The ALP - Arguing for a Minimum Program

 

by Dr Tristan Ewins ; ALP member of over 30 years

The ALP has long been characterised by internal ideological divisions between self-identifying social democrats and self-identifying socialists.  This division has always problematic because there are competing definitions of social democracy and socialism.  Sweden has been described both as socialist and social democratic. Democratic socialists always contested the notion that the former Eastern Bloc represented ‘real socialism’.   Other socialists continued to find inspiration in one or another form of Leninism.  Some self-identifying social democrats simply see their politics as ‘progressive but moderate’.  In a relative sense we think here of a ‘traditional social democracy’. Other social democrats identify as ‘revolutionary social democrats’: basically a continuation in the tradition of early Marxism. (before Leninism, and typified to a degree by the example of Austrian social democrats in the 1917-1934 period)  This paradigm of socialism (the Austrian example specifically) is notable for adherence to revolutionary aims ; even if pitched as ‘revolutionary reforms’ or ‘slow revolution’.  It is not opposed to socialism (or democracy) as such – but rather is a reclamation of an old politics where ‘socialism’ and ‘social democracy’ were not opposed to each other.  The question I intend to explore here is ‘what is a reasonable minimum program for the ALP, which brings together the Party’s diverse ideological elements?’.   What elements of a Party program should all members of the ALP share adherence to?  This is no easy question to answer: as there must be a degree of ‘give and take’, but without compromising on certain basic issues.  There’s also the question of what the modern ALP Left should stand for: and whether or not it is also ‘losing its way’.

The ALP used to adhere – in theory – to its own ‘Socialist Objective’.  This was always complicated by the so-called ‘Blackburn Amendment’ which committed itself to socialisation to the extent of eliminating “exploitation and other anti-social features”.   It was long considered by some as a ‘dead letter’ ; at odds with the practice of actual Labor policy ; and containing a contradiction: at least as far as Marxism is concerned.  For Marxism exploitation is structurally inbuilt in capitalism (expropriation of surplus value) : and socialisation must be absolute to eliminate it entirely.  Arguably the Objective was also at odds with political practice on the ALP Left ; despite the Left fighting tooth and nail for many years to preserve it.  When arguing for the preservation of the Objective Left leaders such as Kim Carr watered down their arguments to the point  where there was a very significant loss of meaning and content – in an attempt to broaden its appeal.  Guy Rundle has described Carr’s project as one of ‘national social democracy’ characterised by greater self-reliance in manufacturing.  But does this meet appropriate minimum requirements as a ‘stream of socialism’?  Meanwhile, Rundle portrays the rest of the party of embracing “distributionism” which aims to broaden economic ownership, including a place for co-operatives, but does not aim to negate capitalism’s core dynamics.  This means more than competition and markets ; it means accumulation of capital and hence political power in the hands of a dominant capitalist class – achieved through economic relations of exploitation. Meanwhile  avowed ‘Third Way’ politics water down social democracy itself – even in the traditions of ‘mixed economy and welfare state’ – to the point of meaninglessness.

For socialists in the Labor Party the reality is we cannot have it all our way.  And there are questions as to what ALP Left politics are really about these days anyway.  Cynics might argue that in practice the ALP Left simply stands for “a slightly bigger welfare state and social wage” ; and “a slightly more progressive tax system”.  Though incremental improvement of welfare, progressive tax and the social wage is desirable if the progress is sustained. The Left itself needs its own statement of beliefs: which involve a more fundamental critique of capitalism.  This might include critiques of monopolism, exploitation, alienation created by physically demanding work, and work involving lack of creative fulfilment and control ; as well as economic cycles and crises, and the distribution of political and economic power.  But these could also include building blocks for the broader Party.

To begin it is worth considering the common ground between different schools of socialism and social democracy in terms of a minimum program.  This would be inclusive of a steadily expanding social wage and welfare state – preferably to Nordic proportions. (in the sense that was realised at the height of Nordic social democracy)  Though Nordic Social Democracy has long been in retreat ; and this means we need to take their example with a grain of salt.   This means more robust pensions ; comprehensive socialised health (including Medicare Dental)  ; and appropriate subsidies for services and amenities  fundamental to modern human existence. This includes power, water, socialised or co-operative housing, communications (including internet access), transport, availability of nutritious food, and so on.  Ongoing Education is also crucial to modern life ; and all people ought be able to pursue personal fulfilment through education as well as skilling up to meet labour market requirements. 

While the reality is that the modern labour market is characterised by exploitation (workers do not keep the full proceeds of their labour power) , we do operate in a global economy where it is necessary to sell labour power in order to participate.   Right now there is ‘no way out’ of capitalism ; but that does not mean we cannot have a critique which informs strategies which address the anti-social, irrational and unfair features of the system. The Left should have a critique – including of the core workings of capitalist political economy ; and it needs a code of principles which provides this ; but a minimum program for a wide range of socialists and social democrats also needs to account for an alliance of forces including elements who are not committed to negating capitalism ; even far into the future.  Something needs to change in discourse more broadly – with an effective counter-hegemony - to achieve anything like a consensus on a Socialist Objective within the ALP.  This means we need a mobilised Left fighting to challenge ‘common sense’ ideas both within and outside of the Party.  Arguably the Communist Party of Australia used to play this role very effectively ; as did other Western Communist Parties - even though they did not usually enjoy significant electoral success.  (The Communist Party of Italy – the PCI - is a very important exception ; having won very strong electoral success for many decades)

That said, a minimum program could include a commitment for the foreseeable future to a democratic mixed economy ; or a hybrid system.  Strategic socialisation should be pursued for reasons of economic efficiency, equity, and sovereignty.  In areas characterised by a lack of competition, or by collusion – government business enterprises can be a game changer.  Think banking, general insurance, health insurance, postal services. In other areas it is appropriate to have natural public monopolies.  Infrastructure in energy, water, communications, transport -are other areas where the logic of natural public monopoly ought apply.  Public monopolies in these fields translate into reduced cost structures ; with the benefits flowing on to the economy more broadly, including consumers.  Governments – including Labor Governments – have systemically undermined the place of natural public monopoly in the economy.  But we need a debate on this within the Party ; about a commitment to strategic public ownership ; and if possible to natural public monopoly in specific fields such as water, energy, transport and communications infrastructure ; as well as a restoration of a public sector job network after the example of the old CES.

