Showing posts with label neoliberalism. Show all posts
Showing posts with label neoliberalism. Show all posts

Saturday, August 21, 2021

Did the Accord Cause Australian Neoliberalism?

Bob Hawke and Paul Keating key architects of Australian Neoliberalism

Lisbeth Latham

Reading the publications of the Australian far-left has seen a sharp rise in the discussion of the Prices and Wages Accord and attempts to relate that experience to the contemporary Australian union movement’s attempts to respond to the double crisis of the COVID pandemic and the associated financial crisis[1]. While there is much to be criticised in the Accord experience - these left critiques tend to see the Accord as a singular process, rather than the complex dynamic interaction with the unfolding not only of the Accord itself but the broader dynamics of Australian political and economic life in the period of the 1980s and 1990s. Many of these left critiques oversimplify and overplay the level of the intentionality of the leaderships of the labour movement in the implementation of the Accord and posit it as the key mechanism by which neoliberalism was established within Australian society. In this article, I aim to outline: 
  • the circumstances that the labour movement found itself in that lead to the Accord project; 
  • the changing character of the Accord over the period of its implementation; 
  • the internal processes of control and discipline within the labour movement to enable the Accord to be implemented and maintained and the impact of these on democracy within the labour movement; 
  • the impact of the Accord on working people; and 
  • the impact of the Accord experience on the capacity of the Union movement to organise and respond to attacks from the state and capital.
Inflation and unemployment crisis
In the early 1980s the Australian economy, like other advanced capitalist economies, entered into recession. The Fraser government responded to the recession by seeking to impose wage restraint by using the centralised wage-fixing system to cut real wages. In 1981, in response, unions, most notably the Amalgamated Metal Workers and Shipwrights Union (AMWSU)[2], launched a campaign to achieve a 35-hour week with no loss in pay - in order to maintain workers’ buying power and to create jobs by reducing working hours. This campaign was partially successful, the AMWSU, operating outside the arbitration system, won a pay rise of $20 per week and a reduction in the working week to 38-hours per week in 1981, with a further pay rise to be paid in the second increase of $14 in 1982, based on projected inflation for the next six months. These gains were based on a basis of the union agreeing to no further claims for twelve months[3].

In the wake of this victory, the crisis in the Australian economy deepened as the global economic crisis intensified driving down demand for consumer and capital goods. This downturn had already begun to be felt in Australia before the wage campaign, but the AMWSU had been protected from it initially due to residual demand for skilled workers.

In response to the crisis, manufacturing employers started to rapidly shed jobs, and about 90,000 workers were sacked. In the face of this assault, the AMWSU’s leaders abided by the “no-strike” agreements and did not take industrial action to try to protect jobs. At some shops, workers tried to secure jobs by agreeing to reduce their hours to a four-day week at four days’ wages[4].

This experience is now raised by the right as demonstrating the inevitable consequence of workers achieving wage rises [5]. Whilst, that conclusion is deeply wrong, and a fundamental misreading of the situation, this experience gave greater weight to the position adopted by the ALP in 1979 supporting the creation of an agreement with the union movement aimed at maintaining living standards that avoid either a wage breakout or hyperinflation[6]. The impetus for this position within the ALP had come from the period of hyperinflation during the Whitlam government (1972-1975). This was particularly the case within the AMWSU and other unions where members of the Communist Party of Australia were part of the leadership[7].

Stated objectives of the Accord
The initial objective of the Accord was to reduce unemployment and to hold inflation in check. This would be achieved by limiting inflation by restraining wages, while at the same time improving the standard of living of working people by boosting the “social wage” via expansion of government spending particularly around healthcare (Medicare), increased family payments and childcare. A major flaw of the Accord process was that whilst the system had mechanisms that effectively restrained wages, via a centralised wage-fixing system, there were no such restraints on capital regarding the setting of prices, leaving the system open to companies covering any rise in their costs via increasing prices, or just deciding to do so to boost profits. This limitation meant that understandably groups of workers, if not whole unions, were motivated to break out of the Accord in order to defend wages[8]

Control and discipline
The process of entering the Accord sparked immediate resistance within the labour movement. Most notably this was reflected in individual far-left individuals and organisations opposing the proposal. The Socialist Party of Australia (SPA)[9], which had a number of members who were elected officials in unions, most notably the Building Workers Industrial Union{10], Waterside Workers Federation, Seamen’s Union, and the Firemen and Deckhands' Union of New South Wales[11], publicly opposed the Accord and sought to direct their members who were union officials to oppose the Accord. These members revolted against the direction, arguing that it represented an attack on union democracy, splitting away to form the Association of Communist Unity (while some officials were expelled by the SPA for their refusal to follow party discipline, others simply resigned)12. While there are a range of reasons for this refusal to abide by party discipline, one factor was undoubtedly the reliance of these officials to their collaboration and alliances with officials from the CPA and the Labor left who supported the Accord. Brown has argued that these internal processes of control and discipline impacted on individual officials who had second thoughts regarding the Accord who could expect to be disendorsed and excluded from internal tickets if they did not tow the pro-Accord line[13].

Efforts to tie the movement to the Accord only intensified as the process continued. The Accord was posed as a necessary protection against the threat to the movement by the “new right” - in the form of the members of the Institute of Public Affairs and the HR Nicholls Society. This meant that those unions which sought to break from the Accord, were not just seen as revolting from the Accord, but risking the protection that the Accord was seen as offering the movement. So those unions that did revolt, such as the Confectionary workers[14], Builders Labourers Federation[15], and the Airline Pilots, not only faced aggressive and hostile employers, which included deregistration processes, strike-breaking, and the initiation of civil damages suits, but also were isolated, vilified, and raided by their “comrades” in rest of the union movement, including the Hawke Labour Government. Most notable was the deregistration of the BLF in the ACT, in NSW, and in Victoria[16].

How the Accord changed over the course of the process 
As much as it is tempting to discuss the Accord as a singular process, it changed considerably over the course of the 13 years it was in effect - with eight different Accords negotiated (although Accord Mark VIII was never actually implemented)[17]. Whilst the early Accords had wage-fixing aimed at addressing specific macroeconomic issues, such as inflation and unemployment, Accord Mark III, in 1987, introduced the concept of two-tier wage rises - with all workers automatically receiving the first tier of wage increases, and the second tier only being received subject to improvements in structural efficiency[18]. This shift both resulted in extremely uneven timing of when the second wage-rise was received, it marked a significant shift in the conceptualisation of the basis on which wage increases would occur, that they should be tied to demonstrated productivity increases beginning a process of Award restructuring.

As the Accord proceeded, a major justification for the need to maintain the Accord process, was to both hold off the introduction of enterprise bargaining (which was seen as a project of the new right) and to maintain the ALP government to prevent anti-union attacks that had been implemented by conservative governments globally – Peetz as argued that one of the major achievements of the Accord was precisely this delay. However, with the introduction of the Accord Mark VII in 1991, enterprise bargaining, that is negotiations on a company by company basis, rather than industry-wide arbitration and conciliation, was introduced[19]. While bargaining had always occurred within the Australian Industrial Relations system this process had always had a complex and integral relationship with the centralised systems around the Award System. The 1991 process, enshrined in the Industrial Relations Act, began to unravel this relationship. A process which has been deepened with the 1996 Workplace Relations Act, 2005 WorkChoices Act, and the 2008 Fair Work Act. Historically improvements achieved by militant unions in their better organised and more industrially strategic “hot shops”, most notably the AMWU, at the enterprise level could be leveraged and incorporated into the Awards via the state and federal industrial commissions. Enterprise bargaining began a process of severing this connection - which meant that militant unions and their members could only bargain for themselves in their local workplaces (albeit they have attempted to work around this via pattern bargaining which is now legally banned), rather than their actions to improve conditions serving as pacesetters for the conditions of all workers reinforcing individualism and breaking social solidarity between workers, which is such a central drive of the neoliberal project[20]. This process led to a tiering of working conditions based on the extent to which workers had access to enterprise bargaining, with those works reliant on the awards not only falling substantially behind on wages but in their broader working conditions through a combination of the successive award stripping by the Howard government and the achievements by workers and their unions within the EA system in adding and improving conditions.

