… this affair of the water-power had been a tangled business somehow, for all it seemed — look at it one way — as plain as water’s water…

George Eliot, The Mill on the Floss

Political journalism follows scandal like a loyal dog. The Murray-Darling Basin is a gift to such an enterprise, breeding scandal and tragedy, windfall and downfall, wealthy abundance and mass ecological death. It is a windvane for the nation, a near-continental barometer.

In 1980, the artist Bonita Ely produced what she called Murray River Punch in the gallery of the student union at Melbourne University. In a glass bowl, she poured the ingredients of the river, witnessing its decline since European colonisation and the intensification of agriculture along the banks: water, urine, faeces, toilet paper, salt, European carp as well as phosphate, nitrogenous and other fertilisers, garnished with rabbit dung and served hot or cold depending on the season.

Political journalism is infused with an analogous list of ingredients, mixed into a pungent formula. Journalists source some sympathetic locals, tell representative anecdotes and evoke vivid images to symbolise the parlous state of the river system. They weave a narrative thick with dramatic irony, where the decisions of our illustrious administrators fatally fail to foresee the tragic consequences of their actions. You can set your watch to its turns: an obligatory visit to the deep time of the geological past, a lamentation for the dispossession of Aboriginal people, a jarring turn into the pioneering agricultural experiments of the notorious Chaffey brothers and their state-sponsor Alfred Deakin, and then a cascade of fateful policy decisions that — somehow — were not as ecologically enlightened as we believe ourselves to be today.

Scott Hamilton and Stuart Kells’ Sold Down the River: How Robber Barons and Wall Street Traders Cornered Australia’s Water Market is a recent entry to this canon, which also includes contributions from veteran journalists like Ticky Fullerton’s 2001 Watershed: Deciding Our Water Future and Michael Cathcart’s 2009 The Water Dreamers: The Remarkable History of Our Dry Continent. Margaret Simons’ Cry Me A River followed in the wake of the same combination of political scandal and ecological catastrophe that motivates Hamilton and Kells. The titles come in a steady stream in syncopated rhythm with the tendency of the water to dry up.

With each contribution, we expect a sort of final reckoning. We hope for some plan laid out. The authors promise a single, secret problem no-one else has uncovered. They claim to have found the heart of the problem. They line up their facts and plunge in … only to surface on the intractable problem of Basin politics entangled in a water market that has come to look increasingly like just any other market.

What frustrates me is an unwillingness to perform what we might call ‘analysis’, by which I mean the kind of theorising to which Australian journalists seem to have an almost belligerent aversion. The political and economic features of the Murray-Darling Basin’s hydrological and cultural landscape require something more potent than political journalism.

One simple problem ‘at the heart’

Hamilton and Kells’ book promises to uncover

[a]t the heart of the policy experiment, at the heart of the regulators’ analysis, at the heart of scores of official reports and plans and strategies, there was a simple, basic error.

Recalling a muckraking tradition of political journalism, with its origins in progressive era anti-corruption populism, Sold Down the River trades in simplification. The problem of Basin politics can be summarised by boiling it down to “a catastrophic error, a broken promise, a market failure.”

That error centres on the introduction of a water market, which disconnected water entitlements from land ownership. The book’s political angle evinces a nostalgic longing for an older, more regulated period of market management, prior to the financialisation wrought by de-regulation and privatisation. Kells and Hamilton trace the origins of the error back to the pre-Federation initiation of irrigation on the Murray, when advisors from California warned then-Commissioner for Public Works and Water Supply, Alfred Deakin that

[It] is desirable that the land and water be joined never to be cut asunder; that the farmers would enjoy in perpetuity the use of the water necessary for the irrigation of their respective lands …

Deakin’s search for models in Californian irrigation communities dredged up this warning, which Hamilton and Kells make resound through to the epochal development of water markets in the late twentieth century. This span of time is covered in two different modes: the mythic, quasi-biblical mode of fate, governed by inevitabilities, and an almost animate nature (anthropomorphised when revenge is due); and the steady march of policy decisions and legislation, planted in textureless historical time and populated with faceless bureaucrats and organisations. Between these two scales, they draw on a selective group of informants, sourced from “an informal communication network, part bush telegraph, part dark web.” This latter aspect, the seedy under-side of water markets, suggests some unearthed secrets that will crack open the story in a Sorkin-esque manner, casting light on injustice.

