By Max Lane
A general feature of the world economy during 1994 has been an upturn in production. With the exception of Japan, most of the imperialist countries have been achieving a growth rate of 3-5%, and some of the major Third World countries have been achieving growth rates of 4-8% or even higher.
Of course, massive sections of the Third world, namely some of the smaller countries of Asia and South America and virtually the whole of Africa, continue to suffer more-or-less permanent recession.
The upturn has been fuelled by a number of factors. Firstly, a lowering of wages for firms based in the capitalist heartland, the US, through the North American Free Trade Agreement. NAFTA has allowed increased access to cheap Mexican labour and has increased pressure on the cost of labour-power in the US.
A second factor has been the expansion in investment opportunities and markets provided by the opening up of the Chinese, Indian and major South American economies. In China alone, investments are now measured in billions of dollars.
However, these positive growth figures do not represent any fundamental shift of the international capitalist economy out of its long-term crisis.
The most pressing evidence of this is the escalation of trade war measures. In 1994 the major initiatives on this front have been presented as acts of international collaboration rather than competition — the signing of the General Agreement on Tariffs and Trade (GATT) and the moving forward of Asia Pacific Economic Cooperation (APEC).
However, in both cases what all countries are trying to do is break down trade barriers so as to open up more possibilities for competition between firms based in different trade blocs. All the imperialist powers are aware that the crucial thing is to be able to break into other powers' market share — it is not enough just to protect their own market.
In a period of business cycle upturn, these international negotiations can be given a positive gloss, but when recession returns again, the competitive side of the trade negotiations will be become more evident. (For some sectors in Australia, such as agribusiness, this competitive aspect is already very evident as the US continues to expand the range of products it subsidises.)
A boom?
Establishment commentators sometimes get carried away by a particularly good month's economic statistics and proclaim a "boom". We can be very doubtful about any boom being sustained for any significant period.
Scepticism about a boom goes beyond the question of how long the current business cycle upturn will last. The word "boom" has become very much associated with the long upswing in the economies of the imperialist countries from 1948 to the end of the 1960s, one of whose major features was an unemployment rate of less than 2%, even during recessions, and rising prosperity.
One thing is already very clear: the current upturn will not significantly relieve unemployment, reduce poverty or even halt the widening gap between rich and poor. In the richest country in the world, the US, unemployment, homelessness, poverty and income disparity continue to increase. The same is occurring in the major countries of Europe.
Even in the big Third World countries, there has been no general rise in prosperity. The exceptions have been a few of the smaller countries where there are labour shortages, such as Malaysia, Taiwan and Singapore. In India, China, and Indonesia, by contrast, there has been a significant expansion in absolute numbers of the middle classes, but this usually represents way under 10% of the population.
Growth without an extension of prosperity or erosion of unemployment is a character of the current upturn internationally, as it is of the Australian economy.
The "success" that the ALP government has had over the last two years is promoting a higher growth rate and keeping inflation relatively low. The problems that haunt it are the inability to keep interest rates down and the enormous pressure on Australia's international balance of payments.
Crucial to Labor's "success" have been the Accord and the suppression of real wages. Enterprise bargaining has delivered enormous gains to the employers. These are reflected not only in the many atrocious enterprise "bargains" that have been struck. Enterprise bargaining has also resulted in the almost indefinite postponement of any wage increase at all for many workers.
Even so, this success has not delivered any real certainty to big business. There is constant fear that the economy will grow too fast, worsening the current account deficit and adding to inflationary pressures.
This fear leads to an increase in interest rates in order to slow down the economy. But the ruling class has to make sure that interest rates don't explode either, which means that the government's own borrowings have to be kept to a minimum. This leads to pressure to reduce and eliminate any budget deficit.
Investment in Asia
Because of the precarious nature of this recovery, there is increased government intervention to assist and promote Australian penetration into Asia, and also to a certain extent the Pacific island economies.
In the last few years both the government and big business have raised their efforts to expand this penetration. Major infrastructure projects (such as the Telecom projects in Vietnam and Indonesia, and road and bridge construction projects in China), major minerals exploitation such as BHP's and CRA's mining ventures in Indonesia, the oil exploration activity in the Timor Gap and manufacturing, especially food processing, are all areas of investment with very high rates of return.
With falling rates of profit in many areas of the domestic economy, Australian capital is desperate to maximise its cut of the Asian economies. Total investment in Indonesia now has reached $2.5 billion.
This is the basic impetus behind the Australian government's APEC policy.
The government has seen the possibility to assist in promoting Australian capital's interests through political intervention in the region.
