Interesting article. I would gladly give up my tax cuts for greater investment in education and infrastructure, which the Howard Porkbarrellers shamefully neglected while they pretended that budget surpluses solely from mining revenue somehow made them economic geniuses.

However, calls for a more generous welfare state will fall on deaf ears. Howard knew that working people would applaud his attacks on a bloated welfare state which had undermined the incentive of many Australians to work at all.

When a welfare system is developed that can adequately separate the genuinely vulnerable and temporarily needy from those who would endlessly exploit the generosity of the taxpayer, calls for a more generous welfare state might get some traction.

Dear Cosmogirl,

To called the welfare state 'bloated' is to miss the reality of a system that is failing dismally to keep up with a spiraling cost of living.

Petrol, internet, water, energy, interest rates: all contribute to the desperate straits felt by those on welfare. In Victoria we face the prospect of a private desalination plant which will - as far as I've heard - will triple the price of water.

Believe me - surviving on welfare is no easy task. And we bipartisan support for 'active labour market programs' - sometimes the process is crushing, oppressive and demoralising.

This in mind, I cannot see any justification for policies which force the burden of combatting inflation on those least able to afford it

And finally - if the burden can be - to a greater degree - shouldered by those who CAN afford it - why put pressure upon those whose financial situational is strained - or even desperate.

I am at least glad, though, to see some debate.

*Believe me - surviving on welfare is no easy task.*

Well the general idea is that you go out and get a job
like everyone else.

Perhaps our retired politicains could also stop living on our welfare. $80 000 per year superannuation after nine years for a back-bencher and $330 000pa plus countless perks for failed Prime Ministers are far too much, especially when such can tread the world, at our expense, earning massive ammounts of money from "consulting" and giving paid-for speeches about how they screwed the rest of us.

This was a good article, full of interesting ideas and facts and figures. (One question on the facts, Tristan. You refer to a Ken Davidson article showing the shift in GDP from wages to profits since 1996. ABS figures from memory show the shift actually began much earlier - I think from about the time of the Accord under Hawke and Keating. Do you have those figures for say 1980 to 1996 by any chance?)

I too believe that Labor is a party of inequality. Unlike Tristan I don't think forming a party to the left of the ALP is the solution if such a party is trapped in the archaic idea that parliamentary parties can fundamentally challenge capitalism, the source of inequality.

Parties elected to parliament and then government are about managing capitalism. This would be as true of a parliamentary left party as it is of the ALP.

For me the solution is to build an organisation (at this stage party would be too grandiose a word to describe it) of the left committed to abolishing the font of inequality, capitalism and the way it is organised.

Nevertheless, congratulations to Tristan for a well thought out and well argued article. It was a real pleasure to read.

I voted for Labor because Howard was moribund. Although I believe that Rudd is a conservative politician who thought he would do better as a Labor politician I had hoped that he would inject some vision into the Australian political landscape so that this country could have a future not just a mediocre past.

It has been apparent since September 2007 that the world and Australia was entering a period of economic instability just when the effects of global warming were starting to bite.

The promise of tax cuts for the people who earn over $180,000 has to be broken. If we are serious about making the transition from welfare to work easier even larger tax cuts for those earning under $30,000 should be implemented. Ross Garnaut's recommendations have to be implemented otherwise even more than 1 in 7 Australian households major income stream will be welfare payments. I am sure Yabby would like to see all the unemployed, single parents, disabled and old age pensioners fend for themselves like we make sick people do.

Dear Passy,

It is common knowledge that there was wage restraint - and a corresponding fall in real wages - under Hawke and Keating...

According to The Gaurdian "labour's share of national income dropped... from 61% (in 1982) whereas in December 2000.. (it stood at) little more than 54%.

While many Marxist theories no longer hold up to scrutiny, his idea of a 'falling rate of profit' makes sense...

As productivity increases, and economic activity becomes less labour intensive, profits stand to fall unless the rate of exploitation increases...

Thus the wage share of the economy falls - and many would see this as an injustice... But many people do not notice or care - because new technology means increasing material living standards regardless...

Nevertheless, promoting a fairer share of the economy for labour is still a question of social justice... The best way of responding is to continue pursuing productivity - but to compensate labour through collective capital share... (ie: through wage earner or pension funds etc)

I am disappointed that so few posters seem to realise that we are moving into an entirely new economic period, in which few of the old certainties apply. There is, for example, not going to be enough oil to enable people to carry on as before, irrespective of income. One of the hardest hit groups will be those in gated communities in Sydney's south-west, who currently have about five cars per household, and consume 150 litres or more of fuel per week. It doesn't matter what money they receive, there won't be any fuel. They will have to commute to work using public transport, and spend many hours each day doing so. The value of their houses will collapse, because they are situated so far from shops and transport. Interest rates will have to rise substantially, otherwise people won't lend in an inflationary climate.

