Left populism versus revolutionary Marxism: Debating economic strategy in Australia

During the second half of the 1970s and early 1980s, there were important debates on the Australian left. Chastened by the Australian Labor Party’s defeat in the 1975 elections, the dominant right wing of the party continued to moderate ALP policies, a process which had begun when it was in office. Left-wing union officials, the ALP left and the Communist Party of Australia countered with left reformist, populist policies, embodied in “alternative” economic programs and strategies. According to these analyses, transnational corporations and their allied conservative parties, rather than the capitalist system, were at the root of unemployment and attacks on pay. The solution was to elect a Labor government committed to more radical policies, particularly for the development of domestic manufacturing industry, and backed by union mobilisations. Revolutionary Marxists argued that class and social struggles were the only way to defend workers’ interests, which were undermined by any strategy that involves taking responsibility for the health of Australian capitalism.

These debates are the focus of the discussion below. Although there is no significant left reformist current in Australia today, that is unlikely to remain the case. The idea that Australia is being underdeveloped by foreign capital and that “we” need to rebuild Australian manufacturing industry is still widespread. It is still pushed by some unions covering manufacturing workers and, in vague terms, was an element in Labor’s campaigning before the 2022 election.^[1] And the idea that the left should put up proposals that will make capitalism function better or shut up is very widespread. So the debates of the 1970s and 1980s are relevant today. They were not, however, unique and can be best understood in their historical context.

The following section very briefly traces the history of different left conceptions of Australian capitalism and responses to it. Then the background to and content of left populism after 1975 is examined. The third section summarises the revolutionary Marxist critiques of the alternative strategies. The degeneration of left populism into apologetics for the Hawke Labor government’s Prices and Incomes Accord is the subject of the fourth section. In the concluding section changes that have taken place since are discussed.

Early economic controversies in the workers’ movement

If the initial reasons for the invasion and colonisation of Australia were strategic and penal, rather than strictly economic, unfree and increasingly free labour was soon creating surplus value for local capitalists and their creditors in Britain. The most lucrative investments generating the most important exports were in primary industries, especially the production of wool. But there were also commercial, construction, manufacturing and local transport industries, if on a small scale, from early in the nineteenth century.

The development of manufacturing industry started to accelerate in the 1870s, expanding the size and influence of the non-mercantile, urban capitalist class, in comparison with pastoral, commercial and financial capitalists. There was enthusiasm within and beyond the labour movement in the following decade for ideas that focused on the control of land. The US political economist Henry George, in his 1879 book Progress and Poverty, identified rent derived from private ownership of land as the source of poverty and other social ills, and a “single tax” on it as the means to create prosperity and overcome inequality. The fifth Australian Intercolonial Trade Union Congress in 1888 endorsed this panacea.^[2] Like other variants of populism, George’s ideas ignored or discounted the contradictory class interests of capitalists and workers and regarded the conflict between just a section of the capitalist class and “the people” as of greatest importance.

Within the labour movement, a pamphlet issued by the Australian Socialist League in 1890 refuted George’s analysis, on the basis of a Marxist class analysis. It referred to Marx’s analyses of private property and the exploitation of wage labour.^[3] Most early Australian socialists from the 1880s, even those familiar with Marx, regarded their goal as state ownership under a parliamentary government dominated by workers’ representatives, rather than a different kind of state, like the Paris Commune, which would wither away with the remnants of social class. Others believed that socialism could be achieved gradually by the establishment of cooperatives or were utopians, notably the followers of William Lane who went off to set up a workers’ paradise in Paraguay in 1893. But, at least by the end of the nineteenth century, there were some who looked forward to the “abolition of the wages system” and a different means of collectively organising production to the existing form of state.^[4]

Parliament, arbitration, protectionism and the “money power”

Trade union officials were decisive in the establishment of the colonial Labor parties and, through affiliated unions, had great influence in their affairs. Founded in the midst of the defeats of the great maritime and shearers’ strikes of the early 1890s, the parties were shaped by this period of working-class weakness. During the “Great Depression” of that decade, the urban union movement came close to total collapse. For years the increasingly conservative Australian Workers’ Union, which organised rural workers, dominated and in many places effectively was the party. Under these circumstances, the dominant currents in the colonial Labor organisations and, after 1901, in the federal, national party saw parliamentary representation and government action within the framework of Australia’s capitalist economy and capitalist state institutions, rather than class struggle, as the means to improve people’s, particularly workers’, lives. In particular, as a means to achieve class peace, they favoured arbitration of disputes between unions and bosses.^[5] This has remained their orientation and they have therefore been dedicated to pursuing the “national interest”, not international working-class solidarity. While substantial left currents in the party have had more favourable attitudes to at least some industrial struggles and international causes distasteful to Australian bosses, their orientation has also been essentially parliamentarist and nationalist.

In the 1890s, the Labor parties were not only divided between dominant groups content to ameliorate capitalism, who might call that socialism, and minorities who wanted to achieve socialism, understood as extensive state ownership, by means of reform. There were also major differences in and between the colonial Labor parties on the question of tariff protection.

The promotion of import-substitution industrialisation by means of protective tariffs had begun in Victoria in 1866, especially as a means of employing both capital and labour that would otherwise have been idle after the gold rushes.^[6] An important goal of the federation of the Australian colonies in 1901 was the establishment of an internal free trade area, behind uniform tariffs. But governments only began to raise the level of duties, primarily for the purpose of protecting local industries, rather than raising revenue, with the Lyne Tariff of 1908. Tariff barriers were subsequently increased and remained high into the 1980s, supplemented by import quotas during some periods. The attenuation of international trade and the need to produce arms during the two World Wars intensified the process of industrialisation as a means of expanding the scope for capital accumulation beyond primary production and commerce.

