At one point in my student days anyone who wasn’t reading Marx on a particular day, was reading Satre, Camus and Merleau-Ponty, among others, at least in the groups that I mixed in. But then they were also reading Dostoyevsky. Whichever way – they learned a lot about class conflict and existentialism. Labour-type political parties might reflect on the concept of an existential crisis because the declining electoral fortunes around the World are of their own making and reflect a lack of identity and certainly little ‘essence’. These parties have lost their meaning and purpose of existence and everyone knows it. The reasons are relatively straightforward. They have bought into the free-market myths and demeaned the role of the State. They now only argue about how much fairer their version of fiscal austerity will be relative to the conservatives, never challenging the underlying lies that drives the austerity agenda in the first place. Here are some lunchtime thoughts on the matter.
While there was a mass of analysis in the media about the demise of the British Labour Party in last week’s national election, another story in the Australian Fairfax press helped frame an understanding of what happened to British Labour.
The report (May 11, 2015) – Skilled Filipino migrants were given illegal contracts – reports that a major Australian construction company Thiess has been employing foreign workers in Australia on illegal contracts in an effort to bash the local union and undermine local wages and conditions.
The company had clauses in the short-term contracts “allowing migrant workers to be sacked and deported if they joined a union”.
The 457 visas are controversial and were introduced to provide companies with the capacity to import skilled labour to fill vacancies that would otherwise be difficult to fill. The scheme is largely ‘self-regulated’ by the companies themselves but external audits have shown it is badly rorted by the same companies.
The latest scandal follows “allegations of migrant farm labourers being grossly underpaid and kept in slave-like conditions”, a matter still to be dealt with by government.
Australia is a signatory to international human rights treaties that “ensure the right to freedom of association”.
However, both sides of politics have turned a blind eye to our international obligations to a number of requirements in different treaties.
What this story tells us is that traditional notions of class conflict between Labour and Capital within the Capitalism production system are alive and well.
Workers still want more for less and bosses want more for less. No matter how many people become self-employed as an act of desperation in economies starving for adequate spending, the principle remains the same – there has to be a surplus created and expropriated by the owners of capital.
Capitalism hasn’t gone away no matter how it has morphed into some international global morass with financial capital now dominating over industrial capital.
The fact remains that the dynamics of capital still drive the show. Every day, there is something happening that tells us how the struggle is ongoing.
The desire for individual freedom to do what we want does not undermine the centrality of the state being our vehicle to discipline capital and prepare for some sort of post-capitalism evolution.
The idea that the ‘left’ and ‘right’ dichotomy, or working class versus capital etc are obsolete is rejected by the evidence.
It is an idea that is propagated by those with a vested interest in developing the ‘free market’ myth where we are all, essentially, free traders and own-producers at heart who agree (aided by market forces) to specialise into labour suppliers or capital providers.
The myth continues that we are all free traders – everything is voluntary and all exchanges are mediated by market prices which deliver equalised use values to each exchanger to be enjoyed upon completion of the same.
The reality is different. Workers do not sell labour – they rather sell labour power (the capacity to work). That immediately invokes a managerial imperative.
Why? Answer: because the use-value of the labour power is enjoyed (extracted) within the actual exchange (that is, while the workers are still at work). The use-value – the source of profit – is uncertain and a control function is indicated.
Bosses have to control the realisation of that use value as production in an environment where the majority of workers would rather not be there. That is a very different dynamic environment to one where we go into a shop and buy a trinket to be enjoyed later.
There are clearly complex layers over the basic capital-worker distinction and certainly these layers are exploited by the power elites to obscure them further (for example, gender, sexuality, race etc) but when push-comes-to-shove the struggle over the distribution of income arising from production is still highly significant.
The on-going suppression of real wages growth, the redistribution of national income towards profits, the enormous executive salaries have all combined to generate rising income and wealth inequality over the last thirty years.
There is a reason that has emerged after workers had made gains in the Post World War period up to the 1980s (or so).
The neo-liberal period – crisis included – has been an attack on the conditions of workers and the suppression of the lower ends of the income distribution.
In this blog – The origins of the economic crisis – I outline how deregulation has dramatically altered the distribution of national income over the last 30 years in the advanced nations with governments being the facilitators.
Governments became ‘pro-business’ as neo-liberalism gained ascendancy among policy makers. Prior to that – in the full employment era between 1945 and the late 1970s – governments acted to mediate the class conflict and recognised that without intervention the capitalist system was prone to creating entrenched mass unemployment and stagnant economic growth.
The experience of the Second World War showed governments that full employment could be maintained with appropriate use of fiscal deficits. The employment growth following the Great Depression really only accelerated with the onset of the War.
All the orthodox neoclassical remedies that had been tried during the 1930s largely failed. These are the same policies that are being proposed by neo-liberal economists now. We have short memories.
Following World War II, the problem that had to be addressed by governments was how to translate the full employed war economy with extensive civil controls and loss of liberty into a fully employed peacetime model. That is very clearly stated in the White Paper.
