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.

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.

Responding to Kim Carr on the ‘Socialisation Objective’

 

Above: ALP Socialist Left Senator Kim Carr is right to take NSW Labor leader, Luke Foley to task for rejecting the ALP's 'socialisation objective'; But he is wrong in his apparent rejection on an 'extensive' public sector.

The socialisation objective is about more than nationalisation ; but extensive and strategic social ownership needs to factor into our plans and principles.

Tristan Ewins

In ‘The Age’ on August 9th 2015, Socialist Left Labor Senator Kim Carr provided a statement in defence of the ALP’s standing Socialist Objective.   That includes the ‘socialisation objective’ specifically which (originally in 1921) committed Labor to the following:

‘‘The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other antisocial features in these fields.’’

He also relates how in 1981

“23 explanatory subparagraphs were added to it. These set out goals such as full employment, the abolition of poverty, a more equal distribution of wealth and the elimination of exploitation in the home.”

Carr places himself at odds with NSW Labor Leader Luke Foley – for whom the socialisation objective was ‘confusing’.   Foley was beginning from the assumption that socialisation means nationalisation – and that those defending it were simply engaging in obfuscation.  For Foley Labor ought ‘say what it means and mean what it says’.   If we are about ending exploitation, then in the Marxist sense this infers the abolition of wage labour.  This is important – as is the question of socialisation interpreted as nationalisation.  And we will come back to this later- to consider why the positions of both Foley and Carr are problematic.

For Kim Carr it is the more-recent explanatory paragraphs which communicate the true essence of the Party’s Socialist Objective.  Further elaboration or reformulation are thus considered not necessary.

Some commentators have argued to the effect that these ‘explanatory paragraphs’ rendered the Objective meaningless anyway.  But before proceeding it is useful to consider specifics.  Hence the following selection from that section of the ALP Platform in question:

"c) Redistribution of political and economic power so that all members of society have the opportunity to participate in the shaping and control of the institutions and relationships which determine their lives.

"d) Maintenance of and support for a competitive non-monopolistic private sector, including small business and farming, controlled and owned by Australians, operating within clear social guidelines and objectives.

"l) Equal access and rights to employment, education, information, technology, housing, health and welfare services, cultural and leisure activities and the law.

"j) The abolition of poverty, and the achievement of greater equality in the distribution of income, wealth and opportunity.

"n) Recognition and protection of fundamental political and civil rights, including freedom of expression, the press, assembly, association, conscience and religion; the right to privacy; the protection of the individual from oppression by the state; and democratic reform of the Australian legal system.

"p) Elimination of discrimination and exploitation on the grounds of class, race, sex, sexuality, religion, political affiliation, national origin, citizenship, age, disability, regional location, economic or household status.

"t) Recognition of the need to work towards achieving ecologically sustainable development.

"u) Maintenance of world peace; an independent Australian position in world affairs; the recognition of the right of all nations to self determination and independence; regional and international agreement for arms control and disarmament; the provision of economic and social aid to developing nations; a commitment to resolve international conflicts through the UN; and a recognition of the inalienable right of all people to liberty, equality, democracy and social justice."

Hence the Objective is really quite extensive and substantial, and it does not restrict itself solely to socialisation interpreted as nationalisation. Indeed it could be considered both politically liberal and democratic socialist as well in the sense of advocating universal social rights of citizenship.  The promise of moving towards equality of political and economic power suggests a radically redistributive project, but at the same time there is the important (and realistic) concession in support for a non-monopolistic, competitive private sector. 

This Objective – reformulated in 1981 to be inclusive of both the Party’s Left and Right could be interpreted after the way of Nordic social democracy, with the probable implication of supporting a comprehensive welfare state and social wage; a progressive taxation system; as well as appropriate industrial rights. But there is room for improvement.  Some of these could be spelled out more clearly and overtly. And the significance of socialisation interpreted either as occurring through the public sector – or through a more diverse ‘democratic sector’ including State Aid for co-operative and mutualist enterprise – is not elaborated upon sufficiently.