Still ;  it is hard enough already getting many self-identifying  ‘moderate’ social democrats to even agree to restoring a public sector role in these fields (in competition with private enterprise) ; let alone restoration of natural public monopolies.  Nonetheless the Left should lead a debate on natural public monopoly and strategic (including competitive) government business enterprise.  Specifically, a minimum program should refer to a democratic mixed economy ; and this should frame an internal debate which the Left tries to lead.  Government could also invest in primary industries ; and in Australia especially there is great scope to benefit from a public role in minerals exploration and mining.  Billions in revenue could be directed towards social programs.

Co-operatives could also play a central role in a democratic mixed economy ; and as far as they reach they attack economic exploitation at its very roots.   It’s important to observe, however, that even in Spain where the successful Mondragon Co-operative operates – that co-operative ownership is not very significant in the context of the broader economy.  But particularly, in Australia government could underwrite co-operative enterprise to enable it to remain competitive on global and local markets ; including by investment in Research and Development and economies of scale.  Government could also provide cheap loans to facilitate the establishment of co-operatives ; including smaller scale co-operatives – eg: co-op cafes – which not only attack exploitation ; but which also allow intimate creative control by workers.  Strong policies could secure a significant (as opposed to marginal or minimal) place for co-operatives in the Australian economy.   But importantly, co-operative enterprise is not a substitute for the public sector: both play a core role in a democratic mixed economy.  Commitment to promoting a greater and greater role for co-operatives in the economy needs to be integrated in a minimum program.

Other areas where an agenda of popular and workers control could be advanced include co-determination and collective capital mobilisation.  In Australia superannuation funds have become powerful players in investment.  Though they operate in the capitalist context ; and tend to adhere therefore to capitalist imperatives.  (eg: share value maximisation) Hence they advance a distributionist agenda ; but not much which is more radical.   Also public pension funds would have been more equitable ; and the superannuation system threatens the eventual marginalisation and undermining of the public Aged Pension over time.

Meanwhile, co-determination can manifest either as consultation, or in the sense of all parties having to agree on major decisions. In Australia the starting point would be workers’ representatives on company boards. Hence workers could have ‘an insiders’ view’ on the decisions affecting their productive lives.  This specific strategy would not be radically transformative in the sense of workers’ control ; but it would be a step forward.  Again we need to set the broad framework in a minimum program ; and then for the Left to lead a debate within that framework.

There is a broad scope to reform welfare. Labor should also be committed to strengthening the Aged Pension, Disability Pension, Job Seeker’s Allowance,  Sole Parents’ Pension , Austudy, and other welfare.   The Disability Pension (and National Disability Insurance Scheme supports) should be for life- in the sense of not being withdrawn depending on age.  Also, there should be more scope to earn additional income through casual or part-time work (or other means) without losing the Disability Support Pension. And entering into a relationship should not see a substantial portion of welfare payments withdrawn.  The NDIS should be strengthened more broadly also  ; not undermined.  University fees should be replaced by progressive tax levies which effectively relate proportionately to the actual financial advantage gained.  A Garaunteed Minimum Income relating to the cost of all fundamental needs could consolidate basic universal economic rights.

In a minimum program reference could be made to all pensions ; and the imperative of providing them on the basis of need.  (again perhaps expanded, and then indexed quarterly to inflation or cost of living – whichever is greater).  The debate on a Garaunteed Minimum Income can be won ; but it may take time to integrate it into a Minimum Program.

Finally there are issues of human rights, labour market and industrial relations rights, and housing – which also need to be addressed in a Minimum Program.  Labor needs to be unequivocal in a Minimum Program in its commitment to freedom of association, assembly and speech ; as well as the right to basic needs such as housing, heating, cooling, nutrition, education, health services, access to transport services, and access to communications and information technology.  This needs to be amended as new relative rights and needs arise with technological and economic progress.  The right to engage in Pattern Bargaining and to withdraw labour in good faith (whether for industrial or political goals) needs to be promoted ; and at the lower end of the labour market especially more robust minimum standards and regulation need to be provided for.  This should have a substantial effect if implemented in the case of heavily exploited ‘feminised’ industries.

Again, shelter is a human right ; and government policy (including provision of public housing) should seek to achieve its universal fulfilment. Government could also help facilitate co-operative housing, and affordable housing – through subsidies and regulations.  The Federal Government and the States have long lagged behind here ; and support from the Federal Government especially is needed – as they do not endure the same fiscal constraints as do the other tiers.  Recently there has been a trend to promote ‘affordable’ housing (as an alternative to public housing) through deals with private developers ; but while this strategy can provide better outcomes for some renters, it does not achieve either efficient financing or equity compared with public housing.  Labor needs a minimum program which significantly expands an ongoing policy of building enough high quality public housing to meet the demand ; while looking to the Austrian example to destigmatise public housing and establish it as an option for all Australians ; including but not limited to the most disadvantaged.  A minimum program needs to aspire to this ; and it should not be controversial for genuine social democrats and socialists.

In conclusion Labor also needs an independent foreign policy outlook and a humane policy with regards to rights of asylum seekers. We should lead the way on defusing conflicts between China and the United States and heading off any potential war. And there is no place for Mandatory Detention in any Party of the broad Left.  We should also promote 'deep democracy' ; supported through civics education 'for active, informed and critical citizenship' ; and government programs which put active citizenship at the centre of policy. This could include government funding to access public space - including, for instance shopping centres - where political and social movement organisations across most of the spectrum could promote their own ideas of 'active citizenship'.

