Review: How labour introduced neoliberalism

by Stephanie Price

Elizabeth Humphrys, How labour built neoliberalism. Australia’s Accord, the labour movement and the neoliberal project, Leiden, Boston: Brill, 2019.

“It is a blatant denial of history for Scott Morrison to allege that the Labor Party cannot manage the economy when he knows the design and structure of the modern Australian economy was put in place exclusively by the Labor Party. The economy is Labor’s.”[1]

“While Bill’s opponents argue his trade union background is a liability for a future Prime Minister, I consider it an asset, as it was for me. It gives him the experience to achieve consensus with business, unions and community-based organisations for the challenges that lie ahead.”[2]

In pre-election correspondence with their “fellow Australians”, former Labor prime ministers Bob Hawke and Paul Keating provided a timely confirmation of a central thesis of Elizabeth Humphrys’ How labour built neoliberalism.

The shape of the modern Australian economy belongs to the efforts of Labor. It was only the Hawke and Keating governments (1983-1996) which could cohere the political and social forces needed to construct a neoliberal economic order in response to the crisis of profitability which developed after the end of the post-war boom. Moreover, it was a Labor government alone that could bring the union movement in as a willing collaborator to a national reform project which ultimately depended for success on a historic defeat of the Australian working class.

How labour built neoliberalism examines the Prices and Incomes Accord as the key instrument of this process. The Accord was a series of agreements struck between Labor and the ACTU – the first in 1983 and the last in 1991. Over their life, the agreements provided a “flexible, adaptive and lasting framework”[3] for the development and implementation of national economic policy at a time when capitalism was beset by crisis. As Humphrys writes:

For the state and capital, the Accord was “fit for purpose” in a period of failing profitability and high levels of industrial struggle. For the labour movement, including the militant blue-collar unions (whose members were bearing the brunt of mass retrenchments), it held out the promise of resolving the crisis and delivering progressive social wage reforms for their members. In practice, the interests of the state and capital won out.[4]

Though Humphrys’ work is predominantly an exposition on the dynamics of the Accord years, she situates the social contract within a long history of corporatist arrangements – including arbitration – “corralling” trade unions within the machinery of the Australian state. Under the stewardship of an ALP “preaching consensus and economic reform”,[5] the Accord represented a reshaping and strengthening of the ties binding unions to the state apparatus.

To hear some union and Labor leaders describe the era today, these were halcyon days. “[It] was a high point of the political and industrial wings of the labour movement linked informally and formally in the national interest to deliver economic stability and historic reforms”[6] is how then-ACTU president Ged Kearney put it in 2013, speaking at an event to mark 30 years since the first Accord. In the audience at the same event, Humphreys described the occasion – in which former Labor politicians and union officials recounted their role in the Accord – as having “an air of the surreal, like a party in a cemetery”.[7] Six years on the self-congratulation continues, reaching a new fantastical peak in the aftermath of the death of Bob Hawke. Among the torrent of eulogies, current ACTU secretary Sally McManus tweeted simply: “Medicare. Superannuation. Modern Australia. Union movement hero”.

The “modern Australia” delivered through the Accord is one in which fewer than 15 percent of workers are members of their union, and industrial action has all but disappeared. Measured by the number of days lost, the rate of industrial disputation has declined more than 97 percent since the 1970s – down from an annual average of 3,146,000 days spent on strike in the 1970s to just 145,000 in the 2010s.[8] Wages are stuck – registering their slowest growth in the post-war period. Industrial Awards have been “modernised” to the bone. Collective bargaining – even limited to the workplace level – is in freefall. The number of workers covered by enterprise agreements has collapsed. This is the legacy of the Accord. How labour built neoliberalism is an argument to turn on the lights, turn off the music and reckon with this history.

The Accord

Humphrys argues that, “[a]fter the failure of ‘Keynesian’ strategies to resolve the crisis in the 1970s, a proactive union leadership became committed to a solution based on offering up organised labour – and its ability to increase its own exploitation by accepting ‘wage restraint’ on a national basis – as a critical tool of macroeconomic policy”.[9]

The fleeting promise of the Accord was that, in exchange for agreeing to peg wage rises to inflation and to abandon industrial action as a tactic, workers would share in the prosperity of the economic recovery. Job creation, price moderation, redistributive tax policies and an expanded “social wage” were the assurances. The reality was that the indexation of wages to inflation was scrapped almost immediately, real wages fell sharply while profits rose, the mechanisms for setting wages and conditions were permanently restructured in bosses’ favour, tax reform favoured the rich, and most elements of an expanded social wage did not materialise. Most significantly, in the bargain, the trade union movement laid down its weapons and hasn’t picked them up again since.

