Socialism as Regulation: Is it Enough? A Response to Adam Ford

Above: An image of Nils Karleby:  Adam Ford's account of 'Socialism as Regulation' has some things in common with the thinking of this important Swedish Social Democrat

Dr Tristan Ewins

 

Veteran Australian Labor Party activist and blogger Adam Ford has put forward a critique of socialist metanarratives insofar as they retain a commitment to what I would personally define as a ‘democratic mixed economy’.  Specifically, by this I infer a mixed economy including a very robust public sector, but also a broader ‘democratic sector’ including various co-operative models, as well as co-determination, democratic collective capital mobilisation and so on.   Partly in response to my own consideration of the substance of modern socialism, instead Adam Ford proposes a reformed socialist project; one which breaks away from prior emphases on Marx, and prior emphases on public ownership.  Ford reserves the right to define socialism however he chooses, and not necessarily follow in the footsteps of Marx, or anyone else really.  Though in a Bernsteinian fashion (ie: after Eduard Bernstein)  he argues that socialism is a premise from which we depart rather than an ‘end destination’.  

Specifically at  his blog 'The Bloodied Wombat' he argues:

“The light on the hill is as a beacon, not a point of arrival. It guides us forward, rather than telling us where to stop.”  

So in its emerging incarnation Adam sees the concrete form of modern socialism as comprising the quite vigorous and indeed aggressive regulation of capitalism.   Though he is not very specific in detailing what form this regulation would take.  Nonetheless, perhaps he has something in common with the Swedish theorist Nils Karleby  - who saw regulation like a peeling away of an onion – where the prerogatives of capital were progressively removed ‘until nothing is left’.  For example: I would speculate that this could take the form of legislated provisions for co-determination, or industrial rights including minimum wages and conditions. (though to be honest this is against the grain of so-called ‘reform of the labour market’ under successive governments, Labor and Liberal)   Karleby was critical of narrow interpretations of socialism which focused only on nationalisation.

For Adam Ford ‘socialist outcomes’ do not adhere to “pre-determined” and “known” “socialist structures”.  And rather than comprising an enduring beacon for socialists, the figure of Karl Marx is seen as imposing a “straight-jacket” on socialist thought.

Finally, Adam Ford condemns not only ‘command economies’ as ‘stupid’; but he applies the same judgement to mixed economies where the public sector extends beyond “natural public monopolies”, and certain essential services and infrastructure which the market would not provide via its own devices.

What follows is a response to Adam Ford’s arguments.

The hinting of a Bernsteinian angle is appreciated.  Bernstein had a lot of relevant things to say about socialism and ethics, socialism and liberalism, and the notion there no absolutely-final ‘end point’ for socialism. 

Though Bernstein had also insisted of Marx’s theory:

“The fall of the profit rate is a fact, the advent of over-production and crises is a fact, periodic diminution of capital is a fact, the concentration and centralisation of industrial capital is a fact, the increase of the rate of surplus value is a fact.”   (Bernstein, Pp 41-42)   

Ford is right to suggest that in Marxism we do not have the meaning of ‘life, the universe and everything’.  Ethics, for instance, was a blind spot for Marx and many who followed in his tradition and in his name.  As was the tendency of Marxists – not least of all Lenin – to pose socialism and liberalism practically as polar opposites.  (Whereas for Bernstein socialism comprised ‘liberalism’s spiritual successor’)
 
Certainly it is fashionable in this day and age to decry the ‘old’ socialism. The neo-liberal Ideology remains largely hegemonic throughout much of the world.  Public ownership is seen as an anachronism.  ‘The market’ is revered; ‘command economies’ are reviled.  And indeed – even for those proposing a democratic mixed economy, the spectre of the ‘command economy’ hangs over all debate as if there really is no ‘middle path’ or otherwise diverging paths from those of neo-liberalism and so-called ‘state socialism’.  Though to be fair to Adam Ford he personally diverges significantly from neo-liberalism in proposing a thorough regime of regulation.  And his allowance for natural public monopoly puts him at odds with the likes of Mises or Hayek.