In short – and to summarise in conclusion - a Minimum Program should promote a progressively expanding social wage and welfare state ; as well as a democratic mixed economy – with stronger public and democratic sectors which aim to improve underlying cost structures to the benefit of the broader economy and consumers - through strategic public ownership.  Here, the social wage includes socialised health and education ; and ensuring universal access to shelter (including public housing) , information and communications technology, transport services ; and a minimum income where access to energy and water is also universal.  And with a steadily more progressively-structured tax system – with an open commitment to just economic redistribution.  And we will define the welfare state’s role as comprising social provision of income ; especially the vulnerable ; with cross-over between welfare state and social wage where it comes to social services.  

Also the minimum program should include reference to the progressive expansion of economic democracy on several fronts ; and the provision of fundamental industrial and broader human rights.  This means a regulated labour market and the right to withdraw labour in good faith for industrial or political purposes.  As well as the minimisation of the anti-social complications of capitalism ; including its crisis-prone nature ; its tendency to concentrate wealth and promote monopolism ; as well as problems of inbuilt obsolescence – and of collusion and other anti-competitive or anti-consumer practices.   Also ‘the market’ does not necessarily ‘organically’ provide for human need – though there is a role for it in providing for the flexible satisfaction of individualised needs structures.   The need for choice – and hence competition – means there are limits to socialisation – at least under current conditions. ‘The market’ has a place ; but so too does social provision which goes beyond ‘market logic’.

This article has sought to explore the issues which should inform a minimum program for the ALP.  It should be possible to win broad agreement on most of this article’s broad tenets.  In other areas the article has outlined areas where minimum policies could be applied ; but where the Left should lead the debate in terms of achieving stronger policies. 

Also importantly ; there are limits to purely electoral politics – and there is a need for an organised counter-hegemony.  The counter-hegemony should seek a more radical reframing of debate and issues than the minimum program ; and it is necessary to build an alternative to the old Western Communist Parties who used to contest ‘political and economic common sense’.  But that is beyond the broad scope of this article. 

The point is that it is possible to achieve broad agreement on a minimum program which mobilises the broad Labor Party and frames its policies.  The minimum program, here, attempts to frame the ALP as involving currents ranging from traditional social democratic (mixed economy, labour rights and welfare state) on the relative right, to democratic socialism and revolutionary social democracy on the Left.  (involving a more ambitious agenda of economic democracy and socialisation) And these various currents are considered as being capable of solidarity behind basic programmatic and policy principles and agendas.  The most diluted ‘Third Way’ positions – which stand for little in terms of the traditions of social democracy or socialism – need to be seen as liquidationist – and hence are not accepted within the framework of the minimum program.

It is hoped that this article will promote debate and influence the development of the ALP’s Platform running up to the next National Conference.  And also the development of a program behind which both elements of the ALP Left and the ALP Right might be able to coalesce ; as well as non-aligned elements.  This goes so far as to problematise the very idea of an ‘ALP Right’ which is right-wing on the broader political spectrum. Even the most relative right-wing elements in the ALP should be relatively Left on the broader spectrum.  We all need to see ourselves as part of a ‘broad Left’, and in this sense having common cause.  Once we agree on this perhaps we can truly ‘move forward together’.

Labor's First Budget pitched as "Modest and Responsible' - But more Ambition needed

 above: Federal Treasurer, Jim Chalmers

Labor’s first Budget has been pitched as ‘modest and responsible’, with limited new spending ; and the intent of not fueling inflationary pressures. That said, there are some welcome measures.   $20 billion will be invested towards upgrading the electricity grid ; preparing for a low-emissions future. Promises on Aged Care will be fulfilled, with tougher regulation and an improvement in the wages and working conditions of Aged Care workers. Over $2 billion will go into Education ; with free TAFE, 20,000 university places for the disadvantaged, and money for more qualified teachers and better-resourced schools.  Money will be provided for ‘urgent care clinics’, and reducing the maximum co-payment for medicines from $42.50 to $30. Finally, there will be more support for parental leave and subsidised childcare ; with a plan to promote an increase in housing supply (and hence affordability), as well as an increase in Defence expenditure to over 2 per cent of GDP.  (Herald-Sun 26/10/22)  Though this housing plan appears over-dependent on private investment.

All that said, there are numerous problems as well. Jim Chalmers has flagged possible intervention into the energy market, with power prices set to rise by 40 to 50 per cent.  This will crush struggling individuals and families. Also, Labor is flagging its intention to go ahead with the Stage Three Tax Cuts which will deliver a  $9000 windfall for those earning $200,000 at a cost to the Budget of around $250 billion over 10 years.  Nothing has been projected in the way of energy subsidies, and the price for reining in inflation seems to be falling upon those least able to pay.  Wages are also flatlining, regardless of pre-election commitments to get wages moving.

So – what *should* Labor do?  Some would oppose improvements for those on low wages and welfare as fuelling inflation.   But those people should not be shouldering the burden.  Already the bulk of their income is going towards non-negotiable necessities ; and increases in power costs will challenge their capacity to make ends meet in the most basic sense.  There will be homelessness, skipped meals, and Winters and Summers without heating or cooling. A temporary increase in tax for those on middle and higher incomes could also have an anti-inflationary effect without impacting on the most disadvantaged.  Specifically, temporary tax increases for those on middle incomes could tighten demand significantly.  Without such tax increases, individuals and families will be left to shoulder the burden with higher interest rates, and hence higher home loan repayments.  Some of this will be passed  on to renters as well. The question is: What is the most efficient way of containing inflation? ; and how can this be achieved while lessening the burden on those least able to pay?   Also ; what other measures need to be taken to sustain an improvement in the social wage longer term?  Including the preservation of a truly needs-based National Disability Insurance Scheme. (NDIS) This may mean some other taxes need to increase progressively and permanently.

Over the longer term Labor needs a rethink on tax reform. Ideally the Stage Three tax cuts should be withdrawn completely.  There are so many priorities which demand funding.  But a compromise strategy could be to deliver the same amount of tax relief ; but skewed towards those on lower and  middle incomes.  Median taxable income is just under $50,000/year.  If tax credits are provided for those on low and middle incomes ; relief could be delivered without delivering an expensive windfall for those on higher incomes. By the time the tax cuts are projected to be phased in we will likely be struggling to recover from an inflation-induced slowdown ; or maybe even a recession.  At this point, it makes sense to support the vulnerable and low-paid – as they spend the highest proportion of their income on ‘getting  by’ compared with others.  That is ; they can be depended upon to spend their incomes.