The leader of the capitalist Protectionist Party, Alfred Deakin, had come up with the formula of “new protection”, according to which the benefits of protection for manufacturing industry would be shared with workers, through the operation of the Arbitration Court. On that basis, Labor voted for the Lyne Tariff in the parliament. But the new protection legislation of 1906 was overruled by the High Court less than two years later. The ALP, which had itself previously been internally divided over the issue of tariffs, replaced a referendum on the “fiscal question” with the restoration of new protection as a plank in its federal platform just two days after the High Court decision. After two referenda, initiated by Labor governments, failed to open the way to this goal, in 1913 the party’s leader Prime Minister Andrew Fisher committed Labor to “effective protection”.^[7] The fiscal question was controversial within the Liberal Party for a while. But soon both Labor and the main conservative party agreed that protectionism was crucial for the development of Australian capitalism. That consensus lasted sixty years.

From the 1890s through to the 1930s, sections of the labour movement, especially inside the ALP, argued that the “money power”, essentially banks and their stooges, was responsible for the suffering of ordinary people. Support for these ideas was associated with working-class defeats during three great social crises: the Depression of the 1890s, World War I and the Depression of the 1930s. The depressions highlighted the role of domestic and imperial financial institutions in the Australian economy. The left populist advocates of money power theory saw in Labor politicians champions of the people, able to counter plots by international financiers and their local allies, and to disempower them, when direct working-class action could not. Kingdom of Shylock by federal Labor parliamentarian Frank Anstey, for example, analysed World War I in terms of an international financial conspiracy, an argument continued in his Money Power and Facts and Theories of Finance.^[8]

The right-wing NSW Labor leader Jack Lang drew on populist money power rhetoric in his campaign against the emergence of a radical left inside the party, organised in Socialisation Units. He had displayed little concern about the money power during the 1920s but emerged as the main antagonist of the “financial dictators” during the Depression. At a time when workers felt unable to defend their interests through struggle, his slogan “the socialisation of credit” was used to undermine the explicitly anti-capitalist Socialisation Units.^[9]

Class peace through arbitration, protectionism, parliamentarism and the populism of money power ideas, all premised on Australian nationalism, were contested. During the 1890s and especially the first two decades of the twentieth century, there were radical socialists in various organisations outside the ALP, notably the Industrial Workers of the World, who rejected Labor’s practical acceptance of capitalism. Eventually, these criticisms were integrated with a recognition of the need for a coherent political organisation in the outlook and practice of the Communist Party of Australia, which emerged, belatedly, from the heightened class struggles after World War I. For a few years from the mid-1920s, the CPA, while only a few hundred strong, embodied a consistently Marxist socialism whose goal was the self-emancipation of the working class. It continued the tradition of rejecting the populist notion that particular sections of the capitalist class were more deserving of support or hostility than others.

Hector Ross gently summed up the attitude of Communists and earlier revolutionaries that “the Arbitration Court enables armies of workers to be disciplined and driven back to work under vile conditions pending the decision of over-paid class-biased parasites”.^[10] The Marxist attitude to the debate between free traders and protectionists was expressed by Mick Considine: “A plague o’ both your houses”. Although he was never a member of the CPA, he was a veteran of pre-war Marxist groups. Between 1917 and 1922 he was the Labor and then the independent member for Barrier (Broken Hill) in the House of Representatives. On the floor of the house, in 1921, he summed up the case against protectionism:

It is over the surplus value that is wrung from the working class in the place where they are exploited that the importers and the manufacturers quarrel, and attempt to use the workers and the political representatives of the workers to aid them in securing their respective share of the plunder for their particular sections.

Protection meant “that one section of workers will make an arrangement with manufacturers for which all other workers will be obliged to pay”.^[11] In the early 1930s, the Communist Party was particularly concerned to demonstrate that massive increases in tariffs introduced by the Scullin Labor government did not serve workers’ interests.

The constraints imposed on Australian governments if they were to abide by the terms of their large international loans drew attention to the capitalist financial system during the Depression of the 1930s, as bank collapses had during the 1890s. Communists and socialists inside the ALP responded to the resulting appeal of money power ideas along the same lines as their critique of protectionism: the basis of capitalism was the extraction of surplus value and workers had an interest in overturning that process rather than siding with industrial capital against bank capital in their dispute over the distribution of the spoils of exploitation.^[12]

Hostility to nationalist protectionism and money power populism drew on the internationalism of both the local socialist tradition and the Marxism of the Communist International. In the first issue of the CPA’s journal, Esmonde Higgins had argued that “The alternative to the idea of the Empire lies, not in the petty-bourgeois ‘cultivation of an Australian sentiment’, but in cultivation of the sentiment of the international working class”.^[13]

Popular frontism

Under the influence of the Stalinised Communist International’s popular front turn of the mid-1930s, the CPA abandoned internationalism, eventually pursuing an alliance with “progressive” capitalists, ostensibly in the Australian national interest. In the party’s now populist analysis, there was still class struggle between capitalists and the workers they exploited. But the main enemy was the “financial oligarchy”, “monopolists” or a few “rich families”,^[14] rather than the capitalist class as a whole. This approach was presented to a wider audience, particularly where Communists had won leadership posts in important unions, including the Miners’ Federation, Seamen’s Union, Waterside Workers’ Federation, Federated Ironworkers’ Association and the NSW branch of the Railways Union, during the 1930s. It also displaced money power theories on the left wing of the Labor Party. The forces of Australian Trotskyism, which attempted to maintain the tradition of revolutionary Marxist internationalism, were very slender indeed until the late 1960s.

The long economic boom after World War II saw further growth of local manufacturing, supported by tariff and quota protection, and a massive program of subsidised immigration. In the promotion of manufacturing industries, these policies encouraged and were complemented by an accelerated flow of capital from abroad. A greater proportion of this flow now took the form of direct investment, as opposed to private and especially government borrowing.^[15] The main source shifted from Britain to the United States. The “defence” alliance between Australia and the USA, the world’s greatest military as well as economic power, likewise came to overshadow relations with Britain.