As already observed: Nils Karleby shared similar notions to Ford in the sense of emphasising regulation as the substance of socialisation; the means of negating ‘capitalist prerogatives’. Though Karleby himself had also argued:

“How can one imagine a social transformation other than by the growth of collective property at the expense of private property, and through legislative changes together with social and cultural policy measures, and through changes in property rights brought about by the influence of free organisations?” 

 

And further Karleby anticipates a

 

“grinding away of capitalist society in the true sense, a steady progressive growth of new social forms.”  (Karleby in Tilton, p 82)

Hence despite his emphasis on regulation-as-socialism Karleby does not deny the mixed economy.  Though perhaps his position is also suggestive of strategies such as democratic collective capital formation for example.

Again: Ford rejects “predetermined” “socialist structures”. Most particularly this appears to relate to state ownership ; but perhaps it also applies to collective forms of property posed in opposition to exploitative labour-capital relations.  Though Ford also suggests “democratic markets”.  What could this mean?

In truth I have considered “democratic markets” myself.  But here I conceive of a wide variety of producer and consumer co-operative forms, as well as collective capital formation and so on.  I think of workers and consumers organising collectively and co-operatively in the very midst of markets. And I envisage of the state playing an enabling role here: via state aid, including cheap credit, tax breaks and so on.

Still - any role for the state is really the rare exception for Ford.  But is a truly robust mixed economy really “stupid”?

True: Ford and I agree on the need for “natural public monopolies”.  Ford is not specific, but for me here I think of energy, water, communications and transport infrastructure. I also think of near-monopolies in education.  But why not extend strategic socialisation beyond these strictly conceived boundaries?  Government business enterprises can enhance competition in areas as diverse as banking and health insurance; also providing progressive cross-subsidisation where that makes sense. Dividends can potentially be socialised into the tens of billions empowering the extension of welfare and the social wage.  In areas such as mining partial socialisation via some ‘super profits tax’ made sense ; but opposition to a direct public stake here could be seen as Ideological. In any case - even a public sector mining company would operate in a global and competitive market. As could other competitive state enterprises.

Furthermore: ‘the market’ could no-doubt ‘find a way’ to intrude upon just about every facet of our existence. But should we allow for it to do so?  Are ‘markets’ and the profit motive appropriate in Aged Care for example?  The public sector needs to intervene where the market fails.  And market failure takes many forms. This includes the lack of democratic forms; the exploitation of vulnerable people; as well as ‘Planned obsolescence’ and the creation of oligopolies and monopolies which fleece consumers. Also there is the potential for neglect of consumer minorities whose ‘market power’ is not sufficient to ensure the provision of the highest quality goods and services at competitive prices.  Perhaps Ford allows for this final case in his model, however.  Though the question remains: how would that work?

Then there’s also a case for strategic government intervention in support of ‘multi-stakeholder-co-operative enterprise’. Government has a potentially progressive role to play in helping to finance co-operative enterprise large and small.  Especially in the case of large co-operative enterprise large injections of capital may be necessary to attain the economies of scale necessary to remain competitive on global markets. This is where government can help.  And not only State and Federal government – but regions as well.

Underlying rejections of a larger role for government is the notion that private ownership is “natural”.  It is considered the ‘default” form of property compared with which the public sector is but a rare exception. 

I reject this notion. But I do suppose a large role for competitive private sector markets into the foreseeable future.  A ‘democratic mixed economy’ is realisable in the foreseeable future in a relatively modest form. To illustrate: I personally envisage an increase in public revenues and associated outlays by 5 per cent of GDP – achieved perhaps over a decade, and flowing in to social wage and welfare provisions.  As well as public borrowings for ‘nation-building’ infrastructure. 

But ‘autarky’ is not the answer.  As I have argued elsewhere: transnational enterprises from Samsung to Apple respond to ‘the intricacies of consumer demand’. And they innovate under pressure in the context of competitive markets where massive economies of scale are necessary.

Nor should we aspire to ‘nationalise the corner store’.  This has always gone without saying.  Though small-scale co-operatives could also potentially respond to those ‘intricacies’ at the local level as well; while addressing the alienation many workers experience where they have little creative control over their workplaces and their labours.