Unemployment is also set to rise to 4.5% over 2023 to 2025.  This begs the question of whether Labor accepts arguments around a supposed Non Accelerating Inflation Rate of Unemployment. (NAIRU) Again ; recession and ‘spare capacity’ are not the only means of containing inflation.  Taxes can achieve this without depending on social misery and wasted human resources.

Also, record profits in the gas industry should be subjected to taxation ; as has occurred in Norway for instance. Those resources properly belong to all Australians ; and any windfall should be shared substantially with the Australian people. This could be redirected to energy consumers with subsidies – especially those on low incomes – while a legislated gas reserve could ensure Australian consumers don’t miss out because of exports and global demand.

Into the future Labor should be seeking to reduce poverty and inequality by boosting the social wage and driving reform of the labour market ; especially for the working poor.  An important improvement in the social wage would be implementation of Medicare Dental.  Earlier in its first term Labor delivered an increase in the minimum wage.  But others on low wages also need urgent assistance.  This is especially the case in feminised industries like early childhood education. Again, any inflationary impact could be countered with strategic and temporary increases in tax.  While impacting ‘the economic middle’ would be regrettable ; the plight of those on low incomes is more urgent ; and Labor needs to prioritise.  

While Labor needs to deliver on promises to improve the Cost of Living, including energy affordability, it also needs to be looking to boost the wage share of the economy. To some extent this should be delivered as a matter of distributive justice ; and not only in return for improved productivity.  In 2018, Jim Stanford explained how the wage share of the economy had fallen from 58.4 per cent in 1975 to 47.1 per cent in 2018. That translated to over $16,000 a year on average per worker ; and $210 billion per year in total.  Not only does Labor need to agitate for improved Awards at the lower end. It also needs to improve workers’ bargaining power more broadly ; and this must include support for pattern bargaining.  Even Secondary Boycott should be legalised in circumstances where the ‘industrially strong’ support the ‘industrially weak’ ‘in good faith’.

Importantly, though, the wage share is lagging in areas like mining ; where regardless of this wages are significantly higher than average.  Profits are that high.  In this case the social wage needs to be factored in ; and again a windfall profits tax ; and a longer-term super-profits tax – could help.   Welfare also needs to be reformed to respond comprehensively to the Cost-of-Living crisis ; including all pensions and unemployment benefits.

Finally, the required strategic expansion of social and affordable housing demands a greater public investment.  While Labor is correct to promote an increase in housing supply in geographic areas of job growth, it also needs to ‘put its money where its mouth is’.

Labor has come to government at an especially difficult time.  But there is a need to deliver on its mandate ; especially for those most in need.  Inflation can be contained without hitting the most vulnerable overall ; and this needs to be Labor’s priority during its first term.

Labor Retreats on the Principle of Progressive Taxation

 

Dr Tristan Ewins

Last month Anthony Albanese announced that not only was Labor backing away from contentious reform of Negative Gearing and Capital Gains tax ; it was also prepared to back income tax cuts for the wealthy ; such that Australia will drift towards a flat and regressive tax regime with Labor’s implicit consent.  As Greg Jericho writes for ‘The Guardian’, Labor is supporting the entrenchment of a tax regime which will see those on below-median and below average wages effectively paying the same rates of tax as income earners between $120,000 and $200,000. 

Rob Harris – writing for the Sydney Morning Herald – explains that these tax ‘reforms’ will cost the Budget “an estimated $137 billion” over their first six years. Specifically, the 37 per cent tax rate will be abolished and a 30 per cent rate will apply to all income between $45,000 and $200,000.  This will occur at a time where ordinary Australian workers will need to service the massive debt induced because of Covid wage subsidies and other subsidies for business.  Those subsidies were (and at the time of writing still are) necessary ; but the debt should not be serviced in a regressive fashion which affects those least able to pay.  And because those on lower incomes spend a greater proportion of their incomes, policies which impact negatively upon them will be ‘bad for the economy’ as well.

Yes, there is a very small minority of wage labourers and others earning over  $100,000 a year. Maybe ten per cent.  But because of their relative privilege parts of this ‘labour aristocracy’ can be inclined to support economically-Liberal distributive taxation policies which minimise redistribution.   The vast majority of wage labourers and vulnerable Australians will not benefit from this policy.  In fact, the scope will be also reduced for improvement of social security and the social wage.  Labor will be restricted in its capacity to deliver reform of Social Security, Medicare, the NDIS, public and social housing, Aged Care.   In the field of social security, easing means testing of recipients with partners could also remove a perverse incentive for disabled Australians to shun relationships because ‘they cannot afford not to be alone’.  Reform of the Jobseeker Allowance (previously ‘Newstart’) is also long overdue and widely accepted.

With Aged Care, Labor is committed to staff ratios ; but to provide this without regressive user pays mechanisms the funding needs to come from somewhere else.  Either reform will be funded progressively or regressively ; or otherwise (even after the Aged Care Royal Commission) it will not happen at all.  After the Royal Commission findings ; which identified gross structural neglect of Aged Australians receiving care ; this would be a damning indictment of the major political parties in Australia who failed to mobilise public opinion around reform even after the shortcomings of the system were laid bare for all to see.  It is not too late to embrace a progressively structured ‘National Aged Care Insurance Levy’ to fund reform of Aged Care in this country.

True, Labor is also intending to reform labour market regulation ; but that in itself will not make up for the distributive consequences of this policy. It will be a case of ‘one step forwards, two steps back’ for Labor where nothing can make up for capitulation on the principles of progressive taxation and redistribution in the most basic sense.  Nonetheless if reform of labour market regulation is strong enough it could still make a difference. Specifically minimum wage rates need to increase significantly ; as well as Award rates for struggling workers – many of whom work in feminised professions such as Aged Care.  Teachers – many of whom also already work unacceptable levels of unpaid overtime – could also do with improved wages and conditions ; and this is essential to attract and maintain the most capable practitioners in the system.

