Liberal Democracy In The New Neonationalist Era: The Three 'O's

Friday, 13 May 2022, 1:37 pm
Article: Keith Rankin

Modern 'western' governments are known as 'liberal democracies'. While each political party in a liberal democracy has a 'policy agenda' which it would like to implement, only single-party governments have a realistic opportunity to fully implement their agenda; and they typically need multiple terms of single party (or near single party) government to do this. Such agendas – commonly, solutions looking for problems – are implemented when it is politically possible, and not as a timely response to a critical problem.

The dominant agendas we became used to were 'globalisation', associated with the 'centre-right', and 'social democracy' associated with the 'centre-left'. Social democracy emphasised the necessity to address 'market failure', while never questioning the property right assumptions of economic liberalism. Both agendas, as we have come to know them, are 'neoliberal', and are underpinned by shared assumptions that are best described as liberal mercantilist.

In the twentyfirst century, as liberal globalisation collapses, we have seen the re-emergence of another agenda, which is a form of political nationalism. New Zealand, with its first single-party government in 25 years, is at the vanguard of this 'neonationalism'; of neonationalist politics. The agenda in New Zealand is to implement the 1840 Treaty of Waitangi in terms of bicultural nationalism. It represents a significant shift away from the neoliberal globalisation agenda for which a former New Zealand single-party government, in the 1980s, was also forging an ideological path which some other countries' governments consciously followed.

Neonationalism represents both an extension of and a narrowing of the politics of diversity. The extension typically focusses on domestic ancestry and gender identities. The narrowing represents a de-emphasis on attention to socio-economic diversity, and an accentuation of the differences in rights between 'citizens' (commonly inclusive of 'permanent residents') and foreigners; in neonationalist polities, 'foreign' denizens represent an important component of neonational workforces.

While some liberal democratic governments are dogmatic, and others (especially coalitions) are pragmatic, three principles dominate the day-to-day governance in the liberal democracies. I call these the three 'O's: order, optics, and oeconomy.

Order

All governments – liberal democracies or otherwise – require an orderly and predictable environment, so will act to suppress disorder. Their inclination is to transfer disorder, and risk, to private sector minorities; eg households with particular health or housing needs, small business sectors, and the denizen labour force.

I will give four examples, here, of global crises for which national governments have emphasised the maintenance of domestic order over attempts to address the underlying issues.

In 2008, the Global Financial Crisis (GFC) hit the western world – with apparent suddenness – as a grey rhino event. For a few weeks there was panic in the halls of western power, and governments took swift decisions – in this case, for unorthodox financial policies – which allow the maintenance of order in emergencies but not in normal times. (In normal times, such unorthodox financial policies disrupt the domestic balance of power.) As soon as the GFC panic was over, these policies were withdrawn in indecent haste. Except in emergencies, it was the orthodox fiscal and monetary policies which suppressed the opportunities for market-led challenges to the existing state of order.

The Covid19 pandemic represented an event which had the potential to spark an outbreak of global disorder; or, from a neonational point of view, simultaneous disorder in most domestic polities. Initially largely ignored in 'the west' – ie treated as a mainly Chinese problem that would soon go away – suddenly in March 2020, after eventually realising that one in a thousand of the population dying could represent over 50,000 people in each of the world's largest western nations, there was an awareness that an unpredictable panic could take place. Countries' hospital systems could be overwhelmed by a 'spike' of coronavirus-infected people. Hence quite draconian policies were pursued, to protect already overextended public hospital-systems; the call was to 'flatten the curve', so that Covid19 victims could gain medical attention in a more orderly sequence. Raised death tolls can be politically managed if they do not all happen in a compressed time period.

We also note that, in this kind of pandemic, international travel itself represented an 'excessive risk' for disorder. Nations became fortresses.

Thirdly, in 2022, we have a renewed 'cost of living' panic; comparable with the global panic of 1973/74. As in 1973, this is a panic triggered by a war. In the present case, it is also a panic exacerbated by a predictable – but not well-predicted – consequence of the Covid19 pandemic; the present barely suppressed disorder in China directly caused by the China government's suppression of disorder two years ago. 'Inflation' – as any event of rising prices is called in the media – is a trigger point for widespread and unacceptable (to governments) levels of disorder. Governments will not allow their conservative or progressive policy agendas to be disturbed by panics over prices. Indeed, it was through the playing of this 'inflation card' that the neoliberal policy extremists were able to justify and get away, in the 1980s, with their rulership policy agenda.

Finally, the climate crisis. Governments pay lip-service to this, while taking fright at, for example, rising fuel prices. Rising petrol prices – the marketplace in action doing what it should be doing to resolve the problem – are one of those 'lightning rod' issues that are seen to threaten public order and thereby understood to threaten extant governments. Their security takes precedence over ours; the security of the rulers inevitably takes precedence over the security of the ruled.