Australian consumers don’t want to be isolated from the innovations that go on in competitive global markets. And Australian workers also stand to benefit from jobs-creating foreign investment.  I accept this. No-one (or at least almost no-one) wants ‘socialism in one country, Stalinist-style’.  We can gradually build up to a robust democratic mixed economy. But the ‘traditional socialist society’ as epitomised by the old Soviet and Eastern bloc is ‘lost to us’. 

In some ways this is actually a good thing.  The old command economies produced a ‘dictatorship over needs’ (Fehr, Heller, Markus) where ‘needs’ were defined ‘from above’ and consumers did not enjoy the freedom to determine their own needs-structures via markets.  Markets can be appropriate to the extent to which they enhance responsiveness to consumer demand, and reasonably enhance personal determination of needs structures.

But we should not adopt an Ideological perspective which closes off the strategic extension of the public sector.  Nor should we fetishize markets – especially where they fail.  And we should not just jettison the Marxist tradition in its entirety – when there is such a rich and diverse range of viewpoints and insights even still.  Even though in today’s more plural Left there is greater tolerance towards the pursuit of ‘ethical’ or even ‘liberal’ socialism.  (a good thing) 

We probably can define socialism ‘however we choose’.  But we should also ask ourselves what is reasonable when we return to ‘first principles’.  Socialism began with notions of economic equality; notions of ‘equal association’. There was also the communist notion of ‘From each according to ability, to each according to need’.  And that notion still retains its force today.  Though quite rightly the modern Left has also considered that economic equality alone is not enough to achieve ‘The Good Society’.  A ‘good society’ and a ‘strong democracy’ needs to include a participatory and authentic public sphere.  It must encompass mutual respect and free enquiry.  It must support peoples’ need for economic security; but also peoples’ search for meaning in many-varied ways.  Whereas the Left once focused its attentions on nationalisation too-narrowly, however, the opposite tendency to reject public ownership as a strategy is itself ‘Ideological’. Democratic socialists are learning from past errors.  But it is not a ‘clean break’.  Our efforts today should still be informed to a significant extent by past insights, and past tradition.

 

Bibliography 

Bernstein, Eduard  “Evolutionary Socialism”, Shocken Books, NewYork, 1961

Tilton, Timothy; “The Political Theory of Swedish Social Democracy – Through the Welfare State to Socialism”; Clarendon Press, Oxford, 1990

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

A Response to the 'Consultation Draft Platform' of the ALP - Chapter 2 'A Strong Economy for all Australians'

 

by Tristan Ewins, ALP Socialist Left member of over 20 years

Friends and Comrades;

Not long ago a ‘Consultation Draft’ of the National Platform of the Australian Labor Party was released for purposes of feedback between now and National Conference in July this year.  Over the coming weeks I will release commentary on this consultation draft. 

Today, though, I will discuss Chapter 2 specifically – which relates to economics policy.  Importantly, in the consultation draft there was little or no mention of economic democracy, exploitation or the public sector.  To begin, therefore, I will propose an addendum whereby in this section the Labor Party needs to come out clearly in favour of what I call a ‘democratic mixed economy’.   

Considering we maintained the Socialist Objective for the best part of a century - we should at least be able to sustain a Platform that as a minimum supports a mixed economy ; but a mixed economy which aims to extend the principle of democracy in the way I suggest here - as much as can practicably achieved.

Other areas of concern include: fiscal reform to pay for and extend social insurance, the social wage, welfare, social services and public infrastructure; as well as the progressive structure of the overall tax system.  The form of superannuation for the working poor also needs to be considered, as well as an notion of ‘equal opportunity’ which goes behind the narrow confines of the labour market.   The TPP also needs further discussion; and our capacity to grow the public sector, including natural public monopolies, and also to assist  the democratic sector (eg: co-ops) – also needs to be maintained.  The failure of ‘the market’ to provide just outcomes needs recognition also.   And the social wage and social insurance must assist and protect the working class as well as the most disadvantaged of all.   Finally ‘a simpler tax system’ should not necessarily be our aim if the end product is less progressive for distributive purposes.

IMPORTANT ADDENDUM re: ALP Economic Platform

In an earlier version of this post on the ALP economic platform there was a passage which read as follows:

• "Finally, in keeping with our principles we will not deliver natural public monopolies or near-monopolies into the private sector because this may result in an abuse of market power."