Peetz has argued that the Accord process provided important protections to Australian unions in delaying conservative governments and their full-frontal assault on unions in Australia similar to what occurred in New Zealand as a consequence of the Bolger government’s attacks[21]. It is also arguable that the Accord process rather than protecting unions instead left them more vulnerable to the attacks when they came[22]. Whilst comparisons can be made to New Zealand and the devastation wreaked on the labour movement. A counter comparison can be made to the experience of the French labour movement which via ongoing resistance, including splits within the labour movement over responding to attacks by employers and governments[23]. This response meant that while the French movement, like the working class globally over the past forty years, suffered defeats in the wake of government attacks it was able to limit these defeats. In raising the example of France it is not to say that that course was necessarily open to the Australian movement, or would have been easy to pursue if it was but to make it clear that there are and were always multiple responses to challenges confronting movements, and that accepting one as the only alternative path to disaster can unnecessarily close off other alternative paths which may pose the possibility of a more positive outcome.

Over the course of the Accord, it delivered less and less on its promised objectives. Whilst there was an expansion in the social wage, real wages declined[24]. This decline was not simply problematic due to the stress it put on households but because real wages only failed to decline further as a consequence of increased productivity, i.e. as a consequence of work intensification and the reduction in broader working conditions - which were at the core of Accord Mark III and all subsequent Accords. This normalisation of wage rises to increases to productivity rather than maintaining and improving living standards is now embedded in what is left of Australia’s wage-fixing system under the Fair Work Act[25].

These shifts have resulted in a sharp and ongoing shift in the wages share of GDP, which has helped to drive up company profits. While this shift began under the Accord, it is important to recognise that this shift has occurred across advanced capitalist countries as corporations have sought to overcome declining growth and maximise their share of income[26].

Whilst the adoption of the Accord was contested within the labour movement, and as outlined above it was not a singular experience, its character changed over time. Contrary to some claims within the left, the early phase of the Accord, whilst deeply corporatist, was not neoliberal, in particular, the expansion of the social wage was not a neoliberal project, objectives which could be seen as neoliberal objectives came later in the life of the Accord[27]. Indeed, whilst the solution via collaboration was a break with the historic approaches of many of the communist lead unions, it was not a sharp break from that of many unions, particularly those associated with the right-wing of the ALP and formations to its right, such as the Democratic Labour Party[28]. These more conservative unions had long relied on “friendly” relationships with employers and the state in order to hold their own in demarcation disputes and contests with left unions. Indeed, Peetz argues that it was the ending of these relationships which were the driver of the decline in union membership and power rather than the Accord. Unlike the claims of some on the left, such collaboration is not inherently neoliberal, if anything the experience of neoliberalism globally has been an intensification of hostilities by capital against organised labour. The primary driver of the neoliberal transformation of Australian society was the Hawke and Keating Labor governments[29]. The initial incorporation of neoliberal aspects into the Accord was justified as a necessary defensive response rather than the direct intention of those who proposed and advocated the Accord and its maintenance. While this argument may have been cynical on the part of some of its advocates, it also reflects the extent to which direct advocacy of neoliberalism would have been resisted, even if the movement, like the rest of society, having absorbed neoliberal ideas as a consequence of the hegemonic position neoliberalism[30]. 
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Footnotes
1  Glanz, D. 2020 ‘Morrison’s ‘Accord 2.0’ talks are a trap for the unions’, Solidarity, [online document] accessed 23 May 2021. https://www.solidarity.net.au/unions/morrisons-accord-2-0-talks-are-a-trap-for-the-unions/.
    O’Shea, L. 2020 ‘Beware union leaders bearing deals’, Red Flag, [online document] accessed 23 May 2021. https://redflag.org.au/node/7224.
    Boyle, P. 2020 ‘Reject the Coalition’s Accord-style JobMaker’, Green Left Weekly, [online document] accessed 23 May 2021. https://www.greenleft.org.au/content/reject-coalitions-accord-style-jobmaker.
    Knobloch, B (18 October 2020) ‘How Australia’s Labor Movement Helped Build Neoliberalism’, Jacobin, [online document] accessed 23 May 2021. https://www.jacobinmag.com/2020/10/australia-labor-party-neoliberalism-accord. 
2  Now the Metals Division of the Australian Manufacturing Workers Union 
    Smith, B. A. 2001a ‘Amalgamated Metal Workers & Shipwrights Union (1976 - 1983)’, Australian Trade Union Archives, [online document] accessed 16 May 2021. https://www.atua.org.au/biogs/ALE0053b.htm.
3  Latham, C. ‘Wage rises don't mean job losses’, Green Left Weekly, [online document] accessed 23 May 2021. https://www.greenleft.org.au/content/wage-rises-dont-mean-job-losses.
    Wright, C. F. 2014 ‘The Prices and Incomes Accord: Its significance, impact and legacy’, Journal of Industrial Relations, 56(2):264-272. 2014
4  Wright ibid. 
    Latham ibid.
5  Hewett, J. 2009 ‘Lost lessons of the 100,000 'dead men'’, news.com.au, [online document] accessed 23 May 2021. https://www.news.com.au/news/lost-lessons-of-the-100000-dead-men/news-story/81ef1b0ee808c0db147562597741559b?sv=927bc14851e593f17f7ed5b4ea4305c9.
6  Latham op cit.
7  Strauss, J. 2013 ‘Opposition to the Accord as a social contract’, Labour History, 105:47-62.
8  Wright op cit.
    Stilwell, F. 1991 ‘Wages policy and the Accord’, Journal of Australian Political Economy, 28:27-53.
9  Now the Communist Party of Australia, but distinct from the original CPA which was founded in 1920 and dissolved in 1991
10 Now a major component of the Construction and General Division of the Construction, Forestry, Mining, Maritime, and Energy Union (CFMMEU). 
     Smith, B. A. 2001b ‘Building Workers Industrial Union of Australia (ii) (1962 - 1991)’, Australian Trade Union Archives, [online document] accessed 16 May 2021. https://www.atua.org.au/biogs/ALE0316b.htm.
   Holland, P. and Jerrard, M. 2018 ‘Unions have a history of merging – that’s why the new ‘super union’ makes sense’, The Conversation, [online document] accessed 4 June 2021. https://theconversation.com/unions-have-a-history-of-merging-thats-why-the-new-super-union-makes-sense-93077.
11 These unions amalgamated to form the Maritime Union of Australia and are now the Maritime Division of the CFMMEU. 
     Smith, B. A. 2001c ‘Maritime Union of Australia (1993 - )’, Australian Trade Union Archives, [online document] accessed 16 May 2021. https://www.atua.org.au/biogs/ALE0595b.htm.
     Holland and Jerrard ibid.
12 Bentley, S. 2003 ‘The origins and politics of MUSAA’, Green Left Weekly, [online document] accessed 29 May 2021. https://www.greenleft.org.au/content/origins-and-politics-musaa.
     Strauss op cit.
13 Brown, T. 2004 ‘Silencing dissent to win consent: National training reform in the Accord years’, Labour & Industry, 15(1):33-51.
14 Now part of the Food and Confectionary Division of the AMWU. 
     Smith, B. A. 2001d ) ‘Confectionery Workers Union of Australia (1986 - 1992)’, Australian Trade Union Archives, [online document] accessed 16 May 2021. https://www.atua.org.au/biogs/ALE0379b.htm.
15 Now part of the Construction and General Division of the CFMMEU. 
     Smith, B. A. 2001e ‘Australian Building Construction Employees Builders Labourers Federation (ii) (1976 - 1986)’, Australian Trade Union Archives, [online document] accessed 16 May 2021. https://www.atua.org.au/biogs/ALE0134b.htm;
     Holland and Jerrard op cit.
16 Strauss op cit.
17 Stilwell op cit
     Wright op cit.
     Strauss op cit.
18 Stilwell op cit.
19 Peetz, D. 1998 Unions in a contrary world: The future of the Australian trade union movement, Cambridge University Press: Melbourne.
20 Buchanan, J. Oliver, D. and Briggs C. 2014 ‘Solidarity reconstructed: The impact of the Accord on relations within the Australian union movement’, Journal of Industrial Relations, 56(2):288–307.
21 Peetz op cit.
22 Ewer, P, Hampson, I, Lloyd, C, Rainford, J, Rix, S and Smith, M (1991) Politics and the Accord, Pluto Press: Leichhardt.
23 In 1988, the leadership of Confédération française démocratique du travail (CFDT - French Democratic Confederation of Labour) expelled workplace unions from the Confederation’s federations in health, post, and telecommunications over a series of wildcat strikes that the workplace unions had supported. These expelled workplace unions formed a new federation within Post France and France Telecom, the Solidarity, Unity Democracy PTT - which played a leading role in subsequent mass mobilisations in defence of employment conditions, pensions, and workplace rights within French society over the three decades. Their success led to further splits by the left-wing of CFDT particularly in transport, health, and government services. These make up the core of the Trade Union Solidaires which is one of the most militant and left-wing confederations within the French labour movement.  
     Damesin R. and Denis, J.-M. (2005) ‘SUD trade unions: The new organisations trying to conquer the French trade union scene’, Capital & Class, 86:17-37.
     Connolly, H. 2012 ‘Union renewal in France and Hyman’s universal dualism’, Capital & Class, 36(1):117–134.
24 Stilwell op cit.
     Wright op cit.
25 McKenzie, M. 2018 ‘The Erosion of Minimum Wage Policy in Australia and Labour’s Shrinking Share of Total Income’, Journal of Australian Political Economy, 81:52-77.
26 Lapavitsas, C. Kaltenbrunner, A. Labrinidis, G. Lindo, D. Meadway, J. Michell, J. Painceira, J. P. Pires, E. Powell, J. Stenfors, A. Teles, N. and Vatikotis, L. 2012 Crisis in the Eurozone, Verso: London.
27 Humprys, E. 2018 How Labour Built Neoliberalism: Australia’s Accord, the Labour Movement and the Neoliberal Project, Brill: Leiden.
     Stilwell op cit.
28 Peetz op cit.
     Peetz, D. and Australian National University, Centre for Economic Policy Research 1997 The Accord, compulsory unionism and the paradigm shift in Australian union membership, Centre for Economic Policy Research, Australian National University Canberra.
29 Peetz op cit.
     Hillier, B. 2020 ‘Sally McManus is a neoliberal’, Red Flag, [online document] accessed 23 May 2021. https://redflag.org.au/node/7340
     Harvey, D. 2005 A Brief History of Neoliberalism, Oxford University Press: Oxford.
     Quiggin, J. 1999 ‘Globalisation, neoliberalism and inequality in Australia’, The Economic and Labour Relations Review, 10(2):240—59.
30 Mirowski, P (2013) Never let a serious crisis go to waste: How neoliberalism survived the financial meltdown, Verso: London.