Despite major setbacks during the late 1940s and early 1950s, Communists continued to be elected onto the leaderships of some powerful unions into the 1980s. In the context of the Cold War between Russia and the USA, the CPA, still loyal to Moscow, identified monopolists and rich families with US influence. Australia was losing its independence. The country’s rulers had become devoted allies, “junior partners” of US imperialism, and the party’s perspectives were pervaded by anti-American nationalism. The conservative government of Bob Menzies was not only selling out the Australian national interest to the US but was also jeopardising “the aims of Australian imperialism”. Participation in the Vietnam War “lowers Australia’s stature to that of a stooge for the US gendarmes”.^[16]

A section of the Communist Party’s membership departed to join the Beijing-aligned Communist Party of Australia (Marxist-Leninist) in the split of 1964. Its members led the Victorian branches of the Builders’ Labourers Federation and the Waterside Workers’ Federation in the 1970s. The CPA(ML) was particularly strident in its own brand of Australian nationalism and explicitly sought to enrol the “national bourgeoisie” in the cause of Australian independence.^[17] Unlike the Communist Party, its perspective was a revolutionary rather than reformist nationalism: US influence was so great that Australia had already lost its independence and needed a national revolution.^[18] The sect’s appeal rapidly declined after it shifted its emphasis to denouncing “Soviet social imperialism” as the breeze from Beijing changed following détente between China and the US in 1973.

The Communist preoccupation with monopolies and US influence after World War II overlapped with more statistically inclined studies of ownership and the influence of foreign capital in Australia during the late 1950s and early 1960s by the Sydney University economist and Labor Party supporter Ted Wheelwright.^[19] Together with Brian Fitzpatrick, who had written influential left-wing histories of Australia, he published The Highest Bidder in 1965. It was a pivotal book in the history of Australian left populism. With its critique of the “subordinacy of our economy to foreign decision-makers”, the book provided a manual of staple arguments which served left nationalists for two decades. Wheelwright and Fitzpatrick contended that Australia had become more vulnerable to restrictions of capital outflows from other countries. Multinational (later the term “transnational” was often preferred) corporations might also limit the flow of technology to Australia and exports by their Australian subsidiaries; avoid local taxation; damage the balance of trade through transfer pricing; and create local monopolies, which would be harder for workers to deal with. At the same time they squeezed Australian capital out from profitable investment opportunities. And their profits were repatriated. Foreign capital also influenced Australian politics and culture. Indeed, there was “little difference between the situation of Australia and that of poor, undeveloped countries”. Public ownership was therefore necessary, although it might not extend to all large, Australian-owned enterprises.^[20]

Fitzpatrick and Wheelwright regarded Australian capitalists as a decisive element among the forces which could implement their economic nationalist program. The book was couched as a plea to Australian bosses. The class structure portrayed in their analysis counterposed the Australian people (apart from a few allies of multinational corporations) to foreign capital, which “has been allowed to construct a gigantic pump for sucking up the cream of our industrial production”.^[21] Left populist rhetoric now identified multinational corporations, rather than monopolies, as the source of Australia’s ills.

The very small numbers of Trotskyists in Australia in the 1960s were critical of the CPA’s populism and nationalism. As a consequence they could recognise that Labor and conservative Australian governments pursued the interests of locally based capital, while conservative politicians were not simply puppets of the US. Their rejection of both nationalism and the idea that socialists should be concerned about Australian independence was distinctive on the left^[22] and soon found a wider, though far from mass audience.

The rising level of social struggle, especially the movement against the Vietnam War and industrial action by increasingly militant workers, in the context of the booming economy, revived the far left. By the early 1970s, the most successful Trotskyist group was growing and ambiguously moving towards an understanding of the Australian ruling class as an imperialist actor in its own right. The Socialist Youth Alliance’s newspaper declared that Australia was a “client of US imperialism” but, “Where Australian capitalism’s own interests coincide with those of the United States it seizes the opportunity to have these interests defended by the greater imperialist power for the minor price of a token military and moral involvement in the struggle”.^[23] There were other Marxist critics of left nationalism. They demonstrated the consequences of Stalinism for the understanding of class in Australian history and the connection between nationalism and imperialism, and particularly the ALP’s imperialist policies for Asia. The journal Intervention, associated with the “Left Tendency” in the CPA, carried material critical of nationalism, including a classic anti-nationalist “interview” with the cartoon koala Blinky Bill. One of the new Marxist left’s notable products was the history of Australia’s class structure by Bob Connell and Terry Irving.^[24]

Left populism after Whitlam

Mainstream economists and elements of the Australian public service argued that government policy should promote the competitiveness of domestic industry rather than just protect it at the expense of other sectors.^[25] The Whitlam government, from December 1972, took some steps in this direction. But, in the face of the deep recession of the 1970s, the shift to lower rates of protection slowed down. The ALP increased protection for the car industry. It also backed the wage indexation system introduced by the Arbitration Commission to restrain workers’ pay, in the context of high inflation. The expenditure cuts in the government’s final budget, introduced by Treasurer Bill Hayden in 1975, was justified in terms of monetarist economic theory, an ancestor of neoliberal doctrines.

The conservative government of Malcolm Fraser, placed in office by the constitutional coup of 1975 which dismissed the Whitlam government, went even further in supporting the profits of car makers and also textiles, clothing and footwear manufacturers, that were likewise already highly protected, by means of quotas and higher tariffs. Fraser’s government trumpeted the virtues of free markets but its achievements in this area were limited. By 1982/83 average rates of assistance to manufacturing had actually increased, compared with 1976/77.^[26] Yet the end of the long post-war boom and the onset of the deep recession of the mid 1970s had raised the costs of protectionist policies and made them even more burdensome for the capitalist class as a whole.

Although it engaged in robust denunciations of “union intimidation”,^[27] ultimately the industrial relations record of Fraser’s government was no better in the eyes of Australia’s bosses. The Fraser years saw some intense fights by workers and the oppressed with the federal and conservative state governments, and employers.^[28] Titanic by the standards of the following four decades, the level of class struggle in this period was nevertheless significantly lower than during the late 1960s and early 1970s. Many workers became warier about taking industrial action in the face of punitive government policies, especially during the recession of the mid-1970s, with unemployment higher than at any time since the 1930s. But between 1979 and 1981, during a mining boom which had lowered unemployment, there was a strike wave, peaking at an annual level of almost 800 strike days per thousand workers.^[29]

The mainstream of the ALP, with the parliamentary party leading the way, responded to the defeat of 1975 by moderating its policies. In other words, by abandoning its enthusiasm for reforms and admitting that “the Whitlam government had tried to go too far, too fast”. The 1977 ALP Conference approved an economic platform whose short-term policy section twice emphasised the importance of the money supply, the touchstone of monetarist thought.^[30]

There was resistance. Between 1975 and 1978, major workplace confrontations took place over mass sackings at Chrysler in Adelaide, as well as at the Newcastle and Whyalla shipyards, and over management efforts to increase the pace of work more generally. But they ended in defeats. This led to a turn to politics in the class struggle, with industrial action not only over Medibank in 1976, but also against the export of uranium in 1977, to prevent the construction of the environmentally dangerous Newport power station in Melbourne and in support of the Queensland civil liberties movement in 1977 and 1978.