This SHOULD have read as follows instead:  

• "Finally, in keeping with our principles we will not deliver monopolies or near-monopolies into the private sector because this may result in an abuse of market power."

Clearly this changes the meaning completely.

Sincere apologies for any confusion.

Tristan Ewins

HENCE – beginning with a discussion of ‘the democratic mixed economy’ -  the following needs to be inserted at some point in Chapter Two:

“Labor believes in the principles and practice of a ‘democratic mixed economy’. Hence we seek to extend democratic principles and forms to the economy as far as is practicable.  Though there are limits to what can be achieved for the foreseeable future: the consequence of the prevailing ‘balance of forces’ both in the global economy, and the domestic Australian economy.  

Promotion of  ‘democratic principles’ in the economy includes support for sectors of the economy which can be held accountable to the populace in their capacities as citizens; as workers/producers;  in mutual association; and as consumers.  And this applies on both a large scale and a small scale. 

In this context we strive after the best balance between various kinds of enterprise which can realistically be achieved for the modern day. Such a ‘balance’ involves checks and balances between producers, government and consumers; and includes strategic socialisation of various kinds.  

In addition to existing private enterprise, and the need to remain engaged with the transnational corporations whose innovations and investment are essential to Australian jobs and material living standards, our vision for a ‘democratic mixed economy’ includes an expanded role for the following:

·        producers’ co-operatives of various types – on both a large scale and on a small scale;  This is also to include multi-stakeholder co-operatives which involve producers, regions and government

·        consumers’ co-operatives through which the associated consumers are empowered

·        Mutualist enterprise; for example Mutualist insurance

·        natural public monopolies, including in areas of essential services and infrastructure, where duplication of cost structures can be avoided to the benefit of the economy at large, and where the superior credit ratings of government result in more efficient finance

·        other public infrastructure (eg: where a natural public monopoly cannot apply because of existing privatisation; eg: through Public Private Partnerships)

·        strategic Government Business Enterprises which actually enhance competition in areas of oligopoly, concentrated market power and potential collusion; and also enhancing accountability to consumers

·        Government Business Enterprises which can also compete internationally - subject to global market forces

·        Public investment in Australia’s Natural Resources which are properly the property of the Australian people collectively.

·        Co-determination agreements between workers, unions and business – supported through a legislative framework

·        Democratic collective capital formation, including through the superannuation system, but also through public pension funds which will support the operation of a strong and fair system of Pensions in this country far into the future

·        Self-employment

To these ends we believe there is a role for government in extending democratic principles and forms to the Australian economy.  That includes:

·        through tax breaks, advice and cheap credit for co-operative and mutualist enterprise;

·        through co-investment to help co-operative enterprise upgrade its economies of scale so as to remain competitive in larger markets while retaining the co-operative form

·        through the creation/construction/maintenance of government business enterprises,  social services and welfare, and public-owned infrastructure

·        through an active industry policy

Finally, in keeping with our principles we will not deliver monopolies or near-monopolies into the private sector because this may result in an abuse of market power.

Strategic socialisation of different kinds can also ameliorate exploitation; and sometimes even enhance competition. Progress in extending a democratic mixed economy can also assist in ameliorating the self-destructive aspects of capitalism, while extending the principle of democracy into the economy in such a way as advances social democracy not just into the distant future - but beginning here and now."

What follows now are some excerpts from Chapter Two of the Consultation Draft of the National Platform – with my responses under headings labelled as ‘Comment’.

P 11    “Labor rejects the false choice between economic growth and equality. Excessive inequality detracts from economic growth and damages the social fabric. Labor believes in economic growth that is inclusive of all. We believe there is a role for Government in ensuring that people from all backgrounds and circumstances can both contribute to economic growth and benefit from it. The benefits of economic growth must be redistributed through the economy to those on low wages, not in work or reliant on welfare.”   

COMMENT:  To this we should add:  “We also believe that through the social wage and social insurance  we can redistribute wealth in a socially just manner from the wealthy to the working class.”

4) “Labor believes in economic policy that promotes social mobility and opportunity. Your family’s wealth should not determine your ability to grow to your full potential. Promoting equality of opportunity is at the core of Labor’s economic approach.”

