The evidence is now irrefutable that the neo-liberal project that has dominated public policy across the major economies for nearly four decades now has been an unmitigated disaster. If nothing else, those who voted for Donald Trump have made that abundantly clear. In Australia neo-liberal (or economic rationalist) policies have resulted in wages stagnation, widespread job insecurity and declining living standards for the majority of the population.

Neo-liberal taxation strategies favouring big corporations and the rich are a major cause of the fiscal crises facing governments at all levels across the country. Gold-plated promises that a deregulated economy, freed-up market, and pared-back state would see the majority of Australians benefiting from the trickle-down effects of economic growth have gone up in smoke.

As the French economist Thomas Picketty has shown, inequality has intensified across the capitalist world: the rich are certainly getting richer while the less well-off are certainly getting poorer. Moreover, economic growth right across the developed world has stalled as neo-liberalism’s counterproductive “reforms” have been rolled out.

On the international stage their most egregious consequence – to date – has been the Global Financial Crisis (GFC) of 2007/8. Given the reach of neoliberalism, there are bound to be more – and worse – GFCs to come. And the Australian economy is simply in no position to weather the coming shocks in the way it coped with the GFC.

What neo-liberalism has bequeathed to Australia is increasing evidence of blatant corruption in Australia’s finance industry, aggressive profiteering and arrogant service provision by the big four banks, huge energy price hikes, skyrocketing private medical insurance premiums, and evidence of stand-over tactics by insurance companies. This amounts to the vandalizing of the Australian economy and its plural communities in the name of an economic doctrine cum political ideology that must now be abandoned.

It’s time to face the truth: the neo-liberal emperor is – and always has been – grotesquely naked. Nonetheless, the appearance of the big four bank CEOs before a parliamentary committee in October made it perfectly clear that they believe they hold the public policy whip handle. They offered meaningless mea culpas and departed from the committee to carry on as usual, convinced they have the backing of a querulously insecure Prime Minister and a bumbling Treasurer as prone to fundamentalist thinking in economics as he is in religion.

If our mainstream political leaders are unable to comprehend that their enthrallment to neo-liberal dogmas is now seriously politically counterproductive, they will very soon be handing over power to extremists and populists posing as saviours – wolves in sheep’s clothing. The most cynical among them will be joined by the most ignorant to produce something like Marine Le Pen in France, Nigel Farage it Britain, and of course Donald Trump in America.

In Australia this would result in the likes of Pauline Hanson and her sidekick Malcolm Roberts entering a loose coalition with ideologues on the right like Cory Bernardi and Eric Abetz to confect an ideology of populist hysteria, inflaming fear while offering up simplistic solutions to complex problems in politics. This could well cripple the country for generations to come. It has to be stopped.

What is to be done?

The onus is now very heavily on Bill Shorten and the Labor Party to break away from neo-liberalism’s siren songs and chart a fresh social democratic course in Australian politics. This means bringing government back – making it clear that a vibrant private sector can only flourish where there is a robust public sector complementing, competing and cooperating with it. This fresh policy direction needs to place communities at its centre, nurturing interactions and collaborations across ethnic and religious, socio-economic, gender, and age divides – divides that at present are deepening dangerously, leading to social breakdowns, rising crime, mental health crises, and a faltering economy.

The task for Labor is to identify closely with the victims of neo-liberalism. It will require developing policies that will deal swiftly and comprehensively to alleviate the humiliations of a jobs-poor economy, the vast alienation that is opening up between the haves and the have-nots, and the personal suffering that this has unleashed on too many good people in the Australian community. That suffering is real and widespread. This appears to be beyond both the empathy and understanding of too many politicians whose gaze is fixed on an ideological vision that bares no relationship to the realities of the people struggling to get on in the world. Politicians deserve condemnation for not recognizing this a long time ago. If Labor doesn’t wake up very soon it will be shoved aside by the Greens and any other progressive group on the left. Or, more worryingly, One Nation and its ilk will step into the policy vacuum Labor has helped to create.

It’s time for a raft of strong public institutions at the commanding heights of the economy, to compete with the capitalist carpetbaggers currently dominating those arenas.

First, we need a publicly owned bank to compete with the big four banks. It must offer friendly customer-focused service to small account holders – precisely for the reasons the original Commonwealth was established, to look after the little people whom the private banks then treated with disdain – and they still do today. Watch the public flock to such a bank!

We need a publicly owned energy supply commission, to sort out the crazy mess into which private electricity and gas suppliers have managed to plunge the economy while creating a new parasitic version of capitalism in our midst.

We need a public legal entity to compete with the big, unscrupulously profit-focused law firms that constitute one of the surest guarantees that justice is only available for those who can pay for it.

We need a comprehensive public medical service (including specialists), along with a publicly owned health insurance commission, to ensure that good medical services are available to everyone, not just those who pay the highest private health insurance premiums.

These and many more publicly responsible competitors in the private sector are urgently needed to begin to ameliorate the ravages of neoliberalism. And the capital they generate above their capital costs can go into general revenue, to be spent on better public housing and transport, while investing in alternative energy research and development and public education.

This of course is only the beginning. Other measures – increasing taxes on the rich, imposing scrupulous regulations on strategic areas in the private sector – have to be taken on board and explained carefully and well to voters by the ALP. If Labor fails to go in these directions it will be the end of the ALP as we know it.

Dr Allan Patience is a political scientist in the University of Melbourne

What’s Next After Neo-Liberalism?