THE KERR COUP AGAINST WHITLAM – 40 YEARS ON, STILL A MYTH

Originally published in Strange Times, no.10 April 1991. (This article was written well before Keating launched his ‘republican debate’.) On 11 November 1975 the Australian Governor General, Sir John Kerr, dismissed the Prime Minister, Gough Whitlam, on the grounds that he was unable to get the budget through the Opposition dominated upper house (the Senate). Kerr then appointed the opposition leader Malcom Fraser caretaker Prime Minister and called an election. Fraser subsequently won the election in a landslide.

I am republishing the discussion about the article as well, including my own which is the last comment below. I sum up my position thus: I look back on the semi-fascist coup analysis now with a sense of bewilderment. The writ by which Whitlam was sacked specified that a caretaker government be appointed and that an election be held. There’s nothing fascistic about that. Why then did people who had good leftwing credentials pursue that line?

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THE KERR COUP – ANOTHER MYTH

The recent death of former Governor-General John Kerr is a good excuse to look back over the way the left reacted to his sacking of Whitlam. It is a remarkable example of how people who claimed to be radical leftists could tie themselves to the coat tails of the Laborites. They convinced themselves of all sorts of conspiracy theories about CIA involvement and described the sacking as a semi-fascist coup – a case of the ruling class abandoning parliamentary institutions. The left’s analysis of the Whitlam sacking is second only to its stance on the Gulf War as an example of its cretinism.

Essentially all Kerr did was to force the most unpopular government in Australian history to face the electorate. According to the left this was all terribly fascist because the government’s unpopularity was due to a malicious media campaign engineered by the media barons and multinationals. However, given the ability of the Whitlam government to shoot itself in the foot every other week, it would have required the media to be actively biased in its favour for it not to show the government in a bad light. It was also the time of the worst world economic downturn since the depression of the 1930s and for that reason alone very few elected governments anywhere in the world survived the mid 1970s.

The left was also outraged at the Liberal’s blocking supply in the Senate. The Labor Government liked to describe the House of Representatives as the ‘people’s house’ and to claim that it was being de_ed by the Senate which is elected on a less representative basis. This is a funny argument given that Fraser’s main interest was in getting an election for the lower house, so that ‘the people could decide’. It was Labour that was keen to avoid that at all costs. They had schemes for calling half senate elections, anything but an election over who was to govern.

Certainly the royalist institution of Governor-General should be replaced by a president, but that is another issue. Hopefully the appointment to the position of a republican and atheist in the person of Bill Hayden will do much to hasten its demise.

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• Re: The Kerr “coup” – Another myth
Posted by keza at 2005-11-24 10:01 PM

There’s a detailed account of the events referred to in the article above in the the Wikipedia entry for Sir John Kerr…

I notice that the “left” is still referring to what happened as a “coup” eg the following was posted on the GreenLeft website Just recently (November 11):

The enduring political significance of the coup lies in the fact that it demonstrated, in a particularly dramatic form, how ruthlessly the ruling class is prepared to defend its interests. Behind the assiduously cultivated façade of parliamentary democracy lies the organised violence of the capitalist state, ready to be called upon when needed.

Never mind that all John Kerr really did was to insist that an immediate general election be held.

Never mind that prior to this he had given Whitlam the opportunity to call a general election himself – and Whitlam had refused.

And never mind that when the election happened the Labour Party suffered a landslide defeat.

The pseudo- left dismissal of the recent Iraqi elections is a continuation of the same style of thinking. It indicates a deep misunderstanding of the meanings of words like “fascist”, “coup” and “democracy” as well a contempt for people as gullible victims of manipulation.

The genuine left always defends hard won democratic rights while pushing for more of them. Governments should have to face the electorate more often, not less often.

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• government or referendum?
Posted by kerrb at 2005-11-25 08:38 PM
keza wrote:
Governments should have to face the electorate more often, not less often

Why? I think that needs more explanation.

Should governments be allowed to get on with the job or should policy be decided by a series of referendums? Don’t we already have enough populism and governments afraid to bite the bullet? What government today would introduce a measure that would have long term benefits 20 years down the track but few short term benefits – for example an intensive preschool program in disadvantaged areas?

If there were elections in USA right now then Bush would probably lose and I don’t think that would be a good thing. Should we get behind the Unions populism and demand that Howard’s IR reforms be decided by a new election? They are unpopular despite an expensive and phoney government advertising campaign.

From a broader perspective many correct ideas lack popular support: atheism, communism, the idea that we are not on the verge of environmental catastrophe. Democracy is a good idea too, far superior to fascism, but the concept of deciding everything by 51% vote has its limitations IMO. I’m not clear about the solutions.

The Whitlam government was elected in December 1972 and initiated a lot of reforms many of which were blocked by the hostile Senate. Because of this Whitlam called another election in May 1974 but that backfired, he was re-elected with a reduced majority. Obstruction from the Senate continued leading to the blocking of supply.

After the Queen’s representative intervened and sacked the Whitlam government there was another election in December 1975 which Whitlam this time lost. Three elections in three years, was that good?

Given that the Whitlam government was the first labour government since 1946 then it was easy to get the impression that the Liberals believed they were born to rule.

I take the point that what happened then wasn’t fascism, that that was bad analysis. But the combination of the Liberals born to rule attitude and the colonial relics in our constitution (Queens representative) were sound reasons to oppose The Dismissal.

And I still like Whitlam’s anger and speech on parliament house steps: “Well may we sing God Save the Queen… Because nothing will save the Governor-General”. Guess I’m a sucker for a nice piece of rhetoric.

_________________________

Bill Kerr
• Re: government or referendum?
Posted by keza at 2005-11-25 11:13 PM
Well of course populism can be a problem. The majority isn’t always right, people embrace all sorts of backward ideas etc etc. But the solution can’t be to support having restrictions on the democratic process. If there is popular support for backward or reactionary policies then it’s up to progressive people to fight for better ideas. The way I see it, the more opportunities for people to have their say, the more opportunities are provided for genuine struggle and the overall lifting of the general level of debate and understanding.

I remember this happening on a small scale in the Melbourne Moratorium debates in Richmond Town Hall (1970’s). As far as I know, the Melbourne Moratorium was run differently from the Moratoriums in other Australian cities because rather than being organised from on high by a committee, the major decisions were taken by open public meetings where policy issues were subject to a debate followed by a vote.

As a consequence the Melbourne moratorium policies were far to the left of anywhere else in Australia – eg here the USwas clearly labeled as an imperialist aggressor whereas in other places the policies were mainly pacifist. When there is genuine debate about things, the better ideas do tend to win out. It is lack of discussion and lack of opportunity to engage in any sort of democratic process which leads to the persistence of reactionary ideas.
If the voting system here in Australia was based on proportional representation this would break the current two party system but it would also have the effect of giving representation to all sorts of smallish groups – many of them with more reactionary policies than either Labour or Liberal. It would also lead to more unstable government. But I’d see both these things as good relative to the situation we have now. Anything which opens things up and gives people more of a chance to engage with the issues of the day has to be a good thing from a progressive perspective.

