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A light on the hill the Labor Party prefers to leave off

Today’s guest blog, while I am away, is from Victor Quirk who has been tracing some early modern monetary resonances (from the 1930s). He argues that this month (September) marks the 90th anniversary of one of the proudest episodes in the history of the Australian Labor Party (the current Federal government), but one that, he ventures, will not be acknowledged by the present owners of the ALP franchise. It involved the first serious attempt by an Australian Government to establish full employment, the celebration of which would only serve to highlight the distance to which the ALP has moved from serving the interests of working people. I will be back writing tomorrow.

Back in September 1919, E.G. Theodore, Treasurer and Minister for Public Works in the Labor Government of T.J. Ryan, steered The Unemployed Workers Bill through the Queensland Legislative Assembly, a Bill to establish full employment in Queensland. It provided for a high-powered consultative council with resources and authority to commission research, obtain data, design labour market interventions, and order their implementation; it established three forms of job creation:

  • Large scale developmental works by the Queensland government (roads, rail, ports, etc) to add to the overall pool of jobs.
  • Ordering the expediting or delaying of public works by local authorities to offset seasonal peaks and troughs in labour demand (given the large agricultural sector).
  • Where public job creation was insufficient, private employers with more than 15% profit (and £10,000 profit) could be offered the choice of either employing a number of additional people themselves or purchasing State Government debentures to provide the government the funds to employ them itself.

Though aiming to eliminate unemployment, it included a non-contributory work-tested unemployment benefit to cover people while work was being found or created for them, sheltered employment for the disabled, railway passes for workers to travel to jobs, and regulations preventing job ads that exaggerated the amount of work available in a region, to stop a common practice of creating a glut of workers in to drive down the local price of labour. Some of this was to be funded by charging all employers with more than 5 workers, a fee of £2 per person per year, with a £1 rebate for each worker that remained employed all year.

At the core of the Bill lay an explicit commitment to the ‘right to work’, a now forgotten principle of Britain’s Independent Labour Party and the early Australian Labor Party, a principle once championed alongside the ‘eight hour day’. It simply meant that the government had a responsibility to provide dignified work to people when they were unemployed, and thereby eliminate unemployment as a weapon with which employers threatened workers to make them work hard and cheap.

The commitment to this principle by the Labor members of parliament who spoke in support of this Bill makes for refreshing reading for those of us who have waited thirty years to hear contemporary Labor representatives make the same statements. For example, a Labor member by the name of Kirwin, speaking on the 10th of September 1919 asked:

There is just one other matter with regard to the right to work. If it is considered to be the duty of all men to work, and I think it is generally accepted by all men, irrespective of their political views – if it is their duty to work, why has not some method been established to provide the right to work?

The Bill provoked an unprecedented employer mobilisation, and was vilified in the mainstream press as the ‘Loafer’s Paradise Bill’, without any explanation as to how people were encouraged to ‘loaf’ by offering them work. Employers and their parliamentary mouthpieces all said they shared the government’s desire to ‘solve the unemployment problem’, but that such a Bill was the wrong way to address the problem.

They never said they shared a desire for full employment. Instead, they argued for a contributory unemployment insurance scheme, along the lines of that which Winston Churchill and William Beveridge had implemented in Britain 8 years earlier.

This provided a degree of security to skilled workers who had regular work, and hence were able to make regular contributions (that were matched by employers and government), but did nothing for the bulk of workers who were subject to lengthy spells of unemployment, whose entitlement would be quickly exhausted.

Churchill devised this policy to counter a growing ‘right to work’ campaign in Britain, led by James Keir-Hardie, which argued for the elimination of unemployment through large scale public sector job creation.

Churchill’s policy took the heat out of the unemployment debate by showing the Government doing something to help the unemployed worker, while taking care to preserve the unemployment that kept most workers in a state of insecurity and subordination.

Mr. Kirwan , the Member of the Queensland Legislative Assembly who I quoted above, went on to make the point that many people were asking the same question as he about the injustice of not acknowledging the right to work:

This question is not only agitating the mind of the Secretary for Public Works [meaning Theodore] and those who sit behind him, but we find the leading writers in different parts of the world are discussing this particular question. A writer in the ‘New Statesman,’ for June, 1919, deals with the question in this way –

“But the point we wish to emphasise is that the rich have the power to be idle, and that the politics of the privileged classes have, in the past, been concerned to a far greater extent with defending the rich man’s right to be idle than with establishing the poor man’s right to work. The poor man’s right to work has never been admitted by society; the rich man’s right to be idle has. The only excuse for the continued recurrence of periods of unemployment is that no solution could be found that did not interfere with private enterprise, and private enterprise simply means competition for the right to be idle. The State, it was supposed, could do nothing except at the expense of the leisure of the leisured classes. And this the leisured classes declared to be the ruin of society. As nobody wants to ruin society, we have thought it better to do nothing at all.”

