Andrew Leigh

On Labor and Liberalism

Andrew Leigh MP
Federal Member for Fraser
www.andrewleigh.com


Per Capita Reform Agenda Series
‘The Future of the Left in Australia:
Embracing Social Liberalism?’

Corrs Chambers Westgarth
Melbourne

5 December 2012

Exiled in the Polish town of Poronin in 1913, Vladimir Ilyich Lenin had plenty of time on his hands. Having already spent three years in a Siberian jail, he was biding his time to return to Russia. And so the man who would soon serve as Russia’s first Communist leader turned his attention to the antipodes.

Like many around the world, Lenin was struck by the way that the Australian Labor Party had swept into parliament. Just a few months after the party’s formation in 1891, Labor won 36 out of 141 seats in the NSW Legislative Assembly. In 1899, Labor won government in Queensland (it lasted a week). In Australia’s first national elections, Labor won 14 out of 75 seats in the House of Representatives. In 1903, Labor’s share of the vote doubled. In 1904, Chris Watson became Labor’s first Prime Minister. Other parties were struck by the strength of Labor’s support, and the energy and youth of their leaders.

And yet Lenin was puzzled. In 1913, he wrote:

‘What sort of peculiar capitalist country is this, in which the workers’ representatives predominate in the Upper house and, till recently, did so in the Lower House as well, and yet the capitalist system is in no danger? … The Australian Labor Party does not even call itself a socialist party. Actually it is a liberal-bourgeois party, while the so-called Liberals in Australia are really conservatives. ...

The leaders of the Australian Labor Party are trade union officials, everywhere the most moderate and “capital-serving” element, and in Australia, altogether peaceful, purely liberal.  ... Naturally, when Australia is finally developed and consolidated as an independent capitalist state, the conditions of the workers will change, as also will the liberal Labor Party, which will make way for a socialist workers’ party.’

Lenin’s characterisation of the two major parties in Australia stands up better than most of his ideas. Unlike many other commentators, Lenin discerned that Labor was not solely driven by a belief in egalitarianism. Even in its early decades, the ALP was also a party of social liberalism. In his discussion of the ALP, Lenin’s only mistake was in assuming that the party would not endure as it had begun.

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Fast forward a century, and Labor finds itself in a spot of bother.[i] In December 2007, there were 445 ALP representatives across the nation’s federal, state and territory parliaments.[ii] Today, there are 302. In less than five years, 143 Labor parliamentarians – one in three – have lost office.

At the same time, Labor is shedding members. In the 1950s, more than 1 in 100 adults were ALP members – now it is less than 1 in 300.[iii] The trend is common to other Australian political parties, and to political parties around the globe. Across the developed world, mass parties are under threat.

For the Australian Labor Party, one of the world’s oldest progressive parties, a sense of realism about the challenge shouldn’t diminish a sense of pride in our achievements.[iv] Significant migrant inflows and strong economic growth allow Australia to undertake reforms like a price on carbon pollution and building a National Disability Insurance Scheme.

But we must also recognise that parties need to renew. For the Labor Party, I believe that our renewal may be found in an unlikely spot: becoming the party of egalitarianism and social liberalism. Liberalism means standing up for minority rights, and recognising that open markets are fundamental to boosting prosperity. To borrow a phrase from journalist George Megalogenis, Labor needs a commitment to markets and multiculturalism.

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In my first speech to parliament, I argued that the Labor Party stands at the confluence of two powerful rivers in Australian politics. We believe in egalitarianism – that a child from Aurukun can become a High Court Justice, and that a mine worker should get the same medical treatment as the mine owner. And we believe in liberalism – that governments have a role in protecting the rights of minorities, that freedom of speech applies for unpopular ideas as for popular ones, and that all of us stand equal beneath the Southern Cross. The modern Labor Party is the heir to the small-L liberal tradition in Australia. As my friend Macgregor Duncan likes to put it, ‘Labor is Australia’s true liberal party’.

Alfred Deakin was one of the earliest Australian leaders to make the distinction between liberals and conservatives. Deakin argued that liberalism meant the destruction of class privileges, equality of political rights without reference to creed, and equality of legal rights without reference to wealth. Liberalism, Deakin said, meant a government that acted in the interests of the majority, with particular regard to the poorest in the community.

