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What the Economic Rationalists (Dries) Really Believed

The below Guest Mannerism by John Hyde OAM was published in Amity, in September 2002″

During the 1990s the Australian economy avoided almost any of the consequences of the “Asian meltdown”, achieving sustained growth of 3% to 4%. Multifactor (labour and capital) productivity gains during the whole of the 1990s averaged around 2% annually (2.4% in the final six years), compared with an historical average of 1.5%. That half of one per cent added 5.8% to average incomes over the decade.

The tendency was part of an international phenomenon, but Australia did better than almost every other nation. When compared to all of Western Europe, the US, Canada, New Zealand and Japan, Australia’s per capita GDP, expressed as the percentage, had declined from 132.3% in 1950 to 99.9% in 1975 and to 88.6% by the time of the 1992 recession. However, it then rose to 95.5% by 1999.[1]

Real wages increased while unemployment was reduced from around 11% to less than 7%.

These gains followed five to 10 years after a sharp change in the whole approach to governing made most notably, but not only, by the Hawke Labor Governments in Canberra and the Kennet Coalition Governments in Victoria. Although Australia started late, it did more, more quickly, to deregulate or privatise than did most countries. These new economic freedoms offer the only plausible explanation of the sharp turn around of a 40-year downward trend. What is more, advocates of the policies had predicted the nature and, less accurately, the extent of benefits achieved.

Nevertheless the “dry” or “economic rationalist” ideas that drove the change are today disparaged and misrepresented to the point of parody. For instance, members of the press glibly refer to them as “right-wing” when in fact they closely follow the classical liberal tradition, once referred to as “left wing.”

Core dry beliefs call for less intrusive but stronger Government that concentrates on protecting the “institutions” by which individuals cooperate and compete voluntarily. The habit of following rules of conduct is quite different from the knowledge that one’s actions will have certain outcomes. The ideal is thus not an end but a way by which an optimistically-viewed future may be discovered. It is practised most in nations to which people choose to migrate.

For a while much conventional wisdom had it that the ideological struggle between liberalism and collectivism ended in liberal victory in 1989 with the fall of the Berlin Wall. However, in Australia, except in a few universities, it had ended well before then. Collectivism was still practised, but its defence was conducted by people with interests in the status quo and it is these who misrepresent dry ideas. In fact, Australian Dries only rarely participate in the Battles Royal of ideologies but instead skirmish endlessly with vested interests and the Governments that do their bidding. Those who seek Governments’ favours and the politicians who grant them cannot admit that the favours are privileges by which the few gain advantages over the many. They, therefore, defend tariffs, tax breaks, regulations, occupational licences etc. by minimising the costs and asserting the spurious community benefits. In the intellectual tradition of Adam Smith, Dries attack their tortured logic.

In the intellectual tradition of John Locke, Dries accord moral status to individuals who are entitled to choice but cannot escape the consequences of their choices. They, therefore, view “civil society” as a community of selfmotivated, free citizens – members of a spontaneous non-political order. They adhere to the modern political convention among most Western nations, but honoured at some point in the breach rather than the observance by probably all of them, that citizens should be of one class only – that is, that the Law should be blind at very least to race, religion, sex and wealth, but why stop there? By the criterion of equal status in Law, apartheid, ethnic subsidies and industry protection are all unsatisfactory.

They are also in the classically liberal tradition in their belief that the powers of the Crown, parliaments and courts are held in trust, the terms of which require the powers to be exercised only on behalf of the public, who are of one class. No politician would explicitly deny these principles but Pitt the Elder and Lord Acton made fair points when they warned of the corrupting tendencies of Power that Dries wish to see constrained and dispersed. During the 1980s and 1990s, when they were often frustrated by the Senate, the Federal system and, the courts, Dries were seldom heard railing against the checks and balances. Even democratic politicians too easily; travel from the correct opinion that they can use powers for the common good, to the belief that in their hands it will be so used, to the assumption that their own positions of power are in the public’s interest, t~ preserving and extending their own powers and tenures by avoiding due process.

The defining feature of Government is the lawful use of force and Dries do not question Hobbes’ observation that withou! effective authority “the life of man [would be] solitary, poor, nasty, brutish and short.” They fight misuse of legitimate authority. They are not anarchists.