Theodore himself was a remarkably perspicacious and eloquent debater: self-educated from the age of 12, Treasurer of Queensland at 31. Faced with objections to almost every clause in the Bill, he became exasperated with the cant of the opposition and their mantra of ‘we share your desire to solve the unemployment problem’ as they moved a motion to block the Bill:

It seems to me, judging by the speeches this afternoon and the speeches made last night in Committee, that honourable members do not desire to solve the problem. They are satisfied to uphold and carry out capitalistic desires in regard to the existence of a reserve army of labour. The capitalists, as a body, are opposed to this Bill. Hon. Members say that it is condemned throughout the country. So it is – by the capitalists. They do not want to solve the unemployment problem. They want a large reserve army of labour from which they can draw in order that they will have more docile employees than they would otherwise have (QPD, 18/9/1919:844).

He elsewhere quoted from ‘Pro and Con’, by J.B. Askew, which set out the standard reasons for opposing full employment:

It is a law of nature that some should fall out of the ranks in the struggle for existence. The State, therefore, should not attempt to deal with the problem, which lies in the nature of things, and which it can never solve. The problem of unemployment is not to do away with it (for a reserve of idle labour is an essential element in the industrial system), but to lessen it as far as possible, and to see that the unemployed workman does not deteriorate during the period of unemployment more than need be. If the State should intervene to supply work for the workless, until could once more find a footing on the industrial ladder, it would tend to undermine those qualities of self-help upon which alone a healthy body politic can stand”

In the end the unelected upper house blocked the Unemployed Workers Bill, so the following year Theodore swamped it with Labor appointees. They passed several controversial Bills that had previously been rejected, but when the Unemployed Workers Bill was reintroduced, in an unprecedented move, the Opposition prevented a quorum by all leaving the Legislative Council chamber.

Two years later the Labor MLCs voted the Queensland upper house out of existence. The Unemployed Workers Bill was never implemented, however, because the money masters of the City of London, to which the Dominion governments then regularly turned for loan funds, placed a financial embargo on Theodore’s government that lasted four years.

Other historians say the blockade was in retaliation for a Bill increasing pastoral rents on crown land, which also attracted fierce opposition. Theodore explained after the blockade was over, however, that it was not because of pastoral rent rises, but because his government had been spuriously perceived as ‘Bolshevik’.

The evidence suggests that London got this idea from the opponents of the unemployed workers bill. A Nationalist (pro-employer party) member named McCartney, responded to Theodore’s accusation that they wanted to preserve a ‘reserve army’ of unemployed:

We have to approach this Bill from the point of view of the party which introduces it, having regard to their platform – a platform that goes for the abolition of the wages system, for the destruction of private enterprise, with a view to putting in its place State enterprise; a policy which is openly admitted, and is not denied except when the Premier sometimes suggests that it is not wise to point these things out for fear the public may take alarm … it seems to me the Bill is so framed as to be capable of being made a machine for the complete annihilation and destruction of private enterprise, even if it is only entered upon by degrees. That is the point of view to look at it from (QPD, 18/9/1919:837).

Of course, after full employment was established 25 years later by the Curtin/Chifley Federal Labor administration of WWII, it was subsequently maintained for thirty years (mostly for fear of the electoral consequences of not doing so) by Liberal governments, and for the most part by the staunchly anti-Communist Sir Robert Menzies (as, by the way, was Theodore). The association of full employment with communism, that underpinned its opposition before the war, was thus no longer plausible after the war.

But in the 1970s, a campaign was hatched by the OECD to abandon full employment around the world, which was championed in Australia by the Chairman of BHP, Sir Colin Syme. The OPEC oil shock of 1973 provided a smokescreen for governments around the world to slash public sector employment so it no longer sufficiently augmented the private sector to preserve full employment.