Deakin’s Australian version of liberalism drank deeply at the well of the British Liberal Party. In the late-nineteenth century, Deakin’s speeches frequently noted that the British Liberal Party was a positive force that sought to resist and overturn economic and class privileges throughout society. To Deakin, two of the British Liberals’ greatest achievements were the legalisation of unions in 1871 and removal of ‘religious disabilities’ tests levelled against non-conformists and Roman Catholics.

As a member of Victoria’s pre-Federation parliament, Deakin began sketching out the parameters of antipodean liberalism. Deakin was a great supporter of the Anti-Sweating League meetings, highlighting the exploitation of women’s labour (or ‘sweating’) in that state’s factories. He introduced into parliament the first factory act in Victoria, regulating hours and providing compensation for injury. And in his campaign for Federation, Deakin’s vision and idealism helped the movement overcome setbacks and bypass the blockers.

On race and trade, Deakin’s views were shaped by the time. He supported discriminatory migration policies and high tariff walls. Looking to the Asian region, he saw only danger. When I read back through Deakin’s writings, I find myself thinking (perhaps naively) that if he had better understood the role that openness could play in alleviating poverty, he might have been a Keatingesque internationalist who welcomed ‘the Asian Century’. Given Deakin’s extraordinary career, sparkling writing, and strong political philosophy, it’s surprisingly easy to amputate his more illiberal views.

In the early years after Federation, it was conceivable that Deakin and his supporters might make common cause with the Labor Party. As Troy Bramston has pointed out, Deakin argued in 1903 that ‘more than half of [Labor’s] members would be Liberal Protectionists’. In 1906, he said that Labor and the Liberals were united on ‘seeking social justice’, with the only difference being that Labor wanted reform to proceed ‘faster and further’.

By contrast, Deakin regarded the Anti-Socialists and hard Conservatives as little more than wreckers brought together by their ‘attitude of denial and negation’ to progressive reform. When George Reid began to take his party down the anti-Socialist route in the 1906 election, Deakin said that his platform amounted to nothing more than a ‘necklace of negatives’ (a line that echoes down the decades, even if it was a mite exaggerated). In another speech, Deakin said the forces of conservatism were:

‘a party less easy to describe or define, because, as a rule it has no positive programme of its own, adopting instead an attitude of denial and negation. This mixed body, which may fairly be termed the party of anti-liberalism, justifies its existence, not by proposing its own solution of problems, but by politically blocking all proposals of a progressive character, and putting the brakes on those it cannot block.’

But with the conservative-liberal ‘Fusion’ in 1909, Deakin’s liberals finally made common cause with the conservatives. Much as he might have wanted to ally with the ALP, there was little appetite for such an alliance in Labor ranks. Moreover, Deakin felt uncomfortable with the tightly binding ‘pledge’ that Labor candidates were required to sign. The difference seems trivial in an era when all political parties require their parliamentary representatives to implement their party platforms. If anyone needed proof that the scales of history could have tipped the other way, they need only have looked to UK politics after World War I, where the collapse of that country’s Liberal Party led to a surge in electoral support for British Labour. Bramston calls Fusion in Australia ‘a marriage of convenience … in order to counter and challenge the rise of Labor’. But should it have been Labor at the altar?

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Since its founding in 1944, the Liberal Party of Australia has regarded itself as the rightful heir to Australian liberalism. Moving the creation of his party, Robert Menzies said ‘We took the name ‘Liberal’ because we were determined to be a progressive party, willing to make experiments, in no sense reactionary, but believing in the individual, his rights and enterprise, and rejecting the Socialist panacea.’ Menzies never once used the word ‘conservative’ to describe his party. In 1960, Friedrich Hayek wrote his famous essay ‘Why I Am Not a Conservative’. At the time, most in the Liberal Party would have agreed with him.

Yet under the leadership of John Howard, liberalism ceased to be the raison d’etre of the Liberal Party. Instead, Howard argued that the Liberal Party was the custodian of two traditions: ‘It is the custodian of the Conservative tradition in Australian politics. It is also the custodian of the progressive Liberal tradition in the Australian polity’. Howard, who had once said ‘I am the most conservative leader the Liberal Party has ever had’ – was breaking with his party’s liberal past. As George Brandis has noted: ‘Alfred Deakin, Robert Menzies, Harold Holt, John Gorton, Malcolm Fraser were all happy to describe themselves simply as liberals. Howard was the first who did not see himself, and was uncomfortable to be seen, purely in the liberal tradition.’

