The Price of Everything: Neoliberalism and its blind spots

Neoliberalism is among the most influential social, political and economic forces of our time. Danu describes the neoliberal project and examines its effects upon higher education in Australia by beginning with a simple question — does it produce good social outcomes?

The Price of Everything

Have the economic reforms pursued in Australia since the early 1980s produced positive social outcomes?

To give this question proper consideration, we shall need to do a number of things, beginning of course with an explanation of what economic reforms are in question. To do this, I will focus on one particular policy area — higher education policy. This is an area of policy to which the sort of economic reforms we will be discussing have been applied visibly and purposively; it is also a policy area in which we can comfortably discuss social outcomes. We will also need to tackle the more difficult issue of evaluating what constitutes a positive social outcome and how we might recognise one.

Let us turn first to the discussion of the economic reform itself. ‘Since the 1980s’ is code for a number of related and complementary notions and assumptions about economics, society and human behaviour that became widely influential and accepted around this time — the sort of constellation of ideas that we might best describe as a movement. The movement in question has been variously described as ‘neoliberalism’, ‘economic rationalism’, ‘free-market’, ‘Friedmanite’, ‘lassez-faire’, ‘small government’ and even ‘Reaganomics’. These labels all emphasise different aspects of the movement and are largely interchangeable, though my preferred term is neoliberalism, which I will use hereafter.

Attempting a precise definition of such a fuzzy category as neoliberalism is a futile exercise, so let me instead lay out some of the core principles that underwrite it. At heart, neoliberalism combines a libertarian political philosophy with an economic world-view. That is to say, it invokes an image of humanity as a collection of rational individuals each acting in their own self-interest — the role of public policy on this view is to ensure each individual has freedom to exercise his or her rational choices as efficiently as possible. Efficiency here means with as much information (price signals) and as little interference (government) as possible. Neoliberals believe that in this state of affairs, the sum of each individual’s rational, self-interested choices in a perfect market will secure the best possible outcome for all. Free markets, free people. (In that order.)

By valuing education wholly on economic terms, we begin to deprive ourselves as a society of the capacity to comprehend our own folly in doing so.

When former US President Ronald Reagan famously said, ‘government is not the solution to our problem, government is the problem’, we can see what he was getting at. Similarly, when former UK Prime Minister Margaret Thatcher more ominously said ‘there is no such thing as society’, we see she was appealing to a vision of homo economicusEconomic Man.

Politically, it is important to understand neoliberalism as a bipartisan affair. Though its chief proponents in the US and UK during the 1980s and early 1990s were both from conservative parties, in Australia similar work was carried out by the ALP under the Hawke and Keating governments, generally regarded as centre-left. Economic reforms undertaken during this period included floating the Australian Dollar, ending the tariff system and privatising the Commonwealth Bank.

There is much of interest to be said about the origins of neoliberalism (as a counter-movement against the previously dominant Keynesianism, for example) and the work of some of its key adherents (Friedrich von Hayek, Milton Friedman, Gary Becker), but this is not our chief focus today. Instead, let us now examine the influence of neoliberalism on higher education policy in Australia.

In higher education, the most notable reforms since the 1980s were those undertaken by then Education Minister John Dawkins, that included the introduction of the HECS scheme, measures aimed at increasing efficiency and international research competitiveness, and the amalgamation of some universities with Colleges of Advanced Education. The so-called Dawkins Revolution is broadly characteristic of and consistent with neoliberal policymaking.

Central to higher education policy since this period (though arguably to an extent beforehand as well) is an economic conception of education that owes much to Gary Becker’s notion of ‘human capital’.1 Let me clarify this point a little, as it will be crucial when we come later to the question of good outcomes. Clearly, education is not a fungible commodity (i.e. readily exchangeable for another of the same kind) in the same way as milk, felt-tip pens or dollar coins. We can exchange one bottle of milk, felt-tip pen or dollar coin for another and its value remains the same. We would hesitate in saying we can exchange one education for another. Education is a complicated ‘good’ with inextricable individual and social qualities. According to Gary Becker, these sorts of goods are best understood as forms of ‘human’ capital.