A large proportion of the willing labour supply has been left unutilised ever since, by way of labour force marginalisation, unemployment and underemployment. While shunning all but the most temporary and modest forms of direct job creation, successive Labor and Liberal governments have refined methods of bullying unemployed workers, to heighten their willingness to work hard and cheap, and make them fearful of doing anything to place their jobs at risk, like joining a union.

These refinements have been at the cost of having to ‘dumb-down’ the public employment service so its staff would be more willing to do the bullying. The Job Network (however re-badged) lacks the capacity to assess, refer, counsel, rehabilitate or develop the pool of unemployed because it is perceived as a threat and unhelpful by unemployed people.

They do not candidly share their circumstances (for fear of being breached) and therefore their barriers to employment (in addition to the insufficiency of jobs) cannot be identified, nor therefore, addressed.
And no amount of bullying can employ more people than the insufficient number of available vacancies.

And saddest of all, this defective, deskilling, demoralising system of managing the unemployed is largely a product of successive ALP governments.

The introduction of ‘reciprocal obligation’, the activity test, breaching, the privatisation of the Commonwealth Employment Service, work effort certificates… are all projects initiated, if not also implemented, by the Australian Labor Party. This is how far it has come since 1919.

So I do not expect the humanity and boldness of the Queensland Labor Party of 1919 to be honoured by the ALP of today. To be fair, that party all those years ago did not have to raise 40 million dollars every three years to fight its election campaigns.

And back in 1919 working people had Labour newspapers, public lectures and meetings at which working class perspectives could be shared and understood, so that notions like the ‘right to work’ needed little introduction when embodied in a Bill before the parliament; people knew they could have full employment, that they would be enormously better off with full employment, and that employers would resist it to the last.

At least back then the ALP knew it would win the votes of working people with such a Bill.

Today, working people are conditioned to consume, understand the world through mostly corporation-controlled television, admire the rich and powerful, not step out of line at work, and despise the poor, injured workers and the unemployed. What could the ALP possibly do with a constituency so unaware of its situation?

So the franchise continues as something akin to a management services firm, competing against its nearest rival for three year contracts to manage Australia Inc. Both create poll-driven facades in an endeavour to appeal to a majority of electors, utilising the expensive media and organisational resources provided to them by the corporate giants on whose behalf they run the country.

This is done to gain power, which they use to do both good and bad, but always with care to avoid jeopardising their funding sources. And corporate Australia has never wanted full employment.

Perhaps it would be useful to once more have a political party in Australia that advocates full employment as its central pillar – not with any expectation of winning Government – but to at least have a few voices in a few parliaments advocating full employment, not just so people can hear the case in favour of it, but to force its opponents to tell Australians why they oppose it.

Perhaps over time, the once great Australian Labor Party might find a constituency ready to support a new ‘Right to Work’ Bill with the boldness and humanity of that it once championed 90 years ago.

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    This Post Has 9 Comments
    1. Excellent article Victor!

      Do you have your own blog? I was wondering if you could perhaps do an article more comprehensively outlining the implementation of full employment in Australia after WW2, the policies that were used in practice and it’s ultimate demise in the 70’s.

      I know little about the period, save that in 1946, Curtin issued a white paper titled “Full employment in Australia”, that near-full employment was subsequently achieved and maintained for 30 odd years until it all ended after the oil shock and that we have never again had anything approaching the success of these decades.

      Such knowledge would have come in handy the other day when someone argued to me that the very low unemployment of those 3 decades was largely a lucky accident (consistently for 3 straight decades – as if!). I knew that this was dead wrong but could not produce evidence of any such policies being implemented.

      cheers
      Lefty

    2. Thanks for your interest Lefty,

      I’m rather submerged in finishing a large chapter on the history of opposition to full employment in Australia at present, and not allowing myself too many distractions.

      You may find my paper (that will form part of my present chapter) on ‘The Problem of A full Employment Economy’ ( http://e1.newcastle.edu.au/coffee/pubs/wp/2004/04-02.pdf ) which discusses the campaign to abandon full employment in the 1970s of interest. The best evidence that unemployment was not preserved by accident is that the leaders of Australian industry explicitly called on the Government (not God) to abandon full employment in 1971.

      But I think it betrays a sad ignorance of the achievements of a great Australian government, that of John Curtin and Ben Chifley, to deny their great achievement in embedding the expectation of full employment in the minds of the Australian electorate, so that no matter how much it frustrated the Menzies administration that succeeded them it could do nothing about it. By the time the conservatives won Federal office again in 1949, after six years of full employment , any deviation above 2 % unemployment would have resulted in their party being annihilated at the next election. The public fully understood the restoration of unemployment would either be deliberate or evidence of administrative incompetence.

