Neoliberal authoritarianism and the politics of debt

By Dr Chris Butler
Griffith Law School

This post draws on a research article ‘State power, the politics of debt and confronting neoliberal authoritarianism’ that will be published in a special issue of Law and Critique on Forms of Authority Beyond the Neoliberal State (vol. 29(3)). The article is currently available at:

Neoliberal authority

Recently, a growing body of legal scholarship has begun to consider the role of law in neoliberal governance (Brabazon 2017; Golder and McLoughlin 2018). In a forthcoming article in the journal Law and Critique, I explore the connections between neoliberalism as an intellectual, political and legal project and the consolidation of state authority (Butler 2018). While its tendencies toward economic deregulation, the commodification of public services and the undermining of collective systems of social welfare superficially suggest a reduction in state power in comparison to the Keynesian welfare state, it has been clear from the early 1980s that one of neoliberalism’s primary concerns has been the reshaping of state power to engineer specific social outcomes. Contrary to the commonplace ideological presentation of neoliberalism as dependent on the return of a classical liberal nightwatchman state, state institutions have played a crucial role in securing the dominance of market rule, the privatisation of collectively owned assets and the defence of private property rights. Indeed, active interventions of the state have been an essential prerequisite for the progressive neoliberalisation of social relations in areas such as criminal justice, social welfare, systems of urban governance, the policing of organised labour and the normalisation of entrepreneurial forms of citizenship.

The contribution of the state to the rolling out and entrenchment of processes of neoliberalisation is a topic of crucial importance in an era where the subjection of social relations to the logic of the market appears to be increasingly accompanied by political and bureaucratic forms of authoritarianism. Indeed, numerous scholars have noted that, from the outset, neoliberal governance has been premised on an implicit need for the reorganisation and strengthening of state power (Bonefeld 2010, 2017; Mirowski 2009). So perhaps it is not surprising that parallel forms of aggressive neoliberal interventionism have become firmly established across numerous fields of social ordering and policy formation in the decade which has followed the financial crisis of 2008. Contemporary examples of these authoritarian tendencies in the exercise of state power include the extension and deepening of regimes of austerity in the provision of social services, public education and healthcare, the progressive weakening of democratic controls over executive decision-making and the activities of non-market institutions, and the fusing of technocratic governance with authoritarian populist policies such as the militarisation of national territory and migration (Harvey 2005, Brenner 2004; Peck and Tickell 2002; Wacquant 2009; Pugliese 2013).

Debt, guilt and austerity

One important recent contributor to the study of state power under neoliberalism has been Maurizio Lazzarato, who has drawn on the work of Foucault, Deleuze, Nietzsche and Marx in explaining neoliberalism as an explicitly authoritarian imposition of the creditor-debtor relation on society (Lazzarato 2012, 2015). Lazzarato describes the relationship between creditor and debtor as the contemporary ‘archetype of social relations’ and as morally

producing a mode of subjectivity which is premised on ‘work on the self’; an ‘ethico-political labor constitutive of the subject’ (Lazzarato 2012: 33). Through our promises to honour our debts into the future, we are all transformed into indebted economic and political subjects whose tendencies towards potentially unpredictable or insurrectionary behaviour are kept under control. Accordingly, the neoliberal debt economy expands through a dual ‘exploitation of subjectivity’, both ‘extensively’ (through infiltrating the entire corpus of social activities), and ‘intensively’ by framing the relationship to the self

in the guise of the entrepreneur of the self – who is at once responsible for ‘his’ [sic] capital and guilty of poor management – whose paradigm is the ‘unemployed’. (Lazzarato 2012: 52)

There are certainly dangers in framing contemporary social relations solely in terms of debt and subsuming all political struggles to a terrain defined by the imperatives of finance capital. Nevertheless, Lazzarato’s approach provides a useful lens through which to view certain instances of punitive forms of austerity which rely upon an intimate association between debt and guilt.

Robo-debt and the politics of austerity

A recent demonstration of this association can be observed in the recent controversy over the implementation of an automated debt recovery system by the Australian Department of Human Services. Promoted by the Government on its introduction in late 2016, the ‘Online Compliance Intervention’ (OCI) system was projected to raise $2.1 billion by 2020, by eliminating welfare fraud and recouping overpayments of benefits (Morrison and Cormann 2016, p. 24). In practice, the OCI raised less than a quarter of the projected revenue during its first year of operation, but has generated thousands of incorrect debt notices to ‘customers’ who have been identified as owing debts for past overpayments of unemployment benefits. The Department of Human Services has been subjected to widespread criticism from activists in the welfare sector, commentators and legal academics for the system’s multiple design flaws and the aggressive way it has dealt with the process of debt collection (ACOSS 2017; Carney 2018; Hanks 2017).

While the Department had been using manual processes of cross-matching of declared income and taxation records since the early 2000s, the OCI system has removed previously necessary stages of human oversight, which ensured that an average of only seven percent of data discrepancies were pursued as formal debts. The new algorithms used by the OCI’s ‘robo-debt’ system average out yearly income into fortnightly amounts and effectively generate false discrepancies in any case where a person’s pay, employment or training circumstances have varied throughout the year. These design flaws and the removal of stages of data-checking has allowed for a massive increase in debt notifications sent to welfare recipients of up to 20,000 per week. This can be compared with around the same number of notifications annually, when the previous manual system of checking discrepancies was in operation.

The OCI system has effectively shifted the onus of proof of establishing whether a ‘debt’ actually exists, or whether the amount alleged is accurate, to the person who is notified of the ‘debt’, who then has the obligation to pay the debt, challenge its existence or dispute the amount which is owed. This is a very serious issue for the individuals involved because the inaccurate data used by the OCI algorithms has often either falsely generated debts, or grossly inflated the amounts of money alleged to be owed. In testimony before the Senate Committee Inquiry into the OCI system, the Department’s Secretary acknowledged that in ‘approximately 20 per cent of cases where an individual has received an initial letter identifying a discrepancy’ between [income and taxation records], the debt had been cancelled after they provided information clarifying their circumstances (Senate Community Affairs References Committee 2017: 32-33; McKinnon 2017).

Questions have been raised about the legality of this shift in the onus of proof onto welfare recipients and the state’s avoidance of its responsibility to prove the existence and size of a debt, given that there is no provision under the Social Security Act 1991 (Cth) which authorises the creation of a debt solely on the basis of a discrepancy revealed by data-matching technology, without further investigation (Carney 2018: 6). The robo-debt system provides a real-time demonstration of how neoliberal governance has aggressively harnessed emerging forms of digital technology and the management of large data sets to implement reductions in public sector staffing, and retrospectively impose responsibilities on welfare consumers (Galloway 2017; Desai and Kroll 2017; Coglianese and Lehr 2017). Perhaps most importantly for the purposes of this discussion, the shift in the onus of proof that is built into the system reveals the use of these technologies to administratively assign guilt for the provision of past welfare benefits as a reminder to the recipient that they will perpetually remain in the public’s debt. In this way, the robo-debt system can be seen as more than an administrative machinery to enhance financial accountability, but demonstrates the authoritarian character of the politics of austerity under neoliberalism.


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