at this system that undeniably produces abundance for some – but at a questionable cost to most. Like gunpowder, it has its uses, but only under the strictest and most stringent of legal, social, and democratic controls. Capitalism is still very much with us; the neo-liberal heart within it, though subdued for the present, still beats defiantly.