Current Liberal leader Tony Abbott has taken the Liberal Party further down the conservative road, writing in Battlelines: ‘“Liberal National” might actually be a better description of the party’s overall orientation than simply “Liberal”.’ By 2010, Abbott had watered down liberalism further still, nominating three instincts that animated the Liberal Party: ‘liberal, conservative and patriotic’. It was a special irony that Abbott chose the Deakin Lecture as the venue to declare that liberalism’s stake in the Liberal Party had been diluted from 100 percent to 33 percent.

What is occurring today is the undoing of the Fusion movement – the divorce of liberals and conservatives. Small-L liberals like George Brandis and Malcolm Turnbull are distinctly in the minority. It is little surprise that genuine liberals like Malcolm Fraser and John Hewson spend more time criticising than praising the party they once led. As political commentator Peter Van Onselen argued recently, ‘It is high time the Liberal Party changed its name to the Conservative Party’.[v]

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A century on from the conservative-liberal fusion, Deakinite liberalism is back on the auction block. Increasingly, the Liberal Party is defined by what it stands against, rather than what it stands for. The spirit of progressive liberalism – described by Deakin as ‘liberal always, radical often, and reactionary never’ – is in need of a new custodian.

Labor has always contained a liberal strain – partly indebted to Chartist and Fabian traditions, but also influenced by the type of social liberalism that Deakin and his followers advocated in the later nineteenth and early twentieth centuries. This fact was not lost on astute foreign observers, such as Lenin. Australian philosopher Tim Soutphommasane argues that the social democracy of Anthony Crosland and H.C. Coombs owed more to liberalism than Marxism, summing up with the words ‘we are all liberals now, comrade’.

Throughout the twentieth century, social liberalism joined together many of Labor’s achievements. Broad-based income taxation under Curtin. A Race Discrimination Act under Whitlam. Trade liberalisation and a floating dollar under Hawke. Enterprise bargaining and native title under Keating. Removal of much of the explicit discrimination against same-sex couples under Rudd. Carbon pricing and disability reform under Prime Minister Gillard. Whether through support for individual liberties or the belief of open markets, social liberalism has a prominent place in the story of the Australian Labor Party.

And yet Labor’s future is still up for grabs. The debate over the future of the British Labour Party has seen many reject the economically liberal reforms of the Blair years. Labour leader Ed Miliband has engaged parliamentarian Jon Cruddas to conduct the party’s policy review. Cruddas writes beautifully about his party’s proud traditions. He also points out the vacuity of polling gurus like Philip Gould – whose caricatures of ‘Mondeo Man’ and ‘Worcester Woman’ drew more from advertising agencies than political philosophy.

But Cruddas also throws away too much that is valuable. My heart swells when he uses the beautiful GK Chesterton line that ‘Tradition is the democracy of the dead’. But in his yearning for Labour to reconnect with Britain’s romantic and patriotic traditions, Cruddas is too ready to discard market economics and social liberalism. British Labour had to renew its self-image after the end of the Blair-Brown era, but I hope they do not make the same mistakes Kim Beazley’s opposition made in the late-1990s, when the ALP distanced itself from many of the economic reforms of Hawke and Keating, and advocated illiberal policies such as abolishing the Productivity Commission.[vi]

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Labor will always be the party of egalitarianism. Too much inequality can tear the social fabric, threatening to cleave us one from another. A belief in equality is deeply rooted in Australian values, and underpins policies such as progressive income taxation, means-tested social spending, and a focus on the truly disadvantaged. This marks Labor apart from many in the Coalition, who maintain that inequality does not matter, that economic outcomes have more to do with effort than luck, and that government can do little to reduce poverty. I’m currently writing a book about why inequality matters: an act that I expect would quickly see me expelled if I were a Liberal or National Party MP.