      As to how it was managed, they applied Keynesian economics and estimated the public spending gap required to achieve full employment. They had the opportunity to test their theories and refine them during the war, and managed to bed them down in the post war, despite the hostility of the Liberals and the Banks. Full employment was sustained by a large amount of public sector employment, including major works like the Snowy Mountains Hydroelectric Scheme, public housing construction, and expanded service provision in other areas. Apart from outlining this strategy, the 1945 White paper introduced a national labour exchange and labour market program service delivery network (the Commonwealth Employment Service), a Commonwealth Rehabilitation Service and an unemployment benefit. All these things played a role in managing the full employment economy.

      In one sense, though, it was luck: it took a conjunction of events to create the political opportunity for full employment: a genuine Labor government, led by capable men who understood the misery of unemployment, armed with the moral capital and constitutional powers of a war-time government, needing to shore up national commitment to a war that could require enormous sacrifices from the population before it was over, and within living memory of the disgraceful treatment of returned soldiers from the First World War just twenty years earlier…

      The full employment objective was justified (within the real halls of power) as a necessary proof to Australian working people that this time the promise was real: that their sacrifices, both at home and away, would be rewarded with a post-war Australia ‘fit for heroes’.

      But in practical terms, establishing and maintaining full employment required constant, conscious, deliberate intervention in the labour market, that was undertaken by the Governments and bureaucrats of both major parties for 30 years, and was no accident in that sense. Nugget Coombs (one of the key bureaucrats involved in establishing full employment) gives a good account of how they did it in his book ‘Trial Balance’.

      As soon as I get up to that part of the story in my Phd writing, I’ll see if Bill would like another Blog, and I’ll present the story in a bit more detail.

      Great to have your input as always.

      Cheers

      Victor Quirk

    3. Victor,

      Let’s not forget that the group of policies we now refer to as the White Australia Policy were also endorsed / advocated by a good majority of the Labour Party as well. So from what I can gather they were only advocating these policies for males and white males at that.

      With respect to Ted Theodore he was as morally bankrupt as any current labour politican – perhaps more so. What about The Mungana Affair? Where Ted Theodore and William McCormack authorised the state purchase of a mine that was not economically viable, and then concealed that they each had a financial interest in the mine . In addition Theodore was mates with Frank Packer and indeed later a business partner. So Theodore is also probably the link between corporate welfare and the Labour party as well.

      Lefty,

      What Bill refers to as the P-Gap is the simplest explaination of why we had full-emplyment then and not now.

      The reason is that while the share of total jobs by the private sector has remained relatively stable over time the share of jobs maintained by the public sector has declined.

      So if we had full employment then and the share of government jobs has declined while the contribution of the private sector has remained stable it’s obvious that unemployment must prevail.

      The solution is simple in macroeconomic terms – just make the government an employer of last resort. The difficult bit is the microeconomics of the labour market – who coordinates what and so on.

      If Neo-Liberals say unemployment exists because the real wage is too high then you simply ask them why do they assume that the market clearing real wage would be positive? If they don’t get them to explain the benefit of working for a real wage that is negative ?

      Cheers, Alan

    4. Thanks for that Victor.

      This particular issue has seized my interest. The economic outlook of the 1970’s must have been bleak and frightening for the public to allow our leaders to dismantle and abandon their guarantee of full employment that had stood for nearly half a human lifetime. How quickly did everyone forget the success of those decades?

      Cheers Alan.

      I understood that full employment was the outcome of deliberate government initiative but I couldn’t find any actual evidence of such policies being implemented. Although it is as you say, quite obvious when you see public sector employment numbers falling from the 70’s while unemployment rises.

    5. Hi Allan,

      Actually, for the purposes of the Bill, a ‘worker’ was:

      “Any person, male or female, of the age of 16 years or upwards, in any manner engaged or employed by an employer in work of any kind whatsoever subject to the direction of an employer, and whether the worker’s remuneration is to be according to time or by piecework, or at a fixed price, or otherwise howsoever…”

      Had it been implemented I have no doubt that the gender and racial discrimination that was so endemic at the time, would have permeated its operations, but thats only to be expected. I can’t really see how that, or his subsequent career, detracts from my point that in 1919 Theodore showed more practical commitment to full employment than any government prior to Curtin’s, or since 1975.