I think this has been happening in Iraq. Opponents of regime change have talked endlessly of the dangers of democracy in Iraq claiming that the result would be an Islamic state. the Iraqis aren’t ready for democracy, there’s no chance of the Shia, Kurds and Sunnis working things out, what they need is a strong leader etc etc.

If there was to be an election in the US aimed at trying to bring down Bush and his policies then the issues wouod have to be fought out. I think that would be a good thing.

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• Re: government or referendum?
Posted by tomb at 2005-11-26 12:12 AM
perhaps not a fear of elections but a fear of losing. (whitlam would relate to this given his close relationship with the fascist indonesian government and support for the annexation of east timor)

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• Re: government or referendum?
Posted by kerrb at 2005-11-26 01:27 AM
keza,

You have cited some good examples where more democracy / extended democracy is a very good thing – Melbourne Moratorium, proportional representation, Iraq elections …

It’s a fundamental point and as a general principle I agree … extended democracy combined with real discussion does work in favour of the best ideas winning through and there are precious few examples of discussion of this sort in Australian politics.

However, I can also think of examples where not following established democratic procedures was a good thing too … the US / Coalition of the Willing invasion of Iraq for example, not supported by the United Nations … I think the argument here is that fighting fascism is a more urgent principle

As for holding regular referendums in the USA about whether to continue the Iraq war, that strikes me as impractical – pull the troops out, a few months later send ’em back in – you can’t fight a war like that.

_________________________

Bill Kerr
• Re: government or referendum?
Posted by anita at 2005-11-26 05:35 AM

Thanks for following up my post, and apologies for the obtuseness of my original post.

What is highlighted is the paradoxical nature of democracy. (Take it away AL) I think it was courageous of Gough Whitlam to try and stand for his policies via election, but he didnot read the writing on the wall after they were soundly rejected and his majority was reduced. We know the outcome of his failure to take account of the mood of the electorate.

Politics is about brinkmanship and government’s can fall. My gut feeling is that a smart politician probably says yes to elections when out of office, and No when in office. I take the points Bill, but don’t think the example really works because the coalition did follow established democratic procedures, but broke from the outcome of those procedures muttering something about the numbers.

There is something to be said for a binding caucus type of principle but there comes a time when you might have to walk as the coalition did over failure to reach a necessary or desired outcome.

I support Proportional Representation with four year terms, but think that it is probably ok to maintain the Australian custom of the govt choosing the election time. I also think that the Australian practice of no limit on the number of terms in office is preferable to the American provision for 2 terms only. IMO it is about accountability, and George Bush for instance would be much more accountable and useful if he was facing the prospect of a third term in office.

Back to the so-called Kerr ‘coup’ which we find is not a coup. It was not, as happened in my own sphere of involvement, (Flinders uni in Sth Australia, mid 90’s) where democracy was about Annual elections; General Student Meetings; and Action Groups – there was a referendum policy measure that worked quite well in the circumstances – but I too would not recommend governing a country by referenda on policy questions) a matter of being hit with an unconstitutional referendum and having to wear the disastrous consequences of ‘boycotting’ said referendum, once the uni administration was convinced that pushing through an unconstitutional was in their political intrerests.

This resulted in… I’m losing count… maybe 4 or 5 full elections at Flinders in 1995.

Anyway in the example of Whitlam’s sacking, it was brought upon himself. So I don’t think his sacking – or more recently the decision to go to war in Iraq, strayed far from accepted democratic and legal conventions at all.

Bugger, I replied to the response and not the main topic,,, and now have only the last message to re-read before concluding these late-at-night, hastily written words. For better, or worse, and before i drag up anymore of my Flinders uni. memories.

c’est la vie

c’est la guerre

Que sera sera

Fare-the-well the ALP* student movement. (To the tune of Polly Wolly Doodle all the day)

Best of all RIP NUS** (I could not help myself) (

Anita

* ALP = Australian Labour Party

** NUS = National Union of Students)

• Re: The Kerr “coup” – Another myth
Posted by arthur at 2005-11-26 10:41 AM
Great to see Anita republishing stuff from “Red Politics”. Already seems to have raised the level of discussion by provoking deeper thought on both imperialism and “The Dismissal”. Hope this stuff gets properly integrated into the folder navigation structure of the site for permanent reference rather than lost in more ephemeral forum discussions. Also hope to see us starting to write articles like that from a current perspective (and David, who wrote both of those and many other excellent articles more than a decade ago, adding some more).

This topic has already branched into two additional issues of more contemporary and global (non-Australian) significance – “Revolutionary Democracy” (including the dialectics of leadership and mass line in broad struggles we have had experience of such as the student movement and Vietnam solidarity movement and “Constitutional Reform” (including electoral systems).

I’d like to see both of those separated out into topics of their own (and will do so myself if not beaten to it). Bill’s points about populism, majoritarianism, biting the bullet and not being limited by process is of even deeper relevance to how revolutionary democrats build mass movements (and how they organize themselves) than it is to how governments should be organized in modern western societies. We didn’t achieve the wider extended democracy favourable to left politics that keza refers to in either the student movement or the Vietnam war protests by accepting majority rule – we were a very small minority and loudly denounced as undemocratic by our opponents – but we avoided isolation by tight leadership following a mass line.

On “The Dismissal” itself, that’s precisely what the ALP did not do. Looking through the wikipedia article, their “radical” reforms – hysterically opposed by the conservative opposition at the time – were pretty tame then and are conventional wisdom now. When Harold Holt was denouncing Whitlam for betraying the American alliance by proposing to recognize China, Kissinger was already in secret negotiations with Peking.

The ALP government tore itself apart with no tight leadership and made no serious effort to mobilize the masses for its reform program. Instead they absorbed much of what had previously been anti-government and anti-system activism into a new caste of do gooders funded by government – completely gutting the activist movement that had been developing against their more conservative predecessors.

The sordid constitutional maneuverings on all sides were pathetic – bribing an opposition senator with an ambassadorial post to Ireland to gain a vote for the government, state governments appointing replacement senators opposed to the party of deceased senators to gain a vote for the opposition, the governor-general not warning the Prime Minister of his intention to dismiss him etc etc.

But on the fundamental issue, Fraser was open and above board in declaring his intention to bring down the government by blocking supply and mobilized the people in opposition to government policies, while Whitlam made no attempt to mobilize the people in defence of his policies but instead tried to minimize the landslide against his government by demagogic attempts to deflect popular anger through making the decision to call an election the central issue.

In the USA the Executive government with a fixed term in office is often dominated by one party while Congress is dominated by another and conflicts between the two occasionally result in the Federal Government grinding to a halt due to supply being cut by Congress.

Australia (wisely or not) deliberately chose the Westminster system of the executive being responsible to Parliament instead of fixed term governments. Whitlam tried to “crash through” in a system where the ultimate result of the opposition refusing to back down could only be a crash (before or after supply ran out, depending on the Governor-General).

