The victors behind Brendan Grylls loss of the seat of Pilbara are the same mining corporations who campaigned against Labor’s mining super profits tax. The miners targeted Grylls because of a tiny 25c a tonne tax rise to fund Royalties for Regions.
The labour movement needs to innoculate Australian workers against capital’s “jobs” blackmail or we’re doomed.
Baby demands to be fed
though she can’t pay for mother’s milk
Mother supplies to keep baby content
No money changes hands
Without a price milk has no value
to capital, accumulating
Replace the milk from the breast
with pricey milk from a formula tin
Deliver value to hungry capital
Mother’s supply dries up
no longer stimulated by demand
Millions of people in the streets against Trump must win. Not necessarily, these street protests may be a necessary, but far from sufficient condition for beating Trump. Scott Walker smashed union rights in Wisconsin despite huge numbers of protestors, as Mike Gecan reminds us.
He says that the Trump administration has “studied the game films from Wisconsin in 2011, when Gov. Scott Walker declared war on organized labor, the Democratic Party and the moderate wing of his own Republican Party. Right after his election, Walker introduced Act 10, a bill that drove large holes in the defensive position of unions by severely limiting collective bargaining and eliminating the main fund-raising tool of the unions, fair share.”
“The unions and their supporters responded to this play by organizing massive demonstrations and sit-ins in the capitol in Madison. During the week of Feb. 14, attendance grew day by day, hitting 25,000 by Friday and more than 50,000 on the weekend. The next week, the daily average was 50,000, and the weekend attendance hit 100,000.
“On and on it went, with the opposition using massive demonstrations and a statehouse occupation to counter the offense run by Walker.”
“This reaction attracted national and international media, brought celebrities flooding into Madison, and generated scores of millions of dollars for the cause. The demonstrations took on a life of their own. Their leaders then called a second play — a recall of the governor, which attracted more than $75 million to just one progressive organization and untold millions to others.”
“Here was the problem. These defensive moves didn’t work. On March 9, the Wisconsin Legislature passed Act 10. And on June 14, the state’s Supreme Court ruled the law constitutional, after which the demonstrations and occupation evaporated.”
Gacen skirts over the governor recall tactic chosen by the Democrats, and Walker’s subsequent increased numbers in the legislature. The mobilisation in the streets became a campaign to elect Democrat Tom Barrett as governor, after union preferred candidate Kathleen Falk lost the primary.
Nonetheless, a huge number of protestors against Walker in Wisconsin was not by itself enough to stop him smashing the unions. So what direction for the masses assembled against Trump? How will they avoid a repeat of the Wisconsin defeat?
These things also matter – what demands do the protestors agree they are fighting for, how do they organise, what tactics and leverage will they use, how will they decide who gets to speak for them, and how will they decide when they are satisfied with any settlement or result.
Leverage against Trump will be critical, and it is employed labor that can bring a halt to Trump, by stopping work, and stopping doing Trump’s bidding.
One group of workers responded immediately, according to Peter Cole: “perhaps, the most dramatic and important action [on inauguration day] was taken by dockworkers in Oakland, California: They stopped working. Their strike demonstrated the potential power ordinary people have on the job, when organized. Longshore workers, who load and unload cargo ships, chose not to report to their hiring hall. As a result, “Oakland International Container Terminal, the largest container facility at the Northern California port, was shut down Friday,” according to the Journal of Commerce. It also reported that all other Oakland container terminals were essentially shut down, too.”
As Buzz Malone says in Jacobin magazine “It’s truly organize or die time, and that doesn’t mean simply signing up new members — it means moving all of them to action around their issues, not ours, because clearly, there must be a difference between the two that we have missed along the way.”
The recently late John Berger described The nature of mass demonstrations, and to paraphrase Berger, it could be said of the Trump protests that there is a danger that these demonstrations may in retrospect appear to have been merely public spectacles, if they do not become the property of a movement for revolutionary change.
“It would seem that the true function of demonstrations is not to convince the existing State authority to any significant degree. Such an aim is only a convenient rationalisation.
The truth is that mass demonstrations are rehearsals for revolution: not strategic or even tactical ones, but rehearsals of revolutionary awareness. The delay between the rehearsals and the real performance may be very long: their quality – the intensity of rehearsed awareness – may, on different occasions, vary considerably: but any demonstration which lacks this element of rehearsal is better described as an officially encouraged public spectacle.”
I like that this article reasserts the case for democracy, and identifies the failure to persuade citizens of a viable alternative as lying behind the Brexit vote (and presumably the Trump vote), not the idiocy of voters.
I also find a lot of sense in the explanation that limits are being reached in productivity increases, in economic growth and in the material limits of application of energy and use of natural resources.