It is important to understand that Becker is interested in a wide-ranging expansion of the traditional domain of economics. He wants to claim that economics is more than the science of production and distribution of scarce resources and the mechanisms of markets by which this is conducted. In studying the behaviour of markets, Becker claims, we can also learn everything we need to know about other spheres of nonmarket human behaviour, including our social, political, cultural and psychological lives.2 Thus, we should properly regard a complicated idea like education as an investment made in an individual’s future productivity.

With this in mind, we can now make better sense of statements like the following, from the 2009 Bradley Review of Higher Education:

The Government is committed to making Australia one of the most educated and highly skilled workforces in the world in order to secure national long term economic prosperity.

Such a statement is notable not so much for what it says but for what it leaves out — specifically any idea of education, or indeed work, as a valuable end unto itself, the kind of ‘democratic education’ values articulated memorably by John Dewey.3 Here, both education and work are purely instrumental, in this case in order to secure a dividend from an investment in education in the form of national economic prosperity. This instrumental, investment thinking is also evident in the Howard Government’s alterations to the HECS scheme and its deregulation of university fees. As part of those changes, the amount of funding for student placements provided by the government would now vary by discipline according to the expected earnings a student will make in the future working in that discipline.

This is a timely moment to ask — is this way of regarding education a good social outcome? If you apply the neoliberal ideal of free markets, the answer appears at first to be an unqualified yes! Rational individuals will choose to undertake an education that will be most likely to benefit them, perhaps in the form of a high-paying job that requires specialist expertise, or as ‘social capital’ that unlocks membership in certain communities. Everyone is better off when individuals are allowed to make these decisions freely and with good information — one job of public policy must therefore be to facilitate a market in education that allocates funding to the most valuable, in-demand courses and institutions (this is one of the chief aims of the Bradley Review’s recommendations.4) However, even this is complicated somewhat by the idea of national prosperity — in a world of individuals, what kind of thing is a nation and why should it matter?

More importantly though, neoliberalism doesn’t really offer us much in the way of judging what is good, except to the extent that it promotes individual freedom. To be fair to neoliberalism, this is also not something it aspires to offer. After all, once you have freedom, it is up to you what you do with it. So aside from the promotion of individual freedom, neoliberalism is neutral on the question of what we should judge as good. But it does have a close and comfortable relationship with an ethical system that does aspire to offer us that judgment — utilitarianism.

A proper account of the utilitarian tradition is not something we can hope to achieve here, except to state its two core principles. They are, firstly, that we should judge the goodness of an action by the outcome it produces (as opposed, for example, to the obligation that prompted it or what it says about the character of the agent who is doing the action) and, secondly, that an outcome is good to the extent that it maximises utility (i.e. pleasure/gain/happiness/satisfaction of preferences). Hence Jeremy Bentham’s well-known formulation of ‘the greatest happiness for the greatest number’ as the measure of what is right and wrong.

Here we can begin to see the prejudice expressed in the initial question, which asks specifically about outcomes, and therefore preempts an answer in utilitarian (or at least consequentialist) terms. We could assess the goodness of policy in other terms than the state of affairs it brings about. For example, we might consider the extent to which a government seeks to uphold a duty to provide education on fair terms to the least advantaged. Alternatively, we could judge the manner in which an education policy contributes to the flourishing life of its citizens. In both cases, the way we regard and value education becomes important, not simply for the outcomes it produces but for what it says about our attitude towards education. Economics however does not give us much of a frame of reference with which to engage either of these approaches, as they require the consideration of sorts of information (rights, virtues, duties, character) that economics, at least in its neoliberal form, is not equipped to deal with. This is because economics relies almost exclusively on certain sorts of empirical data. It does not have a way of talking about values, except when they are expressed as price information or as a measure of utility. Because of this, there is a very real sense in which economics is utilitarian.