Instead of defending his program, Whitlam tried to deflect attention of ALP supporters from his leadership failure by demagoguery against “colonial relics”. This worked and there is still deep anger among ALP supporters about this “betrayal of democracy” by holding an election, while Whitlam remains a party hero.

Its complete and utter phoniness was highlighted by the “Republican” fiasco in which the ALP proposed to remove the colonial relic while retaining EXACTLY the same system that led to the Dismissal.

In reality the only “colonial relic” involved was the ALP which, for the first time in Australian history actually appealed to the British (Labor) government to directly intervene in Australian affairs when the Speaker of the House asked the Queen to act on the advice of her imperial British Ministers rather than her Australian Ministers to refuse to hold the election advised by her Australian Ministers. Naturally the British government and the Queen did no such thing (and in fairness the ALP could not have imagined that they would but was just engaged in more demagoguery in appealing to the Queen).

I was outside Australia during the whole period leading up to The Dismissal and so missed out on the developing atmosphere. But it was quite stunning on coming back to find so much latent support for the ALP among leftists who had previously been completely contemptuous of it – with genuine anger about how “our” party had been viciously deposed by such undemocratic means as holding a (CIA inspired, fascist, etc etc) election at which it had been undemocratically rejected by a landslide due to the ignorance of the unwashed masses about the importance of governmental stability!

This really was an early warning about the tendencies that have now shown themselves more fully in the current collapse of the left in the face of the pseudo-left. Perhaps that historical event, as well as the Red Eureka Movement discussion about international questions was a factor in why there seems to be greater clarity about the pseudos in Australia than elsewhere.
• Re: The Kerr “coup” – Another myth
Posted by kerrb at 2005-11-26 05:29 PM
arthur wrote:
I was outside Australia during the whole period leading up to The Dismissal and so missed out on the developing atmosphere. But it was quite stunning on coming back to find so much latent support for the ALP among leftists who had previously been completely contemptuous of it – with genuine anger about how “our” party had been viciously deposed by such undemocratic means as holding a (CIA inspired, fascist, etc etc) election at which it had been undemocratically rejected by a landslide due to the ignorance of the unwashed masses about the importance of governmental stability!
I think there was evidence of CIA displeasure at the Whitlam government to do with two issues of substance – the raid on ASIO by Murphy and nervousness that Whitlam might kick out US military bases (Pine Gap) in Australia. The ASIO raid perhaps arose from the practice of ASIO keeping dossiers on some ALP politicians who were active in the anti-Vietnam war movement. Murphy believed that ASIO was withholding information about Ustasha involvement in Australia. This had an echo later in SA when Don Dunstan sacked the police commisioner Salisbury, I think for similar sorts of reasons (dirt files on ALP politicians).

Significant reforms by the Whitlam government included the medicare health reform, increased access to University education by students from working class backgrounds and some ongling support students from disadvantaged backgrounds. These reforms have been incrementally whittled away by the current Liberal / National Coalition, illustrating the point that more than reform is needed.

I agree with tomb’s point that Whitlam did a dirty deal with the Indonesian government on East Timor.

In the final analysis the people did vote out Whitlam, so no argument there.

Two Australian labour governments have been dismissed (Whitlam and Jack Lang in NSW) in this way – intervention by the Queens representative – and no Conservative governments. This contributes to the sense of foul play.
_________________________

Bill Kerr
• Re: The Kerr “coup” – Another myth
Posted by byork at 2005-11-28 01:56 AM
I was a member of the CPA(ML) at the time, in 1975, and the party line was that it was indeed a semi-fascist coup. But this was not seen, as I recall it, only in terms of CIA involvement but in terms of superpower contention. Whitlam had recognized Soviet domination of the Baltic states and had been friendly to the Australia-Soviet Friendship Society. There was also some minor stuff happening with the Moscow Narodny bank in Australia which was also meant to clinch the argument. I don’t think Whitlam ever threatened the US bases in Australia but rather sought joint US-Australia control over Pine Gap. The CIA didn’t need to do much, as world events such as the oil crisis, plus the Labor government’s own incompetence as a manager of capitalism, brought it down. Whitlam lost the plot, even in his own social democratic terms, and turned to the fascist regime in Iraq to raise election funds which he could never raise from the Australian working people.

I look back on the semi-fascist coup analysis now with a sense of bewilderment. The writ by which Whitlam was sacked specified that a caretaker government be appointed and that an election be held. There’s nothing fascistic about that. Why then did people who had good leftwing credentials pursue that line?

I think part of the reason relates to the fact that the struggles over the big issues like Vietnam, censorship, White Australia Policy, and apartheid, in which the Left did win ground, had been more or less successful. The resultant absence of issues, or vacuum, led to frustration and recrimination within the Left and a desire, by some of us, including me, to try to keep something alive that was really gone.

The religious type of analysis that saw dialectics in terms of constant progress with people’s struggles intensifying and going from victory to victory with every new year’s issue of Vanguard led those who accepted it into a dead end. When people close their minds, as I did, to debate and exchange of ideas, and instead conglomerate within a very small sect (within a sect), then they can’t possibly understand revolutionary theory and they have lost touch with reality. (“All that is real is rational”). They become self-satisfied opponents of everyone else, praised and egged on by respected veterans.

People like me applied themselves to the ‘semi-fascist coup’ issue with similar dedication as we applied ourselves to supporting the Vietnamese liberation struggle, the struggle against apartheid, etc. Being militantly active was part of the religious ritual, evidence of our ‘superiority’ – ie, we were making real sacrifices on demonstrations – and a substitute for critical thinking. I look back on it with regret and embarrassment but also think it a big pity as there were some astute minds zombified by that sect. Very few of them today take a progressive line on things like Iraq and globalisation.

Yes, there were people saying good things and the republication of the ‘Red Eureka’ material on this site shows that its analysis was pretty good and stands up well to this day.

On Whitlam, it interests me that the reforms that are applauded and held up by his supporters generally do not include those that were most significant. Sometimes, the claims made for him are not even accurate. I have written a few times over the years to the ABC to get them to correct the oft-quoted claim that Whitlam withdrew Australian troops from Vietnam. This is a nonsense, as the ground troops were withdrawn by Gorton by Christmas 1971 – a tribute to the effectiveness of the Vietnamese struggle and that of its Australian supporters, and also indicative of Australian governmental subservience to US policy changes. There was only a small Australian military group left in South Vietnam in 1972). Even the claim that Whitlam abolished conscription is wrong – he merely suspended the National Service Act by regulation (which was a good thing, as it freed the few remaining imprisoned draft resisters). (It was rescinded many years later).

The recognition of China would have happened anyway – my old friend Joe Forace, late lamented, was Malta’s High Commisisoner to Australia and Ambassador to China and was the go-between for Liberal Prime Minister McMahon with Chou En Lai. The McMahon Government did much groundwork – Joe used to say that Whitlam merely signed on the line.

Similarly the White Australia Policy had been gradually ‘liberalised’ allowing for categories of Asians to settle here permanently. McMahon would also have done what Whitlam did in abolishing al racial criteria – maybe he would have been slower. Who knows?