The turn to politics took other forms. Some combined class analysis and the illusion that Labor could reform Australia into socialism.^[31] But the most widespread response to the economic crisis and Whitlam’s dismissal in the labour movement was the populist, left reformist alternatives offered by the Communist Party and those in its orbit, the powerful Amalgamated Metal Workers and Shipwrights Union (AMWU)^[32] and sections of the Labor left. In the left nationalist tradition, they blamed transnational corporations and their influence on conservative governments, subordinate to the United States, for problems workers faced. The solution was to build the influence of left unions and elect a Labor government committed to a “progressive” approach to Australian economic development, formulated and implemented in association with the union movement. That approach would include the nationalisation of some corporations and would be in the interests not only of the working class but also small and medium-sized enterprises, especially in manufacturing.

The AMWU, in which the CPA was still influential, was at the forefront of the campaign around these ideas and issued a series of publications to publicise them. In 1976 the Victorian branch of the union issued a People’s Budget. Pretty tame in its proposals, it espoused essentially orthodox Keynesian economics and called for a reflationary deficit, involving increased social welfare expenditure and public works, to overcome unemployment. The pamphlet argued that taxation of the wealthy and corporations should be increased, indirect taxes reduced; and the 35-hour week brought in. The politics involved can be summed up in the far from radical assertion that “Many economists argue that a deficit which fosters consumer spending would bring about an economic recovery strong enough to counteract the effects of the deficit”.^[33]

The arguments in the People’s Budget did not offer a coherent analysis of the Australian economy’s problems or practical solutions. Its framework was outmoded. By the mid-1970s all but the blindest observers of the world’s economy accepted that the old Keynesian verities were about as useful as a professional economist at a lathe. The publication presented “alternative” policies as a way to restore capitalism’s health. Nevertheless the People’s Budget was an attempt to present a real critique of Fraser’s cuts, more hard-hitting than that of the weak-kneed Labor opposition. The promise it held out for restoring the Australian economy within the framework of capitalism was to be a hallmark of subsequent alternative economic proposals.

In 1977 the AMWU’s national office produced Australia Uprooted, a very professional, mass distribution pamphlet. Although the arguments were crude, it offered a much more comprehensive analysis of Australian capitalism than the People’s Budget, reinvigorating the left populist tradition. The problem with the Australian economy, it argued, was the influence of the multinational corporations whose unregulated activities were also responsible for the international crisis of capitalism. Fraser’s program was to restore profits at the expense of wages and public spending. He wanted to turn Australia into a quarry, allowing the multinationals to destroy Australian manufacturing industry. All of these things had to be fought. The AMWU officials put proposals for a “People’s Economic Program” to the ACTU and ALP conferences of 1977, noting that “They are a departure from limited traditional alternatives precisely because experience of 1973–75 showed how vulnerable such limitations are”.^[34]

To achieve full employment, environmental protection and balanced economic development, corporations should be nationalised, so that the parliament could again effectively determine economic policy. “Democratic principles in work relations” should be introduced into the public sector. Interest rates, foreign investment and credit should be more tightly controlled; the taxation system should be made more progressive and government should provide assistance to small and medium-sized businesses. Industry should be restructured under government direction, by means such as the use of public funds to update equipment, tariffs and quotas. Australia Uprooted also affirmed that the People’s Economic Program “needs to be developed in conjunction with the struggles and involvement of the people which will inevitably arise from the impact of the policies of the Fraser Government!”

The ALP did not adopt the People’s Economic Program. But the mainstream left persisted with the approach and many justified it as a transitional strategy to achieve socialism, around which a mass movement could develop. A prominent proponent was Laurie Carmichael, in 1977 national president of the CPA and assistant national secretary of the AMWU.^[35] Later versions of the alternative economic strategy filled in the details and added subtlety, but Australia Uprooted contained all the essentials of a left populism that had widespread currency into the 1980s: nationalisations, collaboration with some sections of business, conspiracy theory, nationalism, verbal endorsement of class struggle and especially strong, explicit support for the election of a Labor government.

The alternative economic strategy approach in Australia was, in part, inspired by the British academic Stuart Holland’s concept of a “revolutionary reform”.^[36] It looked like a more radical version of the policy package advocated by Jeremy Corbyn when he led the British Labour Party between 2015 and 2020. In both, the assumption was that the key to progressive change was the election to office of a social democratic party with radical policies. Certainly they paid lip service to mass action, but their approach was in practice counterposed to an orientation of bringing about change through workers’ own struggles against bosses and governments.

Communists still acknowledged that workers’ fights to defend jobs, wages and conditions were important. But the CPA retreated from previous efforts to ride the wave of radicalisation among students and workers. Towards the end of its shift to the left, the party’s journal Australian Left Review had observed of one of Whitlam’s most left-wing ministers: “[Jim] Cairns is arguing that workers and socialists should help solve capitalism’s crises then raise the struggle for a socialist solution when the system has recovered – clearly a futile exercise”.^[37] That ceased to be the party’s perspective, as it reaffirmed its earlier left populist outlook.