Kim Carr gives the impression that he believes Foley’s proposed Objective is “tepid” and weak – and could just as easily find a place in the Platform of the Liberal Party.  After all, who today disagrees with the principle of ‘equal opportunity’ – at least openly or ‘in theory’?  Carr gestures towards the true inequality of opportunities that persist under capitalism ; for instance the meaninglessness of any ‘freedom’ of individuals to negotiate terms in the labour market – where the only real strength of workers under these circumstances – their collective solidarity – is progressively undermined and even criminalised.  He argues that this:

“is like saying that a millionaire and a homeless person have the same freedom of choice to sleep under bridges”

And for socialists ‘equal opportunity’ must mean more than ‘meritocracy in the labour market’. As the Objective insists, it must include: “Equal access and rights to employment, education, information, technology, housing, health and welfare services, cultural and leisure activities and the law.”   Socialism implies progress towards the principle of ‘From each according to ability, to each according to need’.

Sure, the Liberals make a mockery of ‘equal opportunity’ in practice – supporting privilege in Education, and proposing deregulation where quality of education would depend upon user pays mechanisms which excluded the poor and much of the working class.  Chris Bowen has also gone a bit further, arguing for equality of outcomes in Health.  Bowen’s proposal of a ‘toothless’ National Conference; his apparent opposition to a robust mixed economy; his support for a simpler (ie: in reality less progressive) tax system –  are all disappointing. But support for real equality of opportunity in education, and crucially equality of outcomes in health - comprise a beach-head for something more progressive – and so this common ground should be capitalised upon.

Hence we desperately need to commit to a National Aged Care Insurance Scheme,  Medicare Dental, and ‘closing the gap’ on life expectancy of the mentally ill – ahead of the next Federal election.

Notably: because the Conservatives are progressively abandoning meaningful commitments to political liberty and civil rights, as well as genuine and comprehensive meritocracy through a more accessible and equitable regime of Education – that should not be taken as a signal to simply opportunistically occupy the vacated political space. (ie: the space vacated by the now-marginal Liberal 'Wets' faction)  Aspects of Greens policy have been depicted as ‘extreme’; whereas in reality they are closer to the legacy of Whitlam, say, than we are ourselves often in the ALP today.  We cannot accept these terms of debate ; and we cannot simply move to the Right and allow the Greens alone to occupy that political terrain. The Politics of ‘Convergence on the Centre’ are really self-defeating where it occurs on the terms of our Conservative rivals, and on the terms of an Ideological monopoly mass media.

If we are truly a democratic socialist party we must not only exist for winning elections as an end in itself.  We must be about contesting the very substance of ‘the mainstream’, progressively reshaping the discourse to shift the relative centre to the Left in keeping with our values.  Antonio Gramsci would refer to the formation of a  ‘counter-hegemonic historic bloc’ – an alliance of forces through which society’s ‘common sense’ is reconstructed as the substance of democratic socialism. Again after Gramsci this could be interpreted as a ‘war of position’ – taken in our own specific circumstances as a process of laying political siege to, and contesting the institutions of civil society and the state. Culminating in the democratisation of the State itself – so that the way is unambiguously open for ‘a democratic path’ to socialism.

Kim Carr concludes his commentary by elaborating on what socialisation means to him.  To establish this we will reproduce some of his closing comments on socialisation:

“It is not about the straw man of extensive public ownership and a centrally planned economy. But it is about public entrepreneurialism, and public investment in the forms of human endeavour that are necessary to build and sustain a democratic, just and technologically advanced society.

Socialisation is about defending a just minimum wage and fair working conditions. It is about the creation and defence of Medicare, the enhancement of a great public education system, and the construction of national infrastructure such as the Snowy Mountains Scheme and the National Broadband Network.”

 

While Carr’s support for public education, nation-building infrastructure and ‘public entrepreneurialism’ are encouraging, he himself appears to be conceding substantially to the neo-liberal Ideology.  That is: In the sense of implying support for ‘small government’ through rejection of an “extensive” public sector.  While Foley wants to get rid of the socialisation objective because he rejects any radical connotations, Carr seems to be implying that we sidestep or reject content associated with public ownership – content which could potentially and progressively challenge the current distribution of power and wealth under capitalism. (and hence a possible 'bone of contention' with capitalists) Though again: perhaps Carr is open to tax reform, as well as social wage, social insurance and welfare extension – all of which are central components of a democratic socialist agenda of ‘socialisation’. In this sense perhaps Carr is less enthusiastic about 'smaller government'. Here we could do with specifics – and policy ambition.