In other words, there will have to be a substantial cut in the standard of living, particularly in those who are unable or unwilling to reduce their consumption of energy resources. There can be no corresponding rise in wages, as this would just push the price of energy up still further.

Electricity is due for a massive increase. In addition, smart meters will charge at the price applying at the time the electricity is consumed, and that means that if you turn on your air conditioner in the afternoon when it is stinking hot, it will cost you a fortune. Those who cannot adapt by modifying their usage will pay the price. There can be no alternative, as otherwise there will be no electricity.

Over the next five years we can expect the price of food to treble, the price of electricity to treble, and the price of fuel to at least treble. People need to get used to the fact that there is nothing the government or anyone else can do to alter this.

How long will it be before the period from 1996 to 2007 is looked back on as the Howard Golden Age?

We are lucky in this country that we have a lot of COAL to burn thus staving off at least some of the costs of electricity.

It is not going to be the people who have massive houses with a fleet of cars who will hurt the most for they already have the money to buy hydrogen or electric vehicles which for the purposes of driving to work will be a treat as there will not be to many vehicles on the road.

The ones who will suffer will be the rest of us without the resources to survive in a lawless society of large groups of largely uneducated immigrants and our own nere do wells. Think South Africa.

Labour Govt is a slightly lite version of capitalism/economic rationalism. Lib Govt were sort of socialism lite, with their raft of middle class welfare.

So-called 'working class' is overstated. Most of this group are upwardly mobile middle-class, frequenting big box stores. Unwilling to delay material gratification, borrowing their way into 'our' mess.

Given that the masses in the middle have driven this whole buy now pay later lifestyle, its only fitting that they start paying. Later has arrived.

5-10% of rich/wealthy, poor/vulnerable at the margins are not the cause. They never are. They're a convenient scapegoat. Stirs up emotion, by exaggerating their impact/experience. Red herring.

Agreed, social justice could mean taking responsibility for your actions and not expecting others to foot the bill of your largesse.

Flog the 'rich' mantra wont be swallowed by the general voter, being plugged into the upwadly mobile pursuit of materialism inspired status, unlikely to flog what they're hoping to become. The 'socially minded' concerned about 'social justice' have embraced the middle class welfare doled out by Howard.

Ideological distinctions have been dead for at least 15-20yrs. Thankyou Keating. Very old fashioned. People have embraced a progressively upwardly mobile lifestyle. Genie's outta the bottle. Until everyone accepts that the oil is running out and population growth is outta control, few will even be willing to talk about how to get it back in.

Simplistic/naive idealism is not what got Labour in. Rudd is an eloquent speaker and master of platitudenous gestures (Kruddy Ruddish). He isnt a fool. Especially not regarding money. His marriage is worth $20 mil, no doubt his govt connections helped fill his coffers.

He's far too pragmatic in his self interest (power) to step into a time machine tuned to 1974.

ps. Hawke tried abolishing neg gearing... disasterous. Given current housing constraints, non-existent vacancy rates and spiralling rents, scarring off new construction of rental property would be disatrous. This cure is worse than the cough. Could advocate for rent controls... then expand pricing controls. But thats already been tried in the world.

A couple of points. Labor did announce the abolition of negative gearing and rents went up in Sydney. This was probably due to a housing shortage rather than the abolition of negative gearing.

On how to deal with a housing shortage, most hotels and motels achieve an average occupancy rate of around 70% from memory. That's an awful lot of spare rooms that we as a society could mandate the owners to make available to the homeless without cost. There are also a lot of Eastern Suburbs and North Shore houses with empty bedrooms. Same deal.

Tristan, you say that many of Marx's ideas are now dead. Stalinism is dead, thank god, but which ideas are you talking about? The revolutionary side of his ideas actually flows naturally from his analysis of the tendency of the rate of profit to fall, something you agree with.

I don't think increased productivity is going to save our bacon because it only increases the tendency of the rate of profit to decline. And it doesn't address the cyclical booms and busts inherent in the way capitalism is organised.

Finally thanks for the figures from 82 on. Not all of us deal with these issues on a day to day basis.

If you have ever worked with poor people,those struggling to make ends meet on low wages or pensions it is transparent that something needs to be done drastically. I cannot see how anyone can argue that this would fuel inflation. For most pensioners an increase will mean that the bills will be paid on time, adequate healthy food and they won't have to juggle their expenses from one pension to the next. I too would glady go without tax cuts to free up money for social infrastructure.

This country sadly needs a voice from the left - too much emphasis is placed on conservative and free trade economics and for a country which has one of the highest tax rates in the world (including hidden taxes at all levels of government) we are becoming more and more a 'user pays' society for services we once assumed were paid via general revenue.