The views expressed in Australia Uprooted reflected the interests of a section of the trade union bureaucracy which shared ways of thinking and overlapped in membership with the Labor left and CPA. Ultimately, they and other officials owe their positions to capitalism, a system where wage labour is a commodity. Unions are organisations whose main function is wholesaling that commodity, negotiating its price and conditions of sale. They are essential for the defence and improvement of wages and conditions, but their purpose is struggle within the system rather than against it. Union officials are, primarily, managers. Their jobs usually provide them with better pay and working conditions than those of the rank and file. To keep control over their organisations and to hold onto their jobs they have to balance between their members and employers, trying to maintain credibility with both. With the members who elect them, that they can defend and even improve pay and conditions. With the employers who are the other party in negotiations, that they are in control and can enforce agreements by avoiding, containing or repressing rank-and-file dissent. So both outbreaks of independent rank-and-file action and employers’ attacks are a threat to union officials.^[38]

A particular stage in the balancing act of left union officials, those more open to pressure from their members, and their political supporters, was the context for Australia Uprooted and the alternative economic strategies of the late 1970s and early 1980s. Nationalism, common to the mainstream left’s economic thought before and since, expressed their practical acceptance of capitalism. Verbal endorsement of the class struggle reflected a recognition that, despite the decline in militancy after 1975, there were still large numbers of well-organised workers in Australia capable of taking concerted industrial action, independently of the officials if necessary.

After the publication of Australia Uprooted, a variety of discussions and publications, mainly by people in the Labor left or Communist Party, developed the idea of alternative economic strategies by means of which a Labor government, under pressure from below, could legislate socialism into existence. In a workshop paper Roger Jowett, a research officer of the Australian Railways Union (later general secretary of its successor) summed up the approach. On the job struggles by workers, he argued, had to be an important part of a Labor strategy. But Jowett articulated union officials’ accommodation to the wage indexation system, when he asserted that the ability of wages struggles to “mobilise, unite and educate workers” was questionable: after all, wages had not even been mentioned at the last ACTU Congress. Instead workers had to take the offensive with their own plans and to engage in the “progressive conquest of power”,^[39] which entailed making capitalism operate as efficiently as possible.

Australia Ripped Off, produced in late 1978 as a sequel to Australia Uprooted, offered a convincing analysis of the nature of income and wealth distribution in Australia, including a brief exposition of the labour theory of value. Having failed to get the ACTU and ALP to adopt the AMWU’s modest proposals, it laid somewhat greater stress on mass action, including organisation on the job over technology, redundancies and shorter hours. But not, despite the pamphlet’s convincing account of income and wealth inequality in Australia, pay. Its explanations of the problems faced by workers was populist: multinationals and the Fraser government were responsible. “The rules of this economic game are set by the largest corporations and the few thousand Australians who control them.” And the message that workers would be saved by a Labor government was conveyed with sledge-hammer subtlety by quotations from then ALP leader (and later top-hatted conservative governor general) Bill Hayden strewn throughout. This was repeated in the pamphlet’s 1982, pre-election successor, Australia on the Rack.^[40]

As economic recovery and the mining boom of the late 1970s and early 1980s improved the bargaining power of the unions, the rank and file put pressure on the AMWU leaders for action to improve their living standards. The union officials preferred a decentralised hours campaign, which did not contravene the indexation guidelines, to a combined assault on hours and wages. Carmichael made clear the role of the hours campaign as a safety valve to save wage indexation:

Diversions will inevitably be encountered and it must be assumed that there will be deliberately sponsored diversions. Probably wage demands will be more complex to handle as we progress through the campaign. Only most careful but insistent efforts will ensure that the shorter hours issue remains as the highest priority!^[41]

The resources boom also gave populist arguments about the sway of transnational mining corporations an added veneer of credibility. In 1982, Wheelwright and Greg Crough argued that because the Australian bourgeoisie could not protect its own interests against transnational corporations, the ALP and unions had to build up local industry and, in the process, build socialism.^[42]

At its 1979 Congress the CPA essentially adopted the alternative economic strategy, affirming that parliamentary “left governments” would be central to the transition to socialism. Struggles over wages were important, but were defensive and workers needed to fight around alternative plans for their industries.^[43] As late as 1981 the CPA could still affirm that “‘Social contracts’, deals between employers and unions regulated by Government and which restrict workers’ rights to fight for a better deal must be resisted”.^[44]

But this soon changed.

The real alternative

Elements within the new Marxist left oriented to the Communist Party. Terry O’Shaughnessy, for example, discussed the politics of the transition away from the strategy of import substitution industrialisation in Australia and pointed out that, contrary to the dominant CPA/AMWU argument, Fraser was “not presiding over the wholesale dismantling of manufacturing”.^[45] But after the left inside the CPA was defeated in 1976, its prominent protagonists generally faded from the fray or moved to the right with the party.^[46]

Other organisations in the Trotskyist tradition were more enduring vehicles for internationalist class analysis than the dead-end of the Communist Party. They continued to provide alternative Marxist accounts of the Australian economy and critiques of left populism into the 1980s and beyond. Their emphasis on class struggle against oppression and exploitation, on internationalism, meaning hostility to the “Australian national interest”, and on revolution distinguished them from other currents on the left.

In 1979, citing the scope of Australia’s manufacturing industry, high living standards and imperialist policies, as well as the support of the Australian bourgeoisie for investment from abroad, Jon West of the Socialist Workers Party (SWP, descended from the Socialist Youth Alliance and a predecessor of both Socialist Alliance and Socialist Alternative) contested the notion that Australia was a neo-colony. Australian-based enterprises, he pointed out, are just as likely to sack workers and move operations off-shore as foreign owned corporations. Protectionism is not only an unreliable way of saving jobs, especially in the face of economic crises and technological change, it is also imposed at the expense of workers in other countries, fuels inflation and is a false “substitute for a class struggle approach” to defending pay, conditions and jobs. Crucially, “The Australian bourgeoisie retains firm control of the apparatuses of the Australian state and utilises these apparatuses for its own advancement and defence”. So “the labour movement needs to break away from seeing its interests as linked to those of the capitalist class”, whether embodied in free trade or protectionist policies. Australia was “a medium sized imperialist power”.^[47]

Tom O’Lincoln, of the International Socialists (IS, a predecessor of Socialist Alternative), argued in 1980 that Australia was “an independent spearhead and springboard for the great powers”. This conclusion was justified with reference to the history of Australia’s relationships with Britain and then the USA. Drawing on a mainstream newspaper article about Menzies and the Vietnam War, he pointed out that:

The pattern of Australia as more hawkish than the great powers is perhaps clearest in the case of Vietnam. Left nationalists are fond of attacking US imperialism for dragging this country into the war. But the truth is that Australia did a fair bit of dragging itself.

