Many nations now advocate unified democratic resistance to growing authoritarianism across the globe. However, the proper focus of this resistance should be the improvement of domestic conditions, starting with serious commitments to curbing climate change, improving intergenerational equity, and providing plain old-fashioned good government

Some choked on their Wheaties. Others spat their dentures across the room. A few laughed so hard they had to change their undies. 

Australia’s PM (Principal Marketeer) recently warned that a rising tide of authoritarianism threatened liberal democracies, which must now band together to defend “… a liberal set of values that underpin the global world (sic) order that has delivered so much for the world (sic).”

He is correct of course, at least in simple terms, but the disbelief sprang from what he overlooked.

“Overlooked” because in this framing, the contest he foreshadows fundamentally equates political legitimacy with the delivery of material benefits to subject citizens; a metric in which Australia’s performance has been increasingly lop-sided.

Let’s review briefly.

Growing authoritarianism

Growing authoritarianism amongst once-liberal democracies over the last two decades is generally held to be a reaction to the accumulated failures to fairly distribute the benefits of the liberal world order and democratic governance. 

Rather than repair these shortcomings, opportunistic strongmen have arrogated democratically distributed power to themselves – only they know best. Their autocratic models rest on the claim that the main barrier to greater universal betterment is democracy itself. Increasingly exasperated electorates seem to agree.

A lot of the illiberal symptoms highlighted in authoritarian regimes abroad have already occurred and are now entrenched in Australia, most acutely in the deep structural composition of our increasingly rentier economy. 

Some trace this antidemocratic turn to the Reagan/Thatcher era, which in popular imagination drove the dismantling of government and the lionisation of private endeavour.  The Reaganite assumption – that government was the problem – certainly appealed at the time and resulted in the repeated re-election of conservative governments on the back of coincidentally fortuitous improvements in economic fortunes.

Under this construction, the Prime Minister is disingenuous to champion democratic resistance to authoritarianism, having participated with his fellow-travellers in a decades-long project to dismantle democratic institutions and aggregate the spoils. 

However, this is too simple a characterisation as government has not so much been dismantled but fundamentally reshaped over this period.

There are at least two significant features of these changes.

The first is the creation of a class of voters defined by greater personal (increasingly economic) rather than ideological investment in voting outcomes.  Thus, the focus of democratic engagement has narrowed to a concern for the direct improvement of personal conditions. 

The second, perhaps more insidious consequence is that the power of democratic institutions to engage with broad collective concerns – like a shared system of values – has shrivelled in proportion to the elevation of individual interests.   Values-based democratic government has been weakened at the very time the PM says it needs strengthening.

Thus, the PM’s current appeal to defend liberal democratic values clangs discordantly with both his party’s hitherto customary concerns and with this evolved electorate more generally. 

Liberal values and the world order

In their March 2021 article, The Illiberal Tide: Why the International Order Is Tilting Toward Autocracy, Cooley and Nexon examined emerging illiberalism by starting with a definition of “liberalism”, which they saw as comprised of three elements.

Firstly, political liberalism, which at is narrowest entails respect for basic human and civil rights, and at is broadest a claim to their universal application.

Secondly, economic liberalism involves a commitment to free markets, which can range from those that include strong social safety nets through to the more arid unrestrained neo-liberalism that achieved dominance in the 1990s.

Thirdly, liberal intergovernmentalism, which refers to the make-up of international relationships. They describe it as characterised by multilateral treaties, international organisations, and institutions that resolve disputes and provide other services necessary for the delivery of international goods. In contrast, “illiberal forms of international governance can range from assertions of privileged spheres of influence to formal imperialism” of a kind that seem to underpin current tensions in the South China Sea and the Crimean Peninsula.  

They stress that these three “domains” coexist in ways that differ between nations and over time, resulting in international orders that evolve and contain liberal and illiberal components, which in turn frequently contradict each other.

Though all three domains have been corroded by nominally liberal nations to some degree, the authors contend that most damage was caused in the realm of economic liberalism.

The most newsworthy were the Trump administration’s trade wars, the features of which are now being redeployed as cover for the frankly self-serving economic policies of many illiberal regimes.

Yet the authors consider of greater significance the more hidden appropriation of liberal economic instruments for illiberal purposes, that:

“…intersect with an increasingly kleptocratic and oligarchic international economy… that involve how ruling elites and despots take advantage of the legal institutions and hidden service providers of the global economic system … through which corporations and wealthy individuals avoid taxation and directly influence the political system and campaigns (emphasis added)”.

In remarks that sound vaguely familiar domestically, they add:

“The combination of extreme capital mobility and secrecy is just one of the features of the contemporary economic order that illiberal leaders find useful for extracting rents (emphasis added)”.

This familiarity snaps into focus when they observe that much of the erosion of economic liberalism originates: 

“’within the house’ (from) policymakers who consider themselves champions of liberal economic order (yet who) frequently pursue capital mobility, financial deregulation, and the excessive privatization of public services (emphasis added)”.

Expressed simply, erosion of international liberalism – the explicit focus of the PM’s remarks – is greatly accommodated by declining economic liberalism domestically. 

Financial deregulation, excessive public service privatisation, tax avoidance, political influence by the wealthy, and rentier-ism are simply different spots on the same illiberal kleptocratic and autocratic animal.

Rents?

Many economists have long held rentier-ism to be a pathological degradation of productive capitalist economies. 

Its contemporary features in the UK were recently explored by Brett Christophers, who notes that the same basic features can be found in all advanced economies, including Australia’s. 

Combining two perspectives within economic scholarship of the topic, he defines rentier-ism as “… income derived from the ownership, possession or control of scarce assets under conditions of limited or no competition… the rentier sweats monopoly from every pore.” 