The post WWII period was marked by governments maintaining levels of demand sufficient to ensure enough jobs were created to meet the demands of the labour force, given labour productivity growth.
Governments used a range of fiscal and monetary measures to stabilise the economy in the face of fluctuations in private sector spending. Unemployment rates were usually below 2 per cent throughout this period.
Fiscal balances were almost always in deficit and the few times that surpluses were targetted and achieved a recession typically followed.
The ‘wealth creators’ were the workers, for without them, there is no production. Governments introduced a range of income support measures and job protections to ensure the workers were adequately rewarded for their work – a practice that allowed consumption growth to be maintained with little recourse to household debt.
The eulogising of those who just shuffle financial products and think this is a productive activity would come later.
This all changed in the 1970s and early 1980s. The free market lobby gained prominence and infested policy makers after the OPEC oil crises.
It was supported by mainstream economists who worked hard in the 1970s (and a bit earlier) to dis-abuse us of the basic truth that underpinned the use of fiscal deficits and job protections. It was hard to find a Keynesian economist after the 1970s.
The rise in acceptance of Monetarism and its new classical counterpart was not based on an empirical rejection of the Keynesian orthodoxy, but was according to Alan Blinder in 1988 “instead a triumph of a priori theorising over empiricism, of intellectual aesthetics over observation and, in some measure, of conservative ideology over liberalism.”
Any Keynesian remedies proposed to reduce the rising unemployment in the 1970s were met with derision from the bulk of the profession who had embraced Monetarism and its policy implications.
They claimed that the economy would always tend back to a given natural rate of unemployment (which was associated with stable inflation), no matter what had happened to the economy over the course of time.
The policy debate became increasingly concentrated on deregulation, privatisation, and reductions in the provisions of the Welfare State. The so-called structural or supply-side remedies.
Unemployment continued to persist at high levels and soon, underemployment entered the scene.
At that point, the Labour-type parties were faced with a crisis of existence. And the path they took almost everywhere only served to quicken their lack of meaning existence, which has finally translated into electoral wipeouts of the type we saw in Britain last week and in Australia in 2011.
My belief is that the Labour-type parties, given their historical charters, have now run out of meaning. They neither serve the working class (in its various states of employment and unemployment) nor capital and are thus expendable for both.
In Australia, the Australian Labor Party (ALP) began life as the political arm of the trade union movement during the 1891 strikes and was committed to democratic socialism.
The Party supported an extensive welfare state and worker protections. It was committed to the nationalisation of the banks and major income redistribution. It was not a free-market party in any way.
The turning point in its approach came in the early 1970s. Gough Whitlam came to power in 1972 with this same social democratic ideal after the conservatives had previously been in power for 17 years. He was a progressive Labor Prime Minister.
Whitlam’s team was inexperienced and they made some serious errors in policy implementation. He was also caught out by the OPEC oil shocks which combined with his expansionary fiscal policy led to an unprecedented inflation spike.
His government also ran afoul of the interests of capital and with the help of the CIA (Source) was toppled by the conservatives – his government lasting from December 1972 to November 1975.
It should never be forgotten though that in his government’s last ‘Budget Speech’ (1975), the then Treasurer extolled the evils of fiscal deficits – claiming they were, in part, the cause of the high inflation of the day. The neo-liberal period in Australia really began with that speech.
Please read my blog – Tracing the origins of the fetish against deficits in Australia – for more discussion on this point.
Prior to that the Australian government clearly understood the need to run continuous budget deficits to ensure that there was full employment. Since 1975, the Australian economy has laboured under the fiscal drag of a sequence of governments intent on delivering surpluses.
Also since 1975, and not unrelated, the Australian economy has not returned to full employment – a state which prevailed from the end of WW2 to around 1974. Unemployment rose as the Labor government … then the conservatives (after 1975) started to hack into net public spending because they thought this would be an appropriate way of dealing with a supply-side inflation shock (from the oil price hikes).
It was never an appropriate response but morphed into serving the neo-liberals very well.
The Labor Party increasingly bought into the narrative that with the decline of central planning (and ultimate collapse of the Soviet system), the way forward was to ensure the market economy was freed up to be as ‘efficient’ as possible.
By the time Labor were relected in 1983, they had firmly embraced the neo-liberal agenda and eschewed direct government manipulation of the economy and promoted the pursuit of fiscal surpluses to a number one priority.
The Labor governments since that time (Hawke-Keating then Rudd-Gillard) became increaseing to the right of the conservatives that ruled for so long in the post-WWII period.
The Labor governments became increasingly full of university educated careerists rather than people who had worked their way up through the trade union movement. That changing demographic is highly significant in the way the Labor party has deteriorated and embraced anti-worker, neo-liberal policies.
Lawyers replaced people who had worked more directly face-to-face against capital.