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Saturday, August 14, 2021

The limits of Modern Monetary Theory as a solution to neoliberalism


Lisbeth Latham

The application by some governments of quantitative easing (the printing of more money) in response to both the Global Financial Crisis and the economic crisis unleashed by the COVID Pandemic has helped to raise interest in the heterodox economics approach of Modern Monetary Theory (MMT) as the appropriate approach economic development in countries such as Australia. While there are definitely important insights that can be drawn from MMT to inform appropriate budgetary responses, particularly in times of economic crisis, advocates of MMT tend to oversimplify the budgetary problems facing sovereign states during crisis, particularly those states which unlike Australia are not imperialist powers, even if a relatively weak one, and are instead in a dependent position within the global economy, but more importantly, mistakes where the real political struggle around budget priorities exist within the context of neoliberal politics.

MMT is a heterodox macroeconomic approach that focuses on the role of the government in the creation of money/currency and how, with the ending of the Bretton Woods Agreement in 1971 and the end of the convertibility of US dollars to gold, governments gained greater freedom in their monetary policy due to not being bound by the need to be able to honour their currency with gold.

Central to MMT is the idea that no government which is a sovereign issuer of its own currency can ever go bankrupt as they are able to create more money, and that doing so is preferable to a government borrowing money as it avoids the need to pay interest on such a debt. Some advocates of MMT argue that this glimpse of the true nature of the economy fundamentally unravels the core premise of neoliberal austerity which has seen the deprioritisation of spending public services across the globe.

However, the reason we have seen aggressive attempts globally to wind back social spending is not that the neoliberals genuinely believe there just isn’t enough money to spend on public services. Instead, neoliberal austerity is driven by a desire to transfer as much of the wealth being produced into the hands of capitalists, a process that is driving unprecedented levels of wealth concentration. Everything else is simply verbiage to prettify and obfuscate this drive to boost and concentrate profits. In this context, the answer of “printing more money” is still the question of “how do you maintain a sufficient level of profit growth to maintain the capitalist system?”. Shifting this priority will take a struggle against capital and its governments, and all too often MMT tends to push its advocates away from this conclusion into a tangential argument about whether there is genuinely a limit to the money supply.

By shifting the terms of debate to the question of “is there a limit to money”, advocates accept what are really false arguments of capital and their representatives in government as having been given in good faith. While the neoliberal drive has relied heavily on the appearance of a lack of alternative choices, Thatcher’s insistence that “There is No Alternative” being one of the greatest examples, the reality is that in the midst of arguing for the need for surplus budgets, most advanced capitalist countries have happily racked up deficits but at the same time they have been shifting spending priorities, so simply arguing “there are no limits to the spending” is unlikely to address the reality that these governments want to prioritise spending on subsidising business profits rather than on social spending.

This reality can be seen in the examples which MMT advocates point to as proving their point. For many MMTers the increase in government spending, as if from nowhere, in response to the COVID pandemic and in response to the Global Financial Crisis of the late 2000s, is evidence of the truth and power of MMT as a solution. Whilst this does show that governments can spend more, we need to also recognise that spending has also primarily been focused not on meeting the needs of the general population but on maintaining company profits and avoiding mass defaults - indeed the US government’s bailout of US automakers was tied to workers accepting cuts in their working conditions. Moreover, this spending has not been sustained, not because it “cannot be”, instead it has been intentionally wound back and the previous rounds of spending used as a justification of future austerity. This is not to say that the creation of money cannot be a solution to government finances. However, it does highlight that it is necessary to see the questions of how much money the state spends and on what as being primarily political.

Related to this problem is a tendency of MMT advocates to dismiss the question of taxing the rich as not important, as the government can meet its budgetary needs via money creation, and thus from an MMT perspective taxation only really plays a role in the currency circulation which can include, if a government so chooses, wealth redistribution via social spending. There are a number of problems with these positions. It tends to detach money from the real economy and part of the reason we are seeing unprecedented levels of market capitalisation and accompanying individual concentrations of wealth, is that money is not circulating and is instead being drawn from the real economy into speculation in the stock market. More importantly, there is a tendency to reduce the question challenging the concentration of wealth to an at best secondary question - when in reality it should be the primary one of moving to a point of contestation as to who should control the means of production and not just the means of creating money. This problem is highlighted by John Christensen and Nicholas Shaxson regarding how to respond to the massive tax avoidance highlighted in the Panama Papers. “To illustrate this clash, take the words of UK Shadow Chancellor John McDonnell during the Panama Papers tax haven scandal that “every pound avoided in tax by the super-rich is a pound desperately needed by our National Health Service, our schools and our caring services.” We’d strongly agree with this statement — though Bill Mitchell, a prominent MMT economist, attacked it as a “dangerous and misguided narrative for progressives to engage in,” because it “fuels damaging myths” about how the tax and spending system works”.

