Why the treasurer has people so stirred up with values-based capitalism

In that sense, the content of his essay was hardly at odds with today’s standard corporate rhetoric of inclusion and dignified intentions common in prefaces to annual reports. Rather than government dictates, for example, it has been big businesses and their investors that have made environmental, social and governance issues such a powerful force worldwide.

The irony is that today the great Labor reformers of the 1980s and 1990s sound more radical in their reform ambitions than Chalmers’ version.

The annual gathering at Davos attracts a more cynical response these days, but it’s hard to avoid continued virtue-signalling by Davos Man equivalents (presumably now he/she/them). Australian businesses are not immune to these trends – including being scolded by the former Morrison government for being too vigilant about social issues.

And despite Chalmers’ aims to create a “better capitalism, uniquely Australian”, support for a greater role for government fits with the international backlash against decades of globalization and free markets. For now, this pendulum is still on the political march in Europe and the US.

The right-wing populism personified by Donald Trump is just one aspect. The “progressive” version is to denounce the failures of years of “neoliberalism” and demand greater government subsidies and support for worthwhile causes – environmental, economic and social. This stance is exacerbated by the impact of COVID-19, as well as new national security fears that threaten supply chains and favor more domestic manufacturing. Protectionism is no longer a dirty word.

Witness the Biden administration’s absurdly named Inflation Reduction Act, which provides massive subsidies for renewable energy and household electric vehicles in supposedly the heartland of unbridled capitalism. It is hard to see this as anything other than a government picking winners – but confident that it will also stimulate massive private sector investment and innovation.

‘Stupidity’ of governments

Not that supporting public-private partnerships is anything new for Australian governments of all persuasions. The irony is that today the great Labor reformers of the 1980s and 1990s sound more radical in their reform ambitions than Chalmers’ version.

It was Paul Keating who started pushing so hard for super funds to invest more in social housing, even though funds insist they can only do so if they get suitably high returns. It is former ACTU secretary Bill Kelty who has condemned the “stupidity” of governments allowing Transurban to make so much money from toll roads rather than encouraging public infrastructure and investment through super funds.

Despite its popularity, the Albanian government seems to believe it has less economic and political leeway for such big policy leaps. Yet the business community is becoming more suspicious of Labour’s agenda despite its frustration with the Morrison government’s timidity, and Labour’s assurances that they want a more constructive relationship.

Chalmers’ first budget did little more than deliver Labour’s limited election promises. The content of the May budget is unknown, but many in business increasingly fear that the focus will be on tax increases to pay for government priorities and projects rather than spending and investment incentives in the private sector.

After all, one of the most far-reaching examples of government “reforms” to date has also been deeply worrying for business – industrial relations changes enabling multi-employer bargaining, the abolition of the construction industry regulator, and the promise of more regulation to come.

While the government’s intervention in the gas market has been welcomed by East Coast producers, the heavy-handed nature and unpredictable consequences of its “reasonable pricing” make sectors outside the gas industry nervous that they could be next.

Frequent outbursts of aggressive language mocking such concerns by ministers such as Tony Burke and Ed Husic further upset them. And what does the promise to revive economic institutions like the Productivity Commission – the ACTU wish list – entail?

This means Chalmers’ essay – if mostly anodyne – has become a reminder of a discredited essay by Kevin Rudd in The Monthly in 2009, which rejected capitalism after the global financial crisis. Chalmers’ line lamenting a decade of a “negative form of supply-side economics and a race to the bottom on wages and public investment” is more suited to election campaigns than governing.

Yet he is still reluctant to acknowledge the disastrous financial results of the last Labor government’s determination to master “nation-building” projects such as the National Broadband Network and the National Disability Insurance Scheme.

Back to work, Jim.