Talk of ‘aspiration’ clouds the fact that Labor’s new tax policy will favour the top ten per cent at the expense of everyone else.  There was a time when radicals would have seen talk of ‘aspiration’ as a kind of ‘false consciousness’. But today Labor is so afraid of the ‘class warfare’ label that it shuns policies that impact even modestly on the top 10 per cent and in favour of everyone else.  Yet ‘flat taxation’ itself is in fact a kind of ‘class warfare’ against the vast majority of working people.

The fact is that in the last election Labor had strong but reasonable tax policies ; but failed to sell and explain those measures at crucial conjunctures. Chris Bowen said those who didn’t like Labor’s tax policies shouldn’t vote Labor. And when many voters failed to grasp Labor’s policies that is exactly what they did.  Furthermore, in the final days of the election campaign – with Bob Hawke’s death – Bill Shorten came across as flat, unconvincing and unemotional.  Despite his commendable work on the NDIS ; and the credit for embracing progressive tax policies in the first place – this fact remains.

Conclusions to the effect ‘it is impossible to sell tax reform’ neglect the fact that Labor failed tactically in mobilising public opinion.  Some Labor figures are reacting defensively to criticisms from the Greens to the effect that Labor is supporting a drift towards flat taxation.  But while the Greens can afford to be more radical because they depend on a narrower electoral base, that does not change the fact that Labor is capitulating on the most basic social democratic principles.  It does not change the fact that we are failing to sell policies that are objectively in the interests of the majority of Australians.

Again: where a bipartisan consensus on radically-regressive tax restructure is conceded, even where Labor does win with such a Platform it is probably a case of ‘one step forward, two steps back’.   Progressives have to actually deliver progress if they are to be seen as credible.  At the moment the best hope is a National Aged Care Insurance Levy, and strong labour market reform. Here’s hoping Labor ‘finds its way’ between now and the election.

On Socialism Today - Planning a Way Forward

The following article - which the author plans to submit for publication by the Australian Fabians - is an in depth survey of the background and options for democratic socialism in Australia and the world.  The idea is to spark debate in the lead up to a series of events in Victoria planned for 2020.  Your contributions to the debate are also welcome!

Dr Tristan Ewins

Socialistic sentiment can be traced back to the slave revolt of Spartacus and Peasant uprisings in Europe ; for instance that led by Thomas Muntzer in Germany.  But ‘modern socialism’ began with those labelled as ‘utopians’ by Karl Marx.  Figures like Robert Owen – who personally wanted to convince the bourgeoisie (and nobility) of an egalitarian, communal society based around the means of production.   (specifically communes of up to 3,000 people) And all those others who depended on a ‘socialist vision’ to convince people of the desirability of a socialist order ; as opposed to Marxists who based their approach on ‘the fact of class struggle’.

Generally, socialists preferred equality ; an end to exploitation ; extension of democracy to the economy.  Marxists wanted to socialise the means of production to end both exploitation and the destructiveness and wastefulness of  capitalism and its boom-bust cycle.

But Marx had another criticism of capitalism ; and that was the way in which the division of labour and demanding nature of much work traumatised workers.   This was his theory of Alienation. Today in Australia for instance we are a world away from the working conditions of the 19^th Century.  But in call centres, offices and factories the division of labour can still exclude creative control and work fulfilment.  Indeed, work conditions can still be traumatising.

In Germany where the class struggle was advanced the Social Democrats arose as a combination of the Marxists (Eisenachers) and the Lassalleans.  Lassalleans (led originally by Ferdinand Lasssalle) believed in industry-wide co-operatives with state aid.  Eventually Marxism became dominant.  But by 1914 in Germany right-wing ‘socialists’ had come to predominate in unions and the parliament, and those people eschewed internationalism and supported the First World War.

Before World War One both the European and British socialists supported the class struggle and the fight for universal suffrage to advance workers’ rights.  But Britain was relatively liberal ; and this resulted in less emphasis on revolution and more emphasis on incrementalism.

Fabianism arose in the 1880s ; and came to represent a movement to influence opinion in liberal and progressive circles. Especially in the Labour Party in Britain.  Beatrice and Sidney Webb (prominent British Fabians) expressed sympathy with the achievements of Soviet Communism – but that view did not last.  Some Fabians would focus on practical public policy ; others on the more radical aim of incrementally replacing capitalism.  Again: Generally Fabians were gradualist rather than supporting a ‘sudden rupture’.

Modern Australian Fabianism shared the British Fabian principles and was formed organisationally in 1947.  The height of Fabian influence was in the Whitlam Labor Government.

After World War One the broad Left was generally divided into Communist, Social 

Democratic and Labourist Camps.   Although pockets of Social Democracy remained highly radical – as in Austria in the 1917 to 1934 period.  (Austro-Marxism)   These sought a ‘middle path’ between Bolshevism and ‘mainstream’ international social democracy. And there were anarchists and anarcho-syndicalists – who were significant in the Spanish Republican forces and the fight against the Nazi-backed fascist insurgency of Franco in the Spanish Civil War.

From the 1940s through to the 1980s Swedish Social Democracy enjoyed remarkable success (replicated to various degrees in other Nordic countries) with full employment, active industry policy, strong unions, and a strong welfare state.  For the overwhelming majority of this period Social Democrats held government. Basically workers received social security in return for a ‘corporatist settlement’ including wage restraint.  The full employment achieved under the ‘Rehn-Meidner model’ also made a stronger welfare state possible. Though Walter Korpi conceived of the  Swedish situation differently:  as a ‘democratic class struggle’, involving mobilisation of ‘Power Resources’ and compromise depending on the balance of class power. But in the 70s and 80s Sweden also had to respond to the Oil Shocks and devalue the Krona.  The ‘Meidner Wage Earner Funds’ plan sought to compensate workers for wage restraint by giving them collective capital share.  But this implied a radical redistribution of wealth over time.  Also - because it appealed only to workers and not to citizens, it could be argued that the funds could have included a wider base. (which is democratically preferable anyway)  Capitalists went on the offensive : socialists on the defensive. And there has been a slow retreat since.