Even the multicultural thing is not entirely a Whitlam era acheivement. Grants had been given to migrant/ethnic community organisations prior to Whitlam. Fraser did much more than Whitlam to institutionalise multiculturalism.

The most significant Whitlam reform – the one that his fans seem to want to ignore – was his government’s reversal of nearly 75 years of national protectionist policy. Whitlam was nearly roasted alive by the reactionary unions when he slashed tariffs by 25 percent. And his government was the first to tell the rural sector that they had to get real and could no longer expect to be propped up by government funding regardless of competitiveness. Remember the good ole days when margarine was controversial and the Country Party was warning everyone that it was produced by soap manufacturers?

So, in sum, I think Whitlam’s acheivements tend to be overblown and his real ones overlooked.

The Australian people voted against him, in an election that had to happen because of the nature of the writs creating the dismissal. Lots of former revoultionary leftists joined the ALP at the time, which probably made more sense than remaining in the CPA(ML).

Barry

Solutions: Part 6 of ‘Unemployment and Revolution’ by Albert Langer, 1981

Part 6: Solutions

Considers various “solutions” from the labour movements, in the light of the earlier analysis, and rejects them all, but cheerfully, in view of the next instalment, part 7.

– “Giving Fraser the Razor”

– Blowing Up the Balloon

– Fine Tuning

– Political Facts

– Shorter Hours and Higher Pay

– Expanding the Public Sector

– Workers’ Co-operatives

– Labor to Power with Socialist Policies?

– Economic Consequences of Statism

– Protectionism

– “Militant Struggle”

– Revolutionary Optimism

6. SOLUTIONS

The collection of previous instalments on the nature of unemployment is important because it suggests what could and what could not be solutions to the problem.

It follows from the above analysis that the unemployed form an essential “reserve army of labour” as necessary to ensure a continuous supply as the existence of stockpiles of commodities in the warehouses or unused production capacity in the plants. The size of this reserve army does not depend primarily on government policy, but on the objective state of the economy and the phase of the business cycle that it is in.

Australia is part of an interlocked world capitalist market where capital flows freely according to the rate of profit, and where movements in interest rates, prices, wages, and unemployment therefore take place in parallel among all the advanced western capitalist countries together. It would obviously be nonsense to blame the overall state of the Australian economy on the particular policies of any government here, since the same situation exists throughout the western world.

The conservatives are right to say Australia has to adapt to changes in the world economy or the situation will get worse. They are also partly right to say that to stimulate investment and reduce unemployment profits must be improved at the expense of real wages and living standards. But they are wrong to pretend that there will be much improvement without a major economic crisis.

Unemployment has grown because overproduction and insufficient expansion of markets has reduced profit margins and therefore reduced investment. Any “solution”must therefore involve expanding markets to increase profitability. That is the crucial fact which emerges from studying the causes of unemployment.

A lot of people in the labour movement do not like admitting this and instead come up with all kinds of fancy arguments suggesting that capitalism is really a wonderful system capable of continuously improving living standards and providing jobs for all – if only the government would follow correct economic policies.

Those arguments are very mysterious and technical, involving “multipliers”, “accelerators” and various tricks with mirrors. But you only have to look around at the real world to see they are bullshit. For what possible reason would the capitalists be ignoring this wonderful advice on how to keep their system going, if it could really work?

The conservatives are openly admitting that capitalism is a rotten system which needs to grind people down in order to keep going. They are admitting that full employment and rising living standards are not permanently compatible with the capitalist system, which has its own requirements contradictory to social needs. They are actually admitting that production for profit is the cause of our problems.

On that point every socialist, revolutionary or not, must surely agree with the conservatives. Only the wettest “liberals” could join the Labor Party in insisting that there is really nothing wrong with the capitalist system itself – the problem is that wrong economic policies are being followed.

Socialists will not disagree with conservatives about the existence of statistical facts, like the decreased share of profits in the GNP, “real wage overhang” and so on. We will not join the Labor Party in arguing that it can all be fixed by magic tricks with mirrors.

Where we do disagree with conservatives is about whether capitalism is such a wonderful system that we should put up with unemployment and reduced living standards just in order to keep it going a bit longer.

Where revolutionary communists will disagree with other “socialists” is whether capitalism is just getting worse in a gradual way that would make it possible to introduce socialism peacefully, or whether it is heading for major upheavals which make a violent break between the old system and the new, both necessary and possible.

Now let us consider some of the various “solutions” that have been proposed for unemployment according to the simple criteria – “will this proposal increase profitability”. If it will not, then we know from the analysis above, that it will not work.

Giving Fraser the Razor

Attempting to blame each other for the state of the economy happens to be one of the daily preoccupations of Government and Opposition politicians, and unfortunately the left generally goes along with this charade.

Conventional wisdom has it that government job creation schemes, more stimulation of the economy through deficit spending, and various specific adjustments in economic policy could improve the situation. Only Fraser’s “razor gang” mentality prevents these solutions being adopted.

In Britain the state of the economy is being blamed on the Thatcher Government, by business as well as labour. But tightfisted “monetarist” governments have come to power in Australia, Britain and the USA as a result of the previous failure of their opponents to improve the state of the economy. They may conceivably make things worse. But their predecessors have not done too brilliantly either. It will be interesting to see what happens in France. Does anybody on the left seriously imagine that France will now escape the economic difficulties embracing the rest of the capitalist world, because it has a more ‘progressive’ government?

At the first Australian Political Economy Movement conference in Sydney, there were a number of papers purporting to explain unemployment and economic crisis as an inherent feature of capitalism. None of them even suggested that the personal malevolence of Malcolm Fraser was a cause of the problem – let alone the cause.

Nevertheless, the conference plenary session adopted a resolution loudly denouncing the Fraser Government for causing our economic difficulties with its wrong policies!

If that is the response of people at a political economy conference, it is not surprising that the left generally completely capitulates to Labor Party views about the economy. The general feeling is that somehow or other, it must be Malcolm Fraser’s fault, even though unemployment actually grew much more rapidly under Whitlam than it has under Fraser.

Even people who know better tend to go along with this because there does not seem to be much else to do. Demonstrations and agitation have to have a target, and Malcolm Fraser, with his callous attitudes, makes a good one.

If we cannot blame government policy, what can we do? It is in the Labor Party’s interest to pretend that Fraser’s policies are the cause of unemployment. But the only way Labor could do better than Fraser at reducing unemployment would be if they know how to make industry more profitable. There is no evidence that they do, and no reason to doubt that Fraser is doing as much to increase profitability as he possibly can.

Certainly we should give Fraser the razor, along with Bill Hayden, Bob Hawke and the rest. It will improve public morale no end. But it will not bring down unemployment. Only improved profitability and expanded markets can do that.

Blowing Up the Balloon

The main thrust of objections to the Fraser Government’s economic policies seems to be that they could do more to stimulate the economy by increases in government spending. They are accused of wilfully refusing to do so because of dogmatic adherence to “monetarist” theories, and general hostility towards the working class.