Few today support a Soviet model of centralised state planning.  But we should not close our eyes to the possibilities of strategically extending the public sector, and engaging in strategic instances of planning.  Neo-liberal Ideology rules out public and democratic sector expansion as well as socialisation interpreted as regulation where ‘the absolutism and prerogatives of capital’ are progressively curtailed.  (see the work of the Swedish social democratic thinker, Nils Karleby) But the old socialist Ideology aspired towards progressive nationalisation – potentially over decades.  In the 1970s socialists like Stuart Holland hoped that the ‘commanding heights’ of the economy would ultimately revert into public hands.  Today, though, we could well embrace the project of a ‘democratic mixed economy’.  

The ‘way forward’ to something along the lines of ‘socialising the commanding heights’ appears to be blocked on account of the dominant Ideology, and also because of the power of Capital to obstruct reform through destabilisation, capital strike, disinformation etc.  Indeed, this can be a corrupting influence upon democracies.  Here, while the sheer political and economic clout of the biggest transnationals is a genuine threat to democracy, working people and citizens nonetheless stand to benefit from jobs-creating-investment, and as consumers from various innovations in areas ranging from automotive industries to information technology.  While the scale of the transnationals is in some ways threatening – and we need to frankly recognise this - the economies of scale and competition involved can have benefits in these fields. Though there are also other problems (eg: built-in-obsolescence) which might be remediable through some form of regulation.  And global solidarity of labour is necessary to prevent the transnationals from simply exploiting the poorest and least organised workers.

And yet much of the old socialism remains instructive. Capitalism can be inefficient, unstable and wasteful. It can create conditions of exploitation and human alienation.  The expropriation of a portion of the proceeds from labour by capitalists remains morally problematic even though few on today’s Labor Left will openly discuss this. For genuinely small investors (eg: other workers) dividends may comprise a fair return in the context of making a sacrifice through deferring consumption. But in the bigger picture a portion of the value created by workers is expropriated by capitalists. (ie: Surplus Value) Workers generally do not enjoy the full proceeds of their labours. These arguments are commonly ignored simply because the consequences are potentially radical for a Left ‘on the back foot’ in a steady (decades-long) process of liquidating its own traditions in order to ‘Converge at the Centre’.  Here it was really Hawke and Keating who ‘led the way’ providing the ‘inspiration’ for Blair.   We need to retain a frank critique of capitalism even if the movement towards something better has currently stalled.

But the extension of the ‘democratic sector’ - including the important ‘subset’ of the public sector -remains important despite being at odds with the prevailing Ideology.  By ‘the democratic sector’ we refer not only to the traditional public sector, but also to a multiplicity of co-operative and mutualist forms, as well as democratic collective capital formation and other like-projects, as well as self-employment and co-determination.  These democratic economic forms and strategies can mitigate or indeed end instances of alienation and exploitation.  They can result in a more equitable distribution of wealth and the power that corresponds to this; and also give working people creative control over their labours.  

Efficiencies and reduction of cost-structures through natural public monopolies can also be capitalised upon – flowing on to the private sector and making better wages and conditions, and more progressive corporate taxation sustainable.  For instance: did we really ever need two sets of mobile telephony infrastructure?  And what price are we still paying for that duplication?  Indeed, ‘competition’ in areas such as energy, transport and communications infrastructure, water – are still deeply ‘anti-intuitive’, wasteful and unnecessary.  Hence it is possible to add to the current capitalism’s survivability while laying foundation stones for something better ‘long term’. 