The emphasis was no longer on ensuring a fair distribution of income, which in part required that real wages grow in line with labour productivity growth (to keep the shares in national income between wages and profits stable) but on pursuing an ever bigger economic pie irrespective of how it was distributed.
The claim was that workers would become better off in absolute terms and that it didn’t matter if some people became spectacularly rich in the process.
These governments rejected the traditional Labour ambit to maintain full employment and provide those without work for whatever reason with adequate income support until they could get jobs (usually a short period). Instead they bought the full employability myth and deliberately kept the unemployment benefit below the poverty line and inflicted meaningless training programs and pernicious work tests on the recipients.
They also bought in – some might say were trapped into accepting – the priority of the ‘apirational’ voter who had been hardened into believing that the unemployed and poor were different to them because they didn’t work hard or were not motivated enough.
The conservative media bombarded us with these notions – dole bludgers, welfare bludgers etc. Within a decade, the Labor Party here and similar parties elsewhere were promoting individualism and rejecting the notion of collective will and solidarity.
The latter concepts were too tied to ‘socialist’ ambitions of the past and the spin doctors claimed the parties would be vilified by an increasingly anti-socialist media and commentariat. It all became a self-evident truth (not!) when the Wall collapsed and the world embrace ‘free markets’ – or so the spin went.
In Australia, the Labor Party embrace of the consumption-driven middle class saw it undermine income support systems for the unemployed, single mothers, the sick etc – all unworthy in the new narrative. They provided massive funding to elite private schools and starved public schools of funds even though the vast majority of children are still educated in the public system.
They also perpetrated mass infringements of basic human rights – with respect to our own indigenous population (the ‘intervention’) and refugees (locking them up and torturing them on remote Pacific islands).
This was so far removed from the traditional roots of the Party, which was splintering into green groups and other coalitions.
More importantly, by buying into the neo-liberal macroeconomic myths about fiscal deficits etc, the Labour-type parties only served to legitimise them the public’s perception.
And once they had bought into the ‘we will run fiscal surpluses too’ narrative, they lost the scope to articulate coherent social policy because the debate would flounder always on who will pay for it.
Their embrace of the aspiriational consumption dogs who had been indoctrinated by neo-liberalism to be selfish first and selfish last meant that any question of making them pay (given the taxpayer-funds everything myth) was toxic.
They trapped themselves and steadily became undifferentiated from the conservatives and their reason for being was gone.
Everyone knows that the conservatives are a more entrenched part of the social networks of capital and will therefore do a better job of being ‘pro-business’ than the wannabee lawyers who parade as concerned Labour-type politicians.
So why vote for the wannabees when you can get the real thing?
They share the same ideology but the conservatives are the real McCoy!
This sort of ignorant pragmatism has meant there are no grand differentiated political philosophies emerging from the Labour-type parties anymore. Those philosophies gave the Labour-type parties meaning to exist.
Please read my blog – The demise of social democratic parties – they are all neo-liberals now – for more discussion on this point.
The same existential crisis is creating havoc in the British Labour Party. They lost the plot when Tony Blair and Peter Mandelson pushed the ‘New Labour’ mantra.
There are those who claim that Miliband lost in Britain because he was too ‘left’. That is a ludicrous assessment. Miliband also bought into the fiscal myths and by doing so legitimised them and gave himself no room to articulate a coherent path.
The signs are that lessons have not been learned.
In the days following last week’s election, various candidates for the Labour Party leadership have emerged. An apparent front-runner, Chuka Umunna exemplifies why British Labour and Labour-type parties around the world are failing and have lost meaning.
He told the press on Sunday (May 10, 2015) – ‘No-one is too rich to be in Labour’: Chuka Umunna sets out leadership stall:
1. “Labour was wrong to run a deficit before the financial crisis”.
2. Condemned “Ed Miliband’s attacks on ‘wealth creators'”.
3. “Labour can regain power within five years if it is ‘pro-business’ and makes clear no one is ‘too rich to be part of our party'”
4. “you can’t be pro- the jobs we want to see unless you are backing the people that create them”.
5. “Labour must appeal to middle income voters in England who have ‘ambition, drive and aspiration to get on and do well'”
He is a lawyer by background.
He is being championed by the pompous and scandal-prone Mandelson, part of the New Labour movement in Britain which destroyed the nature of the Labour Party once and for all in that country and turned it into another pro-business party with tenuous claims to its past.
There is nothing I have heard since the election disaster last week that indicates that anyone who is likely to lead the British Labour Party understands they have no existence if they continue to think that capital is the wealth creator and workers get the benefits of that endeavour, that a political party has to be ‘pro business’, that mass consumption and indvidualism is to be prioritised over decent work and collective well-being.
In Australia, at least, the Labor Party has no reason to exist other than a “a vehicle for political careerists” (Source).
It certainly has no claims to its traditional purpose any longer and now actively undermines the aims that defined its creation.
Until these parties contest the macroeconomic myths and educate the public accordingly they will never be in a position to articulate a socially-progressive and inclusive agenda.
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.