Subsequent research demonstrated not only that the Australian government was keen to draw the United States deeper into the conflict but also contrived to have Australia invited to participate, to this end, by the South Vietnamese government.^[48]

O’Lincoln attempted to distinguish his analysis from that of the larger and more orthodoxly Trotskyist SWP. Australian nationalism should be opposed because the country was not oppressed. The argument that it was had some plausibility because of the substantial presence of US corporations in Australia and the obsequious behaviour of Liberal politicians in the presence of their US counterparts. But Australia was not “an imperialist power in its own right”, because of its alliances with Britain and then the USA.^[49] In essence, his position was, nevertheless, the same as West’s. Earlier, O’Lincoln himself had, if briefly, identified Australia as straightforwardly imperialist. The IS’s successor organisations did likewise, sometimes at greater length and with greater attention to capital exports from Australia, and O’Lincoln’s own 2014 The Neighbour from Hell was subtitled Two Centuries of Australian Imperialism.^[50] Other states, ranging from Britain, France and Germany to Canada, the Netherlands and Belgium were and are similarly small imperialist states in alliance with the USA.

Like West, a couple of years later, I attacked the left nationalist contention that transnational corporations and the Fraser government were determined to deindustrialise Australia, in International Socialist (a predecessor of Marxist Left Review) and the Journal of Australia Political Economy.^[51] The left reformist proposals, I accepted, addressed real problems faced by workers: employment insecurity, low pay, cuts in the social system and attacks by the government. But they were false solutions. During the 1970s declines in manufacturing were less due to changes in levels of protection than the end of the long post-World War II boom and technological changes with increasing economies of scale, which undermined the competitiveness and relative efficiency of some Australian manufacturing industries. Import controls are also an unreliable means of securing local jobs because they can prompt other countries to retaliate in kind, reducing markets for Australian exports. Declining shares of manufacturing in national economic activity were also characteristic of developed countries. And, it is worth adding today, Australia is a developed country, on the fundamental criterion of the level of accumulated capital per worker across the economy. Furthermore, it was not Fraser but the Labor governments of the 1980s and 1990s which took the first systematic steps to reduce protection and adopt an approach to Australian capitalist development that departed from the strategy of import substitution industrialisation.

Protectionism is not simply a matter of redistributing income from protected to unprotected sectors. It is a class question too. It also transfers income from consumers, including workers, who pay higher prices for imported products, particularly to bosses in protected industries. It was, moreover, primarily transnational corporations manufacturing in Australia which benefited from the tariffs and quotas on car imports. The extent to which pay is good or bad in protected industries, as elsewhere, is mainly determined by workers’ ability to extract higher wages from employers through industrial struggle.

The logic of the left nationalist approach was apparent in the middle of 1980 when General Motors Holden decided to close its Pagewood plant in Sydney, where about 1,500 highly protected jobs were at stake. Officials from both the right-wing Vehicle Builders’ and the left-wing Metal Workers’ unions were united in arguing that the fight was over the level of redundancy pay and in heading off a militant struggle. But there were shop stewards who wanted the workers to occupy the factory over demands for nationalisation and no redundancies. The unions’ tacit acknowledgement that concern about employers’ profitability should be shared by workers – the identification with the employer’s interests inherent in supporting protectionism – undermined struggles against redundancies on the ground that an enterprise was not profitable.

Like traditional reformist socialism, which still had adherents and did not regard some sections of the capitalist class as potential allies, the alternative economic strategies all hinged on fundamental change coming through parliament. Both approaches made a series of utopian assumptions, each less likely than the previous one, in comparison with the strategy of workers’ revolution. These were that a powerful left wing can win control of the Labor Party; the party can win control of parliament; a Labor government can succeed in implementing its policies in full, without being sabotaged by the Labor right, the unelected parts of the state (governor general, armed forces, public service and courts) or the responses of capitalists to the resulting erosion of their ability to make profits. The repertoire of such responses, used to discipline the far from radical governments of Ben Chifley in the late 1940s and Whitlam, it can be added, includes media and organisational mobilisations, and investment strikes.

Both the SWP and IS were convinced that a revolutionary socialist strategy was more plausible than the “alternative strategies” they criticised. They also agreed that a successful workers’ revolution depended on the existence of a mass, socialist party, which was based in the working class. Under the leadership of such a party, the working class could smash the Australian capitalist state.^[52] Despite their differences on a series of questions, notably their analyses of Stalinist and third world nationalist states, and the nature of the trade union bureaucracy, they were both attempting to promote the emergence of a revolutionary party.

Later, in Militancy Uprooted, I developed these criticisms and noted that one of their advocates, Bruce Hartnett, an ACTU official and ALP member, had identified where their weakness lay: “A socialist strategy for Australia…must include, firstly, an alternative economic programme which is realistic, credible and achievable”.^[53] But such an alternative economic program to achieve sustained full employment and rising living standards was unachievable under capitalism. The capitalist imperative of accumulation, replacing living with dead labour, necessarily leads to recurrent crises. It is workers and not machines who create new wealth. In the medium to long term, employers spend more and more on equipment compared to outlays on wages and there is consequently a tendency for the rate of profit to fall. Australia is, moreover, inextricably involved in the international organisation of production and exchange. Attempts to withdraw from the world economy can only lead to lower living standards. The alternative economic strategies did not come to terms with Australia’s necessary economic relationships with the rest of the world. Instead, they attributed most of Australia’s problems to conspiracies by transnational corporations rather than the reality of international accumulation, production and exchange.

Australian workers’ living standards, I argued, are heavily and, given the small size of the population, unavoidably dependent on international trade. The importation of a wide range of commodities, from raw materials and machine tools to much of our clothing, not only sustains local industry but also our personal comfort. Attempts to solve unemployment by eliminating these imports can only result in an inferior quality of life, and would still fail to eliminate the cause of unemployment in the dependence of production on the rate of profit. Additional measures of protection would both raise the cost of protected goods and risk retaliation against the country’s mainly primary exports, leading to further declines in living standards.