      It also pays not to forget that the 12 year old Mungana accusation was revived in 1930 in order to sideline him from the policy debate in which he, as Treasurer, argued against sharply deflating the economy as a cure for the depression in the face of British finance capital, treacherous elements in the cabinet, the Governor of the Commonwealth Bank, and the most respected orthodox economists of his day.

      The strategy is evidently still effective in discouraging us from closely examining what he argued and why he had to be silenced.

      Cheers

      vq

    6. Victor,

      What’s there to study ? It’s all common knowledge for anyone that could be bothered to have a read (Like about 20 years ago when I did)

      Ted Theodore:
      1. Excellent financial and business skills
      2. Advocate of Full Emplloyment (He liked / used cheap foreign labour as well)
      3. Corrupt (Royal Commission)
      4. Capitalist Scum (Packers, ACP, Mining pristine environments for profit…and so on).

      cheers, Alan

    7. Lefty,

      The abandonment of full employment in the seventies was inextricably bound up in the destruction of the Whitlam government, which in its last budget signalled an acceptance of public sector cuts (and therefore higher unemployment) to constrain inflation. After promising to restore ‘prosperity’ in the 1975 election, immediately after the election Fraser committed himself to ‘fighting inflation first’ and instigated savage public sector cuts and they and tabloid media attacked unemployed youth, such as me, as ‘dole bludgers’.

      This was against a background of an ‘economic education’ program that was previously conducted in the USA (the largest marketing exercise in history at that time), and imported to Australia in 1976 by a corporate-funded consortium called ‘Enterprise Australia’ . It ran TV ads, radio ads, printed pamphlets and textbooks, funded university research, conducted ‘worker education’ seminars in workplaces, sponsored neo-liberal speakers like Milton Friedman, ran his Free to Choose television program… Their message was free markets, small government, no restrictions on foreign investment, budget surpluses, tight monetary policy, fight inflation first. Alex Carey’s posthumous papers on all this were published in 1995 entitled ‘Taking the Risk out of Democracy’, with a foreword by Noam Chomsky (UNSW Press).

      After 7 years of Fraser (with John Howard Treasurer for the last 5) both inflation and unemployment were worse, in 1982 the Labor (opposition) signed a wages Accord with the ACTU to cut real wages in return for ‘social wage’ measures such as Medicare and the Community Employment Program (a massive job creation scheme that was shutdown in 1987). Labor won the election, Hawke and Keating embraced the economic education program mantra, and so within 10 years of the abandonment of full employment, unemployment was once again institutionalised. Once again, the public were conditioned to believe unemployment was a natural phenomenon that governments could do little about, apart from correcting the personal failings of the unemployed (lazy, unskilled, ineffective jobseeking skills) and constraining wage increases.

      Which is where we are today with people hoodwinked into thinking budget surpluses = sound economic policy.

      Allen,

      What’s there to study? “2. Advocate of Full Employment”

      I don’t know of any of his published views supporting cheap foreign labour, I only know that he insisted on employing indigenous Fijian labour (not the Indian immigrants that foreign capital preferred) in his mine in Fiji.

      He moved for the dropping of White Australia in his suggested draft Labor Party constitution in 1921. Scullin reinstated it to preserve party unity. I’ve not seen it suggested that this was because he favoured cheap foreign labour.

      If you have a source to suggest I’d be interested.

      Thanks

      Victor

    8. “tabloid media attacked unemployed youth, such as me, as ‘dole bludgers’. ”

      Yes, I well remember walking out of school as a young jobseeker – and straight into the 1990 recession.

      I remember being among a group of jobseekers listening to some kind of motivational seminar by a woman who had been paid by the government to tell us that although “yes, these are tough economic times”, the reason we were unemployed was that we were not motivated enough.

      How much public money was this individual paid over the term of her contract? I don’t know, but I’ll bet it would have been enough to employ several of us at a basic wage to actually do something usefull instead of sit there and listen to how our situation was our own fault (it was put to us in the nicest possible terms of course).

      I have never forgotten that!

    9. Of course he insisted on employing indigenous Fijian labour. Theodore was too clever to risk having production thwarted by locals demonstrating / protesting over Indian labour taking their jobs. But to think he did it for moral reasons you must be joking.

      Real costs not nominal costs are what’s important to the capitalist. Buy low and sell high is about all there is to it.

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