Up until and including the 1970s and 1980s there remained strong pockets of radicalism in many Labourist and Social Democratic Parties.  But the Oil Shocks of the 70s and the drive to restore profits divided the Left and led to Socialist retreat.  Also the Soviet Collapse during 1989-1991 had an enormously demoralising effect on the Western Left ; despite the fact the Western Left had long distanced itself from Stalinism. It’s not unreasonable to see the Gorbachev reform movement as a window of opportunity ; and a missed opportunity.

From Hawke and Keating onwards Australian Labor has broadly internalised neo-liberal Ideology.  Small government,  privatisation, free trade, limits on the liberties of organised labour, trade agreements which give capital an effective ‘veto’ on regulation and public sector expansion.  Marxism used to have a strong base in the Socialist Left.  But increasingly the factions have lost ideological cohesion ; and have been subsumed in the mainstream political discourse.

Indeed, the experience of Hawke and Keating inspired Tony Blair and Antony Giddens with their ‘Third Way’ or ‘Radical Social Democratic Centre’.  In the 19^th and early 20^th Centuries ‘Centrism’ had been a largely Catholic phenomenon including limited support for trade unions, labour market regulation and welfare.  Since Giddens and Blair the ‘Third Way’ has come to represent ‘neo-liberalism with  a human face’.   Punitive welfare on the one hand, but also the principle there should be an economic and social ‘floor’ below which no-one should be allowed to fall.  Blair also marginally increased tax.  (will Australian Labor still consider tax reform for the next election?)  But he would not retreat an inch in opposing any re-socialisation – no matter how badly privatisation had failed.  (eg: of railways)  In Australia more recently ‘Centrism’ as epitomised by the ‘Centre Alliance’ struggles to maintain a credible liberalism – let alone any kind of social democracy. For instance there was conditional support for the ‘Ensuring Integrity’ union-busting legislation.  Today ‘Centrism’ in Australia can  mean a shallow populism cashing in on broad disillusionment with the two party system.   Significant parts of the ALP Right consider themselves ‘Centrist’ after the Blairite model. Blairites also generally accept capitalism as a given.

Fast-forward to 2019 and ‘What is to be done?’.

Capitalism remains more vulnerable than people think. There is much focus on public debt, but private debt is a ‘ticking time bomb’ that could lead to loss of confidence, panic and collapse.  In Australia, the US and much of the world private debt is many times the level of public debt.  The Australian economy especially has come to rest on the housing bubble. Millions are locked out of home ownership ; but sudden and radical devaluation would cause panic and collapse.  The boom-bust cycle remains a fact: but governments focused on public debt are less likely to engage in counter-cyclical measures. This could one day mean recession (or Depression) as the ‘solution’ to indebtedness.   Modern Monetary Theory (MMT) has it that government can ‘create money’ at will ; but this is not without limits. It involves a  degree of redistribution which capitalists hate – but also inflation.  Progressive tax is still more effective at redistributing wealth in a targeted and progressive way.  But certainly the MMT crowd are on to something.

The Labor Party today is probably inclined to want to ‘save capitalism from itself’.  The welfare state and higher minimum wages can assist by boosting expenditure and demand.  A return to a meaningfully mixed economy can help by reducing cost structures via natural public monopolies. This could flow on to the private sector as well.   As well, this could counter oligopolistic collusion – for instance in banking.  (actually promoting competition)  Higher government expenditure can also add money to the economy ; increase demand ; and ameliorate the explosion of private debt – which is a ticking time-bomb for the economy. (here and globally) 

An expanded social wage, welfare state, collective consumption and social insurance – can also provide social justice and social security. Think reformed pensions – easing means testing and increasing payments.  Public housing.  Better-funded schools and hospitals. More money for the Pharmaceutical Benefits Scheme.  More efficient public provision of infrastructure. (because of a better rate of borrowing and a ‘public interest test’ rather than share value and dividend maximisation)  Also consider National Aged Care Insurance and a withdrawal of regressive user-pays mechanisms.  As well as a retreat of user-pays in Education.

These are ameliorative reforms that can improve peoples’ lives.  But Australia is still captive to the global economy and will suffer along the rest of the world in any ‘general downturn’ or ‘collapse’.

Over the long term we still need to think about an alternative to capitalism. Sub-Prime and the Global Financial Crisis did not only reveal instability – It also revealed the gap between Use Value and Exchange Value as Marx would put it.  That is: there was an abundance of housing amidst widespread destitution and homelessness.   This is a real capitalist failing and vulnerability.

Marx’s weakness was that he did not propose any concrete alternative vision to capitalism. He assumed ‘the class struggle would take care of things’.   So maybe in part the ‘Utopian Socialists’ were on to something?  The context of class struggle had to be engaged with ; but also concrete visions for the future.  Today perhaps we need ‘provisional utopias’. We cannot afford to be ‘a force of pure negation’ with no vision for the future. Especially after the real historical experience of Stalinism.

But capitalism is a globally-reinforcing system.  You can’t just ‘go it alone’ in revolutionising the entire economy.  There are economic AND political constraints.

But what can be done is to begin a process of ‘revolutionary reforms’.  Say in the spirit of the interwar Austrian Social Democrats.  Even today in Austria there is a legacy in Vienna of 60% public housing – and overwhelmingly high quality public housing.  A ‘democratic mixed economy’ would stabilise capitalism (through strategic socialisation and redistribution) while at the same time advancing towards an alternative.  As in Austria this would also involve a counter culture: a rebuilding and reassertion of the labour movement ; but also a coalition with other social movements.  What Gramsci would have called a ‘counter-hegemonic historic bloc’. That also involves establishing online presences ; other publications ; public meetings ; progressive radio and television ; social events of various kinds ; plays ; workers’ sport ; radical music etc.  Establishing footholds where-ever possible.