Investments from abroad have long expanded the scope of Australian industry and employment. To survive without infusions of overseas capital while industry and employment are maintained would require an increase in the social rate of savings. That is, the amount available for workers to consume would have to be cut. This would especially be the case as capital equipment, produced by protected local industries, would be more expensive than imported capital goods. Any strategy, no matter how much nationalisation it involves, which fails to confront and challenge this reality could not be realistic or credible, let alone achievable.

The most positive element in the alternative economic strategies was their insistence that struggles outside parliament, including industrial action on the shop floor and mobilisations in the streets, were important. At least the reformist left still endorsed the progressive nature of class struggle, even, at a pinch, struggles over “economic” issues. But other key features of the strategies worked in the opposite direction. Theories about multinational corporate conspiracies were associated with the idea that there was scope for collaboration with Australian bosses. The nationalist defence of the manufacturing industry established a further common interest with sections of the bourgeoisie.^[54] The strategies’ reliance on a left parliamentary government, whatever qualifications were made, offered a substitute for working-class action. For union officials the development of the strategy could be an alternative to leading struggles around economic questions. But in the absence of such struggles workers were not self-confident enough to fight for more wide-ranging demands embodied in alternative programs, no matter how “open-ended”. Eventually the contradiction between endorsement of the class struggle and the other components of the alternative economic strategies could not be sustained. The effects of the recession from 1982 and the class interests of the union bureaucratic elements of the left determined the way in which this contradiction was resolved.

Alternative economic strategy turns into incomes policy

Under the governments of Bob Hawke (1983–90) and Paul Keating (1990–96) the resolution took the form of the Prices and Incomes Accord with the unions.^[55] It was the direct descendent of the alternative economic programs. In the rhetoric of left reformists – the ALP left, Communist Party and left union officials – the Accord was not only about workers’ conditions, the paid and social wage; it was a path to socialism.^[56] In effect between 1983 and 1996, the Accord centralised Australian wage setting, while promising to maintain real wages “over time”. It co-opted union officials into the process of industry restructuring, while committing “to a diversified manufacturing sector”, no reduction in industry protection “for the foreseeable future” and improvements in the social wage.^[57]

The new government’s neoliberal fervour put Fraser to shame. One of its first steps was to move away from government efforts to set the exchange rate between the Australian and US dollars, and reduce controls over the financial sector. To facilitate competition, Hawke’s government relaxed rules on the ownership of print and electronic media, expediting the expansion of Rupert Murdoch’s empire and his domination of the Australian daily press. Labor terminated the “two airline policy” (one privately, one publicly owned) and ended the state-owned monopoly of Telecom (now Telstra) over the telephone/telecommunications network.

In terms of the social wage, Labor expanded “user pays” principles for public services, including, in 1989, the reintroduction of university fees, abolished under Whitlam; and the increasing substitution of compulsory superannuation, funded out of wages, for the state-financed pension. Various government-owned enterprises were turned into corporations, which opened the way to their privatisation. Although the Hawke government had already sold the Williamstown Dockyard in 1987, privatisation of public assets took off in the early 1990s. Out the door went 49.9 percent of Telstra, the Commonwealth Bank, AUSSAT (now Optus), Qantas, the Snowy Mountains Engineering Corporation and the Commonwealth Serum Laboratories (now CSL). State governments got in on the act too. John Howard’s conservative Liberal-National government only continued the sell-off. Labor presided over the legislative demolition of industry-wide bargaining over wages and conditions and the introduction of the system of enterprise level negotiations that persists today.

The alternative strategies had been presented as “open-ended”. It turned out that this meant they were subject to rightward revision, to accommodate the left nationalists’ abandonment of their strategy’s most positive feature: a willingness to support, at least verbally, workers’ struggles to defend their wages and conditions. With the Accord all that remained of the reformist left’s principles was reliance on the state and nationalism. Increased state ownership, as a short-term demand, had been ditched. Although the Accord had committed the government to “a diversified manufacturing sector”,^[58] the Hawke government’s policies reflected the orthodox economic prescription that Australia needed more specialised, competitive manufacturing industries. This approach had something to offer Australian capitalism: a degree of rationalisation so that local industry could compete more effectively with overseas competitors. Left nationalists eventually came to accept the (capitalist economic) wisdom of this approach. For a while they maintained their hostility to the multinationals, adapting it to a modified apologetic purpose by contrasting the Labor government’s virtuous policies to the evil intentions of foreign corporations.^[59]

John Halfpenny, secretary of the AMWU in Victoria and a former Communist, summarised the embrace of the new consensus. Trade unions, he wrote, “want sustainable growth, stable jobs and a wealth creating economy. We want more jobs, and not just any old jobs. We want more wealth so that there is a bigger cake to be distributed in a fair and equitable manner”. And, when making a bid for an ALP seat in the Senate, he made clear that this actually meant attacking hard-won conditions of work:

“Changes in work practices, including the avoidance of demarcation disputes, are vital to assist the development of industry”, he said.

“Unions will encourage and co-operate in the elimination of inappropriate work practices, having regard to the particular circumstances in each plant and workplace.”

“…Many workers could be retrained and relocated in the interests of efficiency and quality of production”, he said.^[60]

There was little discernible difference between this attitude of encouraging workers to identify their interests with those of their bosses and Liberal leader John Howard’s comment in his reply to Labor’s 1986 budget: “We want workers and employers to get together and agree to get rid of restrictive work practices”.^[61]

Under the Accord, key advocates of an alternative economic strategy for Australia went over to the emerging, mainstream policy consensus about the way forward for Australian capitalism.^[62] Australia Reconstructed, the 1987 report of the ACTU/Trade Development Council Mission to Europe, reflected this change among left-wing trade union officials. The left populist diagnosis of the country’s problems was nowhere to be seen. Still less mention of class struggle or working-class consciousness. The new strategy focused on the need for local industry to be internationally competitive and saw a positive role for market forces. One of the report’s very many recommendations was: “There is an urgent need in the community to develop in Australia a Production Consciousness and culture, both in industry and the community”.^[63]

The mission was made up of senior trade union officials, from the left and right of the movement, along with Ted Wilshire, the Executive Director of the Trade Development Council’s secretariat, and Terry Counihan, also from the TDC secretariat. None of the participants dissented. That the report’s title echoed those of the AMWU’s publications on economic strategy in the 1970s was no coincidence. Wilshire had been on the team which produced them and made his way via Labor Minister for Trade Lionel Bowen’s office into the public service.^[64]

It is not difficult to establish whose interests the class collaboration embodied in the Accord served.^[65] Critics on the left early pointed out what the main consequences would be.^[66] For the Australian working class, the benefits of the Accord were free retraining opportunities that just those workers made redundant under plans that restructured the steel, car, heavy engineering and textile, clothing and footwear industries could take up; and some limited improvements in the social wage and welfare payments. The limited improvements workers and the poor gained were far outweighed by the costs imposed on them.