Optics

While all governments rely on optics – the art of managing perceptions through narrative – the 'opticisation' of politics is especially important for governments seeking to maintain their liberal credentials.

Framed narratives are required as the first (and preferably) only line against disorder; and second, to promote the policy agenda. Narratives help to define 'the enemy'; they help governments to appear to be doing something about a widely accepted problem – such as housing – while in reality they are only addressing that problem through the optics of bureaucratic budgets. Taskforces and their like are important for sugar-coating what may otherwise be a divisive policy agenda; they represent the politics of delay.

It is widely understood that democratic governments should be responsive to people's current concerns; in reality governments are really most interested in implementing their policy agendas. Optics generated from on high – effective 'spin' and framing, including the diversion of attention to stories which are media-friendly but ultimately unimportant – are widely used to pacify the people. Such stories claim that lots of money has been allocated to a problem of concern to the people, and they distract the 'free' media. 'Enemies' form useful distractions, be they covid variants, gangs and other miscreants, or geopolitical enemies committing violence on some of their own or their neighbours' peoples. If there are not enough real enemies, then it can be useful to manufacture one or two.

Another technique is repetition, as in pushing the line that rising interest rates must follow a bout of rising prices, as surely as night follows day. A further technique is the 'escalating counterfactual' – widely used by Roger Douglas in New Zealand in the 1980s – to present the principal alternative to his failing policy as being the greater evil; the alternative reality becomes more evil the more the actual reality disappoints. We had that with Covid19 too, as an over-the-top quarantine system was justified through escalating rhetoric about what would have happened in New Zealand had that 'sledgehammer' policy not been in place. (The Swedish counterfactual was quietly ignored.)

(The better approach to a pandemic is a set of smart and proportional restrictions, not a dumb sledgehammer; restrictions with a proper scientific evaluation of which restrictions work best, and in which contexts. And which restrictions are unnecessary 'extra layer of protection' add-ons. And, a clear understanding that, as time passes, the benefits of emergency measures wane whereas the costs of such measures wax. The predilection of governments for order at any cost – or at least the appearance of order – means that they are risk-averse, like a football team that is more interested in preventing its 'enemy' from scoring goals than it is in itself scoring goals.)

Political optics include 'virtue-signalling', like labelling bureaucratic Budgets as 'Well-being Budgets'. And, in the pandemic we saw optics around being "kind" and protecting the old and vulnerable; protecting our collective "grandparents". The reality is that the wider pandemic response saw the New Zealand government adopt policies of labour scarcity around aged-care facilities – and under-resourcing of chronic health care – which adversely target the very people we were meant to be protecting. When the government itself that feels vulnerable, it likes to delegate risk to individual households and businesses; especially the most vulnerable as long as they each vulnerable group can be contained as a minority. This year the aged-care industry is imploding due to lack of staff. It will not be long before we hear similar stories about palliative care – hospice care of the terminally ill – which relies far too much on community charity. Dental care also largely by-passes the most vulnerable. Management of these issues through optical strategies is becoming increasingly untenable.

Oeconomy

Here I am using the old-fashioned spelling of the word 'economy' to harken back to its original Greek meaning: 'housekeeping'. In our context, then, oeconomy means 'public finance' rather than 'the economy'. (We may note that the conventionally understood meaning of 'the economy' is a neonationalist expression, in the sense that it is most usually applied to individual 'nation-states' rather than to either the global or the local. Indeed, it is very common in the neonationalist world of neoclassical economics to refer to nation-states as 'economies'; international economics becomes a set of mainly-market interactions between economies, as distinct from the usual market interactions between households and businesses.)

In liberal political economy, it is a given that governments should command as little as possible of 'the economy'; it is also given that, for centre-left governments, 'as little as possible' is a bigger share of the economy than it is for centre-right governments. It is also accepted in liberal economics, at least since the 1930s, that governments should command bigger shares of the economy in national emergencies – including during a global emergency, which is understood as a simultaneous collection of national emergencies.

Nevertheless the liberal presumption is that, as soon as possible after the emergency, governments should get their oeconomic houses back into financial order. That means things like 'balanced budgets', or preferably fiscal surpluses as governments 'pay back' their financial debts.

This is treating a macro issue as if it's a micro issue. Debt is the classic case because, at the macro (global) level, there is no net debt. Some parties are in debt to other parties, who are in credit; while its seen as a problem for the debtor parties, it's rarely seen as a problem for the creditor parties. Because creditors like being creditors. Debtor balances can only be reduced if creditor balances are also reduced.