In also taking on the mantle of social liberalism, Labor would be stating our commitment to open markets as the most effective way of generating wealth. This isn’t a theological belief; it’s a practical one, grounded in centuries of human experience. Where markets improve wellbeing, we should use them. Where they don’t, we shouldn’t. To borrow a phrase from the Harvard philosopher Michael Sandel, ours is a commitment to a market economy, not a market society.

In the realm of social policy, liberalism is the belief that tax cuts are preferable to middle class welfare. It also requires more of what Franklin D. Roosevelt called ‘bold, persistent experimentation’. Australian policy could do with a few more randomised evaluations, to better sort out what works from what merely sounds good.[vii]

Many of Australia’s greatest successes in fields such as farming, sport and medicine have been grounded in practical experimentation and rigorous evaluation. There’s something very Australian about being willing to try new things, honestly admit failure, and learn from our mistakes.[viii] We need more of this in politics.

Good policy evaluation isn’t just a better feedback loop, it’s fundamentally about a more modest approach to politics. As judge Learned Hand once noted, ‘The spirit of liberty is the spirit which is not too sure that it is right’.[ix]

Social liberalism also means an approach to politics which is at least as concerned about the nation’s low entrepreneurship rates as the decline of manufacturing. One which permanently rejects impediments to international trade. And a politics that acknowledges the power of market-based mechanisms to address environmental challenges: from water buybacks in the Murray-Darling basin to a price on carbon pollution.[x]

A commitment to social liberalism would also pledge Labor to an open and multicultural Australia. Listening to the first speeches of Labor members, I sometimes wonder what my party’s founders would have made of the paeans to multiculturalism and migration that are common to almost all Labor maiden speeches in recent years. Many of Labor’s founders regarded Asia’s peoples as the biggest threat to their living standards. By contrast, social liberalism recognises that Australia benefits from immigration (including circular migration). It also acknowledges that national growth isn’t like the Olympic medal tally: prosperity in China, India and Indonesia will boost Australian living standards too.

The modern Liberal Party is not the party of liberalism. Instead, it is the creature of John Howard, and his intellectual heir Tony Abbott. It is, in the words Tim Fischer once used to describe his favourite High Court judges, a party of ‘capital-C conservatism’. And that leaves social liberalism free for just one party: the ALP. It is time for Labor to grasp this mantle with both hands: becoming the party not just of egalitarianism, but also of liberalism.

Andrew Leigh is the federal member for Fraser, and a former professor of economics at the Australian National University. His website is www.andrewleigh.com.

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* I am grateful to a raft of people, including Dennis Glover, Michael Cooney, Emily Murray, Tim Soutphommasane, Macgregor Duncan, Louise Crossman, Troy Bramston, Dennis Altman, Damien Hickman, Nick Terrell, John Hirst, Nick Dyrenfurth, Judith Brett, David Lowe, Michael Jones, Barbara Leigh and Michael Leigh for valuable comments on earlier drafts. Note that several of these people strongly disagreed with my conclusions, so responsibility for errors of fact and argument are mine alone. This speech draws heavily upon an article of mine published in the Global Mail in August 2012. I am grateful to editor Lauren Martin for commissioning it, and thereby encouraging me to think more deeply about these issues.

[i] With apologies to A.A. Milne.

[ii] This estimate includes upper and lower houses. In total, there are 824 federal, state and territory parliamentarians in Australia.

[iii] Andrew Leigh, 2010, Disconnected, UNSW Press, Sydney.

[iv] In the Australian context, Per Capita can probably take some credit for the increasing use of the term ‘progressive’. The thinktank launched with a 11 April 2007 email titled ‘Memo to Progressive Australia’, and it has since published an annual ‘Memo to a Progressive Prime Minister’.

[v] Peter Van Onselen, ‘What’s in a name? Ask the Libs’, Sunday Telegraph, 17 November 2012.

[vi] Similarly, I see Tony Abbott’s opposition behaving quite similarly to the way the ALP acted in the period 1998-2001: repudiating much of their policy legacy; focusing doggedly on a single tax reform issue; and believing that even after a tax change has been implemented, it will still be the top issue on voters’ minds at the subsequent election.

