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The primitive country?

By Marko Beljac - posted Friday, 23 September 2011


In Russia they call this "primitivisation." It is a term that has more than a ring of truth to it.

The previous approach to industry policy in Australia, the golden age of manufacturing in this country, was when manufacturing industry was promoted and protected by a developmental state. This formed a crucial part of a much wider social contract between capital and labour that helped to define the traditional Australian way of life.

That contract made Australia the best country in the world to live in.

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Australia has been progressively deindustrialised not necessarily because of free trade, but because big business had decided to break Australia's social contract in the 1970s.

One can see the consequences of this break across the entire policy spectrum. Consider migration and multiculturalism. The first wave of post war migration occurred because business needed the extra labour and the social contract, which included centralised wage fixation and arbitration, ensured that the migrants did not function as a "reserve army of labour."

The social contract has since been dismantled, but the migrants keep coming, and under the "big Australia" policy heavily promoted by big business, will continue to come. The revolt against multiculturalism, that has so confounded a Labor Party dedicated to breaking the social contract in the interests of corporations, follows on from this.

The current Australian economic model is not sustainable and is fraught with risks. To appreciate this it would be helpful to briefly survey the situation in America.

In the United States private debt has skyrocketed given that, for non-supervisory workers, real wages have largely stagnated since the 1970s. The mountain of private debt that has thereby progressively grown played a key causal role in the onset of the current global economic crisis. That is to say, economic inequality, the effect and purpose of economic rationality, has greatly contributed to the global economic crisis.

In Australia the two big winners in the past 35 years have been the financial sector and the resources sector. So much so that the profit levels of these two sectors of corporate Australia are regular news items on prime time TV.

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The big banks are making massive profits because consumers are laden with debt. On the old model most workers were on high real wages; the boy from Bankstown would regularly lament that wages took up too much of the economy during the golden age of Australian manufacturing. These high manufacturing wages drove our standard of living.

To be sure, workers in the resources sector, of which there aren't as many as commonly supposed, and other areas that exhibit a skills shortage, are on high wages. But the concept that Australia's workers are all "cashed up bogans" is really an urban myth. It would be better to label them "debt laden bogans."

A heavy reliance upon debt, which suits the banks just fine, is not a sustainable way to maintain an economic growth model. Better would be an economy that exhibits a higher share of income toward the wages end of the wages-profits share as we had previously. But, that requires a renewed social contract between capital and labour.

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About the Author

Mark Beljac teaches at Swinburne University of Technology, is a board member of the New International Bookshop, and is involved with the Industrial Workers of the World, National Tertiary Education Union, National Union of Workers (community) and Friends of the Earth.

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