Actually this argument amounts to dogmatic adherence to Keynesian theories that have long been discredited by the course of events. All the governments of the western world have been stimulating their economies by increases in government spending, and it simply is not working any more. Keynesian economic policies now amount to little more than attempting to prolong the “boom” phase of the capitalist business cycle by deliberately encouraging the overextension of credit to finance overproduction and overinvestment.

Credit expansion has deferred the crisis, and intensified the most prolonged boom in history. But only at the expense of deepening the structural imbalances that the crisis is needed to resolve, and therefore making the crisis far more intractable when it does come. There comes a point when it just does not work any more. If it still worked, they would still be doing it.

When asked what would happen in the long run, Keynes replied that in the long run, we are all dead. Glib claims that more deficit financing to stimulate the economy are the answer, are simply an assertion of faith, flying in the face of all recent experience. The conservative Ford Administration in the USA ran a breathtaking $60 billion deficit, and it has not done any more than postpone the problems.

Attempting to stimulate the economy by more government spending has been compared to trying to stop a balloon collapsing by blowing into it harder. At a certain point when a balloon is being inflated, the fabric tears and air starts rushing out the hole. You can keep the balloon’s shape for a little while by blowing harder, but the air keeps rushing out and the hole gets larger. Eventually the balloon has to collapse and the only thing to do is to let it go and patch the hole before re-inflating it again – if the hole has not got too big to patch while you were uselessly blowing air through it.

If government spending is paid for by taxation, then it is just a transfer of resources from one sector of the economy to another, with no necessary increase in employment, although the projects may be well worthwhile for other reasons. If the money is borrowed on the open market, then it drives up interest rates and diverts funds from other investments. If it is effectively “borrowed” from the Reserve Bank, then credit inflation can be the only result. The trick can not be done by mirrors.

“New Deal” policies did help speed up recovery from the last depression. But mainly by helping to keep prices up in those industries where they had collapsed more than necessary due to insufficient monopoly concentration. The “New Deal” stopped dumping, put a final end to “laissez-faire” and thoroughly established the system of state monopoly capitalism. But today nearly all industry is pretty well monopolised. Even the farmers have strong cartels, and with rampant inflation, dumping can hardly be an immediate problem.

Really it has been a remarkable performance since the last depression. Despite predictions of capitalist stagnation since the end of the fifteenth century, and with a social system straight out of the sixteenth century, the bourgeoisie has managed to sustain economic growth for another fifty years at a pretty fair pace.

While pathetic by future standards, the rate of economic growth has been sufficient for conservatives and reactionaries (including most of the “left”) to actually complain and want to slow it down. What more can state capitalist policies be expected to achieve? Permanent survival of capitalism?

Fine Tuning

When people say that government policy is responsible for unemployment being more than it should be, they usually argue that there should be a certain increase or decrease in interest rates, the exchange rate, taxes, deficits or what have you.

Perhaps there should be. Who knows and who cares? The argument always revolve around the fact that any effect in one direction is counteracted by other effects in the opposite direction.

Quite clearly there is some underlying movement in the economy itself that makes the adjustments in government policy necessary. People argue about whether interest rates should be marginally increased or decreased, but they have gone up from 2.1% on two year government securities in 1950 to 10.8% in 1974 on their own volition and for objective reasons. Nobody seriously suggests that any government policy could successfully halve today’s interest rates, let alone restore them to their 1950 levels.

Adroit handling or misguided policies could make a good situation better, or a bad situation worse, or vice versa. But in a market economy it is the market, not government policy, that determines the overall situation. And we are talking about a world market, completely outside the control of any group of governments, let alone the Australian Government.

A government that raises interest rates when it should be lowering them, or vice versa, can certainly make things worse. The same goes for other economic variables that government policy can influence.

But the best a government can do is get its economic policy absolutely right, all the time. In that case they will avoid precipitating any crisis before it is unavoidable, which is not quite the same thing as having “control”. No amount of “fine tuning” can determine the overall direction that the world economy is moving. Nor can it change the fact that interest rates and other variables must be adjusted in accordance with that movement and not against it.

“Fine tuning” has been likened to trying to straighten a piece of string by pushing it. The sort of “controls” available to governments are just not capable of determining economic developments. If you want to straighten a string you need to be able to pull both ends, not just push. If you want to control unemployment, you have to have complete central planning of investment and employment and indeed, production and consumption generally. The economy needs a new engine and new steering, not just “fine tuning”.

There is a branch of mathematics called “control theory” which investigates what observations one needs to be able to make, and what variables one needs to have control of, to determine the future path of a complex dynamic system.

Economists have a “simpler” procedure which consists of counting the number of “variables” and “policy instruments” and hoping they are equal. To predict the future course of the economy they do a lot of plotting straight lines through two points.

The fact is that even very simple dynamic systems are extremely difficult to observe and predict, let alone “control”. It is sheer stupidity to imagine that anything so complex as a modern market economy can be effectively controlled by anything so simple as government monetary and financial policies superimposed on market price movements.

A system like this is bound to have oscillatory movements and catastrophes. It is like trying to damp out ripples in a pond by making counter ripples. You will get pretty interference patterns, but nothing very stable.

Before you can control any dynamic system you have to at least be able to predict what the effect of any changes you make will be. If anyone knew how to predict that, for the world market, they would not be wasting their time giving economic advice to governments. Literally billions of dollars could be made by speculation on the commodity and financial futures markets if anyone knew how to predict what the world market would do next, let alone control it. The funds you could accumulate from speculation would give you far more control over subsequent market movements than any amount of government policy.

There seems to be no obvious reason why anybody on the left should want to enter into the argument about whose policies for fine tuning the economy would work better. But if we are to do so, there seems no compelling reason to enter on the Labor Party side of that debate.

There is good evidence that the conservative parties are better at that kind of thing than the Labor Party is, because they have more idea of what it is all about. At least they understand that the name of the game is “profits” and are therefore trying to make the capitalist economy work the only way it can. Labor Governments do end up adapting themselves to economic reality, and working as hard as they can to boost business profits. But it does not seem to come naturally, and we have to put up with an awful lot of hypocritical mumbo-jumbo about the workers’ interests, before they get on with it.

Labor Party supporters make persistent efforts to prove that the other party’s economic policies are stupidly wrong. This proves only one thing. It proves that these people, even if allegedly “Marxist”, have a very deep faith that capitalism can be made to work much better, and that their party is the one to do it.

Political Facts

Most voters understand how capitalism works, better than the Labor Party does, and they are aware that conservative parties know more about economic management than reformist parties do. That is one major reason so many workers vote for the party that frankly upholds the interests of their bosses. If people did not accept the basic idea of having bosses, they would be working for a revolution, not voting Labor.

Labor supporters seem to have a mental block about it, but Fraser is Prime Minister because he won by a landslide, not because John Kerr put him there.

People voted for Fraser because the economy deteriorated much more sharply under Whitlam than it did under McMahon. One statistic tells the story.