The government's interventions centre on maintaining regimes which ensure access to cheap resources and cheap labour. Further, there is little doubt that close political support for the regimes in the region is seen as a way of buying friends who will look favourably upon Australian business ventures, as compared to those of other countries.
Indonesia figures centrally in Labor's Asian penetration strategy. Indonesia's mineral and oil reserves (including those in the Timor Gap) are another major incentive. China and Vietnam are the other two major targets at this moment.
In the Pacific, the government continues to prioritise the defence of Australian mining capital's interests in Papua New Guinea, including support for the PNG government's military operations against the Bougainville independence movement.
The government is slowly overhauling the military forces to make them more suitable as an effective instrument for regional intervention. Hence the emphasis on high-technology, rapid deployment capacity and ability to work together with regional military forces. Projections of enhanced submarine, jet aircraft (F18s) and missile capacity indicate that the government also wishes to be able to point to military muscle to back up its diplomatic and political role.
A so-called "leaner and meaner" defence force only means a more efficient instrument of violence in the hands of the ruling class — at their disposal for use in scenarios such as those developing in Papua New Guinea and Bougainville.
Impact of austerity
The ALP's package of austerity and labour control and imperialist foreign policies defines the agenda of popular discontent, and determines the character of the struggle between the ALP and the Liberals to win the privilege of governing in the interests of Australian capitalism.
In 1994 there were a number of protest actions and expressions of discontent, although many were short lived. They included those around school closures in Victoria; the Albert Park raceway; hospital closures in NSW; freeways in Brisbane and Sydney; the third runway at Sydney airport; several campaigns in the union sector; student protests against tertiary fees; solidarity actions with East Timor and Bougainville; a range of protests on environmental issues; protests against violence against women.
All these issues set the agenda for activity with a potential for development into a progressive opposition to both Liberal and Labor governments.
Because the trade unions have still suffered no major defeat in any direct confrontation with capital (except for the Builders Labourers' Federation and the pilots union), they remain organisationally intact, although they are slowly losing membership. The ALP's ability to police the unions remains a policy option that the Liberals can still not better. This really undermines the Liberals' ability — at this point — to offer a credible alternative to big business.
At the moment, regulated austerity and labour cooption are adequate to big capital's needs and preferable to a possibly premature and costly confrontation with the working class and the trade unions.
The ALP is obviously aware that its policies have aroused discontent and resistance. The central political task of the ALP since its election to government in 1983 has been to ensure that this discontent does not develop into an effective political opposition.
To achieve this, the ALP has developed a number of methods:
1. Institutional cooption. The most important and substantial example of this is with the trade unions and the Accord. The ACTU has policed worker discontent and ensured that there have been no effective campaigns against government policies. The ALP's control of the unions has even been used to block mass opposition against a Liberal government, i.e., its derailing of the anti-Kennett mobilisations.
Institutional cooption has also been successful in the Aboriginal rights, environmental and social welfare areas, with peak bodies locked into a relationship with the ALP government that blocks them from leading any real opposition.
The National Union of Students (NUS) is another initiative at institutional cooption, though less successful.
2. Cooption through state oppositions or local governments. Austerity in the health, education and the environment has often had to be implemented through state governments. Struggles against health and education cuts in particular, and on some environmental issues, have often been in opposition to state Liberal governments. In these struggles, the state ALP machine and parliamentarians have been used to channel the discontent into purely electoral support for the parliamentary opposition.
Sometimes this has also been done through ALP-dominated local governments, as in the case of the Sydney third runway fight.
3. Divide and rule. The strategic objective of ALP tactics is to block and demoralise any active discontent or to divert it into acceptance of lesser demands. Where this tactic is successful and demoralisation among activists spreads, it also becomes possible to split the campaign activists on the question of what can or can't be achieved.
4. Individual cooption. The access of the ALP to government funds and positions has also enabled it to buy off more people.
The 'social vanguard'
Here we are referring to all those people who are leading the fight against ruling class policies and/or ideology. They include the leaderships of campaigns around specific issues as well as intellectuals who lead the fight against specific ruling-class ideas.
We use the term social rather than political vanguard because, while they stand at the forefront of specific struggles, they present no overall perspective of how to take the fight beyond those specific issues to a political challenge to the rule of the capitalists. They do not have the perspective of building a party to educate, organise and mobilise the working class and its allies to overthrow the capitalist system.
During most of the postwar period up until 1983, a sizeable, although by no means overwhelming, section of the social vanguard was located inside the ALP. After the ALP came to power in 1983, this situation rapidly changed. The Hawke government moved so quickly to implement the Accord austerity package and to ensure its control over the labour movement that many leading activists within the ALP quickly became demoralised or left to become active elsewhere. The ALP ranks quickly emptied of genuine activists.