[vii] No-one makes the case for randomised policy trials in a more engaging fashion than Tim Harford, 2011, Adapt: Why Success Always Starts with Failure, Hachette, London. For a dustier (albeit antipodean) presentation of the argument, see Andrew Leigh, ‘Evidence-Based Policy: Summon the Randomistas?’ (2010) in  Strengthening Evidence-based Policy in the Australian Federation, Roundtable Proceedings, Vol 1, Productivity Commission, Canberra, 215-226.

[viii] For a lengthier discussion of why we need to spend more time experimenting, potentially failing, and then learning from our mistakes, see Andrew Leigh, ‘The Spirit Which is Not Too Sure It’s Right’, ANU Graduation Address, 12 July 2012.

[ix] This has much in common with what Daniel Mookhey’s recent Per Capita paper called the principle of ‘shared risk, shared sacrifice, shared benefit’. Daniel Mookhey, ‘Bridging the Divide: How Reform Consensus Can Unite Australia’s Three Economies’, Per Capita, October 2012.

[x] As an aside, it is striking to see how reluctant the Greens Party have been to embrace markets as a tool to achieve environmental outcomes. For example, the Greens Senators voted against the Carbon Pollution Reduction Scheme in 2009 (effectively killing it, because two Liberal Party Senators crossed the floor). And last week, the Greens again joined a handful of renegade Liberal Party and National Party parliamentarians to vote to disallow the Murray Darling Basin Plan.

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REPLY BY PER CAPITA FELLOW DENNIS GLOVER

Thank you to the chair, and thank you to David for inviting me here to respond to Andrew – who has been a comrade, colleague and good friend since we both worked as opposition staffers during the Beazley leadership days.

This is a great opportunity to engage in philosophical combat with Andrew, who, it is universally agreed, is the sort of member the Labor Party needs and deserves more of.

The fact that one of the most switched-on and best-educated members of the caucus is also possibly the only one to have been elected in an open democratic ballot, un-tainted by factional manipulation, is a good advertisement for more Labor Party internal democracy.

That said, I disagree with his idea that Labor should think of itself as an egalitarian-minded ‘social liberal party.

But the very fact of this debate happening in the party is a positive. A big positive.

As Andrew’s paper points out, Labor is in no small degree of electoral difficulty and needs to think long and hard about its future.

You know, love him or hate him, and I’m sort-of in the love camp, Senator Doug Cameron said something interesting at the conclusion of the disastrous 2010 election campaign. He said that in recent years joining the Labor Party was a bit like volunteering for a frontal lobotomy. It meant accepting the discipline of never thinking too deeply or too hard about Labor’s purpose. I agree with Senator Cameron. With the advent of permanent campaigning, and the need to stay ‘on-message’ for far too much of the time, we’re inclined to accept too much discipline and shy away too readily from debates about the party’s health and direction.

So it’s time to debate the big questions – and there’s no bigger question to debate than what Labor’s basic philosophy should be.

Andew’s answer as we’ve heard is an egalitarian strain of “social liberalism”.

He wants us to steal the mantle of small–l Deakinite Liberalism from the big-L Liberal Party of Australia, which he rightly points out should now more accurately be described as a capital-C Conservative party, and which Wayne Swan has described as driven by the same strategies and beliefs as the U.S. Tea Party.

I have two major objections.

The first objection is reflex one.

Asked to define the future of the Labor Party, Andrew’s answer seems to be the past of the Liberal Party. I suspect most Labor members would feel an almost visceral reaction to that. And it’s my guess that most would prefer the future Labor party was built on distinctly Labor, not Liberal, traditions.

Saying that Labor should fight future elections not as the heirs of the social-democratic tradition but as the heirs of the liberal tradition is a bit like saying we concede the war is lost but we will continue to fight on anyway.

Now obviously, there is an important small-L liberal element in Labor philosophy. That that has always been the case. We were never controlled by Marxists or Anarchists – as many European and Asian social-democratic parties have been. We have always been firmly in the western social-democratic tradition. We were born out of the extension of the franchise to the working class, and out of a desire to pull down the class barriers that prevented all individuals regardless of their birth from achieving their potential and enjoying the full scope of human happiness. We have never regarded individual freedom as being somehow opposed to the creation of a more just and equal society, although we have always put more faith in collective action and activist government than most liberals would. The Whitlam Government was the ultimate example of that – liberating individual talent through activist social policies.