An easy and ready dismissal of MMT is that its application would simply result in a repetition of the hyperinflation of the Weimar Republic in the early 1920s or Zimbabwe in the late 2000s. However, as Mitchell and Fazi point out there were other factors at play here that triggered hyperinflation most notably disruptions in the supply of goods, not simply the creation of additional money, moreover, they point the example of the creation of additional currency during in Germany between 1933 and 1937, which enabled the Nazi government to rebuild the German economy.

The MMT discussion of the potential risk of inflation, which partly relies on the accurate assertion that creating more money will be no more inflationary than any other stimulus effort such as borrowing more money. They tend to treat the impact of increased money supply in the economy as not just felt via inflationary pressures within a national economy - because most economies are in trade relationships with other economies, changes in volume on money can impact on exchange rates which in turn impacts on trade in those goods being sold internationally will experience a reduction in price on international markets, whilst imported goods will cost more. This can be beneficial to both exporters and manufacturers reliant primarily or exclusively on internal markets - as with the falling value of the currency both become more competitive - if it goes too far it can cause considerable dislocation in the internal economy of a country.

Moreover, if we accept that hyperinflation is a potential problem, even if not primarily driven by the creation of money, then we have to also recognise that MMT’s focus on money as being the solution to modern problems of the economy - particularly where shortages are caused not by a lack of money, but a lack of goods - which we have begun to see during the COVID pandemic due to dramatic shifts in consumption patterns of certain goods, most notably personal protective equipment and vaccines, and as a result of disruption in manufacturing and supply chains due to the virus and accidents such as the blocking of the Suez Canal in March by the Ever Given.

In these circumstances simply creating more money or giving more money to people will not solve these supply issues, indeed it will potentially exacerbate the problems and give rise to Inflation at least in part of, if not the whole of the economy.

While MMT focuses on the ability of governments to simply create money in order to overcome problems with either needing to stimulate the economy or to enable necessary and vital government programmes. These are not the only challenges facing the global economy. Moreover, by articulating an almost evangelical view of having unlocked the secrets of the economy its advocates tend to forget that primarily the issue of spending and consumption in national and international economies are not primarily driven by economics, but instead by politics - with economics being a justifier for political positions.

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Tuesday, June 8, 2021

Naked class war will continue post the pandemic, but it is not a break with neoliberalism

Lisbeth Latham 

The current crisis is sparking significant discussion about policy direction for our societies coming out of the pandemic. Zack Brestin’s article is an important contribution to that debate. While I agree that neoliberalism has been demonstrated to be a failed system and that we can expect to see an intensification of naked class warfare, however, I think it is a mistake to believe that we will see a break with neoliberalism is mistaken. What we are likely to see, unless working and oppressed people are able to resist it, is a deepening of the logic of neoliberalism rather than a break with it.

Neoliberalism has been the hegemonic economic and political outlook in the world for more than 40 years. However, defining neoliberalism is extremely difficult. This is for a range of reasons:

  • Its proponents largely deny that it actually exists;
  • It is so hegemonic that it articulates itself in numerous ways has it has permeated through a range of different political traditions on both the left and the right;
  • One of the mechanisms for its hegemonic position is that it subverts and destabilises other outlooks rather than necessarily articulating a consistent position - a primary avenue for this is through what a number of authors have referred to as the neoliberal thought collective.

Having said this there are a number of features that can be associated with neoliberal positions, these include:
  • Facilitating the free movement of capital by removing barriers to capital investment and shattering trade barriers;
  • Increasing barriers to the movement of workers, which results in increasingly constrained rights and marginalisation for migrant workers;
  • Prying open more aspects of social life for capital investment;
  • Reduction in government social spending primarily premised on the justification of the need to rein in deficits;
  • Increase in subsidisation of capital either directly or indirectly via the opening government services to capitalist competition;
Unfortunately, all indications are that these features will be deepened in the wake of the current crisis, just like they were in response to the Global Financial Crisis, and just as they have been after every crisis of the neoliberal era.

Why is this? I think we have to explore two aspects of neoliberalism, the first is that it is a response to the deep-seated and long-run economic crisis the global capitalist economy caused by the overaccumulation of capital which has resulted in capital finding it increasingly difficult to profitably invest outside of seeking to commodify all aspects of social life, redirect social spending into boosting profits and via the increasing financialisation and securitisation of the economy. However, these responses can only provide short-term relief to the problems that it is trying to address and has the tendency then to exacerbate the underlying crisis because it has both eliminated existing protections against crisis - such as the serious problem caused in the current pandemic by so many workers having little or no effective sick leave, resulting in workers with symptoms faced with the stark choice of attending work sick (and potentially infecting co-workers and by extension their families) - and that it has spread the direct impact of the economic crisis into more and more parts of the economy.

In response to both the failure of neoliberalism to avert crisis and the tendency to exacerbate crisis - while you would expect this to result in the death knell of the orientation, has repeatedly in crisis after crisis in the advocates of neoliberalism successfully enforcing prescriptions of the deepening of neoliberalism in the economy.

While this may seem both counterintuitive and running against the developments in the current crisis - with many advanced capitalist countries seeing government responses that have included the expansion of welfare payments, subsidisation of the payrolls of qualifying companies, and taken over privatised hospitals to meet the needs of responding to the pandemic. The reality is that many of these actions were taken late and begrudgingly, with many of the neoliberal governments which have introduced these frameworks already rolling back these programs despite the crisis being far from over. Neoliberal spokespeople both within and outside of government arguing that post-pandemic recovery will require a deepening of the deregulations of labour markets and privatisation, and the winding back of social spending to pay for the debt built up in responding to the crisis, that is, the shifting of the social cost the crisis onto working people in order to defend and prop up capitalist profits. This push is not inevitable, but resistance by working people in the current period is going to be difficult but as the struggles that are breaking out internationally in response to the crisis, it is possible.

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Friday, April 2, 2021

How the Neoliberal Thought Collective uses "feminist" language to defend misogyny

Lisbeth Latham

Other the past months federal politics has seen the airing of a series of allegations of inappropriate behaviour and outright sexual assault against Morrison government ministers and staffers. These allegations have caused understandable anger amongst wide sections of society, most particularly women - highlighted by the Marchs 4 Justice on March 14 and 15 in numerous cities and towns. In response government ministers and their supporters and defenders in the media have relied on dubious legalistic arguments based on spurious legalism and denials of misogyny. Much of the responses to these defences have tended to see these arguments as reflecting a lack of understanding of concerns and/or poor leadership on the part of Morrison. However, these interpretations tend to make the mistake of seeing the statements and arguments coming from the government and its support networks as being genuine, if ill informed or mistaken. I would argue that instead these arguments are not at all genuine, but are instead of a conscious destablisation and misinformation campaign being conducted by sections of the neoliberal thought collective within Australia to buttress and defend the government and if we are to respond effectively to the current crisis we must accept this reality that significant sections of the media are not good faith actors.

Capitalism as a system is a highly unstable system, it has a tendency toward crisis and contains within it a significant number of contradictions which further this instability. At the same time, despite predictions of inevitable limits and the possibility of collapse, it has demonstrated itself to be an remarkably resilient and flexible system that has been able to adapt to, absorb, neutralise, and eliminate potential threats. Central aspect to this resilience has been the capacity of capitalism and its supporters/beneficiaries to construct a cultural hegemony in support of the system which works to normalise and integrate, and where necessary, smash threats to the system. Within late capitalism, as neoliberalism has become the hegemonic response to capitalist crisis and contradiction this hegemony, particularly amongst ordinary people, has been increasingly been buttressed by the neoliberal thought collective(s).