How labour built neoliberalism is an important contribution to the critical study of a period of history that has largely escaped honest appraisal. It builds on the work of Tom Bramble, Rick Kuhn and others, joining a small but important offering of literature that frankly explains the genesis of the unions’ current crisis.

Humphrys examines the political, industrial and economic factors which coalesced to bring the Accord to be. She chronicles its rapid shift from a wide-ranging statement of economic and social reform objectives – with the ostensible if vaguely expressed aim of preserving working class living standards – to a narrow deed of wage suppression and deadening industrial passivity. Humphrys sets out in compelling detail how the key objectives of a neoliberal restructure, including wage suppression, labour disorganisation and the redistribution of national income from wages to profits, can be attributed to the Accord process.

At times, the use of “labour” as a broad category leaves unclear the distinction between the rank and file and union officials, which risks giving the impression that workers and their leaders were comparably culpable in the outcomes of the Accord. In fact, and as Humphrys draws out well throughout, an array of ideological, organisational and industrial weapons were needed to contain the rank-and-file within the Accord process. Along with the role played by left union and Communist Party leaders in winning support for the Accord among militants, Humphrys connects the growth of the union bureaucracy, its increasing centralisation and role in policing workers’ industrial activity and the break-up of rank and file structures with the hollowing out of the union movement’s militant base.

The ambiguous attitude of many rank and file militants is encapsulated in the account of the final meeting of the Coburg branch of the metal workers’ union in August 1988. After registering their “protest at the arbitrary action in closing branches which have a long history in the effective operation of the union”,[10] their final entry into the minutes book reads:

Last and final meeting of the AMWU Coburg Branch 321 closed at 9:35pm. Good luck and best wishes to all the loyal members who have attended the branch meetings over the years it has been in existence.[11]

Their reluctance, combined with sense of powerless to resist the process, was a crucial precondition for Labor’s success.

While How labour built neoliberalism is not primarily a polemic, it nevertheless provides an unflinching and comprehensive critique of the incorporation of the labour movement into a historic project to stabilise and advance class rule.

Vanguard neoliberalism

Humphreys argues that the Accord was both the form and method through which neoliberal transformation was carried through in Australia, a feature which marks the implementation of neoliberalism here as somewhat unique. The Accord did not simply occur at the same time as, nor did it merely assist, the introduction of a particular set of market-oriented policies – privatisation, financial and labour market deregulation, user pays, welfare attacks, trade liberalisation and the corporatisation of the public sector. Crucially it was as a corporatist social contract that the Accord “engendered consent for the neoliberal project to take place by integrating the unions and working class into the efforts of political society to construct a new form of social rule”.[12] In this, the social contract’s central actors, and those within the union movement who provided ideological cover for its key aims, succeeded where earlier attempts to decisively resolve the crisis in capital’s favour had not.

Comparing the Hawke-Keating government with the Fraser Liberal government it replaced illustrates the argument. Though Fraser also pursued a number of economic rationalist policies, including seeking to implement a wage freeze and hobble union militancy to rebuild profitability, his attempts to impose these measures on a powerful and combative union movement were successfully and relatively easily repelled. Fraser’s failure was largely “tied up with how the social forces represented by the trade union leadership – and less directly by the ALP itself – were profoundly antagonistic to his administration”.[13] If consent was to be glue that held the Australian neoliberal project together, it would take a Labor government to get the formula right.

Again, Kearney’s 30-year anniversary address provides an unwittingly frank account of effectiveness of the Accord as the central vehicle for incorporating the union movement into the project to remake capitalist production after the end of the post-war boom:

That these changes took place in Australia in the 1980s without damaging social cohesion must be attributed to the partnership of a Labor Government and working Australians. It is impossible to envisage the same social stability during such a period of significant economic restructuring under a Liberal Government.[14]

The specificity of neoliberalism’s construction and implementation in Australia leads to another key argument of How labour built neoliberalism: that Australia diverges from the dominant narrative about neoliberalism’s social and historical origins. As an open “collaborative project” between a Labor government and representatives of the organised working class, Australia’s neoliberal transformation jars with the conceptual framework used in most radical critiques.

