On the 7th of April Elizabeth Farrelly (2016), writing in the Sydney Morning Herald, launched a stinging attack on the right-wing think tank the Institute for Public Affairs (IPA). Judging from the response on social media her column has been well-received by much of the Left: from left-liberals and social democrats to anti-capitalists. However whilst I have no sympathy for the IPA the argument that Farrelly makes is both deeply wrong and also a fine example of the common-sense of the Australian Left: that the state we are in is due to the nefarious influence of bad people and bad ideas.
Farrelly argues that a great deal of government policy and deeper dynamics of inequality can be explained ‘at least in part’ due to the influence of the IPA. This influence arises from combining ideas and money in a way that gives it undue social power via ‘the charisma of wealth’. Ultimately it leads to the ‘private interest of Big Money’ being presented at multiple levels of society as the same as the ‘public interest’ and thus, one assumes, shaping policy.
Farrelly successfully shows that the IPA works as a node that connects various elements of the Right: politicians, members of commentariat and media, specific capitalists and other figures of the Establishment. But she makes a mistake when she argues that the ‘75 Radical ideas to Transform Australia’, the IPA’s utopian scribblings, have a serious influence on policy – even on the Right.
When the Abbott-Hockey government came to power in 2013 their core strategy was substantially different from the re-heated neoliberalism the IPA constantly sells. Rather their plan (shared by many factions for capital) was to massively stimulate the economy through huge infrastructure spending. This was to be financed via state-level privatisations and by shifting the costs and work of social reproduction increasingly onto the wage and into the home via cuts to social spending. This plan fell apart – broken by intransigence in the Senate, the surprise 2015 Qld state election defeat of the LNP and popular opposition to specific infrastructure programs such as the East West Link – and with it went the Abbott-Hockey leadership team after spiralling into policy disorder. If anything the current Turnbull-Morrison leadership team has been even more incoherent and impotent. 2016 has been the year of random policy announcements, back-trackings and malfunctions.
Indeed a running theme amongst the commentariat and various thinkers for Australian capitalism is that politics is now broken: Laura Tingle (2015) and George Megalogenis (2016) having provided some of the more thoughtful contributions to the debate. But all these thinkers also attempt to understand the problem on the level of politics. Thus they fail to grasp what is actually going on.
Australian society has been radically reshaped in recent decades – but the IPA isn’t to blame (nor are for that matter right-wing governments – though of course they have had some impact.) Australia has been reshaped by the changes to the dynamics of capitalism and capital accumulation.
In the popular debate this is often referred to as ‘The End of the Mining Boom.’ In what everyone once called ‘globalisation’ Australia played a very specific role in the global division of labour. As production shifted from the Global North to the Global South to produce commodities that were then sold on credit to the North (financed by savings from the South) (Varoufakis 2011) Australia provided resource inputs. This boom really took off in the early 2000s.
It created a very specific set of phenomena. The high price of resource commodities and thus the high profits for mining capital, lead to massive expansion in mining which saw the strange combination of the share of income going to capital vis-à-vis labour increasing, but the increase demand for labour also saw incomes rise (in a very unequal fashion), as more people entered the work force, worked longer and also had increased access to credit whilst the price of consumer imports dropped and the value of the Australian dollar rose (Davis, McCarthy, and Bridges 2016, Parham 2013). This created a situation where Australia became an increasingly unequal society but this was experienced (for many and probably most) as a rise in material wealth. Also where people worked and how they worked also changed. The social order of an unequal society was held together through increased work, increased levels of consumption and increased debt – this allowed people to seek escape from the political failures of the early 21st Century into a variety of personal and private utopias.
The ability of China to launch debt fuelled stimulation in the face of the 2007 global crisis meant that Australia was spared the worst of the Great Recession – but that is over now. As Chinese growth drops in the face of the overaccumulation of capital, rising debts and working class insurgency (Hung 2015, Kumar 2016)growth in Australia is shrinking too (the recent National Accounts were healthier than expected – but reveal that business investment is declining whilst consumer growth on credit is increasing. This is a sign of sickness not health). Wage growth is down whilst household debt is skyrocketing(Jacobs and Rush 2015, Reserve Bank of Australia 2016, 6). The latter is driven in part by the panicked switching of capital from mining to real estate – note the current, probably very short term, bubble of inner city unit construction which is profoundly reshaping Australian cities.
The accumulative impact of the currents of boom and exhaustion has profoundly reshaped Australia – making it a paradoxical place materially wealthier but also overworked, exploited, unequal, precarious and insecure. It is this paradoxical land that now tetters as the whole globe faces the possible return of an economic meltdown.
Whilst politics, from the Hawke-Keating government on, facilitated these dynamics of capital accumulation under the rubric of reform (with think tanks playing the role of cheerleaders) it is these dynamics not politics which have had the real power. As capitalism in Australia faces a dismal future all side of politics have been useless in trying to develop an adequate strategy for capital accumulation. This is because we live, as the authors at Left Flank show us, in a time of ‘anti-politics’ where the changes of the end of the 20th and start of the 21st century have meant that political parties no longer have any real social base (Humphrys and Tietze 2013) and because there is no obvious solution within the boundaries of capitalism to the deep global malaise caused by the overaccumulation of capital. All governments in Australia face the problem where they have to support capital accumulation and thus spend more on stimulus or reduce the corporate tax burden, yet also fund social reproduction, and to do so in a way that doesn’t lead to debt spiralling out of control – that is to spend more and spend less simultaneously – and all are failing terribly.
