Yesterday, my suggestion that Labor could be regarded, for the purposes of thinking ahead, as done like a dinner, brought an angry response — largely from old Labor loyalists, who appear to prefer fantasy to reality in assessing what needs to be done. Many appeared to loathe the Greens more than they hated the Right, thus replaying the old ALP Right-Left wars, now stretched across two parties — and to be reminded that the Greens would sail on in the Senate while Labor fell apart, was particularly unwelcome.

The whole point of the exercise was to presume an Abbott Coalition victory, with all that that entailed, and think strategically about what the Left and progressive forces should do, in a situation when the two houses become divided along Right-Left lines, and politically antagonistic. That may not happen, but — given the decrepit state of Labor, created in part by its unthinking loyalists — it’s likely that it will, and it’s worth thinking it through.

Yet the political dilemmas of the Left are merely a part of the whole, and the other dimension of that is the grievous political problems faced by the Right, as they try and perpetuate Howardism, under conditions where it is ceasing to be viable. Tony Abbott’s each-way bet on the steel industry was a wake-up call to many on the Right, that it had to get its house in order. The coal-seam gas issue was able to be dismissed as an anomaly, which it wasn’t — it was simply the first major eruption of a contradiction on the Right, between conservatism and neoliberalism, one that can no longer be ignored.

Howardism? Yes, the term seems fair, it is not ideology inflation. Howard created a stabilised form of economic liberalism and social conservatism, with Australian characteristics. A modest social welfare/social market state was retained, as the Hawke/Keating neoliberalisation was extended. A moderate culture war was undertaken, with careful attention to the limits imposed by the social liberal nature of Australian life — Howard thus quashed Abbott’s eagerness to have a full-bore culture war on abortion, stymied efforts to ban flag-burning, etc. That combined with a reduced-tax, low-reinvestment strategy is sufficient to call it a specific philosophy.

The problem with Howardism was that the conditions of its success created a dilemma for those who followed. We are having a debate about manufacturing now, because it was in the Howard era that most of that sector was fully and finally given away, and replaced by … well, by nothing at all. We simply broke bits off of Australia and sold it on. As an economic strategy it was less Hayek than Beverly Hillbillies — find stuff in your backyard and move into a McMansion.

What history will damn Howard and Costello for — as it will damn Thatcher and Reagan — is that in giving away the old world, it spent no money or energy building anything to replace it. They simply juiced a century of embedded industrial development, a vast network of social, intellectual and physical capital, for a good look on the balance sheet. Howard, better than Thatcher, understood the sense of social dislocation this created, and argued that a socially conservative state policy was necessary to compensate for that effect,  politically and culturally.

Thus all that crap about Bradman, Anzac, values, etc, was designed to reassure people that the place they lived in hadn’t really changed, despite the great sucking sound everyone heard everywhere. (Keating had had what is an essentially Left version of that, based on an anti-British cultural nationalism — their fight was essentially one of content not of form).

So far, so good for the Right. Across the Keating-Howard era, manufacturing essentially disappears as a major economic sector. In that, they are identical. But look closer, and there’s an important difference. When Hawke and Keating mounted a war on protection in the early ’90s, they had a vast penumbra of uneconomic manufacturing to cut into. In the late ’80s, the inner-city suburbs of major cities were still place of work — of factories and workshops cheek-by-jowl with houses and flats. They went in a decade, and the utter transformation of a place such as Brunswick in Melbourne serves as a microcosm of the country — a place of textile factories that became ghost buildings in a snap, and then overpriced spec apartments.

But, as much as people didn’t want to lose jobs, most could see that the jig was up — that there was something absurd about making shoes in Collingwood, dresses in Redfern, fabric in Footscray — when they could be done so much cheaper elsewhere. On that, there was a broad deal of implicit agreement between the neoliberal elites and the masses.

The difficulty now, for both major parties supporting this move, is that it’s a one-time deal. Like a diet that goes too far — cutting first fat, and then muscle and organ tissue — the obsessive free trade/comparative advantage mantra makes no distinction about what is being lost. In that, it wilfully blinds itself with the abstract generalities of economic theory, to its particular effects on the ground, and how they are viewed. The  public lacks that bias, and retains its willingness to take things on a case-by-case basis.