These critiques characterise the introduction of neoliberalism as a project belonging to parties of the right. In its typical origin story, a new economic and political order was hammered into place by coercive state means, presided over by conservative governments. The projects of the Thatcher and Reagan administrations are regarded as the exemplars of a model based on the dramatic imposition of a neoliberal restructure on the working class. Usually a centrepiece of the vanguard neoliberal phase was a major set-piece industrial confrontation with a key trade union – for Thatcher, the miners and for Reagan, the air traffic controllers. This account generally casts social democratic parties in the role of more or less willing followers, implementing attenuated neoliberal measures after the vanguard phase is carried through.[15]

Clearly, this analysis fails to properly account for the dynamics in Australia – denying the Accord partners credit for their historic role as architects of the neoliberal economic order. How labour built neoliberalism restores this dubious credit to the ALP and its union partners:

The hobbling of the trade unions was also necessary in Australia, but took a radically different form – a corporatist social contract that unions willingly signed but which weakened and disorganised them as the full panoply of the neoliberal economic program was driven through by “their” government.[16]

In doing so, it sets out and rebuts a series of claims still offered today in defence of the Accord and the collaborationist strategy it embodies. The shape of such a defence usually appears as some combination of an insistence that the Accord was an advance that delivered important “social wage” reforms, that the pact with Labor was a buttress against the New Right and/or a buffer against worse effects had neoliberalism been imposed without a social contract.

It “reads history backwards”,[17] Humphrys argues, to propose that even if the overall outcome of the Accord was negative for the working class, a social contract based on sacrifice in the national interest produced a better result than the alternative. “Such an approach presumes the inevitability of harsh neoliberal restructuring under any alternative hypothetical scenario”,[18] she points out. In relation to the “social wage” claims by the Accord’s apologists, Humphrys takes a critical look at Medicare and superannuation and questions the characterisation of these reforms today as unequivocal advances. More broadly she situates “social wage” concessions within the “wider and deeper losses”[19] affected by the Accord process, including the decimation of unions’ industrial strength and capacity to organise. As measures supposed to ameliorate substantial losses in other areas for workers, they fall hopelessly short.

Humphrys’ analysis of the Accord process raises some interesting questions about the relationship between the union movement and the state. Characterised, as the advent of neoliberalism was elsewhere, by open confrontation between the unions and government, its legacy in Australia has created different problems for the labour movement here. Humphrys discusses this in relation to Gramsci’s concept of the “integral state”, or the tendency of Western capitalist countries to rely on co-option by a state broadly seen to have legitimacy in order to stabilise and generate consent for the rule of capital. This is a discussion that will be of interest primarily to an academic audience and, while interesting, the political conclusions of the book do not hinge on this aspect of the analysis.

Defences of the Accord share an intention to separate the social contract from its neoliberal heart. In this way, proponents of these arguments – including many current union leaders – hope to legitimise class collaboration. Without it, particularly given the collapse in union membership, the position of these leaders appears increasingly precarious. How labour built neoliberalism is critical reading for anyone who wants to understand the context of today’s trade union crisis.

References

Humphrys, Elizabeth 2019, How labour built neoliberalism: Australia’s Accord, the labour movement and the neoliberal project, Leiden, Boston: Brill.

Kearney, Ged 2013, address to “The Accord 30 Years On” symposium, Macquarie University, Sydney, 31 May 2013, https://www.actu.org.au/actu-media/speeches-and-opinion/ged-kearney-address-to-the-accord-30-years-on-symposium-31-may-2013.

[1] Bob Hawke and Paul Keating, “Scott Morrison is flying the face of history with his fallacious claim”, Sydney Morning Herald, 8 May 2019.

[2] David Crowe, “Hawke backs Shorten as ‘consensus’ leader in new open letter”, Sydney Morning Herald, 15 May 2019.

[3] Humphrys 2019, p100.

[4] ibid., p129.

[5] ibid., p9.

[6] Kearney 2013.

[7] Humphrys 2019, p6.

[8] Jim Stanford, Historical Data on the Decline in Australian Industrial Disputes, The Australia Institute, Centre for Future Work, 30 January 2018.

[9] Humphrys 2019, p113.

[10] ibid., p177.

[11] ibid., p178.

[12] ibid., p9.

[13] ibid., p90.

[14] Kearney 2013.

[15] Humphrys, p52.

[16] ibid., p101.

[17] ibid., p153.

[18] ibid.

[19] ibid., p153.