The concept of a neoliberal thought collective, developed by a range of theorists of neoliberalism such as Philip Mirowski and Dieter Plehwe, refers to the networks of neoliberal idealogues and promoters that exist within and move between academia, think tanks, and media. During the early period of neoliberal thought, when it represented a marginal approach seeking to overturn the dominant social democratic and liberal responses to capitalist crisis, served to help spread ideas and promote the legitimacy of neoliberalism as a response to capitalist response - however has it has emerged as the dominant system the NTC not only promotes neoliberal responses to crisis within its own networks and more broadly, but seeks to defend it’s system by destabilising and undermining alternative approaches - most succinctly articulated in Thatcher’s maxim “There Is No Alternative” in this way demonstrating, as Steven Lukes has suggested, that an important aspect power is the ability to limit possible policy options which are available. Central to the approach of the NTC is to deligitimise alternative perspectives and approaches by co-opting and misusing the language and ideas of its opponents, effectively neutralising by creating confusion as to what these positions actually represent and are arguing.

As mass anger at the allegations against Christian Porter and Liberal staffers - and the acts by the government to protect them rather than hold them to account has increased we have seen a new wave of defences being articulated based a superficially feminist basis - which appears as an apparent break from the attempts at rape apologism and victim initially mobilised by the government and its supporters - most notably Peter van Onselen. This is best reflected in a number of opinion pieces by fairfax columnist Parnell Palme McGuinness titled “Boomer feminism is not what we need at this transformational moment” and “Scott Morrison is not a misogynist, what lacks is a female inner circle” which follow an November 2020 piece “Please, not in the name of feminism:Expose of ministers’ private lives”. In these pieces McGuinness attempts to exploit and mobilise existing divisions within the Australian feminist movement, most notably between older second wave feminists and feminists who have emerged and been influenced by feminisms third and fourth wave.

The significance of these articles is not the actual arguments contained within them, which are dubious and disingenuous, but they way they have sought to mobilise feminist language in justifying a defence of Porter and Morrison. Whilst these articles have been widely seen as bad articles with weak arguments, in drawing responses and shifting debate onto the their spurious arguments the articles work in both shifting the debate away from what to do about an attorney general who is faces credible allegations of rape and a governmetn which defends him to the validity of McGuinness’s argument and adds to the general divisions which exist within the current movement.

It is necessary to simply reject outright any attempt to distract from the seriousness of sexual assault within our community and the failures of institutions to address this violence. At the same time it is vital that we recognise that the only way to move the movement forward and achieve real change is to support the mobilisation of survivors and their supporters with the aim of making attempts to ignore the movement and continue as normal are simply impossible.

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Sunday, October 11, 2020

For Green Universities: Insurgent campuses for sustainability

Lisbeth Latham

Climate Strike Berlin

The events of the past few years have repeatedly demonstrated that our planet faces an existential crisis generated by the way our currently existing social systems, dominated by capitalism, have sought to maximise economic growth at the expense of human need and the capacity of the planet to sustain and maintain the biosphere. Urgent action is needed now. This is a reality which has driven millions of people to mobilise to demand action to correct course. However, this action has been slow at best, as capital and its representatives in government continue to prioritise ever-expanding profits over existence itself, in the delusion that they can save themselves whilst destroying the planet. There has never been a more pressing need to transform our societies in order to save both ourselves and the planet. The question is, how can we turn back the neoliberal and capitalist offensive of the past five decades which has seen defeat after defeat of social movements? The reality is, there are no simple solutions, but we are seeing glimpses of what is possible based on the heroic mobilisations of students globally via the Fridays for Future actions initiated by Greta Thunberg in 2018 combined with a broad range of environmental action, and the rapid efforts to transition away from a carbon-based economy.

Urgent need for climate action and capitals continue resistance
The past few years have seen the acceleration of the climate crisis, with record temperatures, record averages, mass melting events, and ever more frequent extreme weather events. This acceleration has highlighted the urgency of heeding the dire warnings outlined in repeated international climate reports that we are fast running out of time to halt or reverse runaway climate change that will threaten the existence of not just human life, but all life on the planet. Despite this, wide sections of capital and their representatives in governments have refused to take sufficient action to address this crisis, but actively seek to deny the necessity for such action.   

Greta Thunberg outside the Riksdag

Student Strikes for Climate
In response to this inaction, beginning in August 2018, Greta Thunberg began an individual strike outside the Swedish Riksdag calling for concrete action to address the climate crisis. This action quickly inspired hundreds, then thousands, and ultimately millions of young people and their supporters to regularly not attend school/work and participate in protests on an ongoing weekly basis punctuated by truly massive internationally coordinated student strikes. This movement has been so inspiring that it has helped to give impetus to calls for, and in some cases actual, workers strikes in support of concrete action to address climate under a range of slogans such as a “Just Transition”, a “Green New Deal”, and a “Green Industrial Revolution”. This dynamic of student mobilisation inspiring and sparking the mobilisation of other sections of the working class is not surprising, indeed it is a long-term continuation of a pattern of mobilisation going back decades. As has been observed, due to their economic position and lived experience, young people tend to be more receptive to radical ideas than older people and are better positioned for extended participation in political actions and mobilisations.


Climate Strike Santiago, Chile

Limits of student strikes
As important as the student strikes have been in building and renewing the strength and confidence of the climate movement in the face of the very real dangers we face - student strikes at both high school and university level have serious limitations which have been repeatedly demonstrated in the experience of student mobilisations internationally is that as student mobilisation increase in size, frequency, and intensity of action particularly if and when they progress to an extended strike, the student strike tactic tends to act to weaken rather than strengthen the power of the student movement. This is because student organisation tends to be centred on their places of study. In extended strikes, students are no longer at school or university, and the mobilisations will tend to dissipate over time as a consequence of students being separated from the institution.


1968 Student Protests Belgrade, Paris, Rio 

Drawing on this observation, and the concrete experience of the global student radicalisation most notably in Yugoslavia, Western Europe, and the Americas, the United Secretariat of the Fourth International (an international Trotskyist organisation) developed a political strategy based not just on student strikes, but on the occupation and transformation of schools and universities into centres of political struggle and organisation through which the struggle can be transmitted and built in the broader community. They dubbed this strategy the “Red University Strategy” - drawing inspiration for the name from the Yugoslav Students’ demand for red universities.

Central to the strategy is not just about students operating individually and collectively as tribunes for an alternative vision of society but also transforming the character of their institutions of learning and their role within society, making them the centres for societal transformation. This is not just about enabling students to protest, or using art studios (and now IT facilities and studios) create campaign material to build the movement - but transforming the curriculum itself to support the envisioning and construction of an alternative society. In our current context this means the development of technology and production practices that will enable us to respond to the challenges of saving the planet.

In seeking this transformation we need to recognise that such a transformation represented a significant break in power relations and class character of learning institutions in capitalist societies, this has become all the more the case in the context of neoliberal late capitalism. Schools and universities operate as transmission belts of pro-capitalist ideas, but more importantly, they reproduce capitalist notions of control and capitalist reproduction. While this is most immediately recognisable in the role they play in the preparation of students to take their place in the workforce of the capitalist economy, but equally importantly the commodification of not just education but also research. This has seen universities as operating in ever-increasing corporatised ways. This has disempowered and alienated both students and university workers. This has occurred as Universities have both massified to provide an ever-increasing number degree qualified workers as governments have sought to shift the cost of education onto students

In order for students to be able to engage in the political struggle in an ongoing way, it is necessary to transform education from a system aimed at achieving “job-ready” graduates but instead encourages the capacity of students to engage critically not just in their chosen fields but in broader society. In doing so, we must break the disciplinary power of university administrations. An objective which is also in the interest of university workers, enabling them to break key components of discipline and control over their working lives.