An extended public sector specifically can lead to many other desirable outcomes.  Socialisation of profits via public enterprises in areas like mining, general insurance, private health insurance and banking could (in the Australian context) deliver tens of billions into welfare, infrastructure and social wage programs.  And a ‘not-for-profit’ footing could enable better pay and conditions for child care and other professionals who currently face extreme exploitation. Without getting into a long debate over the labour theory of value – public sector workers could be compensated fairly – but again, profits would be redistributed through the social wage, investment in infrastructure and services, and in welfare.  There would be no expropriation of surplus value, here, in the traditional capitalist sense. Though the redistribution of profits could appear to some to be diluting the return to labour. (that would not be a problem for some forms of co-operative enterprise for instance)  Government Business Enterprises and public infrastructure could also be administered in such a way as to cross-subsidise in favour of the disadvantaged ; but also to enhance competition where oligopolistic collusion would otherwise be a threat.

So indeed there are many arguments in favour of an extended public sector as part of a broader project of a ‘democratic mixed economy’.   Contra-Luke Foley - Let’s defend the Socialist Objective.  But let’s not dilute it to the point where it becomes merely token or symbolic.  Indeed let’s try and improve the Objective to make clear our aspirations for a democratic mixed economy; an expanded welfare state; a reformed tax mix and an expanded social wage.  Yet as against Kim Carr’s apparent aversion to an ‘extensive’ public sector, strategic expansion of the public sector remains important and valid, as does the spread of other democratic forms – such as co-operative enterprise – with assistance via State Aid.  Indeed, these together could comprise a ‘multi-pronged strategy’: a long-awaited Left counter-offensive against the dominant neo-liberalism.

Both neo-liberalism and the old ‘Communism’ have demonstrably failed.  We need to reject the prevailing intellectual fetish for ‘undistorted’ markets, privatisation and small government and return to the question of a democratic mixed economy with an open mind.

 

Nb: Several other essays on the theme of a ‘democratic mixed economy’ can be found here:

http://democraticmixedeconomy.blogspot.com.au/2013/10/what-is-democratic-mixed-economy.html

Responding to Chris Bowen on Labor's 'Socialist Objective'

above: Federal Labor Shadow Treasurer, Chris Bowen

The following article is a critique of a recent contribution on debate surrounding the  ALP’s ‘Socialist Objective’ by ALP Shadow Treasurer, Chris Bowen in a Fabian Pamphlet. Bowen’s ‘Crosland-ite’ agenda has more depth than is to be found in other corners of the Right-faction.  But Bowen fails to come to grips with the potential benefits of a democratic mixed economy.  Meanwhile in the Left itself we do not engage with the implications of the ‘Socialist Objective’ – socialist culture is fading amidst day-to-day practical opportunism.

 (the first of two essays; the essay following this will respond to Jenny McAllister)

by Tristan Ewins

In a recent Fabian Pamphlet (‘What is Labor’s Objective?)  Shadow Treasurer Chris Bowen makes his case against the existing Socialist Objective.

He observes its current form:

 “The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields.”

And he contends in response that:

 “the socialist objective [does not reflect] our ambition for a modern, fair, sophisticated, cosmopolitan, outward looking, multicultural country.”

Thereafter Bowen rejects those parts of the Objective which propose “the establishment and development of public enterprises” as well as “democratic control of Australia’s natural resources”.  Specifically he suggests the privatisation of Qantas was justified; and that the alternative was a waste of public funds.

Continuing, he rejects what some have come to call ‘State Socialism’; but nonetheless argues the case for an effectively Crosland-ite agenda involving equal opportunity in education and life chances; but equality of outcomes in health.  (Anthony Crosland was an important reformist democratic socialist thinker within British Labour who – beginning around the 1950s - proposed an emphasis on public services and social infrastructure as opposed to socialisation of industry)    Bowen reinterprets this agenda as a more robust social liberalism – which cares about the individual in all their dimensions - when considered in contrast to “classical liberalism”

BOWEN also argues for “a decent community environment” with government ensuring the provision of “hard” as well as “soft” infrastructure; which means not only “transport and roads”  but “a liveable community with attractive public art, open spaces and a good environment.”

He concludes the Objective is out of date because it says nothing about multiculturalism, indigenous rights, engagement in the Asia-Pacific, preservation of the natural environment and action on climate change, and also equality of opportunity in education and equality of outcome in health.