The point I’m hoping to expand on though, is the excessive complexity of managing the damaging consequences and terms of class relations, and the complex market systems and regulations that attempt to find equilibrium and consent in a system that is fundamentally hugely unequal. We are told socialism is too difficult and inefficient but capitalist complexity is failing us.
You don’t have to be a socialist to pick the bull-dust and self-interest behind corporate tax cuts. The SMH and even US “bond czar Bill Gross” can see the danger in Trump’s proposed 15% corporate tax rate. But Malcolm Turnbull seizes the opening to peddle the line that cutting corporate tax rates is good for everyone, because lower taxes lead to more investment and “more investment makes workers more productive, it means greater demand for workers, it means more jobs and over time higher productivity [which] as we all know, everybody knows, is the foundation, the bedrock of higher wages.” He argued that if Australia’s corporate tax rate is higher than other countries, then capital will not invest in Australia.
I can only laugh and then feel angry to hear Turnbull argue that after 25 years of continuous growth in the Australian economy that “Australians will have to accept policies that create short-term ‘winners and losers’ [um, who could they be?] in the interests of strengthening the economy for all.” But “to overcome disquiet we [he’s talking to the Business Council of Australia] must ensure that the benefits of open markets deliver, and are seen to deliver for all Australians, not just a few.”
If growth is meant to create jobs and higher wages, and we’ve had 25 years of growth, then when are the benefits meant to arrive? In 2016 we have:
- 1.1 million part-time workers wanting more hours, i.e. 8.7% of workers
- wages growth at a record low of less than 1.9% a year
- prevalent insecure employment – only 48% of people in work or looking for work have full-time jobs with paid leave entitlements
- inequality increasing – the growing Gini coefficient is 0.446 compared to 0.417 in the mid 1990s (0 is perfect equality – 1 is total inequality)
- unemployed people driven into deeper poverty (graph from ACTU submission)
There’s no value (except to the Business Council of Australia) in allowing Turnbull to take Australia into the global race to the bottom for corporate tax rates. That must lead to further cuts in benefits, in public services and public sector jobs. So, after 25 years of economic growth we have such poor results for the majority. And it is inevitable that growth will end, leading to even worse employment and income conditions, and less tax revenue. If we need to wait for so much more growth before we get the jobs and higher wages, we are waiting for Godot.
So let’s raise, not lower, the corporate tax rate. And let’s not be blackmailed – a workers’ government would retaliate by taking fleeing capital’s property into public ownership for continued productive use. Alternatively, how about producing and sharing the goods and services we need without private capital investment at all?
This article suggests that the separation that most of us are shown, between politics and economics perhaps doesn’t apply for the ruling class. It just applies to the ruled class.
“Unemployment is not a mere accidental blemish in a private enterprise economy. On the contrary, it is part of the essential mechanism of the system, and has a definite function to fulfil. The first function of unemployment (which has always existed in open or disguised form) is that it maintains the authority of master over man. The master has normally been in a position to say: ‘If you do not want the job, there are plenty of others who do’. When the man can say: ‘If you do not want to employ me, there are plenty of others who will,’ the situation is radically altered’ From a Times (UK) editorial of 1943, during wartime debates over full employment in the UK, quoted by Victor Quirk on the Australian Unemployed Workers’ Union website.
“When Scottish farm labourers were fired it meant that the thatched roofs of their houses were burnt to make them unlivable. Sacking meant they were only allowed to take a sackful of belongings with them.”From Susan Stead via Sydney Morning Herald column 8, 2 Sept 2016.
PS Other sources say that being given the sack originally meant being given back your sack of tools to take away, i.e. go find another job. In the Scottish Highland clearances, thatched rooves were burned to force evictions but were not necessarily connected to “getting the sack” of tools or belongings. Perhaps being fired in Susan Stead’s story might refer to burning the roof of the house? But here’s an article that says being fired from a job may be more like a bullet being discharged or fired from a gun.
More on the labour market and unemployment from my Macroeconomics Theory course: “The natural rate of unemployment is the unemployment rate such that the actual inflation rate is equal to the expected inflation rate.” This idea has been guiding economic policy since the 1970s. Let’s unpack it.
The two main components of the prices that are subject to inflation, are the markup (m) on production costs in sale prices, and factors that increase the bargaining power of workers (quaintly called z in macroeconomic equations), such as unions, minimum wages, job security, unemployment benefits – all things that have been squeezed in recent decades.
So, looking at markup, the inflation rate and the unemployment rate are both products of the contest between capital and labour over the effective size of the markup, the markup being at the core of profits and capital accumulation.
Profits are capital’s way of retaining (or appropriating) output beyond that paid in wages for household consumption. Capitalists then choose what parts of the value of that retained extra output to allocate to further investment and accumulation, or to their own personal consumption and pet projects.