In addition, transforming universities requires a fundamental transformation of the funding processes in Universities along two key lines. The first is a shift in the conception of education from a commodified individual good, which individual students pay for, which is central to the neoliberal conception of education, and back into a social good supported collectively by society via the payment of taxes, particularly the taxing of the rich and corporations.

Equally important is the reconception of the role of university research both within institutions and within the broader society. Within Australia, government funding priorities have sought to emphasise the role of research to find and develop ideas, technologies, techniques which “boost our comparative advantages and our Boosting the commercial returns from research”. This has led not only a shift away from pure research for the sake of benefiting our understanding and may lead to yet unknown practical applications, but also in developing prioritising funding relationships between universities and businesses - which means research and other university work will prioritise the direct making of corporate profits and maintaining these relationships. While problematic at the best of times, when the majority of major corporations are intimately connected with environmental destruction it is particularly problematic.

General Assembly, University of Grenoble 2019

So what would a “Green University” look like? 
The first thing is that it would need to be controlled by students and staff in sharp contrast to the current dynamics which places power primarily in the hands of unelected senior administrators and university councils/senates dominated by senior executives drawn from the corporate world. This student/staff control should be exercised via mass popular assemblies of staff and students which are a common feature of mass student and staff mobilisations in much of the world, most notably France. Such a body is not simply seeking to be given a say by university management, but instead an assertion of power against university management and the right of staff and students to control and direct the university and an assertion of the right of working people to guide society more broadly.

A Green University would see its obligation not just to make itself more sustainable as an institution, but to help transform society to meet the challenge of the climate crisis. In practical terms, this means seeking to infuse the curriculums with a full understanding of the challenges facing us and prioritising critical engagement with these problems where the addressing of these problems is prioritised over profit. It also means prioritising and supporting research aimed at addressing the climate crisis both within and between institutions - not with the aim of commodifying or monetising that research but instead enabling humanity to respond to the crisis so we can collectively save the planet.

Campus Blockade, University of Strasbourg, 1999

How do we get there?
The reality is that we do not have a movement with the confidence and organisational capacity to currently conduct this struggle with confidence - and we have not had such a movement for decades. Such a movement will not just materialise based on us wishing it into existence. The challenge is to expand and build the capacity of the movement as it exists today. This includes normalising and expanding the existing movement based on building not just concern about the depth and extent of the climate crisis, but by building people’s confidence that via a combination of social mobilisation and practical social action we can address and effectively respond to the current crisis. That such action will require both a change in individual and community consumption but more importantly will require placing pressure on both governments and corporations to act in our collective interests rather than private profit and if they will not do so force them to do so via collective action. A central aspect of this would include:
While the movement that is necessary seems distant from where we are at, the need for such a movement has never been greater and it is only by starting to build such a movement now that it can be achieved.

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Thursday, September 17, 2020

Keynesianism Is No long-Term Solution To The Economic Crisis

Lisbeth Latham

The current COVID pandemic has caused massive financial damage to the global economy, damage which has been felt viscerally by working people in the form of dramatically reduced incomes and the loss of millions of jobs. As we progress through the pandemic and look hopefully towards its ending and eventual recovery, minds have begun to look towards what the eventual rebuilding of the economy might look like. Whilst capital, and its representatives in governments, are already looking towards an, even more, deregulated labour market and a general deepening of the neoliberal model, on the other hand, alternative models for recovery are being forward, most particularly that proposed the by the Australian Council of Trade Unions which draws its inspiration from the post-war recovery globally and most particularly in Australia post the Second World War. While this example has understandable appeal, it is well known, it refers to a period of massive and sustained economic growth. It is a deeply problematic model for recovery to the current period of crisis as it fails to understand the roots of the recovery post Second World War which will not be easily replicated but more importantly fails to recognise the broader reality of the global climate crisis that also confronts us, and which should mean we are wary of productivist solutions to this crisis.


The current moment of twin crises of the COVID pandemic and climate change makes it both opportune and vital that progressive forces put forward a vision of a potential course of action. A course which not only facilitates economic recovery but also addresses key questions economic justice. Specifically, this means charting both a course to enable the global transitioning of the economy away from its reliance on fossil fuels and build ever-higher profits. At the same time, this process must also focus on reducing economic inequality both intra- and internationally.

In the wake of the war, the Australian government engaged in a large scale and ongoing social spending which included the building of infrastructure, such as the Snowy River Scheme and helped the Australian economy and society for an extended period of prosperity and helped the Australian economy and society for an extended period of prosperity. This spending and development played a significant part in creating employment in a context which risked mass unemployment. With demobilising armed forces and the waves of refugees that found homes in Australia in the wake of mass displacement caused by the Second World War and reconfiguring of post-war Europe. However, while it is undoubtedly the case that significant government spending was a major factor in this growth; it is not the only story.

It is important to remember that the post-war boom, which was a global phenomenon, occurred in the wake both the destruction and stagnation caused by the great depression and then shattering of the global economy and destruction of capital goods which occurred during the Second World War. This was a period of extended destruction of capital, which resulted in mass immiseration, destruction, and loss of life. This created an opportunity for an extended period of growth - which would not have been possible without this previous destruction. It lay the foundation for extended capital accumulation as countries like Australia were able to profit from the rebuilding much of Europe and East Asia. The ability to experience extended periods of growth was also expanded and extended by the ongoing arms build-up and destruction associated with the Cold War and the imperialist interventions in Korea and Vietnam. In addition, there was an opening up of a wide range of markets to international competition, markets which had previously been closed due to colonial relationships.

The current economic crisis, as devastating and destructive as it is, has not recreated the circumstances of the post-war period in any way. While COVID has unleashed a significant economic crisis as a consequence of a long run over-accumulation of capital, the COVID crisis has primarily stalled the global economy, disrupted in supply chains, and reduced demand and spending power as millions of people have either seen their hours reduced or lost employment entirely. It has not, at least not currently, substantially damaged or reduced the volume of capital goods in the real economy. Particularly not at the level of destruction which would be necessary to enable an extended period of acceleration and growth in profitable investment in the real economy. Which means that it is highly unlikely for the current crisis to reproduce a similar period of growth post the current crisis to that of the post-war boom. 

The significance of this difference can be seen in the what happened to the economies of the advanced capitalist countries at the end of the long-boom, where government stimulus spending was no longer able to smooth the business cycle and enable ongoing growth, but instead resulted in a prolonged period of stagflation, which is characterised by low growth, high unemployment, and high inflation. Any extended attempt at smoothing the business cycle now is likely to result in a similar outcome, particularly, as I will discuss later, as capital is flush with surplus capital.
This is not to say that there should not be an effort to stimulate the economy. Instead, the object of any stimulus should not be modelled on the post-war recovery other than to say it is possible to carry out large scale government spending - just as the government spending of the second world war demonstrated the possibility of massive government spending in the post-war period.

Many small and medium, and some large, businesses will go bankrupt during the current crisis. Any government stimulus should be aimed at supporting these businesses to minimise the impact of any such collapse on the hundreds of thousands of workers employed by them. However, we can see the problem of excess capital in the system even now, where the stock markets globally continue to rise despite being the global economy being in a massive down-turn (admittedly much of this rise isolated to those sections of the stock market that have been seen as a “safe bet”, particularly tech stocks). So government spending in the post-COVID recovery would be best focused on either establishing worker cooperatives or state-run initiatives. Where spending does flow to the private sector it should be tied to the shifting of ownership in part or whole to the state and to establishment and expansion of workplace democracy in those organisations. With a focus then being on a discussion on refocusing these enterprises to meet the needs of society, the workers, their communities rather than achieving private profits.


Chart: All Ordinaries Index 2000 - 2020, source: Market Watch.