Justifying a market

Hamilton and Kells’ history focuses on post-war economic developments in the Basin, including the localised experiments with water trading through the sixties, seventies and eighties. They cover neoliberalism in the broadest brushstrokes, invoking Thatcher and Reagan alongside Milton Friedman but ignoring Australian variations on the movement, as examined (sometimes under the banner of ‘economic rationalism’) by Michael Pusey, Lindy Edwards, Elizabeth Humphrys and many others. Markets, they write, were seen as “a way to manage a scarce resources, and to spur improvements in water management and on-farm efficiency.”

This view is represented by institutions such as the Productivity Commission, who in 2006 produced a report arguing that

[t]rading can reveal the opportunity cost of water to the community — that is, the benefit forgone by not using water in its best alternative use — and, through mutually beneficial trades, facilitated the movement of water to regions and for uses where it is most highly valued.

The book’s narrative disagreement with this claim does not flourish into an analysis, either rhetorical or economic, of the merits of such a claim. The notion that trading is “mutually beneficial,” however, is not simply disproven but a core contradiction of capitalism, and to avoid stating this is an abdication of analytic clarity. As the details of the book demonstrate, there is a direct conflict between the interests of traders on the market, even before financialisation set in.

Before establishing this, we must wade through the potted policy history, interspersed with colour commentary from the informants, who range from inter-generational family farmers to water brokers. This historical modes misse analysing further contradictions, such as the conclusion of a 1984 meeting between the Australian Water Resources Council and the Australian Agricultural Economics Society that the best way of achieving an efficient allocation of resources would be “to expose production processes to market forces, with inputs and outputs valued, as far as practicable, at their economic cost.” This claim creates a circularity in which the value of inputs and outputs is measured by “economic cost”, while “economic cost” works as a benchmark of value. Price or cost is both the measure and the object of measure, as Joan Robinson highlighted in her demystification of the foundation of economics.

Water comes naturally

Water has no being in political journalism of this sort. It is not a substance that merits the kind of attention anthropologists, geographers and philosophers such as Astrida Neimanis, Veronica Strang or Jamie Linton have paid to it. As George Eliot’s Mr Tulliver remarks in Mill on the Floss, “water’s a very particular thing — you can’t pick it up with a pitchfork.”

Water as a cultural, material and ultimately financialised substance, which I am almost inclined to say refutes in itself its treatment as an abstract commodity that can be traded from one river to another, becomes just a surface navigated only via political events. Water’s algal eruptions, such as those in 1991 and 2019, however, mark significant crises, as do the periodic droughts, marked in settler-colonial memory since the late nineteenth-century’s frontier expansion. These crises produce reports, newspaper chatter and political noise that is the material of political journalism.

There is ambiguity in Sold Down the River over whether the water market was an intentional, designed policy or a haphazard, quasi-natural outgrowth of a series of misguided policies. Increasingly formalised local experiments in the 1980s developed into a movement to introduce a water market, supported it seems by lobby groups, ideologues and businesses. Yet it was also “in the water,” as it were, as part of a trend towards privatisation. One exchange manager proposes that the market was not “designed” but “grew through happenstance.” Yet the Council of Australian Government endorsed the National Water Initiative in 2004 as the culmination of a ten-year process, as deliberate as it gets. This promised major de-regulation, including the “progressive removal of barriers to trade in water and… to facilitate the broadening and deepening of the water market, with an open trading market in place.” Yet, even here, the rhetoric is of “understanding” rather than creating markets, as if they existed naturally already.

The water market effectively created overnight a new asset class for landowners, and gifted them what had been a regulated and managed public resource. Ticky Fullerton’s Four Corners report, which lends the book its title, foretold of doom from marketisation. The sense of having opened Pandora’s box is palpable in Hamilton and Kells’ descriptions and sources: “there were lots of positives, and then the horse bolted and you can never turn back.” Attempts to rein in the market have consisted largely in buybacks that aim to recover water for the environment, effectively lowering the cap on how much water is available in the system. Alongside, and in tension with this move, is the progressive deregulation of markets, including the introduction of inter-system trading.