Expressed another way, rentiers obtain wealth from the investment of capital, not labour, and the extent of that wealth increases with decreasing competition.

The rentier bent of the fossil fuel sector – the disproportionate income it derives from extraction licences – accounts for its deep and effective resistance to environmental policy change, particularly in Australia.

Noting the blurred boundary between rentier-ism and economic activity derived from trade or labour, he then examines seven sectors of the UK economy that display strong rentier-ist overtones. 

He notes that despite its well understood adverse economic consequences – stifling competition and economic efficiency; declining innovation; and extreme wealth transfers associated with income and wealth inequality – rentier-ism has grown dramatically over the last 30 years to such an extent that markets worldwide are being destabilised.

Yet, despite this corrosive effect on capitalist efficiency, rentiers were politically enabled and sustained to the extent that they are now a fundamental feature of contemporary productivity and wealth distribution.

Though all seven of Christophers’ categories have recognisable Australian counterparts, three warrant quick mention here – resource extraction, infrastructure, and housing. 

Firstly, the rentier bent of the fossil fuel sector – the disproportionate income it derives from extraction licences – accounts for its deep and effective resistance to environmental policy change, particularly in Australia. Think of current coal and gas industry debates, in which species survival is weighted less than Australian jobs or ongoing returns on what are essentially stranded assets.  

Secondly, transport infrastructure rentiers are increasingly dominant, particularly in new urban road projects. Transport infrastructure generally is a natural monopoly, which is a powerful reason for it to stay in public hands but also accounts for its desirability as an investment class. 

A good example is WestConnex, which also featured less-than-transparent procurement and disposal processes in which state government was pivotal. As a thought experiment, if these same events were reported in a dodgy overseas autocracy would we have suspected endemic corruption?

Thirdly, there are few clearer examples of rentier-ism than housing price hikes, particularly in Sydney. Long understood as due to friendly taxation treatment of this asset class, Sydney’s average post pandemic house price exceeds $1 million and price growth is currently some $1220 per day or slightly less than $500,000 per year – more than the combined incomes of all but a few Sydney households. 

Rising house prices do not reflect or deliver increased productivity. Their only effect is to transfer wealth from those who want them to those who own them, which is the reason why the early access of superannuation savings by home-buyers is such bad policy. 

There are fears that house price increases are now so rapid that they could suppress post-pandemic consumption and economic recovery. Yet, obvious policy solutions, such as increasing the density of inner suburbs, continue to be strongly resisted in order to preserve the wealth of suburban incumbents.

In short, our contemporary economic structure has been realigned over the past three decades to serve the interests of rentiers and away from wage earners or producers. Our economy now systemically favours rentiers, an outcome which both hues of government have enthusiastically abetted.

However, the democratic system of government itself also appears to have been weakened in the process. For example, both state and national governments now consider it acceptable practice to deploy taxpayers’ funds for their own electoral advantage.

In another March article, The Liberal Order Begins at Home: How Democratic Revival Can Reboot the International System, Niblett and Vinjamuri explore these political and economic conditions within the context of global challenges to the liberal order. 

Though they ultimately agree with the PM and support coordinated democratic pushback against authoritarian states, they emphasise a more fundamental need to improve nations’ internal conditions,

“Never have liberal democracies looked so vulnerable at home and so insecure abroad. If these states are to re-emerge as influential forces, they will need to demonstrate that they can again nurture their citizens’ economic productivity and personal liberty. Doing so will require a new social contract between each state and its citizens—creating a twenty-first-century state with a new social purpose that emphasizes inclusion over growth (emphasis added)”.

Authoritarian “pushback” must entail internal reform commitments 

Expressed simply, a lot of the illiberal symptoms highlighted in authoritarian regimes abroad have already occurred and are now entrenched in Australia, most acutely in the deep structural composition of our increasingly rentier economy. 

The detrimental effects of these changes are about to descend on future generations.

As John Hewson points out, inaction on climate change, rising house prices, stagnant wages, lack of national investment in knowledge-led industries all amount to intergenerational theft and promise a long-term low-growth future for Australia. These are the very conditions that preceded the authoritarian turns in many formerly solid democracies. 

The point here is that if we are to take the PM’s commitment to confront authoritarian threats seriously then his obvious immediate and urgent task would be to address the pathologies in the patterns and modes of wealth production and distribution within Australia. 

Yet undoing these deep structural underpinnings is now extremely difficult, even with determined commitment; a quality unlikely to be found amongst our current political leaders or an electorate now firmly determined to perpetuate its own advantage. 

Yet, however much the unlikelihood of policy reform needed to fulfill the PM’s challenge, the one feature that distinguishes democracies from autocracies is the exercise of the vote. 

Statisticians are fond of reminding us that demography is destiny. The cohort copping the raw end of the current deal is growing. They will eventually vote.

For this sole reason, the PM’s challenge to demonstrate the superiority of democracies over autocracies can be resoundingly demonstrated by voting him out. 

But who would we vote for? Though some might blame an increasingly conservative political bent worldwide for our ills, the absence of any articulate coherent progressive alternative is more damning.

Consequently, necessary and worthwhile change may take some time. In the meantime, we should eat our Wheaties less wastefully, look after our dentures more carefully, and wash our undies regularly and thoroughly.

Mike Brown has worked in NSW local and state government in planning, urban design, and strategic roles for 15 years. He is also a graduate of the Masters of Urban Policy and Strategy program at the University of NSW.

2 replies on “A rentier’s paradise: The real threat to liberal values”

  1. Congratulations on the lively exposition and analysis of our present and future economic, social and environmental challenges. As for a remedy …? Is the only hope that the children who stand to inherit the future debt and the catastrophes of global warming will act to reverse the rentier rip off.

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