The benefits for the capitalist class were far weightier. Without precedent in Australian history, there was no improvement in real wages during the economic recovery of the 1980s. The feat was repeated during the 1990s. Work practices which limited the pace of work and maintained the number of jobs in enterprises were sacrificed to achieve pay rises which just kept up with inflation. The Australian Financial Review noticed that at BHP’s steelworks, “One continuing problem has been the difficulties of the union management in convincing its rank and file that some entrenched methods of work should be ditched for something as general as industry rationalisation”.^[67] The profits share of national income rose, the wages share fell. While the living standards of the bulk of the working class stagnated, income redistribution upwards, to the capitalist class, outbalanced what went down to the poorest, through expansion in health, education and welfare spending. Centralised wage fixing and productivity bargaining led to a severe erosion of workplace union organisation and accelerated declining union density. The reluctance of union officials to spread industrial action to support workers in dispute was decisive in a series of landmark defeats for the movement and victories for employers, at the South East Queensland Electricity Board, Mudginberri abattoir, Dollar Sweets, all in 1985, and the massive Robe River iron ore operation, a bastion of union strength, in 1987. While officials from other unions were complicit, supportive of government action or silent, the militant Builders’ Labourers Federation was destroyed in 1986 and a strike by domestic airline pilots broken by the air force in 1989. Both unions had pursued improved pay outside the Accord’s provisions.^[68]

Most senior union officials also did well out of the Accord. By embracing it, they sold the union movement’s birthright – the struggle to defend and improve workers’ lot – for a mess of pottage. Those at the top of the union movement supped on a very generous share of the pottage – not just the hefty fees enjoyed by some senior union officials appointed to part-time government offices and industry superannuation funds, but also the enhanced status and public recognition that went along with these posts, photo-ops with ministers, and their role as very junior partners in the management of Australian capitalism, which came in handy when union elections came around.

In left debates over the nature of Australian capitalism and strategy, the arguments of revolutionaries in tiny organisations were overshadowed by those of the much more influential reformist left. Among my first publications, from over forty years ago, and some later ones were contributions to those debates.^[69] My broad assessment and criticisms of the developments during the 1970s and 1980s, outlined above, draws heavily on what I wrote then and like my political orientation are little changed. My commitment to both was reinforced by the outcomes of the Accord. If I have, in this sense, been conservative in my views that is not the case for left reformists. For my concluding prediction in Militancy Uprooted was wrong.

Lack of discord

In 1986, I argued that disillusionment with the Accord and the Hawke government would probably grow over the next few years and that the left would be reconstituted as a stronger force, more independent of the Labor right. But there was a danger that it could continue to be populist and reformist. In fact, there was no sustained revival of class struggle or the reformist left, even during the long period of economic growth after the 1990–92 recession. But the nationalist left’s preoccupation with domestic manufacturing industry, earlier shared across the political spectrum to the right, has remained a widespread, common-sense notion.

The reformist left had entered a period of prolonged decline well before upticks in social conflict: against the industrial relations policies of the newly elected conservative government of John Howard in 1996 and again in 2005–6; the attempt to break the Maritime Union by Patricks Stevedores and the government in 1998; the 2000 S11 protests against the World Economic Forum in Melbourne; and movements against the invasions of Afghanistan in 2001 and, featuring the largest demonstrations in Australian history, Iraq in 2002–3. In 1991, after years of stagnation, the CPA had already liquidated itself into the New Left Party, which promptly disappeared, and the SEARCH Foundation, whose front web page now appropriately has a link to “Obituaries”.^[70] The distinction between left- and right-wing union officials has almost evaporated. Most former left reformists remained true to the Labor Party. Some saw hope in the Greens, which grew and achieved a consistent presence in most Australian parliaments, though unlike Labor, it did not even have a declining organic relationship with the working class. But the big shift in the labour movement was away from any vision of radical social change let alone a “socialism” that is more than a slightly more humane version of capitalism, under which workers’ lives improve as the size of the cake increases, not because they win a bigger slice.

The Labor Party and the Labor left continued an uneven shift to the right. Eventually the left of the ALP caught up with the right. Organised left reformism in Australia collapsed. So today there is little to differentiate the Labor left and Labor right except as rival ladders occupied by union officials, politicians, their families, friends and staffers, along with the mates of ambitious university students and graduates, seeking jobs with trade unions, in politicians’ offices, on local councils or, at the pinnacle, seats in the parliamentary pastry shops that front the capitalist bakery.

Left reformist ideas may be in eclipse today but can become influential again, particularly if there is a sustained revival in the level of class struggle. Taking responsibility for the course of Australian capitalism’s development has been a defining characteristic of both mainstream and left reformists. By accepting the logic of capitalist profit-making, it is counterposed to workers’ interests. The still minuscule far left, mainly embodied in Socialist Alternative today, has fared better than left reformist currents over recent decades. The far left has continued to advocate the combination of the fight for improvements now, to expand workers’ share of the cake they produce, with a longer term perspective not of being governmental assistants to capitalist confectioners but of workers’ revolutionary takeover of the whole bloody bakery. So, at present, the contrast between the Labor-Liberal consensus about the management of Australian capitalism and the revolutionary alternative is stark and uncomplicated by social democrats with socialist rhetoric who are, ultimately, defenders of capitalism.

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