Paul Scarr (Queensland, Liberal Party) Share this | Link to this | Hansard source

I rise this evening to make some remarks in relation to the essay which was written by the Hon. Jim Chalmers, MP, the member for Rankin in my home state of Queensland. The article was entitled 'Capitalism after the crises' and it was published in the Monthly magazine of February 2023.

I should say that I have a copy here. I did buy the magazine—there is no such thing as a free lunch; that's one of the economic principles I believe in, so I actually did buy a copy of the magazine. But I left it at my apartment, so I'm using my one free Monthly article and printed this out. But I have certainly paid my dues and I have read the 6,000 words in the article. I want to make some preliminary comments firstly in relation to the member for Rankin.

Firstly, I engage on a very regular basis with the same local communities and multicultural communities that the member for Rankin engages with, and I acknowledge, and deeply respect, the work he does on the ground in his engagement with local communities and multicultural communities. In fact, the last event I attended with him was a celebration of Waitangi Day in Logan City just last Friday.

Secondly, I think it really is important—I think it's incredibly important—that participants in the political sphere actually go to the trouble of putting down their thoughts with respect to their philosophy et cetera, as Mr Chalmers has done in a very well-written and articulate article. I acknowledge that.

And, thirdly: whilst, clearly, this article evidences a deep, philosophical divide between those who are social democrats, on the one hand, and those of us who believe in classical liberal principles with respect to economic management on the other, these are very much two mainstream views with respect to the economy, and so it is quite legitimate that we have this discussion and debate. So I think it is to be welcomed. I may not be able to get through all of my remarks in my 10 minutes, and there may be a collective sigh that that means I'm going to use the next seven minutes! But I will at least attempt to cover some of the main points. I will do this by reference to some of the major players in Mr Chalmers. article.

The first quote is on page 2 of my printout:

Successive leaders failed to find their way conclusively or convincingly past the neoliberalism of the pre-crises period. In other words, while the world was getting more uncertain, we had been growing more vulnerable.

This is in the manner of Kevin Rudd's article which appeared in the same publication following the global financial crisis. There's this attack on the concept of neoliberalism, as if neoliberalism were a dirty word. So I brought some friends with me in order to defend the concept of neoliberalism, and what it actually means.

My first friend, of course, is Nobel Prize laureate Milton Friedman. In his book, Capitalism and Freedom he wrote:

The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the "rules of the game" and as an umpire to interpret and enforce the rules decided on. What the market does is to reduce greatly the range of issues that must be decided through political means, and thereby to minimize the extent to which government need participate directly in the game. The characteristic feature of action through political channels is that it tends to require or enforce substantial conformity. The great advantage of the market, on the other hand, is that it permits wide diversity. It is, in political terms, a system of proportional representation.

…   …   …

It is this feature of the market that we refer to when we say that the market provides economic freedom. But this characteristic also has implications that go far beyond the narrowly economic. Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority—

as we have today—

The preservation of freedom requires the elimination of such concentration of power to the fullest possible extent and the dispersal and distribution of whatever power cannot be eliminated—a system of checks and balances. By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power. It enables economic strength to be a check to political power rather than a reinforcement.

That is one of my heroes Milton Friedman.

Mr Friedman was inspired by another of my heroes Friedrich Hayek. I wish to quote from Friedrich Hayek's book The Fatal Conceit: The Errors of Socialism. Friedrich Hayek said:

This book argues that our civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection—the comparative increase of population and wealth—of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be 'fruitful, and multiply, and replenish the earth, and subdue it' …

…   …   …

The main point of my argument is, then, that the conflict between, on one hand, advocates of the spontaneous extended human order created by a competitive market, and on the other hand those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources is due to a factual error by the latter about how knowledge of these resources is and can be generated and utilised.

That's Hayek's The Fatal Conceit: The Errors of Socialism.

Of course, Hayek was inspired by Ludwig von Mises. I'd like to quote from Ludwig von Mises's magisterial analysis of socialism entitled Socialism: An Economic and Sociological Analysis. He said:

If a socialist community were capable of economic calculation, it could be set up without any change in men's moral character. In a socialist society different ethical standards would prevail from those of a society based on private ownership in the means of production. The temporary sacrifices demanded of the individual by society would be different. Yet it would be no more difficult to enforce the code of socialist morals than it is to enforce the code of capitalist morals, if there were any possibility of making objective computations within the socialist society.

The common theme in all of those contributions is that you do not get better results from seeking to dictate the allocation of resources from a central government under a command structure than you get from the millions and millions of spontaneous decisions made between individuals in a free market who make decisions based on their own interests and who thereby take into account information and knowledge which cannot possibly be taken into account by a government. So we come back to the old debate between classical liberalism on the one hand and social democracy on the other. Those opposite should remember the lessons of the Hawke-Keating years and should remember that this country did have 30 years of economic growth and a major reason for that was that both major parties of government were on the same page with respect to the need for economic reform, with respect to the need for growth based on productivity and on the basis of the power of the market to make decisions, which government is simply unable to make.