Thus, the evisceration of manufacturing could proceed in the Keating era, because everyone could see the sense of it — there was no compelling collective reason we needed to produce our own shoes (though there may be all sorts of social and cultural reasons for it) and most people can see that. But steel is a different matter, and most people can see that too.

Under Howard, the country began to enter a second stage of de-Fordism — all the obviously uneconomical industries had been wound up, and the process was starting to affect industries that might be viable. The continuation into the Gillard era has taken it to the point where the threat is poised over industries that any intelligent person might say are essential to the independence of a modern state, steel being the pre-eminent example.

What characterises the current period is the absence of anything left to cut. You can’t show your fearless commitment to the global market without hacking into something people think might be necessary to a viable independent country. A type of political anorexia takes hold, in which a permanently distorted image of the body politic guides action. Cutting a little more, would make things perfect.

The Howardist ethos was always an efficient form of fantasy (thus it came to grief over WorkChoices) but it was viable. Its success made Abbott’s continuation of it impossible — it was a cover by which the remainder of Australia could be disassembled and shipped away.

Now the contradictions are coming to the surface and neither major party is equipped to cope with it. From 1983 onwards, the Labor centre argument has been that free-market economics could be harnessed to supplying the revenues needed to funnel back into tackling poverty and inequality. This is still the position taken robotically by Craig Emerson and the free-market power elite within Labor. Long since most people have wondered if there is not something fundamentally wrong with a country giving away its most basic means of life, and trusting to the possibility that it will always be able to buy what it needs in a global market.

This is the gap that Tony Abbott has exploited — in typically cack-handed fashion, but nevertheless … But it’s a high-risk strategy because it has the capacity to crack the Right open irrevocably. Labor can, in the last instance, always reconcile these contradictory notions on the grounds of pragmatic social interest — for the Coalition it represents the fundamental contradiction between its twin political poles, the prudence and traditionalism of conservatism and the anarchic possessive individualism of classical liberalism.

The more that the latter undermines the former, the more that the Right falls apart as a political formation. The slow death of the National Party has been the most obvious example of that, but it will pop up everywhere — the Coalition has peddled a fantasy to its followers, and now they demand its maintenance — an Australia unchanged in key respects, but nevertheless relentlessly free market, with the exception of rural subsidies … and capital subsidies to industry … and … and …

In diving in to the eye of the storm, Abbott has been admirably creative and audacious, but he needs to be. He is coming from the political tradition of B.A. Santamaria, who was not so much protectionist as autarchic, arguing for a de-urbanised Australia with millions of families resettled on small farms, ruled over by bishops and protected from the depredations of running water and radio, etc. The Cold War pushed Santa to abandon such a radical social vision — all the more so when it was taken up by the New Left — and subsume his movement to the secular Right. He never liked them much, and he loathed Howard and free-market consumerism, and Abbott, his disciple has never managed to shake off those influences.

Hence, his bizarre acquiescence to Barnaby Joyce’s demand to be shadow minister of finance — a man who does not believe in finance in the modern sense, considering it “usury”. With major corporate capital demanding a neoliberal framework, and the “heartland” demanding the lost world of the postwar settlement, the Coalition is squeezed worse than Labor. It is easy prey, not only for Labor, but for forces to the Right of it, chiefly Bob Katter. Luckily for the Libs, both of those are so inept that they constitute minimal challenge.

Meanwhile, for Katter and the Greens, such circumstances represent unparalleled political opportunity — if they have the courage to be audacious. Katter should radically and finally renounce any fealty to the beliefs of his former allies, and position his nascent party as radically pro-Australian, unequivocally positive towards protection and the common good of the nation. The Greens should also make an unequivocal pitch to such localism — but from the Left tradition of communitarianism, a community that happens to be a (multi-ethnic) nation.

Both parties should push the major parties to declare where they stand, which side they come down on. In Labor it would serve to isolate the free-market elite, the power intellectuals, who believe that Australia should be ceaselessly reconstructed against its public wishes. In the Coalition, it would serve to sow total internal conflict. Those who yearn for the verities of either side will be disappointed. The sides are changing their most basic composition, as the world does.

*This is part of a Crikey series Make or Break: the state of Australia’s manufacturing sector.