Beyond this problem - there is a deeper existential one. Our planet is on the verge of environmental collapse, the biggest threat is climate change, but we have a significantly broader problem, which even if we could achieve a change in the carbon budget, we would be faced with the fact that the planet cannot sustain the need of capitalism to constantly expand and grow. This drive towards growth and expansion is not driven by a commitment to meet human consumption needs - it is entirely disconnected from them and puts human life at risk and threatens to accelerate the metabolic rift being experienced by the planet.

As such while there is space for:
  • Expanding manufacturing for transitioning the Australian economy and those of other countries away from fossil fuel-based energy production;
  • Growing local manufacturing to reduce our reliance on importing manufactured goods and the associated environmental impact of large scale transport;
  • Supporting and funding the transition away from fossil fuels for countries of the global South supporting the development of their local manufacturing and agriculture;
  • Construction of public housing with an emphasis on better quality and more sustainable housing stock;
  • Expanding recycling industries as part of an effort to reduce our reliance on extractive industries for raw materials;
  • Expanding the scope and frequency of public transport;
  • Repairing and strengthening of public services, most notably health, education, and research which the crisis has demonstrated have been woefully under-resourced as a consequence of decades of neoliberalism;
  • Growth in employment in counteracting the destruction that capitalist development has wrought on the environment;
  • Shifting agricultural practices to more sustainable forms;
  • Establishment of a conservation body aimed at direct remediation of the environment and ecosystems
There is no space for a drive for an extended period of growth in the output of either capital or consumer goods.

It remains unclear how much work the focuses above would create. Collectively we need to start to re-envision what full-time work is. The focus on a five-day 38-hour workweek has resulted in both problems of unemployment and underemployment which combined was more than 13% prior to the onset of the pandemic in Australia. At the same time, workers in Australia who are employed full-time worked some of the longest hours in the Organisation for Economic Co-operation and Development. This meant that work is extremely unevenly distributed across the labour market. Rather than pushing for full employment based on 38-hour week model, we should be exploring how to more effectively share employment, particularly in socially and environmentally useful ways that will both enable working people to actually benefit from the last three decades growth in labour productivity by evening the spread of working hours, reducing income inequality across the workforce and ensuring those individuals those who are unable to work have their incomes lifted to a liveable level.

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Tuesday, September 15, 2020

Superwealth: Understanding The Decoupling Of Stock Values From Real Economic Value



Lisbeth Latham

Global wealth inequality is reaching historic highs. Inequalities have been both highlighted and exacerbated by the current crisis. However, while the world’s super-rich are obscenely wealthy, most discourse around this issue fundamentally misunderstands and misrepresents the nature of much of this wealth – which, in turn, can distort our view of what addressing this inequality should look like.

Deindusrialisation and financialisation
As the global, post-war long boom came to an end in the late 1960s and early 1970s, capital began to intensify a range of processes that had been at play in the economies of the advanced capitalist countries. Most notable of these was the process of deindustrialisation, as capital shifted manufacturing from high-wage, heavily organised factories in the metropolitan centres of the Global North to the periphery – initially of the imperialist countries themselves, and then to former colonies and neo-colonies of the Global South.

This shift temporarily boosted profits and provided spaces for these profits to be reinvested, but this was possible only up to a point (though repeatedly, capital shifted from one low-wage country to the next in response to worker organisation and resistance). Capital still faced the problem of what to do with the new profits being generated, and to maintain profit growth the capitalist class sought desperately to find new areas to invest in.

While new technologies have developed and state-owned industries have been pried open through privatisation, the main source for investment and reinvestment of profits was in the financial markets, where new and more bespoke products, with ever more rapid exchanges and turnovers, were developed as mechanisms through which to make money. This process of shifting investment and money out of the real economy and into financial markets is known as financialisation.

The 60 stock exchanges around the world currently have a total capital value of $69 trillion. The growth in financial markets over the 45 years can be seen in the S&P 500 index, which tracks the value of the top 500 stocks and equities on the US New York Stock Exchange, NASDAQ and Cboe BZX Exchange.

The S&P 500 had an average closing price of 21.0 points in 1930. This rose to 86.18 in 1975, and to 3,050.00 in 2020. Similarly, the Irish Overall Index, which has measured the value of stocks on the Irish Stock Exchange since 1989, has grown from a closing price of 1,586 in 1989 to 6,464 on 3 August 2020.

The S&P 500 Index, Historical Chart 1928-2020.

Stock market detached from economic performance
This growth in the value of capitalisation on a stock exchange, while significant, does not necessarily reflect the same level of growth in the real-world performance of the underlying companies and equities. These two factors can be significantly out of step with each other, resulting in financial assets being either significantly over or undervalued.

When they are overvalued, which can occur for a range of reasons, a bubble can form. When the two values come back together, considerable losses, both notional and real, can occur (up until an individual sells their assets all gains and losses are purely notional).

So what does this mean for the wealth of people like Jeff Bezos, Bill Gates and Mark Zuckerberg? These individuals are undoubtedly obscenely wealthy, and they have significant political power based on their wealth and control of large companies that play a central role in the global economy.

However, as impressive as it can sound to say that Bezos is worth $190.6 billion, or that his wealth has increased by $74bn this year, much of this wealth is simply not real. These statements are supposed to sound impressive to build on the myth of these great capitalists ‘creating wealth’.

If we were to seize all of Bezos’s wealth and turn it over to the public good we would not gain $190.6bn. Instead, we would have a – not insubstantial, but far smaller – amount of money, and have a percentage share of a company with an annual revenue of $280.52bn and net profits of $11.588bn, profits that would be sharply reduced as we dismantled Amazon’s super-exploitative employment practices and its parasitic relationship to other businesses.

The reality is that the bulk of the growth in the “value” of Amazon – which has seen its share price increase to a high this year of $3,312.49 compared to an average price of $1,789.19 in 2019 – has not been driven by a significant increase in the performance of the company, but rather by a perception of Amazon and other similar companies as a safe bet by some investors, and by hedge funds looking to make money from speculation based on this perception.

The Financial Times reported on 20 August that we have entered a new renaissance for hedge funds using a macro investment strategy (strategies based on assessment of shifts in geopolitical and macroeconomic trends in countries), saying: “The main fund at Brevan Howard, the firm headed by billionaire Alan Howard, was up over 21 per cent in the first half of 2020; Paul Tudor Jones’s flagship fund at Tudor Investment Corporation has gained 8 per cent through July; and Chris Rokos’s Rokos Capital Management has climbed 24 per cent through to the end of July, according to investor documents and people familiar with the matter.”

It continued: “Caxton Associates has returned 31 per cent this year, according to investors, while a fund run by the firm’s chief executive Andrew Law is up 42 per cent. Meanwhile, Louis Bacon’s Moore Capital, which last year decided to eject the remaining external investors from its flagship funds after a long barren stretch, notched up a 25 per cent gain in seven months through July.”

None of this is to say that we should not aim to nationalise large companies, and put them to the use of meeting the needs of people. But we need to be aware that the amount of real value locked up in these companies is overstated, and has much more to do with stroking the egos of the rich and reinforcing ruling-class myths than it does with the actual potential social good these companies could perform.

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Originally published by the Irish Broad Left.

This article is posted under copyleft, verbatim copying and distribution of the entire article is permitted in any medium without royalty provided this notice is preserved. If you reprint this article please email me at revitalisinglabour@gmail.com to let me know. 

Top image: Jeff Bezos. Photo by Michael Prince/Forbes.

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Sunday, August 30, 2020

A Transitional Programme for Today?

Lisbeth Latham

Radical Left movements across the globe face multiple challenges that place human survival at stake. At the same time, our movements are currently not strong enough to effectively challenge capitalism and the determination of the capitalist class and their representatives to prioritise profits over human life and survival of the planet.

This poses the question of how we can start to cohere and build the capacity of the popular classes and oppressed people to unite and struggle for a better world. One possible source of inspiration for strengthening the movement may be the Transitional Programme, which was written by Russian revolutionary Leon Trotsky in 1938 as part of a process to cohere and regroup consistently revolutionary forces.