COMMENT:   Here we should refer to diverse forms of equal opportunity – not just work;  but also education, civic activism and cultural participation and consumption as well.

6) “Australia’s long-term prosperity depends on competing successfully in global markets. This means Australia needs to produce high quality goods and services that the world wants to buy, and remove barriers to overseas markets. Labor will work to ensure major policy settings like skills development and training, infrastructure planning, tax and regulation frameworks do not hold businesses and workers back from achieving their full potential in global markets, while at the same time ensuring that all Australians enjoy a fair share of the benefits of growth. Strong and sustainable public finances underpin the progressive future we want for the next generation. Meeting the health care, pensions and education needs of future generations will require prudent budget management and prioritising support for those most in need.”

COMMENT:  We need to provide for those most in need; But also we need to provide for more general forms of collective consumption and social insurance which EVERYONE can benefit from.  For example through funding state schools; through funding the NDIS; through funding a National Aged Care Insurance Scheme which provides the highest quality infrastructure and services, but which eliminates user pays mechanisms for disadvantaged and working class families.  Also consider the universalism of Medicare – which now needs to be extended further throughout the health system.

7) “The market will often create the most equitable and efficient distributions of power, wealth and services, but markets sometimes fail. Government has a responsibility to intervene, to address market failures and the extremes of capitalism. Labor supports an active role for governments in addressing market failure, and improving equity and social justice through the full range of government policy instruments including expenditure, taxation, regulation, and the provision of goods and services.”

COMMENT:  Often markets do NOT create “the most equitable…distributions of power”; This point in the Draft Platform needs to be removed or edited so as to change the meaning.  Private sector monopolism – and sometimes oligopolism  - produces inefficiencies as well - and deserves a specific mention.

Responsible Fiscal Policy

9)   “Labor is committed to sound public finances by adhering to a fiscal strategy that achieves budget surpluses on average, over the economic cycle…”

COMMENT: this should be changed to read: ‘balance the budget on average over the economic cycle’;  And should also include mention of productivity-enhancing public investments that adds to economic growth.  (A good example is the NBN) The EFFECTS of these INVESTMENTS need to be taken into account re: the aim of “a balanced budget over the course of the economic cycle”.

  16.) Labor, as the party of universal, compulsory superannuation, will continue to put in place reforms to protect and to grow superannuation, to ensure the superannuation system meets an objective of providing a comfortable retirement for all Australians. This will include, when prudent, ending the Coalition’s freeze of the Superannuation Guarantee at 9.5 per cent, and fast-tracking the Superannuation Guarantee increase to 12 per cent, which will provide millions of Australians with higher retirement incomes. The current system of superannuation tax concessions has seen more than 35 per cent of the value of tax concessions accrue to the top 10 per cent of income earners. Labor will put in place reforms to address this imbalance, ensuring Australia has a sustainable and fair retirement income system. 

COMMENT: EXCELLENT to see recognition of the problem with inequitable superannuation concessions; a big victory for progressive forces if this finds reflection in strong policies.  But there are flaws in superannuation as well.  The working poor already struggle; and forcing them to contribute more of their own money into superannuation will worsen their poverty throughout their working life.  If we are to increase superannuation contributions, perhaps the working poor could be excused from contributing. (but not their employers)  Also there is the problem of inequity – affecting women, the disabled and the working poor especially.  Resentment against the Aged Pension could lead to austerity against some of the most vulnerable into the future.

18-30  ‘A Strong and Vibrant Small Business Sector’

COMMENT:  Mention should be made of co-operative small business somewhere in this section.

35- 54  Trading with the World

41. Labor supports trade and investment liberalisation through the Asia–Pacific Economic Cooperation (APEC) forum. Labor will ensure APEC is a driver of regional economic integration and will take an active approach to its role in the region’s economic architecture. Labor believes APEC has a key role in promoting economic reform behind the border throughout the Asia–Pacific region and will promote these efforts. Labor will endeavour to strengthen APEC’s role in mobilising support for the WTO’s Doha Round. Labor will also support Australia’s engagement in the emerging regional trade and investment architecture under the auspices of the Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership and the proposed Free Trade Area of the AsiaPacific. 