Importantly the decline of industrial labour (with ‘deindustrialisation’) has widely meant a decline in class consciousness.  Service sector workers can be just as exploited ; but are more likely to think themselves ‘middle class’ or lack class consciousness.   We can and should fight this. But the industrial working class might not any longer be seen (in the Marxist sense) as a ‘finally redemptive’ ‘universal historic subject’.  The labour movement is central: but the modern Left also needs alliances.

And should another Global Financial Crisis occur the big finance houses should not be ‘bailed out at the public’s expense’.   Where the public sector steps in (if that occurs) it should retain a share in ownership.

Of course when it comes to advanced socialist transition bourgeois economic and political resistance has to be expected.  

The ‘democratic mixed economy’ should be the short to medium term model.  That includes a key place for natural public monopolies, strategic government business enterprises , consumers and workers co-operatives of various sorts (including multi-stakeholder co-ops which bring workers, governments and regions together) , mutualist associations . As well as ‘collective capital formation’.  ( The Meidner Funds were such ; In Australia superannuation was a very pale imitation which may actually endanger welfare into the future by narrowing its base) ‘Multi-stakeholder co-ops’ are an important idea - as they could enable expansions of economies of scale to retain competitiveness under capitalism.   All these are part of a concrete alternative. 

There is also a need to restore and consolidate industrial liberties ; to increase organised labour’s power ; its ability to deliver ; and hence its coverage, strength, and ability to contribute to change.

Furthermore: how do we tackle ‘alienation’ today in Marx’s sense?    Even with deindustrialisation, workers still find themselves alienated in modern professions – for instance call centre workers.  The ‘post-industrial utopia’ has so far failed to emerge.  At the least we can improve wages and conditions for the most exploited and alienated workers with low-end labour market regulation.  (and maybe government subsidies where the market will not bear higher wages)  Perhaps enabling a reduction of the working week for  many.  (though others would crave longer hours)  ‘Free time’ is perhaps one alternative (for now) to Marx’s vision of a communism where workers regained creative control ; and labour becomes ‘life’s prime want’.  (a quote from Marx)  But ‘alienation’ is a feature of broader Modernity and not only capitalism.  The rise of co-operatives could at least facilitate worker control – also ameliorating alienation.

In the final instance we need to think of where improvements in productivity could lead. Either to greater equality, plenty and free time for everyone.  Or in the capitalist context only the intensification of growth, profit and exploitation.  And possibly greater inequality if we do not socialise much of the gains of productivity.  What Marx called the ‘coercive laws of competition’  means that competition forces a focus on productivity for capitalist profit and short term economic advantage.   The problem is finding a way out of this ‘circuit’.   (as well as the intensification of exploitation ; and a 'lagging behind in wages' in labour intensive areas where productivity improvements are hard to come by)   We need to think where free trade and internationalism fit in to this problem.  There are environmental implications as well. Capitalism by its very nature will trend towards the ‘endless growth’ option.   Perhaps if the emphasis is on information and service industries it could be more environmentally sustainable.

But Sweden is also a warning.  Again: there has been retreat since the Meidner Wage Earner Funds.  The ‘corporatist consensus’ delivered for several decades in Sweden.  But since the bourgeoisie ‘got cold feet’ and organised more overtly against Swedish social democracy – there has been a retreat.  Swedish social democracy now has to work with Swedish Liberalism to keep the right-wing parties out ; and the price has been a retreat of the Swedish welfare state and progressive tax.  In short: Socialists and social democrats have to be ready for capitalist backlash.

Class struggle creates change. That remains true.  But so too do broader coalitions, cultural and electoral strategies.  The Fabian Society in Australia  is placed to mount cultural interventions ; and hence influence the electoral strategies of the Labor Party and the broader Left.  We won’t get all that we want all at once.  But we need a critique of capitalism.  We have to be prepared for future crises.  We have to think what a transition would look like: under what circumstances and what time frame?  But all the time considering the reality of power – economic and political ; including the power of the  State.  And all in a global context: where global progress remains limited without global consciousness and organisation.  Which is something the Fabians also need to be thinking about.  Building ties with Democratic Socialists of America, for instance, could be a fruitful endeavour.

The Fabian Society re-embracing its place as an organisation of democratic socialism means engaging with these problems.  For the short to medium term it is to be hoped we have an important strategic place in developing a ‘democratic mixed economy’ ; critiquing capitalism ; and imagining ‘revolutionary reforms’ which could decisively shift economic and political power over the long term.

Conservatives’ Budget puts the wealthy first. Services and Infrastructure to suffer in the End Analysis

above: Frydenberg and Morrison: desperately trying to win support with tax cuts ; 

hoping voters won't 'look to the small print'

Dr Tristan Ewins

Most of the Australian media is trumpeting the Morrison Governments' tax cuts for “low and middle income” Australians.   But does this stack up under analysis?  Ross Gittins at The Age dared to buck the trend and pointed out that this is overwhelmingly a Budget for higher income Australians.  He observes that the real cost of the tax cuts over ten years will skyrocket to “a staggering $302 billion”.   That will inevitably lead to austerity: with a potential hit to Health, Education, Aged Care, infrastructure and so on.  It will mean neglect and user pays ; and that will also hit genuine low to middle income Australians hardest. Those on $925 or less a week will receive nothing, while those on $3485 or more a week will receive $75/week.   These people (the wealthy) are less likely to spend, also, as compared with lower income Australians. That could also be bad for the economy.  (‘The Age’, 3/4/19, p 7) 

The biggest culprit, here, is the tax cut for the $45,000 to $200,000 bracket from 32.5% to 30%.  (‘The Age’, 3/4/19, p 2)  The fact of the matter here is that the tax scales have been unfairly flattened. There should be a stronger rate for those on higher incomes.