Farrelly juxtaposes the interests of Big Money against those of the public interest. However in a capitalist society, where the entire social order is shaped by and dependent on capital accumulation, the public interests and the interest of capitalist society are the same. Rather we can look to our interests (against and in spite of what is good for capitalist society) both as those exploited by capitalism and those who want to overcome and escape it. How are we going to assert our needs and desires now within this framework in a way that fundamentally subverts it and breaks it so we can create a world of dignity and justice?
Think tanks like the IPA are our enemy in as much as they mystify social reality by pumping out endless bullshit. However explanations of our predicament that focus on the IPA, or Andrew Bolt, or the Right or Howard or Abbott or Turnbull or even neoliberalism simply deepen the mystification and make our struggle just that much harder.
Davis, Kathryn, Martin McCarthy, and Jonathan Bridges. 2016. “The Labour Market During and after the Terms of Trade Boom.” RBA Bulletin (March):1-9.
Farrelly, Elizabeth. 2016. “The Think-Tank with Arms Everywhere.” Sydney Morning Herald, 7 April 2016, 20.
Humphrys, Elizabeth, and Tad Tietze. 2013. Anti-Politics: Elephant in the Room. Anti-politics: Elephant in the room [cited 7th April 2016]. Available from http://left-flank.org/2013/10/31/anti-politics-elephant-room/.
Hung, Ho-fung. 2015. “China Fantasies.” Jacobin (19 Fall 2015 Uneven & Combined):37-43.
Jacobs, David, and Alexandra Rush. 2015. Why Is Wage Growth So Low? Reserve Bank of Australia [cited 29th September 2015]. Available from http://www.rba.gov.au/publications/bulletin/2015/jun/2.html.
Kumar, Ashok. 2016. The Devaluation of the Chinese Yuan Marks a Crisis in Capitalism. Independent [cited 12th January 2016]. Available from http://www.independent.co.uk/voices/the-devaluation-of-the-chinese-yuan-marks-a-crisis-in-capitalism-a6802086.html.
Megalogenis, George. 2016. “Balancing Act.” Quarterly Essay (61):1-67.
Parham, D. . 2013. Labour’s Share of Growth in Income and Prosperity. Canberra: Visiting Researcher Paper, Productivity Commission.
Reserve Bank of Australia. 2016. The Australian Economy and Financial Markets Chart Pack April 2016 [cited 8th April 2016]. Available from http://www.rba.gov.au/chart-pack/pdf/chart-pack.pdf?v=2016-04-08-13-09-43.
Tingle, Laura. 2015. “Political Amnesia: How We Forgot How to Govern.” Quarterly Essay (60):1-85.
Varoufakis, Yanis. 2011. The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy. London & New York: Zed Books.
For starters I see little evidence that ‘When the Abbott-Hockey government came to power in 2013 their core strategy was substantially different from the re-heated neoliberalism the IPA constantly sells. Rather their plan (shared by many factions for capital) was to massively stimulate the economy through huge infrastructure spending.’ I see some evidence of some infrastructure spending. I also disagree that the parties have lost their social base. They are losing part of their supporter base but 35% support is still a significant section of the population passively supporting you, and the AL|P continues to attract the trade union bureaucracy and reflect its social position to some extent. The Labor Party’s membership is declining precisely because the role it plays as a capitalist workers’party is forcing it to be, in these times of declining profit rates, more capitalist and less worker oriented.
Hi John, thanks for your comments
On the two objections you make:
I think you are misreading my argument. I think the Abbott-Hockey government had a plan to carry through massive infrastructure spending – but they have failed to carry that plan out. I document this dynamic in the following pieces: Roads to Nowhere – Capital’s Plan A , Building the Infrastructure State: Plans, Anti-Politics and Sullen Refusal , Short notes on the failures of Capital’s Plan A , Is that it for the Plan A for Capital? , Not with a bang but a whimper: The End of the Mining Boom and the next Budget. All are available at withsobersenses.wordpress.com . Neither the infrastructure plan nor the endless policy incoherence that comes after it looks anything like the IPA’s wish list. I assume it would be very easy for you to show us how it did if it did. The icing on the cake is the recent IPA critique of Turnbull government policy (which seems to change on a weekly basis).
The next question is to explain why the Coalition has failed. The most convincing argument for me is that none of the factions of politics have the social base anymore to generate and carry out a solution. This is what makes the current crisis so different from that of the 1930s and 1970s. I find your counter argument that the ALP has a social base because of the attachment of the trade union bureaucracy very weak – what kind of social base do they have? Trade Union membership continues to decline and the vast majority of the working class aren’t members. Of those of us that are members the situation is very patchy. Whist a few unions maintain deep contact with members most of us are simply paper members, on the ground organising is often anaemic to non-existent (outside maybe the CFMEU, various Teachers’ unions etc…) and the social power of the trade unions reflects that.
As for you last point…. Whilst I am sure we will continue to debate the nature of the tendency for the rate of profit to decline, how it can or can’t be measured and the role it and its countervailing tendencies play in determine capital accumulation how do you imagine that declining profit rates influence policy? How do major political parties see this decline as the calculating of profit rates isn’t part of how they see the world? Their economic thinking looks at indicators such as growth, unemployment and inflation. There are a whole series of missing steps that would be necessary to show how this actually operates in reality. The problem is to try to understand how factions for capital think crisis – and not just assume that crisis generates policy in a uni-linear fashion.