He states: “We should mean what we say in the socialist objective. Currently we don’t. It clearly does reflect the modern Labor challenge, and with some updating it could very easily do so."

RESPODNING TO BOWEN

Firstly, Bowen would be wrong to suggest that a Socialist Objective in the Labor Party would have to exclude indigenous rights, the environment, the nurturing of a multi-cultural Australia, or engagement in our region for the extension of beneficial trade and the preservation of peace.  It is true that the Objective was originally penned in the 1920s and probably needs to be updated.  But Australian socialists – and indeed Australian Communists as well  – were amongst the first to promote these causes; as well as the cause of free, universal and equal suffrage.  It is not a stark choice:  of ‘these important modern causes on one hand, OR of socialism on the other’.

In the context of alluding to Labor’s historic support for extensive privatisation, Bowen appears specifically to reject passages which commit Labor to:  “the establishment and development of public enterprises” as well as “democratic control of Australia’s natural resources”.  Following this he suggests his opposition to the “state socialism” – a common ‘political-bogeyman’.

To start the meaning of ‘state socialism’ as argued by Bowen is not properly laid out.  In the past the term has been used to describe a centralised command economy after the way of the former Soviet Union.  But disturbingly it has also been deployed with the apparent aim of stigmatising any kind of extensive mixed economy.  Any form of democratic socialism or social democracy which supposes a significant role for the state as an economic participant is commonly ruled out as ‘state socialism’. 

In response to these kind of arguments: while there are solid reasons for socialists to support a ‘democratic mixed economy’, you don't have to be a socialist to support these kind of policies. A mixed economy with a substantial role for natural public monopolies, government business enterprise, public authorities and public infrastructure -  was supported by Conservatives – even including Menzies - for decades.  But the point - ironically - is that while we may aspire to a more democratic economy, natural public monopolies are also good for capitalists. (and indeed for consumers as well) This is because natural public monopolies can reduce economic cost structures in such a way as flows on to the private sector.  Hence a ‘hybrid-democratic-mixed-economy’.

Continuing: strategic government business enterprises are good for competition - and hence also good for consumers.  Specifically, they can frustrate any collusive economic behaviour between corporations - and prevent the rise of private monopolies.

These kind of policies – which can include strategic extension of the public sector – should not be ruled out as a consequence of some confused shibboleth of ‘state socialism’.

Further – while the creation of a ‘democratic mixed economy’ can be desirable for socialists/social democrats and social liberals alike – a ‘modern socialist objective’ need not restrict itself  alone to the extension of the public sector.  (though that should certainly be part of the agenda)  Consumer associations can also empower consumers; and mutualist and co-operative enterprise of various kinds can overcome exploitation and sometimes also alienation - while nonetheless preserving market relations and avoiding the problems associated with a ‘traditional command economy’.   

These issues are indeed more complex than assumed both by orthodox Marxists and also by capitalist ideologues.  Regarding exploitation: while there are problems with the Marxist ‘labour theory of labour’ which assumed all labour to be equal; nonetheless the structural relationship of exploitation – of the expropriation of a surplus – remains problematic.  And while deferral of consumption by small investors may deserve a return, the economic resources and returns for the wealthy cannot be justified in such a way.  Finally: alienation remains a reality on account of the repetitive and stressful nature of much work.   But democratic structures and processes can ameliorate the lack of control working people have over their labours; and promote a sense of ownership over those labours and the products of those labours.  Government can also intervene to provide wage-justice for the working poor – on the basis of respect for all labour.  Also government has a role to deliver the welfare dependent from poverty; and to provide opportunities for personal growth – through reduced working hours and a fair age of retirement; but also ensuring access to cultural participation and education.  Education must also be about personal growth, and not exclusively about the demands of the labour market.

In conclusion, Bowen’s ‘Crosland-inspired social liberalism’ has more to recommend it than the typical neo-liberalism we endure in the public sphere every day.  At least he sees a role for government in ensuring ‘hard and soft infrastructure’.  Ideas of ‘soft infrastructure’ could also be extended to provision of public (physical and virtual) space for civic activism – as opposed ‘the privatisation of public space’ we have become used to – where public life is reduced to consumerism.  Meanwhile his stated goal of ‘equal outcomes in health’ suggests a very robust public investment; including specific programs to ‘close the gap’ for indigenous Australians, the poor, the mentally ill and so on.  