Unemployment rose by more than 100 for every day Fraser was in office, according to Bill Hayden speaking at the last Federal elections. It did, but unemployment rose by 150 for every day Labor was in office.

Another fact confirms that part of the reason for this sharp deterioration was Labor’s policies and not just objective conditions. The fact that Labor has abandoned nearly all the economic policies advocated by Whitlam and adopted those advocated by Fraser.

Bill Hayden fought the last election on policies to cut taxes and put money back in people’s pockets, reduce government spending, impose wage restraint and so on – exactly the policies that Fraser won with. It is hardly surprising that most voters preferred to let Fraser implement those policies himself, even though he obviously has not been doing much good with them either.

In government, Labor even had a policy of discouraging foreign investment – in a completely open economy largely dominated by foreign capital. When that policy actually started to work, and foreign capital dried up, Labor supporters complained about a conspiratorial “strike by capital” that was aimed at bringing down their Government. How contradictory and inane can one get?

That is a good illustration of how bad government handling can make a bad situation worse. But Labor supporters are well aware than even if the Whitlam Government had handled economic policy perfectly, instead of stuffing it up, unemployment would still have grown dramatically because of the general state of the world economy. Why should we not admit the same about Fraser?

Public opinion turned against the Labor Party because of the mess it was making, and also the mess it was not making but was blamed for anyway. The media mobilisation of that public opinion was carried out by the same newspapers that brought Labor to power in 1972 with viciously personal attacks on McMahon, and “It’s Time” as the front page headline. In 1972 McMahon was blamed for unemployment too. It was not his fault, was it?

To gain control of the Senate, which he had never tried to abolish, Whitlam resorted to open bribery of an opposition member, Senator Vince Gair, in the tradition of banana republics and dictatorships everywhere. When the Parliamentary opposition tried for force the Labor Government to elections by cutting off supply, that Government tried to rule without the consent of Parliament or the people.

Rather than face a democratic election, Whitlam was even prepared to ask the Queen of England to intervene in Australian politics; to sack an Australian constitutional official appointed by Whitlam himself, and allow Whitlam to rule by decree.

If a conservative government had done any of those things, Labor supporters would rightly have been outraged. But Labor supporters prefer to forget about the economic incompetence that cost them their chance in government. They prefer to distract attention from their undemocratic manoeuvres by a loud-mouthed phony republicanism – as though Kerr had caused the constitutional crisis by insisting on elections, rather than Whitlam by refusing to hold them.

Labor supporters adopt the classic conservative and reactionary argument, that an unpopular government should be given a guaranteed period in office so that voters can not throw it out before they find out what was really good for them after all.

After the Kerr business a lot of people suddenly realised what they ought to have known before. That Parliamentary forms do not mean very much and the conservative parties will use every dirty trick to stay in power. It ought to have also taught another lesson – that the Labor Party shares the same basic philosophy.

Neither party is so committed to Parliamentary government that it would fight against Parliament being replaced by military rule in the face of a genuinely revolutionary opposition.

It is sickening how people on the left pretend the economy is crook because of Fraser, when they know perfectly well it is an international problem. We should stop supporting Labor Party lies and start telling the truth about how the capitalist system really works.

Of course we need a target to fight. But if we do not know what that target is, then we had better take time off to find out, instead of just whingeing impotently about Fraser.

Shorter Hours and Higher Pay

Campaigns for a shorter working week and higher real wages have been put forward as a solution to unemployment. The argument is that higher wages will allow workers to buy more goods and so force employers to hire more workers. Likewise shorter hours will require more workers even to produce the same amount as now.

Of course we should fight for shorter hours and higher pay. That will become more difficult as unemployment increases. But it is still possible to win victories, even when there is mass unemployment, for reasons explained earlier. But the effect will be to reduce profits further, not increase them. So it cannot be a solution for unemployment.

In a communist society, any accidental “unemployment” could certainly be eliminated by reducing the amount of work done more rapidly than had been planned. Alternatively, people could work the same hours, but the extra workers could produce more goods so that everyone’s standard of living would rise. But that is because workers would not be “employed”. They would not be used by the owners of means of production to make a profit. They would be the “employers”, using the means of production to satisfy their own social needs.

In a capitalist society production is carried out for profit, not needs. General Motors can certainly be compelled, under some circumstances, to pay its workers more, or let them work shorter hours. But they are in the business of making money, not just making cars. If they can not make more money they are not going to hire more workers just so the workers can buy more cars.

There is no such thing as “overproduction” in the abstract. Whatever Friends of the Earth might say, it is not as though we have too many consumer goods or houses or schools or anything else. Nor have we too many means for producing them. Living standards are abysmally low is most of the world, and nothing to write to another planet about here in Australia. It is just that too much has been produced to be sold at a profit, and that is not a problem you can solve by reducing profits further.

Expanding the Public Sector

Calls to expand the public sector, are becoming more common, (especially from public sector unions!). This is partly just a reaction to government policies aimed at expanding the private sector at the expense of the public sector. But there is also some suggestion that in itself, expanding the public sector would create more jobs and reduce unemployment.

Government job creation schemes either have to be paid for by the rest of the economy, in which case they provide no net investment, or else they have to pay for themselves. In that case they have to sell their products on the market that is already suffering from overproduction and overinvestment. As far as employment is concerned, there is no difference in principle between expanding either the public or the private sector. The problem is that both are contracting, because they both face a lack of markets. Why should one be able to find markets when the other cannot?

In fact, of course, the public sector has expanded quite dramatically and will no doubt continue to do so. There are lots of things capitalist state enterprises can do better than capitalist private enterprises. But this has not prevented unemployment from growing and there is no reason to expect that it will. In Britain for example, some of the biggest layoffs have been in nationalised industries like British Leyland and the British Steel Corporation.

Whether a firm is publicly or privately owned, in a market economy its ability to provide jobs will still depend on its profitability and that will depend on selling its goods on the market. When there is overproduction it affects government owned enterprises exactly the same way as private ones.

It sounds plausible for Australian car workers to demand that the car industry be nationalised to safeguard their jobs. But how has that helped British car workers? What are railway workers supposed to do when their jobs are threatened? Demand that the railways be nationalised? In Britain some coal miners have actually been demanding that their industry be sold to private enterprise because the government is unable to invest funds in keeping their jobs.

Nationalisation is probably a good thing for all sorts of reasons, but reducing unemployment is not one of them. One need only look at Poland or Yugoslavia to realise that even economies completely dominated by the public sector, can have pretty much the same kinds of economic problems as the “mixed economies” of the west. The economic laws applicable to market economies apply whether the capitalise enterprises are owned by shareholders, bondholders, or the state.

Workers’ Co-operatives

There have been some instances of bankrupt firms being taken over by their workers to preserve their own jobs. The Clydeside shipyards, Lipp watch factory and Lucas Aerospace are well known examples. There is also a traditional “co-operative movement” associated with the labour movement, and a movement for workers control and/or “self-management’. Capitalists themselves are also trying to incorporate workers’ representatives in management functions, with extensive legislation for this purpose in West Germany and some other West European countries, and in Yugoslavia and China.