Thus, Dries place more trust in civil society and commensurately less in authority than do their opponents. Order has many sources beside Government. Embracing all, there is that sense of right and wrong we once called morality. There is also sympathy for other people once referred to as charity or simply kindness. Without these virtues, families would be impossible, commerce would be impossible, sport would be impossible, Government would be impossible and social living would be impossible. Beneath the “moral umbrella” there are the written and unwritten codes of various markets, the written laws of cricket, the rules of courtship and so on and on. These have evolved by trial and rejection of error and are not easily re-written. Nor is government the only mediating organisation. There are families, friendships, schools and universities, clubs and associations, trade unions and companies, to name only some others.

Dries contend that only weak Governments yield to demands for legislation that makes favourites or meddles in matters ·best left to the “soft” rules of civil society. They urge Governments to restrict their legislating enthusiasms to their protective rules and to law that is even-handed.

Societies are beyond the wit of Mankind to understand in all their complexity and no one can design or create them. To believe otherwise is, as Friedrich Hayek told us, a “fatal conceit.” Some societies are more successful than others, offering their members lives that are less brutish and short. Societies are remarkably resilient but they can be reduced to unsatisfactory conditions, as in Bosnia, Chechnya and Afghanistan, but with judicious management they can be preserved from destabilising forces. They can also be improved, but only at the margin. To be safe, social engineering must be piecemeal, with each piece tested by experience. A successful society must be willing to abandon what does not work. Would that Greenies appreciated that their correct observations about ecosystems apply so much to the social order also!

Dries do not, therefore, have a vision of the ideal society. Man’s attempts to design Utopias have a dreadful record – none of the unlamented socialist states, Nazi Germany, revolutionary France, Sparta, the the Paraguayan experiment or the Communist states had societies we would wish to migrate to. Dries’ world-views do not include men and women of such superior understanding, morality and wisdom that they can be trusted to identify, let alone run, the ideal society. Dries’ formulae tend to limit rather than direct power.

These general beliefs determine attitudes to specific policies. Dries do not think that unfettered market-forces should or could be the sole determinant of resource allocation. They instead ask whether market failure or Government failure presents a bigger problem in particular cases, bearing in mind that, while action by collective agreement can choose between already-recognised possibilities, it is hopelessly poor at discovering new ones. Serious market imperfections, nevertheless, do provide sufficient reasons for imperfect Governments to intervene. No Dry denies that governments should, for instance, ration common property such as wild fish stocks, and finance the provision of true public goods, such as defence and streetlights.

Private property is a necessary condition of market exchange. Further, its several rights identify private domains from which the state is excluded and it is from within these that resistance – in the courts and ballot-boxes or by revolution – can be organised and financed.

Remarkably, Australian labour market law takes rights from the most basic of all property, that which a person has in his own labour. The awards and picket-lines that deny people the right to sell their own labour are affronts to civil liberty.

The growth of second and third generation welfare dependency and the high incidence of anti-social and self-destructive behaviour among a welfare-dependent underclass have concerned Dries increasingly. Those who fall by life’s wayside should be picked up. However, no good comes of pretending that welfare payments do not change incentives – note the huge increase in the numbers drawing sickness or single parents’ benefits.

Dries long since fell out mightily with the politically correct. Gratuitous insult is objectionable but, if opinion is to progress and bounds are to be placed upon the growing arrogance of governing elites, people must be able to express opinions that other people believe to be wrong.

Dries clash also with Green activists. They are tired of being presented with unexplained trend breaks leading always to disaster. Dries suspect that the doomsayers do not merely seek attention like the boy who cried “Wolf!” but also that they want the powers for themselves that only crises can give them. The fates of Jews, Huguenots, Kulaks and other “enemies of the State” testify to the potential misuse of scaremongering.

Favouritism that is of the very nature of commerce, where customers and staff are protected by their ability to walk away, when applied in politics where citizens cannot walk away, is corruption.

Australian politicians very seldom accept personal bribes. They are, nevertheless, corrupted when they extend privileges to those who are so organised or merely so concentrated that they can deliver blocks of votes or resort to politically-damaging lies.

Dries may be identified by their efforts to bring impartiality to law-making and administration and, in short, by their opposition to privilege. However, they advocate a way not a destination. The best achievable society is what free and equal people make of it.

[1] I am indebted to Ian Castles the former Commonwealth Statistician, for this calculation.

For further information on John Hyde OAM, please visit the links below.

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