Today the number of activists involved in leading real fights against austerity policies, environmental destruction or imperialist foreign policy who are inside the ALP is very small.
Localised revolts
Labor's regulated austerity means that the likely immediate scenario is more of the same: localised revolts, partial fights back, resistance in some sectors and states but not in others, defeats and demoralisation but also a continual replenishment, and a very uneven and diffuse impact from these sectoral and local struggles on electoral politics.
This localised, sporadic character of resistance is made possible by the ability of the government to postpone any deep frontal attack on living standards. It is still possible for the government to agree to wage rises here and there. It still has enough leeway to repackage some of its welfare policies. There is still enough leeway to add some forests to the world heritage lists. Concessions still allow the government to win some people over to the idea that it's possible to make gains without confronting or replacing Labor altogether.
A primary factor is the absence of any apparent vehicle for effective opposition. People angry with government policies still feel they have to work through the existing parliamentary system, dominated by people offering the choice of either a Labor or Liberal-National government.
Illusions in the ALP as a party of progressive reform are at their lowest ebb ever. This does not mean, however, that those who have lost those illusions, or whose expectations have dropped enormously, have developed a revolutionary consciousness. Most of these people still cannot see beyond the existing political system.
In the end, one illusion does continue to characterise the consciousness of most of the social vanguard. This is the illusion that we can still stop things being as bad as they would be under the Liberals, the illusion that at least some gains can be made by voting Labor into government.
The illusion that there is nothing working people or radical activists can do but pick the lesser evil within the capitalist system can result in some activists falling back into a pro-ALP framework. But this is a period of take-backs in every area. All concessions made by the ruling class today are no-cost or low-cost measures or are traded off against even greater take-backs.
Moreover, the demoralisation that acceptance of working in this road-blocked system breeds, helps prepare the way for the Liberals (or for an even more Liberal-like ALP government).
Smaller parties
The Democrats under Cheryl Kernot have moved more firmly into a framework where they go out of their way to prove that they are "responsible". This has most clearly manifested itself in the Democrats' distancing themselves from the WA Greens. The Democrats' position can more and more be characterised as pure parliamentary opportunism. They lead no fight against austerity measures or imperialist foreign policy, even in the parliamentary arena.
The WA Greens, on the other hand, have led the fight within the parliament against some of the government's worst policies. They also give genuine support to activist-based campaigns.
The WA Greens, however, remain imprisoned by their strategic orientation to parliament. Their 1993 prominence was essentially due to the fact that they were getting tacit Liberal support for their stalling tactics on the budget. But in a parliament where Labor, Liberal, Nationals and Democrats are in agreement on so many issues, the opportunity to wield the "balance of power" is vary rare.
Only with a strategy of systematically using the platform provided by parliament to build an opposition to ruling class policy in the streets and in the workplaces could the WA Greens go beyond their current limitations.
The Australian Greens face the question of precisely where on the political spectrum between the Democrats and the WA Greens they will position themselves. A lot will depend on how the various peak bodies pursue their own tactics vis-a-vis the Labor government.
The addition of another "alternative" on the electoral scene is a pointer to the declining grip of the ALP over reformist politics. The persistent presence of independent parliamentarians is another.
Laborism
The fact that the ALP has been exposed as not being a genuine party of reform does not mean we no longer have to battle the ALP for the hearts and minds of people moving into struggle. There are big battles to convince people that they don't have to be satisfied with minor concessions from ALP governments. There are big battles ahead with the ALP or its allies when it attempts to control new campaigns, a battle to convince people not to rely on ALP "leadership" and its compromises.
The ALP still has the advantage that most people see no alternative organised force that can challenge the system. But its exposure and the consequent collapse of illusions in it as a party of genuine reform, the fact that so many struggles end up in confrontation with the ALP government, is its Achilles heel.
The sporadic, localised, partial struggles are more part of so-called mainstream politics than ever before. The environment, toxic waste, woodchipping, East Timor and Bougainville, resentment over enterprise bargaining, the cost of education — these and similar issues persist fairly high up the agenda of public concerns, despite the efforts of the major parties to make these issues go away.
The parliamentary con trick still has the situation blocked; a break from lobbyism in the movements hasn't yet occurred, a real challenge to the "two-party" system is not yet here. But neither can they stop the ferment. More and more politics will be coloured and formed by the need to deal with these issues and the latent threat of a political break to the left.
[This article is based on a report to the 16th National Conference of the Democratic Socialist Party in early January.]