What is the transitional programme?
The Transitional Programme, or The Death Agony of Capitalism and the Tasks of the Fourth International, was the key programmatic document of the Fourth International at its founding in 1938. The programme was drafted by Trotsky with the aim of bridging the historic divide between the revolutionary movement’s minimum programmes (demands raised within the movement, and particularly in parliamentary campaigns, regarding the reform of capitalism) and maximum programmes (the actions that would be taken upon the seizure of power by the working class).

The aim was to build into the minimum programme demands that would more sharply challenge the power of capital, and demonstrate to working people the limitations of democracy under capitalism while building their confidence in achieving something more – these were the “transitional demands”.

The context of the transitional programme
The transitional programme was written in late 1930s, a period during which the labour movement was surging in many countries, but had also suffered heavy defeats at the hands of fascism (Germany, Italy) or was involved in revolutionary struggles that would result in defeat at the hands of fascism (Spain).

It was also expected that the world was heading to a new inter-imperialist war that would be aimed at the overthrow of “actually existing socialism” in the Soviet Union.

Within this context, the tiny Trotskyist movement had been going through an extended period of seeking to unite and build a new revolutionary and anti-Stalinist pole within the workers movement, including the semi-mass centrist parties Workers Party of Marxist University (Spain), the Independent Labour Party (Britain), and the Revolutionary Socialist Party (Netherlands), which involved or were founded by left-oppositionists. This effort ultimately failed with only the Revolutionary Socialist Party participating.

In this context, the programme was aimed at providing an ideological weapon with which the small Trotskyist forces in the global workers movement could agitate around and build both influence within the movement and support for the programme, either in whole or in part.

The Transitional Programme is made up of three distinct types of demands. These are: 

  • immediate demands, primarily around economic issues; 
  • democratic demands around expanding and strengthening democratic rights; and 
  • transitional demands aimed at fundamentally challenging the power and authority of capital itself.

It is important to remember that the Transitional Programme was not intended as a final and finished document; it was instead intended as a framework for revolutionary organisations to develop their responses to known challenges, but also new challenges to the development and dynamics of the class struggle. So while it is possible to simply deploy an existing demand from the programme in response to the struggle of today, it is also just as viable to develop new responses to any challenges that emerge.

Immediate demands
Immediate demands are probably the simplest and easiest demands to understand and develop. They are aimed at responding to the immediate struggles of the day and are essentially based on the target of the demand either stopping doing something, or begin doing something.

Examples would be calls for a doubling of unemployment benefits or an increase in funding to higher education. A problem with immediate demands is that, once achieved, they can and will be undermined by capital and the state.

Democratic demands
Democratic demands seek to either defend or expand existing democratic rights or establish new ones. Examples of democratic demands include demands around expanding the franchise or citizenship, expanding rights and protections such the demand for marriage equality or anti-discrimination legislation, or expansion of community control over their own lives such as minority language rights or establishment of the right to recall elected representatives.

Again, these advances are always subject to being rolled back or subverted by capital and the state, such as the weakening and defanging of environmental protections that has transformed many such agencies into bodies that effectively authorise polluting the environment, rather than protecting the environment from pollution.

Transitional demands
Transitional demands go much further than either immediate or democratic demands. They don’t simply seek to address something happening right now but seek to fundamentally undermine the power of both capital and the state and shift power into the hands of working people. While still capable of being subverted (because everything is) they are far more robust than the other two types of demands.

Examples of transitional demands include:
  • Escalator clauses, through which, in addition to any negotiated pay rise, workers receive automatic pay rises in response to inflation. This acts to not only increase wages, but to protect wage gains from inflation, ensuring wage growth not just in absolute but relative terms;
  • Sliding hour and wages scales. This demand seeks to protect both jobs and wages of workers, particularly during periods of technological change, by responding to any attempt to shed jobs by requiring working hours for workers to be reduced instead of jobs being cut, and the hourly pay increased in order to maintain weekly wages. The demand means that the benefit of technology improvement flows onto working people in the form of reduced working hours rather than simply boosting profits and resulting in increased unemployment.

The nature of the transitional demand
A key debate that has existed around the transitional demand is (1) whether it is achievable under capitalism, or (2) whether it is simply a document for a transition period.

On the second point, this is clearly a misunderstanding of the role of the programme. While it was developed in a period where the Trotskyist movement expected and predicted an expansion of the class struggle in which the question of the transition to socialism would be posed, it was not the situation that they immediately faced, and their forces were not such that they would be in a position to be applying their programme.

Moreover, it does not make sense for many of the demands within the programme to be raised in periods of transition – whether this is a situation of dual power (where there are both capitalist and working-class organs of power existing side by side) or in a workers’ state (the working class would not need to be making demands in this situation, the organs of workers power would just act). Instead, it was an agitational document aimed at engaging workers in the here and now.

With regard to the first point, it is not knowable what capital, and its representatives in government, will concede, at least in the short-term, in the hope of maintaining control and power with the aim of subverting any concessions as the movement ebbs and recedes. The bigger and more conscious the movement, the more desperate capital will be to offer concessions in the hope of returning to a period of peace.

Moreover, individual transitional demands have been achieved and won by the labour movement. For example, cost-of-living allowances, which provide wage increases to workers in response to inflation, have been a feature of a significant number of US union contracts since the 1950s. This is a consequence of US unions, most notably the United Auto Workers, adopting the escalator clause as part of their bargaining demands as a consequence of the influence of Trotskyist-led locals pushing these demands in the late 1940s.

Transitional demands for today
While a modern-day transitional programme would feature a lot of the original demands, it does need updating in order to meet the challenges of today – particularly in relation to the challenges around climate change, indigenous rights and anti-racism struggles, globalisation and the #MeToo movement.

Such transitional demands could include, but should not be limited to:
  • Demands focused on expropriation and bringing major polluters under workers control to fund just transitions to environmentally sustainable zero-carbon economies;
  • Requirements that any company operating in multiple counties must abide by environmental, labour and anti-discrimination legislation not only in its ‘home’ country but in all the countries it operates in, with communities in other countries able to bring suits under these laws;
  • The defunding and disarming of police, with these services brought under the control of local communities of colour;
  • The criminalisation of efforts of officials holding power to discourage or undermine the prosecution of sexual assault allegations;
  • Free movement of all working people with the right to a liveable income for all working-class people, whether in employment or not;
  • Taxation on speculative financial transactions;
  • A four-day work week with no loss in pay (with commensurate reduction in working hours for workers who do not work full-time);
  • No bailouts or government contracts for companies based in tax havens;
  • Any government-funded bailouts must be tied to commensurate state equity in the firm, with the establishment of mechanisms for industrial democracy in the firms;
  • A ban on redundancies in profitable companies, or firms in receipt of bailout money;
  • Free paid training for workers who are in industries that are affected by the transition to a carbon-free economy.

The transitional programme and its associated demands is not a magical solution. The work of the Left will not be, and is not, completed by raising a particular demand, no matter how brilliant its formulation. The purpose of demands is to create mechanisms in which potential solutions to the problems confronting working people can be posed to them – with the aim of winning people to that solution, but also to the need for political action to achieve it.

By drawing people into action in support of concrete demands we can build the confidence and organisational capacity of the class to take action in their own interest and the social power of all working people. And by doing this, we can build a movement that is sufficiently confident and powerful to meet the existential challenges we are faced with. 

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This article was originally published by the Irish Broad Left.

This article is posted under copyleft, verbatim copying and distribution of the entire article is permitted in any medium without royalty provided this notice is preserved. If you reprint this article please email me at revitalisinglabour@gmail.com to let me know.

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Revitalising Labour attempts to reflect on efforts to rebuild the labour movement internationally, emphasising the role that left-wing political currents can play in this process. It welcomes contributions on union struggles, internal renewal processes within the labour movement and the struggle against capitalism and imperialism.

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