Individual neonational governments choose to see their debtor balances as huge problems. And while they also see private debtor balances as being problems, such private balances are by definition non-governmental problems.

In general, any problem where the action of one party if replicated by all others causes an existential crisis may be called a macro problem. The burning of fossil fuels represents such a problem in a global economy the size of ours. (The existential crisis is also known as 'the bottom', as in the expression 'race to the bottom'.) At the micro level, it makes sense to steal from your neighbours, and to kill people – or countries – who are in your way. At the macro level these actions are clearly indefensible – they are criminal – and require moral/legal codes to ensure that crimes are not committed.

Modern global capitalism requires the global public sector to be a substantial net debtor, contrary to the widely disseminated narrative.

Debts can only be eliminated – paid back – by reducing the global financial balance sheet to zero on both sides. That's tantamount to the non-existence of human civilisation. Yet we continue to talk about government debt as a great evil (albeit 'a necessary evil' in some circumstances); and liberal-democratic governments perpetuate that perception, that public debt is a problem that must be prioritised over the many real, chronic, and growing problems faced by the ruled classes. Oeconomy – public oeconomy, debt minimisation – is the third 'O' of liberal democratic politics; it's an excuse for public inaction, except for when faced with those acute problems which threaten public disorder. This preponderant public debt narrative is the 'Achilles heel' which will eventually prove to be the downfall of liberal nationalism – of neonationalism – and of its centre-left variant 'social neonationalism'.

Neonationalism

In an important sense, liberal-democratic governments have always been neonationalist. (Orthodox 'neoclassical' economics has always used a neonationalist language, whereby nation-states are anthropomorphised as economic or military agents; as in 'Russia does this', or 'Australia does that'.) Neonationalism – like neoclassical economics and neoliberalism – is not all that new. But we are now seeing a new social neonationalism, which is much more than the old hat liberal nationalism of economics textbooks.

Social neonationalism is about focussing on constitutional change to create a national society – a neo-nation – that sees itself as distinctly separate from, and exceptional to, the other neo-nations of the world. The relationship with the rest of the world becomes essentially one of economic exchange; that is the liberal exchange of goods and services rather than of labour and capital. But it's also a relationship in which certain other liberally democratic nation states are identified, from the point of view of any one such state, as being 'like us'. (New Zealand, and other western liberal democracies, have recently – and suddenly – discovered that Ukraine is 'like us'!)

While neonationalism creates clear divisions between countries, especially 'unlike countries', it also creates divisions within countries. Most obviously, it creates division between a country's citizens and its resident denizens (refer Two-tier visa system a 'kick in the guts', RNZ, 12 May 2022, for New Zealand's latest episode in separating new citizens from new denizens); people without political rights who perform much of the country's essential labour. Such denizens are being treated essentially as 'foreign labour', with minimal economic rights in the neo-nation, typically a liberal democracy, within which they are labouring. Under neonationalism, such denizens are officially treated as temporary expedients. But, as we have seen in the Gulf States and Singapore, migrant labour becomes integral to a form of nationalism whereby labourers represent accounting costs, and citizens are entitled beneficiaries.

Neonationalism may also create divisions within the formal citizenry, especially if the neonational identity is derived from historical documents which, over the centuries, morph into the centrepiece of a national mythology. This is most obvious in the case of the United States – where the first modern liberal democracy was forged, with Greek classical liberal democracy in mind – where the constitution was forged in an environment in which slavery was normal and not seen as contrary to the principles of a property-owning liberal democracy. George Orwell said in Animal Farm, "all pigs are equal, but some are more equal than others". In modern liberal democracies, not all people are 'pigs'; denizens are not equal to citizens. Denizens aside, it is a widespread problem of nationalism that 'citizens' in nation-states have been – and may continue to be – differentiated on the basis of their ancestry as well as their gender.

Conclusion

The three 'O's – order, optics, oeconomy – represent the core principles of liberal neonational public administration. Globalisation has gone. Governments have reasserted themselves as national rulers, governing by narrative.

The public – the ruled – however are made up of individuals and civil society groups seeking individual and collective goods and services, and space/time to enjoy them. That's what we mean by living standards; by well-being. Rather than oecomomising and obfuscating, liberal governments should facilitate and mediate, promoting equity and efficiency (which are not opposites, as some economics textbooks claim). Democratic development is bottom up. Governments need to listen and respond, and should deploy information and science without bias. Democratic governments – constitutionally – are servants, not masters.

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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

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Keith Rankin

Political Economist, Scoop Columnist

Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s.

Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like.

Keith retired in 2020 and lives with his family in Glen Eden, Auckland.

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