In my view, the Australian Labor Party is in essence not a liberal party but a social-democratic one. The word “democratic” encapsulates our liberal tendencies well enough; there is no need to psychologically re-cast ourselves as another liberal party, even the tender-hearted egalitarian liberal party Andrew would have us become.

My second objection is one of emphasis. Particularly the over-emphasis on economic reform implied by what Andrew proposes.

As an economist, and a damn good one, Andrew’s liberalism is driven party by his strong belief in the power of the free market to create prosperity and higher living standards. It is also driven by his belief in the need for more market-based economic reform to increase national productivity and improve the efficiency, quality and efficacy of our social services and infrastructure.

Again, it has been a long time since anyone could reasonably argue that Labor was anti-market. Labor has long accepted the market as the most effective means of generating wealth. But I believe that Andrew’s position gives economic reform far too central a place in Labor’s philosophy.

In the 1980s and ‘90s the Hawke and Keating governments enacted a number of big-picture economic reforms. Those reforms worked. They modernised a creaking old economy in important ways.

But since then the generation that gave us those reforms – Hawke and Keating themselves, but also their former senior advisers and press gallery supporters – have raised those reforms to the status of an unquestionable Labor religion. They have managed to write the first and largely uncontested draft of the history of their era.

The ‘80s and ‘90s are now widely regarded as the era of the economist as hero, the neo-liberal reformer as revolutionary, the big-picture man as patriot, the productivity ratio as the measure of national progress. Everyone and everything else as of little consequence.

So successful has been the crafting of this new narrative that it has imprinted on the Labor psyche the belief that only those who take up and carry forward the dropped  banner of market-liberal ‘economic reform’ are worthy to be considered true national leaders.

And I think Andrew’s insistence that Labor must become a new free-market Deakinite liberal party places him firmly in this camp.

The problem with that view is that although economists tend to love the idea of reform and productivity before all else, Labor members and supporters tend to hate it. It has a moral flatness that makes it difficult to craft inspiring stories. If you’re looking for an explanation for the fact that Labor supporters seem perennially uninspired, it’s because our language is still too dominated by the rational statistical calculation of the era of economic reform. And this has produced a profound sense of loss of purpose among Labor’s base.

Now the answer to this isn’t to dismiss the importance of the Hawke-Keating years, or become hostile to productivity-enhancing economic reform per se, but to put those years and that economic objective in their full historical and policy context.

Placing economic reform too close to the heart of the Labor Party’s philosophy violently confuses the party’s ends and means. Economic reform is not our ends; it is our means. Economic reform is a policy tool for achieving our ends, which are social-democratic, not market liberal; and which are about creating a more equal society, not just an economically more efficient one.

Must Labor reform the economy for the betterment of society? Yes. But does the Labor Party exist primarily to enact free-market economic reform? No.

Equality, not economic reform, is the religion of the Labor Party.

Human welfare not productivity should be its measure.

Morality, not economics, should be its language.

Social-democracy, not liberalism – not even Andrew’s appealing social-liberalism – should be its philosophy.

Labor’s future success – and potentially its survival as the dominant party of the Left – lies not in giving yet more emphasis to the party’s liberalism but in rediscovering a moral and political language capable of appealing to a majority of its party members, supporters and voters.

It will not find that language in liberalism.

To find it, it has to go to the moral and political wellsprings of its past. It has to rediscover its history, not just its history between 1983 and 1996 when it was the party of economic reform, but its history between the 1850s and 2012. Such a debate will reveal many of the Labor Party’s philosophical tendencies. Liberalism is just one of them. It will also find the Chartism that preceded it; the radicalism and Laborism that established it; the statism that rebuilt Australia after the war; the modernism that rebuilt the party after the split; the Keynesianism that saved the people from the Global Financial Crisis, and many, many more. Liberalism will always be part of the appeal, but it should never be the dominant one.

And the starting point for that next phase of rebuilding the Labor Party must be an examination of its members’ and supporters’ beliefs through a thorough debate about the party’s history and purpose. What is the essence of the ALP that can inform and inspire a new sense of purpose for our future leaders, caucus members, branch members, supporters and voters? That’s the question Labor needs to answer.

Let the debate begin.