To further illustrate the point, the Herald-Sun observed that those individuals on $200,000/year will receive tax cuts amounting to over $11,000/year, while individuals on $30,000 will receive $255/year.  Meanwhile, hypothetically a dual income family with both partners on $200,000/year will receive over $23,000/year ; compared with $510/year for a dual income family with both partners on $30,000/year. (Herald-Sun, 3/4/19, p 2)

On the other hand, there’s $724 million for the elderly “over five years”.  (Herald-Sun 3/4/19, p 13)

It sounds like a lot. But it won’t go anywhere near addressing waiting lists for ‘at home’ services ; or improvements in residential services: such as subsidizing the sector to pay for aged care worker ratios and a registered nurse on-site 24/7.  There’s mandatory reporting for neglect leading to starvation. (which is common)  But that cannot be policed without extra aged care workers.  And aged care workers need better pay and conditions as an incentive to remain in the sector.  There’s also a need to emphasize ‘quality of life’ for those at home or in care – with programs to keep people socially and mentally engaged.  Something more than being sat in common rooms all day in front of a television. 

There’s a projected surplus of $7.1 billion over the next financial year.  (‘The Age’, 3/4/19, p 2)   At least $1 billion of this could have been redirected into Aged Care – where it is desperately needed.

Ian Yates of the Council of the Ageing argued that:  "Up to 125,000 older Australians are waiting up to two years for home care, [leaving] many dying while they wait”.

The blunt fact of the matter is that the Coalition is trying to buy votes with tax cuts: but the consequence will inevitably mean a hit to the social wage and welfare state ; and probably more privatised infrastructure.

While Labor does not oppose all tax cuts per se, Chris Bowen rebuked the Government, arguing the emphasis should have been on those on “less than $40,000.”

That said, there are some sensible measures: such as $3 billion of investments in “suburban rail station car parks” in an attempt to bust urban traffic congestion.   As well as an emphasis on transport infrastructure in outer suburban Victoria. (‘The Age’, 3/4/19)

There’s also money supporting apprenticeships and supporting scholarships to rural universities, and close on half a billion for pre-school education.  Hundreds of millions on mental health and Medicare sound significant: but they’re staggered over several years ; disguising a reality of neglect: which will become clearer as the shrinking revenue base leads to austerity.

The bottom line is that there are a host of priorities demanding our attention: but we end up with neglect in order to conform to small government Ideology ; and to prioritise the higher income Liberal core base.   

There’s a need to ‘fix Medicare’ and further expand into dental.  An extra billion a year could easily go into providing more mental health capacity and cutting hospital waiting lists.  As already observed: there’s a drastic need for more resources in Aged Care.  Again: nothing short of several billions would ‘make a scratch’ on these problems.  

A $75/week increase to Newstart is very much overdue:  such that people are left homeless, or without the resources to effectively search for work in the first place. 

Pensioners could do with a minimum $25/week boost (fully indexed) – which means a great deal for someone living in poverty. Disability Pensioners could also do with more flexibility in supplementing their income with casual work.  Students could also do with more financial support. Taking on part time work can provide experience ; but it can also make it impossible to keep up with studies. That’s bad for students ; but also for the government which is contributing to the investment in the event that people end up ‘dropping out’.

It’s also true that State Governments are running out of assets to privatise. For a long time this was treated like some ‘magic pudding’ to fund newer infrastructure. ‘Asset Recycling’.  But that cannot go on forever.  And there are associated costs.  For instance the privatisation of the Port of Melbourne will see greater cost structures ‘flowing through’ all through the economy.   This (lack of funds for infrastructure) can only be rectified with higher taxes overall (preferably progressive) ; or through regressive user pays which hurts citizens more in the end than higher taxes.  Still: state governments’ tax options are limited ; and those privatisations should never have happened in the first place.

Many of Labor’s projected tax reforms are very welcome.  Negative gearing cuts which exclude new properties will lead to more home construction and more jobs.  It could also end with better housing affordability. Meanwhile ; cracking down on concessions for excess dividend imputation credits will overwhelmingly hit the wealthy. It is not ‘a new tax’ ; but rather Labor is closing a costly loophole ; one which could soon cost as much as  “$11.4 billion over the forward estimates from 2018-19, and removing it could improve the budget bottom line by $59 billion over the medium term.”    Bowen argues that: “More than 92 per cent of taxpayers do not receive a cash refund for excess imputation credits, and won’t be affected at all by this change.”

He concludes that:

Under Labor’s plan:

o No one will pay a single cent more tax
o No one will lose a single cent from their super contributions
o No one will lose a single cent from their pension
o No one will lose a single cent from their share dividends.

Labor’s recalibration of the tax system will benefit a lot of Australian families, citizens and workers.  Its press for ‘a living wage’ could also make a huge difference for the working poor: though we have to hope that Shorten will heed the ACTU’s call  for a “10.7% increase – or $72.80 per week.”  Which is what is really necessary.  

But at the end of the day refusing to consider raising other taxes limits Labor’s room to move.

To fix Aged Care, Health, Infrastructure, Welfare, Education: a very significant amount of money is needed.   Australia’s GDP is now in the vicinity of  $1.7 Trillion/year. Even a modest 1 per cent increase – aimed largely at those on upper incomes – would mean $17 billion/year to invest in services, infrastructure and social security.  This should be the bare minimum for a Labor Government aspiring to improve the social wage and welfare state ; and provide infrastructure. (from fixing NBN, to paying for roads and public transport to bust congestion) 

Over the long term (several terms of government) Labor should be aiming to raise the tax rate by 5 per cent of GDP ; or $85 billion a year in the context of a $1.7 billion economy. (that will have to be adjusted for growth, inflation etc also)   The wealthy should pay their fair share. And corporate tax evasion needs vigorous, tough action. But ‘ordinary taxpayers’ benefit from ‘collective consumption’ and ‘social insurance’ as well. Labor just needs to be brave and articulate, ‘cutting through to the electorate’.  Labor’s come a long way ; but there’s also a long way to go.

As for the Coalition Government: Labor needs to hammer home the line that this is not a Budget for low to middle income earners.  It disproportionately assists the wealthy ; and those on lower incomes will pay through the austerity and inevitable user pays that follows in its wake.