Jane Kelsey's The FIRE economy debunks the myth of neoliberalism

Professor Jane Kelsey, author of The FIRE Economy: New Zealand's Reckoning.
SUNDAY STAR TIMES

Professor Jane Kelsey, author of The FIRE Economy: New Zealand's Reckoning.

REVIEW: 

The FIRE Economy: New Zealand's Reckoning

Jane Kelsey

Bridget Williams Books, $50

The FIRE Economy: New Zealand's Reckoning by Jane Kelsey.

The FIRE Economy: New Zealand's Reckoning by Jane Kelsey.

Every politician who isn't too proud or too stupid knows that there's a political consensus in New Zealand. There's no such thing as the public, only the taxpayer, a small handful of whom should enjoy private ownership of the means of production, a market system for exchange and an elected government to guarantee that nothing - like pesky regulations - or no one – like the gormless public - get in the way. Every politician who's savvy enough to get elected knows that it's his or her job to ensure the smooth running of a society that includes these basic elements.

But what's missing from this picture? The short answer is politics. Politicians can spend their entire careers without ever encountering or explaining a theory of transition. Is social change needed and how should it happen? And what should a new system look like? Although Jane Kelsey, the author of The FIRE Economy and New Zealand's foremost public intellectual, avoids answering how change should happen and what a new system might look like, she expertly argues for its necessity.  

"The sense that New Zealand weathered the global financial crisis better than many bigger and richer countries", writes Kelsey, "masks an alarming reality". "New Zealand's FIRE economy", meaning finance, insurance and real estate, "has many of the features that have precipitated recent crises: a credit boom, rapid financial expansion, skyrocketing property prices, massive household debt tied to housing, and burgeoning private and external debt".

Under neoliberalism, the "organising principle" of the FIRE economy, these factors are known simply as common sense. Unaffordable houses are a sign that "these are golden days", writes Mike Hosking, while the government seems to think unsustainable debt is merely a sign of business and consumer confidence. Dairy prices will eventually recover, we're told, and some farmers will have to go under in the name of maintaining market discipline.

But Kelsey exposes this political consensus for what it is: quick hits where the shorter and shorter financial booms mask the devastating social impacts of the collapse of the productive economy. Under a FIRE economy our alleged prosperity can only be on loan. Wages will continue to sink at precisely the same time as the safety net shrinks. Inequality will keep flourishing. This is neoliberalism working as intended.   

It all sounds like a grim warning of worse things to come, or perhaps a lament for what was lost, but Kelsey is actually offering is optimistic call to action. If, as she proposes, we're entering the "interregnum" – that ambiguous moment between the death of the old order and the birth of a new one – then what's one to do? After reading The FIRE Economy, the only possible answer is to organise for political change.

 

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 - Stuff

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