Wage and labour condition demands are an important way for labour to gain an increased share of that output, but that can only be at the expense of capital’s share. Capital controls the markup, and accordingly inflation, and contests labours’ demands for a larger share of output.
It’s good not to consume everything we produce all at once, it’s good to save or to work on things that may not provide a benefit for sometime, or will provide a benefit for a long time to come, eg infrastructure, productive capacity, environmental repair. But when the savings that can be put to these purposes are decided by and kept in the hands of private capital, they are outside the power of labouring-consuming citizens. We feel we can only squabble for our little share for immediate consumption, and not make decisions about the far more important portion of savings and investments which affect the future shape of our society and world.
We might battle over price markup, wages and employment, but we don’t get to consider the wise allocation of resources to longterm purposes. Instead, as labour we are the victims of an imposed unsatisfactory unwinnable choice. At the macro level the choice is between the wages and conditions of those who are employed versus the proportion of would be workers who are un or under-employed. At the individual and union level this choice makes for employees who are reluctant to challenge the employers’ share of output, and become trapped in a downward spiral of lower expectations of employment and decent labour conditions and reduced power to demand them.
Macroeconomists in the 1970s figured out the workings of the wage-price upwards spiral which capital wanted to end. The policy answer was to reduce the bargaining power of workers by maintaining a so-called ‘natural rate of unemployment’ and to curtail union power and labour benefits that diminished the threat and risk of unemployment. This could be called a working conditions and employment – union power downward spiral. When capital was committed to ending the wage – price spiral, they worked out what action to take against it.
Unions so far have not worked out a platform around which to mobilise working Australians to reverse the working conditions and employment – union power downward spiral. There’s no end in sight.
Why unions should campaign to increase Newstart
Why is the labour market apparently unable to allow all people to contribute useful labour to their potential, and be rewarded for it? Do we have to have unemployment?
I think that trade unionists, unemployed and equality activists need to understand better what conventional macroeconomics has to say about this, to know what we are really up against.
I am starting with Blanchard and Sheen Macroeconomics, Australasian Edition 4, and accompanying lectures in Macroeconomic Theory 5002 at Sydney University.
What I understand so far from the explanation of the labour market
The labour market is one of three markets, the others are goods (or goods and services) and financial markets. They form the system that produces the output measured in GDP. Macroeconomics attempts to identify “equilibrium” points in the various markets, to understand what central banks and governments can do to stimulate the market behaviour that will produce GDP growth.
Higher GDP is associated with lower unemployment.
The equilibrium position in the labour market is in the level of unemployment related to the level of real wages. It is not equilibrium between the participating labour force and the availability of work, i.e. it is not effectively no unemployment.
The higher the level of real wages the higher the rate of unemployment. I have heard this conventional wisdom expressed by employers as an argument against union campaigns for wage rises because “One person’s wage rise is another person’s job.”
Macroeconomics looks at this from another perspective – not to say that workers should forgo wage rises to save jobs for the unemployed, but to say that unemployment rates should not be allowed to fall too low, so that employers can stave off wage rises, and the damage they cause. A desirable minimum rate of unemployment is absolutely conventional macroeconomics. This rate of unemployment goes under many names including “natural”, “structural”, “equilibrium” and the “Non Accelerating Inflation Rate of Unemployment (NAIRU)”.
More than just wages are implicated as a cause of unemployment. There is a wage setting (WS) relation curve, which describes the relative bargaining power of workers and employers when setting wages, and the corresponding natural rate of unemployment. The price of producing the goods, plus a markup, determines the maximum wage that the employer wants to pay. A more minor factor in making an employer willing to pay a little more is the idea of the “efficiency wage”, that morale and productivity are improved by a higher wage.
Unemployment benefits, minimum wage levels, union activity, and other factors that place a floor under low wages are called the Z factor. These lift what is called the “reservation wage”, the level of pay at which workers are indifferent to whether they are unemployed or not. A higher Z factor, and lower unemployment both make it easier for workers to demand higher wages (which will then cause higher unemployment). The Award system (which prevailed until Australian unions permitted Paul Keating to replace it with enterprise bargaining) is credited by the textbook with having “empowered unions and encouraged their membership.” (p 128)
In a theoretical perfectly competitive labour market (with a zero Z factor), the price of labour could fall low enough that all available labour would be employed. But the Z factor allows potential workers to choose not to work. The lower the Z factor, the more readily employers have access to the amount of labour they want at the price they are willing to pay.
Understanding this macroeconomic theory is like reading a textbook for government policy. The plan to cut Newstart yet again, the intrusive work test, the increase in the retirement age, denying single mothers benefits earlier in the lives of their children – all these policies make the threat of unemployment harsher, and make it harder for unions to defend rights at work.
The labour market should not be a market.