However Bowen's rejection of public exploitation of Australian natural resources, and the strategic creation of public enterprises, simply adheres to the Ideology of the day - without concern for the tens of billions in forsaken revenue from natural resources on the one hand, and the ability to progressively cross-subsidise, enhance competition, provide efficiencies through natural public monopolies, and socialise profits - on the other.

BOWEN CONCLUDES by stating:

“We should mean what we say in the socialist objective. Currently we don’t. It clearly doesn’t reflect the modern Labor challenge, and with some updating it could very easily do so.”

In conclusion, there are some points worth observing here. 

Firstly it is legitimate to argue for Labor to mean what we say and say what we mean.  A problem with the Socialist Objective as we have known it has been the confusion as to what comprises exploitation.  For Marxists exploitation means more than just poor wages and conditions.  It refers to the expropriation of surplus value from wage labourers by capitalists. It suggests a structural injustice where capitalists expropriate part of the value that in fact they do not create themselves. They expropriate a portion of the value created by workers.  Hence a devastating moral critique.

The problem here is the idea that socialisation of “industry, production, distribution and exchange” to the extent necessary to end exploitation actually infers blanket socialisation if one is proceeding form a Marxist definition.  Because all wage labour involves the expropriation of surplus value.  By contrast some non-Marxist definitions might simply infer the elimination of poverty and the promotion of social inclusion in a ‘Third Way’ kind of sense.  Obviously the difference, here, is great – and we need to be clear what we really mean.  Hence the famous ‘Blackburn Amendment’ (made to the 1921 Objective; and proposing socialisation where necessary to end exploitation)  is confusing in the sense it leaves open the question of how we interpret that exploitation.   

(nb: my own opinion is that economic exploitation by large capitalists - including surplus extraction - cannot be morally justified 'on principle' - but that we have a problem transitioning to a fundamentally different society - because we must adapt to the real balance of forces in the international economy, and the need to remain engaged with transnationals who bring with them innovations and investment; but we should take democratisation as far as we practically can; The balance of forces may shift in the future; And in the meantime both definitions of exploitation have their uses so long as we are clear what we mean)

But within the Left itself we are already losing touch with our socialist roots.  We might well fight to preserve the Socialist Objective doggedly and persistently: but many of us would have no idea as to its meaning and origins.  Marxism itself has become ‘decidedly unfashionable’.

Marx once wrote something to the effect that socialists cannot change the world ‘behind peoples’ backs’.  Hence it is a mistake to suppose holding on to the Socialist Objective will have the kind of consequences democratic socialists want – unless it finds reflection on our day to day discourse; in the consciousness of our activists; and in our actual policies.

A smart move would be to include material which makes gestures towards the plural nature of today’s Labor Party – which is simply an observation of fact.  But while at the same time establishing democratic socialism and radical social democracy as core traditions in the ALP – which inform our values, our policies, and the Platform itself.

If we are to retain the Objective – perhaps in an updated and modernised form – then in the Left itself we must commit to having democratic socialist values and ideas inform our policies and our activism.  This means a counter-culture involving forums, publications, democratic socialist schools and conferences – which preserve and cultivate Left culture – and prevent the dissolution of our traditions into an opportunistic, uncritical and ‘mainstream’ liberalism which forsakes the critique of capitalism; or which abandons the projects of economic democracy; of social wage and welfare extension; of popular struggle ‘from below’ including class struggle; and the strategic extension of the public sector.

IN short: On the ALP Left itself we need to get our own house in order as well as fighting for reform of the National ALP Platform. If we fail ‘to get our own house in order’ any number of temporary symbolic victories will in the end come to nothing.

 

Nb:  Debate on this essay is very welcome here!

An analysis of where Labor should head on its Economic Platform specifically can also be found via the URL below – and debate is welcome there as well.

http://www.onlineopinion.com.au/view.asp?article=17468&page=0