To some extent, workers’ co-ops can positively represent the new form of social production emerging within the old. Just as the emergence of huge transnational corporations and nationalised industries points towards the socialisation of industry, but more antagonistically.

If workers’ demonstrate that they can manage industry better than capitalists, that is certainly worth demonstrating, to pave the way for getting rid of capitalism in future. It may even save specific jobs in specific cases. But so, for that matter, could any other improvement in the management of an ailing firm.

Obviously improvements in the competitive position of a specific firm cannot reduce, but only displace, the unemployment resulting from overproduction in the economy as a whole. Other workers’ in the same industry will lose their jobs as a result of competition from the firm whose management has improved. This may encourage further takeovers, and be well worthwhile, but there is no need to pretend it will reduce unemployment.

Bankrupt industries may not be the best placed to attempt demonstrations of the superiority of workers’ management. If the prospects for a firm are so poor that its owners are prepared to let the workers’ have it, then they must be very poor indeed. The workers will quickly find themselves facing the same problems of finding a market for their products, that the previous management was unable to face.

The workers’ may do better, since they will show more initiative and will know how to increase productivity and so on. But they may also find themselves accepting worse conditions than they would put up with from their former bosses. (Many self-employed people do put up with longer hours etc – the compensation of not having bosses being well worth it). In the end they may find that they too are forced to carry out layoffs.

If we want practice at running industry ourselves, why not start by taking over some really profitable ones, instead of lame ducks? Presumably we cannot because the state power would be used to prevent us. So it comes back to a question of overthrowing the state. I

In itself a co-op need not be anything especially progressive. For example, the ultra-reactionary health funds in Australia are supposed to be owned by their contributors. So are some insurance companies and agricultural marketing organisations. Within a market economy a genuine workers’ co-op is certainly a more progressive form of organisation than the traditional structures, but it still only amounts to the workers collectively being “their own boss”. It does not abolish the status of workers as “employees” of “their” firm, who are “employed” (used, exploited) by it.

In Yugoslavia the entire economy consists of enterprises nominally under workers’ control, but exchanging products with each other, and allocating investments, through the market as in any other market economy. Yugoslavia has one of the highest unemployment rates in Europe, as well as a very high rate of economic emigration.

If all the firms in an entire capitalist economy went bankrupt and were taken over by their workers, to sell each other goods on the market, they would all remain bankrupt. When the working class does take over industry, it will do so collectively as a class, and abolish the market economy, not ” be their own bosses” within it.

To abolish unemployment, we need to abolish the market economy. Any measures that train workers in economic management are beneficial to that, but none can solve the problems of a market economy without actually abolishing it.

We should support workers who take over their bankrupt firms, just as we should support workers fighting for shorter hours or higher pay, or unemployed youths looting shops, but we need not pretend that any of these activities will reduce unemployment.

Labor to Power with Socialist Policies?

Perhaps a Labor Government with more radical policies could solve the problem? Instead of capitulating to business pressure, they could really hit hard with resources taxes, nationalisation, and a siege economy protected from overseas influence. By taking control of the commanding heights of the economy, they could force industry to provide employment whether it is profitable or not.

This sort of program has gained some support in the British Labor Party. Presumably it could become popular here too, although events in Britain may pre-empt that. The “left” program has won some support from traditional Labor Party activists, because of the obvious bankruptcy of previous policies. But it has also been imposed on the British Labor Party by fairly manipulative means, by people who know they cannot get as much support for their program by going to the working class directly, as they hope to get by working through the Labor Party. It is not a socialist approach, let alone a revolutionary one, because it is based on making social changes from above, without the support and against the wishes of the only people who can really change society – the masses themselves. If it could succeed, the result would be a more bureaucratic and less democratic society – a corporate state, not socialism.

There is an ideological convergence between the interest of the bureaucratic bourgeoisie in state owned industries, trade union bureaucrats, state employed intellectuals and so on, in promoting this “statism” as “socialism”. A more fascist face of a similar basic ideology can be seen in Eastern Europe and in the French Communist Party. The techniques of demagogy and manipulation also have a lot in common.

A feature of this approach, is an identification between “socialism” and “government controls”. The solution to practically any problem is supposed to be a government regulation compelling private industry to act more in accord with the public interest. That identification is promoted heavily by ideologists of the right, like Milton Friedman, who exploit resentments against “big government” and bureaucratic regulations”.

In fact government regulations are required in a market economy because of the inherent antagonism between the interests of each separate producer, to maximise their own profit, and the public interest in things like a better environment, safe working conditions, better products and so on. The regulations are effective by making it more profitable for firms to modify their behaviour in the public interest, than to go on ignoring the public interest. The same effect is achieved by various selective taxes, allowances and so on. Where regulations cannot overcome the limitations of production for the market, the bourgeois state itself will step in and provide a “public service” – such as roads, broadcasting, education and so on.

There is always a need for more regulations, because the bourgeois state is unwilling to interfere with the private interests of various sections of the bourgeoisie as much as it should. So naturally, progressives often find themselves involved in campaigns for more government regulation to restrict some particular abuse or other. Likewise there is always a need for more “public services” because the bourgeois state is always reluctant to assume responsibility for an activity that might have been carried out by some particular section of the bourgeoisie. So we find ourselves involved in campaigns for more public services.

In these campaigns, the interests of sections of the bourgeoisie tied to state capitalism, often coincide with those of the working class. This is nothing new – a lot of social progress within capitalism has depended on one section or another of the ruling class breaking ranks from the others. But we should not delude ourselves that the bureaucrat bourgeoisie and their trade union hangers-on are in any way “socialist”.

The statist approach can never turn private production for profit into its opposite – social production for use. Regulations are symptoms of the basic antagonism persisting, while the elimination of unemployment and economic crisis requires a removal of that underlying antagonism. We need to abolish private production, not just provide more public services.

A socialist economy would actually require less regulations and controls than a market economy. Even the “public sector”, and as such enterprises became genuinely “public” they would cease to be separate enterprises having separate interests from the “public” at all. You do not make regulations governing your own conduct at home, so why should you do so at work?

The result of the “left” influence on the British Labor Party has of course already been a sizeable swing of Labor support to the new Social Democratic Party, even though the Labor Party has not yet fundamentally broken with its traditional “labourism”. This will presumably produce a Labor Party and trade union backlash against the “left” program that is alien to the traditional outlook of Labor Party supporters. Alternatively, the present two party structure in Britain may be replaced with a new one, leaving the “entrists” once again out in the cold, and the traditional Labor supporters once again bankrupt. You cannot change people’s political consciousness by stacking their party meetings, and most workers prefer their present bosses to the proposed new ones.

Economic Consequences of Statism

Let us leave aside the political aspect and look at the economic consequences of a statist program being implemented. Remember, we are not talking about a popular revolution in which the working class takes command of society and re-organises it. If that was the aim, the method would not be through the Labor Party. We are talking about policies to be implemented by a parliamentary government, with the existing state machine still in place, and with the working class still tied to its traditional organisations. Viewed in that light, we have an excellent recipe for a Chile style disaster.