COMMENT: I’m not not sure about the TPP.  There hasn’t been enough consultation.  Also we need to make sure that any agreements we enter into do not prevent appropriate regulation; or prevent policies which are meant to support or encourage a ‘democratic mixed economy;  For example establishing natural public monopolies, or implementing tax breaks, advice and cheap credit for co-operative enterprise.

42. Labor will work to:

 Provide leadership to the Cairns Group and seek reductions in agricultural subsidies and protection;

 Secure reciprocal new market access for all of Australia’s economic sectors;

 Tackle non-tariff “behind the border” trade barriers such as excise tax arrangements, standards, customs procedures, subsidies and other restrictive measures which impede Australian exports;

COMMENT: This cuts both ways; sometimes standards must be applied; sometimes the ability of a nation to feed itself is important to its security;  Subsidies should also be allowed in strategic cases – and with assistance for co-operative enterprise. We should not commit ourselves to a framework which would 'tie our hands' on economic democracy and the strategic extension of the public sector into the future.  I am uncertain of the content of TPP and I’m sure many others in the Party are as well…

Specifically the Consultation Platform argues the following in relation to TPP:

54. A well-balanced Trans-Pacific Partnership offers the prospect of more and better jobs through improved access to member countries’ markets for Australian exporting businesses and their employees. Labor’s position is that the Trans-Pacific Partnership must be consistent with the following principles:

 Does not undermine the Pharmaceutical Benefits Scheme and public health initiatives;

 Provides for national treatment — that foreign and domestic companies are treated equally under the law, while not conferring greater legal rights on foreign businesses than those available to domestic businesses;

 Does not require Australia to remove protection of cultural industries;

 Retains the Foreign Investment Review Board and its powers to review foreign investment in the public interest;

  Retains quarantine provisions to reduce the risk of imported pests and diseases;

 Retains the flexibility to encourage industry development including through research and development, regional development and appropriate environmental, employment and procurement policies;

 Contains enforceable labour clauses that require signatories to enforce core labour standards in International Labour Organisation conventions; and

 Contains enforceable environmental clauses that require signatories to meet all relevant international environmental standards, including those in applicable United Nations international environmental agreements.

COMMENT:  In response the following points should be added:

·         Does not inhibit the right of government to support and extend the public sector, including maintenance of natural public monopolies

·         Does not inhibit the right of government to extend a ‘democratic mixed economy’, including through support for co-operative and mutualist enterprise of various sorts

A Fair and Efficient Tax System

67. Labor is committed to a fair and sustainable tax system that provides incentives for all Australians to work and undertake productive enterprise while guaranteeing adequate revenue to fund the proper role of government, including providing quality public services and ensuring an equitable distribution of income and wealth. Public confidence in Australia’s tax system depends on a simple and transparent tax system where everyone pays their fair share of tax. Labor has implemented important tax reforms to improve competitiveness, boost savings through superannuation, make superannuation fairer, simplify personal tax, reduce barriers to participation and provide better assistance to families. We will also continue this record of tax reform, making the system more efficient, less costly and more equitable.

COMMENT: ADD THIS:  “Specifically we support a simpler tax system only where the final outcome does not negatively affect our efforts to ensure a fairer and more equitable distribution of wealth and income.”

68. Future tax reforms will:

[large excerpt cut out]

 Minimise the impact of high effective marginal tax rates, particularly on those moving from welfare to work or the second income earners in low- to middle income families;

COMMENT:  The excerpt above is problematic as it suggests cutting tax for those who do not need to have their tax cut; That is, it suggests a general cut in taxes (the word ‘particularly’  needs to be deleted so it is clear the reference is only to the specific disadvantaged groups. The consequence of cutting tax more generally is that pressure is put on public finances, and hence also the social wage, public infrastructure, social services and welfare. It must be edited to read:

“ Minimise the impact of high effective marginal tax rates on those moving from welfare to work or the second income earners in low- to middle income families”

I hope the readers of this commentary will have found it interesting, and will be inspired to respond to the ‘Consultation Draft’ as well.  I especially hope readers will register their support for this document and the documents which are to follow.

Specifically members can provide feedback on the Consultation Draft Here:

http://www.alp.org.au/2015_draft_national_platform

If you want to support this Commentary please include a link to the appropriate URL in your submission.  Ie: link to this URL in your submission