Disembedded narratives

Hamilton and Kells analyse the market in curiously anachronistic terms, focusing specifically on the separation of the water from the land as a sort of taboo suggestive of the treatment of usury in the classical tradition. This moralised taboo could be analysed in terms of Karl Polanyi’s concept of disembeddedness, usefully summarised by Nancy Fraser as markets “freed from extra-economic controls and governed immanently, by supply and demand.” Polanyi’s historical analysis would helpfully contextualise the claims brandished by the book and people quoted within it who make an exception of the way markets “disconnected [water] from the land” and people whose “interest in water is estranged from place.” What this missed analytic framework forces us to conclude is that the estrangement is a feature of capitalism, not an exception or recent consequence of neoliberal financialisation. As Melinda Hinkson points out, farms on the Murray are networked into a global economy through and through.

The emphasis on the separation of water and land enables Hamilton and Kells to draw dividing lines — as is common in reporting on rural and regional politics, between “locals” —and interlopers. The quintessential local is the “family farmer”, while Aboriginal people and their nations represent a deeper history that serves different, more charged symbolic functions.

In Sold Down the River, Indigenous history and the dispossession Virginia Marshall calls aqua nullius is cursorily acknowledged as the background condition of water politics. The book implies an alignment between the rooted belonging of Aboriginal people and the ethos of the inter-generational family farm. Against these figures, water barons and “megafarms” are joined by almost every politician (with the apparent exception of Tony Windsor) and bureaucrat. The complete absence of labouring workers complements the relative lack of agency of Indigenous people, whose advocacy is presented at an institutional level only through centralised, representative organisations. Labour’s absence, redressed in Madelaine Moore’s Water Struggles as Resistance to Neoliberal Capitalism, makes Sold Down the River a portrait of the economy as a competition between different levels of owners.

Another glaring omission from the range of personal informants to the authors is anyone with involvement in the Murray Darling Basin Authority, a body that is almost universally maligned. The failure of the MDBA is baked into its attempt to balance the competing interests in the region, perhaps most starkly commercial, as against environmental and cultural water uses. Despite the omission of an informer involved in the MDBA, Hamilton and Kells claim that they “began to understand. We came to know” the secret of the dysfunctional water market. This is where their journalistic model, Michael Lewis, plays the most significant role as the narrative warms to its revelation of shadowy backrooms filled with financial traders, high-tech information gathering, and collusion.

Liquid assets

The authors uncover “misbehaviour: insider trading, misleading conduct, outright fraud.” After giving textbook cases of financial misdeeds, including Enron and Long-Term Capital Management, and offering a conspiratorial account of the integration of technology into financial trading, Hamilton and Kells clumsily integrate the Murray Darling Basin’s water market into a larger picture of privatisation and financialisation. They argue that investment bankers set up “special purpose vehicles” to disguise their involvement in water trading, alongside foreign investors, pension funds, and other shadowy figures represented by two sinister informants labelled “Mr X” and “Mr Y” because “Deep Throat” was taken. Traders and brokers, more commonly found on the floors of acronym-ridden stock exchanges, now populate the Basin and “dominated” the water market, “flagrantly chasing easy money” using “sophisticated algorithms and clever mathematics that were transplanted directly from Wall Street dealing desks.”

Despite folding such wheeling and dealing into the technical financial jargon of futures, derivatives, and options, traders “could reap arbitrage profits” (buying cheap, selling dear), a most mundane way to exploit a market. Presenting this as a case of market failure misconstrues the intentions of market design, as if some profits were better than others. Hamilton and Kells assume in what is surely a defunct — or at least problematic — distinction between “productive” and “merely financial” market actions. Not content with the drama drummed up by the “cloak of secrecy” behind which traders hide, the authors pause in the story to reflect that “And it’s “just the tip”,

we felt we had a good sense of what was happening in the water market, and what precisely had gone wrong. The decision to allow anyone in, and then to remove legal protections for participants, had created a free-for-all that was not tempered by the role of water brokers… [But there were] whispers of a bigger strategy and an uglier truth… a way to supercharge their trading strategies into a customised money-machine that would take their profits to a whole new level.