Every measure proposed is designed to transfer economic power from private industry to a government hostile to private industry, without actually expropriating private property. The present owners and managers of industry are to be directed to carry out economic policies hostile to their own interests. But why on earth should they comply?

In themselves, the measure proposed as an “alternative economic strategy” could only reduce profitability and jam up the economy completely. Not capitulating to business pressure must mean reducing profits and therefore reducing private investment and job creation. “Controlling” foreign investment must mean less foreign investment and so less jobs.

Legal nationalisation would just mean saddling the government with a lot of businesses that were already in trouble, plus additional debts to pay off their owners. If capitalism survives the coming crisis it will certainly be with a great deal more nationalisation and state capitalism, but that would be part of the emergency re-structuring after the crisis, not a means of preventing it.

Perhaps the aim of crippling business profitability would not be legal nationalisation, but to force capitalists to hand over their enterprises to the government without compensation. A roundabout sort of expropriation. But if the aim is expropriation, this is a rather odd way to go about it. Expropriation means confiscating the property, worth thousands of millions of dollars, of the class that has up till now ruled society. That class has shown a definite tendency towards hysteria when its property rights are even mildly infringed upon, let alone denied entirely. What on earth is the point of leaving them in charge of industry while you are expropriating them? If they are not kept under lock and key, surely they should not actually be the people asked to implement government directives against their basic interests?

What else could they do except sabotage things in every possible way, and ensure the government is blamed for the economy being in a far worse state than it was before? In war, when one army defeats another, the first thing it does is confiscate the losing side’s weapons. It does not put them in charge of guarding the armories and performing sentry duty. The bourgeoisie’s weapons are its control over industry (not to mention its military weapons).

If our aim is to confiscate the property of the ruling class, then we need our own state and our own army to establish that state. Trying to do it through cabinet ministers in their state, surrounded by their officials and their armed forces, seems rather odd. It sounds like just a complicated way of getting those ministers killed, and anyone silly enough to be associated with them, killed also.

Fortunately, the chances of a Labor Party with “left” policies gaining office seem quite remote. So we need not worry too much.

Protectionism

Unlike other “solutions” proposed from the labour movement, increased tariff protection could have an immediate positive impact on employment in Australia. By restricting other countries from access to Australian markets, the opportunities for employment creating investment in Australia are necessarily widened, at the expense of course, of jobs in other countries.

It is amazing how “leftists” put forward the most blatantly chauvinistic proposals for displacing unemployment from Australian to Asian workers, with pious references to opposing their low wages, exploitation by fascist regimes etc.

Apart from elementary class solidarity, the catch with protectionism is of course, that it cuts both ways. It is to the selfish advantage of any country to restrict its markets. But when all countries do it the result is a loss of markets for all.

While world trade is expanding, there is an increasing “cake” and different countries have been able to agree on how to divide it up. As the crisis intensifies pressures for protectionism will become stronger even though everybody knows the result will damage everyone. So will the pressure for trade wars, and real wars.

Protectionism is inevitable as world trade spirals downwards, but we have no interest in promoting it.

“Militant Struggle”

In their newspapers some political groups urge “militant struggle” as the workers answer to the “employer’s offensive”. It is not entirely clear what this means, if it means anything. But presumably it must be intended to suggest that layoffs and the like are not the result of blind market forces, but are some kind of conscious conspiracy by the capitalist class in order to weaken the working class. By fighting back hard enough, workers can force employers to abandon their “offensive” and restore full employment.

This is obvious nonsense, nor worth discussing. But it does raise the question of how much can be achieved by resistance to layoffs and cutbacks. The answer is, of course, that “if you don’t fight, you lose”. People have to fight or they get ground down, and you can win specific improvements by fighting.

But you cannot change the overall working of the system by this sort of fight. Since we are going to be forced into all kinds of defensive struggles, often losing ones, it is pretty important to be developing an offensive strategy that can win as well. Otherwise it gets rather demoralising. We need to be able to say what could be done about the economic situation as well as just resisting its consequences.

Instead of that, trade unions tend to just resist and lose, in a fairly hopeless sort of way, or even turn the battle against other sections of workers. Often, trade union responses to unemployment ignore the fact the employed and unemployed workers are both part of the same labour force, with common class interests. Trade unions often emphasis protecting the jobs of people who already have them, and especially those who have had them longest – at the expense of school leaves, housewives, part-timers, casual workers and others who need jobs, and perhaps need them more desperately than those protected by “seniority”.

Like demarcation disputes, these trade union efforts can be very “militant” without any positive result. Trade unions are basically conservative organisations concerned with selling their members’ labour power at the best price they can get. We should aim to unite the employed and unemployed workers rather than just protecting the separate interests of employed workers from unemployed ones.

Militant struggles against redundancies, factory occupations and so on, can also suffer this problem to a certain extent. Even if they can actually save the particular job at stake, which is unusual, they can not reduce the size of the pool of unemployed and can only displace unemployment from one group of workers to others, often within the same industry, or even the same firm.

Employers may conceivably be forced to keep a particular factory open, although that is often just as hard as finding new jobs. But it is pretty difficult to change the fact that the total amount of labour required in an industry has declined. The question will be whether a particular factory gets closed down or other factories stop taking on school leavers to replace retirements. Either way, unemployment will grow, but it will affect different groups of workers directly.

The same applies to struggles against “the cuts”. The plain fact is that the government is forced to cut its expenditure because it just has not the resources to sustain it. There is no conspiracy. Nevertheless, what gets cut where, and how much of the brunt is suffered by who, will be influenced by class struggle. So it is worth fighting back. As long as the fight is not just suggesting that some other, more vulnerable section of the working class should cop the lot.

Just saying “cut defence” sounds like an easy way out. But the whole defence budget would not make all that much difference, and it avoids some hard questions about how to deal with Soviet aggression. In practice, if the budget cannot be increased, struggles against the cuts will, whatever people might say and want, just divert cuts from health to education, or education to welfare, or welfare to health.

If we want to not only oppose any cuts at all, but also demand improvements in welfare and public services, we need to have definite proposals about how this can be achieved. We should certainly support militant defensive struggles. But they cannot be put forward as a general answer to unemployment and economic decline.

Revolutionary Optimism

This whole paper so far may sounds rather pessimistic and deterministic. It seems unemployment is inevitable and there is nothing that can be done. But that is only true if your perspective for “something” is for some reform within the capitalist system. Things are grim for reformism, but not for revolution.

Recognising the inevitability of certain laws under capitalism is not deterministic. It implies that the way out is to abolish capitalism. Revolution is a voluntaristic act that must be carried out consciously. The next section, to be published later, (editor’s note: this refers to part 7) discusses revolution. It suggests how the economic situation could be resolved by revolution and suggests that revolution is a perfectly matter of fact “solution” that makes far more sense than the others that have been put forward.

(Next instalment: Revolution, drafted in 1982)