Let us now return to the question I asked at the outset — have the economic reforms pursued in Australia since the early 1980s produced positive social outcomes? I would argue that what neoliberal economic reforms have done, in effect, especially with respect to higher education, is to strip it of its true value and meaning and leave it as a much-diminished shadow of its former self. It is however impossible to make this argument successfully unless you place value on education not merely as an instrumental good but also as an end unto itself, and furthermore regard its true purpose (telos) to be the cultivation of good citizens. But there is no way to assign this value in neoliberalism or in utilitarianism, which, being both ultimately self-regarding, have no way of properly accommodating the full implications of a term like ‘citizenship’ and its related vocabulary.

This highlights the danger of systems that purport to be value-neutral. All systems are value-laden, but some simply don’t declare their values or otherwise disguise them. What this means in practice is that without an ethical vocabulary and means of obtaining self-knowledge about values, such systems can produce terrifyingly tragic effects without any way to notice that they are doing so. If neoliberal economic reforms have produced disastrous social outcomes, we are unable to notice or comprehend them from inside a neoliberal perspective. The failure to properly value education is in itself a disastrous outcome, but the implications become dire when we fully appreciate how crucial education is to arriving at that understanding. By valuing education wholly on economic terms, we begin to deprive ourselves as a society of the capacity to comprehend our own folly in doing so. If education is democracy’s source of renewal, then in pursuing neoliberal education reform, we are quite literally destroying our consciousness and losing our minds.

Rob Watts has described the process of rationalisation of modern Australian universities and tendency towards self-service education as the move to ‘McUniversities’. Still stronger is the assessment of Arran Gare, who claims:

The lack of resistance to the destruction of democracy, as it was originally understood in Australia, by successive neoliberal governments has been due largely to the decadent state of Australian universities. These had come to be dominated by a crude form of empiricist utilitarianism, making Australia peculiarly vulnerable to the ideologues of global free markets and the power of transnational corporations who have sought to transform language to equate the dominance of all facets of life by markets as a defence of democracy.5

For those who reject entirely the basis of neoliberal thinking and its expansion into nonmarket areas such as education, enabled by Gary Becker and others, there is no way to meaningfully engage with the kinds of ‘solutions’ much current policymaking demands. The starting assumptions on both sides are simply too far apart and the differences between them irreconcilable. This perhaps goes some way to making sense of the rapidity of the change/collapse in arts and humanities faculties (where most of the objection comes from) and the lack of effective resistance to it. The resisters have either accepted their opponents’ premise and been assimilated, or have insisted on their own terms and been circumvented, undermined or simply flattened by a class of managerial administrators who are committed to neoliberal education policy.

The core problem I think is succinctly expressed by Harvard political philosopher Michael Sandel in his book What Money Can’t Buy: The Moral Limits of Markets:

Putting a price on the good things in life can corrupt them. That’s because markets don’t only allocate goods; they also express and promote certain attitudes toward the goods being exchanged … Economists often assume that markets are inert, that they do not affect the goods they exchange. But this is untrue. Markets leave their mark. Sometimes, market values crowd out nonmarket values worth caring about.6

The values of democratic education, in the tradition of John Dewey, are worth caring about. Neoliberalism does not simply fail to care, it has no way to care. It’s hard to imagine a worse outcome than that. ◾

Offline References

1 G Becker, Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. 2d ed., 1975, Columbia University Press, New York.
2 ibid.
3 J Dewey, Democracy and Education: an Introduction to the Philosophy of Education, 1916, Macmillan, New York.
4 Specifically, Recommendations 25 and 29 in
Australian Government, ‘Review of Australian Higher Education: Final Report’, 2009, retrieved 27 Mar 2013,
5 A Gare, ‘The Neo-Liberal Assault on Australian Universities and the Future of Democracy’, Concrescence, vol. 7, 2006, p. 21.
6 M Sandel, What Money Can’t Buy: The Moral Limits of Markets, 2012, Farrar, Straus & Giroux, New York, p. 9.

Tags: , , , , , , ,