Now, we must follow them to this “whole new level”, which appears simply as the systems-level scale of what they have described so far. In other words, their claims to have uncovered an emergent cartel or oligopoly of colluding financial actors should be less a narrative revelation than an analytic level. Here the evidence falters and speculation takes over, since the regulators

swore blind that no water market participants could exert market power to “short” the market and price discriminate. On that point they were very consistent… But we are more than confident that, if and when a future audit or inquiry looks at this aspect of Australia’s water market experiment, those regulators will have a lot of explaining to do.

Published in the months before Sold Down the River, the ACCC’s “Murray-Darling Basin water markets inquiry” report insists there was no “evidence that investors exercised market power or manipulated markets to increase water prices in the Southern Connected Basin.” The report suggests that institutional investors account for around 11 per cent of water allocation and 21 per cent of water allocation volumes sold. They attribute the perception of out-sized influence by investors to the fact that there is little transparency in the market, including, as Hamilton and Kells point out, no public registry of owners. The problem is that this treats water as unlike any other commodity, the ownership registry of which is almost always unavailable.

A wrong turn for capitalism

Treating water as an exception may be a way to comfort ourselves that the market goes only so far in determining our lives. However, it is inadequate as an analysis of the capitalist system, within which everyone — from family farms to institutional investors and private traders — must act.

As Johanna Oksala highlights in Feminism, Capitalism and Ecology, capitalism is defined not just by its features, like private property and free markets, but by the impact of the market on every aspect of our lives, the ‘means of survival and self-reproduction’. Oksala writes,

This unique system of market-dependence generates specific systemic requirements and compulsions shared by no other mode of production — the imperatives of competition, accumulation, profit-maximization, and increasing labour productivity — which regulate not only all economic transactions but social relations more generally.

As I suggested, the absence from the story of a labouring class, hyper-exploited in Australia’s agricultural sector, scrubs farmers clean of complicity in exploitative (labour) markets.

The desire to exclude water from this system deepens the illusion that we can escape the market under capitalism, but also subtly reinforces the idea that the capitalist market has its uses — namely, in growing Australia’s national and private wealth through billions of dollars of agricultural exports. The deregulation of banks, argue Hamilton and Kells, was a

wrong turn for capitalism. It altered their incentives in ways that would ultimately separate them from their traditional, useful place in the economy.

This suggests a position broadly in favour of markets, despite the authors’ modest conclusion that lists “stepping away from the use of markets” alongside addressing the “stark power imbalance” between farmers and traders and insisting on “fairness and integrity.” Zeroing in a “central finding,” they argue that

[p]olicymakers had made a critical assumption that both of those things would be the same — that the highest and best economic use would also provide the highest financial return — but they are emphatically not. This is the basic, catastrophic mistake at the heart of our water market.

The differentiation between “economic” and “financial” does not reflect reality. Nor does the differentiation between the “family farm” and the corporatised agribusiness, especially in a context in which, as Melinda Hinkson points out, farms consolidated and expanded in response to economic conditions, and began employing managers with a different relationship to land, “the antithesis of grounded knowledge.” Hinkson contends that “it is not easy these days to distinguish a farmer from a corporate”, a slippage buried by reporting on rural affairs in Australia. From the 1980s to the 2000s, the number of broadacre farms halved, and the size of farms expanded accordingly. In the region Hinkson studied on the Murray, seven out of ten properties had changed hands as part of a process characterised as land banking.

By turning this story into a tale of financial journalism modelled on Michael Lewis — an author they cite multiple times known for exciting accounts of (in)glorious financial (mis)deeds such as The Big Short and Flash Boys — Hamilton and Kells swap the mundane reality of capitalism’s ecological and human cost for a murky, but intriguing world of “traders [who] adopted the names of celebrities and porn stars as aliases and code-names.” Against the extensive scholarship on the Basin, and against the evidence presented by reports such as those of the ACCC, Hamilton and Kells begin to sound like the sort of naïve centrist who thinks capitalism has lost its values. These values are packaged in the image of farmers who “feel one with nature… working with nature to give a crop the best opportunity to reach its potential so that you can provide food for others.” They sound like managers, albeit closer to the interface between the market and soil. Despite Adam Smith’s famous quip that bakers do not make bread out of benevolence, farming still has the mythos of “growing food and fibre for the country.”

Image: John Morton