People are brainwashed into equating left ideas with the "nanny state", Communist regimes and the like - but as a social democracy we accept that many services are free such as roads (most), bridges, schools, emergency services et al. These are socialised services and there are some things that should not be assigned to the whims of the private sector and a pure profit motive. The lack of funding to the mental health sector, disabled services, the homeless and other community services has steadily declined and with dire consequences. This is unacceptable in a civilised democracy.

This is not to argue that governments should control everything as most certainly there are some things best left to the private sector and away from the clutches of bureacracy.

We have to take a horses for courses approach and be pragmatic in how we tackle individual issues without having to conform to some ideal of left or right. What works, what is fair and how will it be paid for?

The health system in the US and the associated health insurers provide a blatant reminder of what happens when health providers are beholden first to shareholders and then to the sick.

"How long will it be before the period from 1996 to 2007 is looked back on as the Howard Golden Age?"
Posted by plerdsus, Saturday, 23 February 2008 11:42:34 AM

When hell freezes over??

(Excellent article, will come back to it, other fish to dissect).

Passy: regarding the 'tendency of the rate of profit to fall': I think this is hard-wired into the logic of capitalism... But as I said - improvements in technology see material living standards get better even despite a move into 'hyper-exploitation.' Wage earner funds, or citizen economic funds - could see justice for workers even in the face of this phenomenon - where capital share for workers is substituted for wage share.

Apart from this, there is still a significant Marxian legacy... On the one hand: the dialectical materialism associated with 'the later Marx' does not allow enough for free will, and is too simple schematicaly. Class struggle is an important 'historical engine' - but history is more complex that Marx's scheme allows for... And Marx's idea of 'false consciousness' assumes a 'correct' set of values for workers... Workers can fail see understand their objective interests - but ethics are broader than the quesiton of interest.

Marx is still 'spot on' in identifying the tendency towards monopoly in a 'pure' capitalist market. And 'commodity fetishism' remains in the sense that many consumers fail to indentify the labour from which consumables come.

Yes, Passy, of course rents would go up if negative gearing were abolished. You have neglected the all important question that needs to be asked - Why? The reason is investors stop buying rental units and the scarcity of rental units drives rent up.

Rent fixing does not work either - you can see multiple examples of that around the world. When rents are fixed with no corresponding fixing of investment (purchase) costs and maintenance (labor and parts) costs then investors are not going to buy rental units. Investors are not going to do repairs because they can not get their money back. Trades people are not going to be happy about a wage freeze, parts retailers are not going to be happy about a price freeze, factory workers making repair parts are not going to be happy about labor cost freeze. Where do you stop?

And your completely ludicrous proposition that hotels/motels should take in the homeless each night in unoccupied rooms.
I made the mistake once of staying in a hotel that had rooms contracted to the homeless - never again.

It seems that the simple reason the far left never is able to get much traction with the general electorate is the half thought out crackpot ideas being tabeled.
While their heart may be in the right place their mind has left them.

taxation is looting made customary, and sanctified by ignorance.

you want social justice?

1. erase taxation.

2. support social spending by a flat percentage collected by computer of all, thats a-l-l transactions. (electronic money can now replace cash)

3. ensure all subjects have an adequate income by putting all to work, by paying parents to raise children, by providing free health care, by providing free schooling. give the ill, aged, or defective a pension sufficient to live on.

labor's problem comes from trying to talk like 'left' while walking 'right'. capitalist societies have no solution to supporting the weak, the young, the ill- they are designed to profit from them. either break out of that mold or fail at the expressed objective.

labor can't break out, they will fail, but as long as they win elections, their pain will be tolerable.

Tristan says: “improvements in technology see material living standards get better even despite a move into 'hyper-exploitation.' Wage earner funds, or citizen economic funds - could see justice for workers even in the face of this phenomenon - where capital share for workers is substituted for wage share.”

While technological change may improve living standards (it may not also) it helps causes the rate of profit to fall and the consequences of that can be ultimately disastrous. The idea of a capital share for workers also won’t work since the surplus value workers create is expropriated and turned into profit, interest and so forth. Taking some of that back from the capitalist class, if that were effective, would see them respond with a capital strike, which the working class would need to address through the expropriation of the expropriators.

Tristan then makes some points about Marx’s ideas being too schematic and denying free will.

I don’t see a distinction between the so called early and late Marx, but that is a debate for another time and place. Marx didn’t see workers as deterministic figures indulging in some sort of historical role play. He saw them as both affected by and affecting history. Some lines from Marx and Engels from the Communist Manifesto have a real kernel of truth.

“The history of all hitherto existing society is the history of class struggles.”

Certainly Marx drew upon historical developments and trends to posit a view of the future. But for him and Engels: “… the first step in the revolution by the working class is to raise the proletariat to the position of ruling class to win the battle of democracy.”

This is not a deterministic formulation at all.

More generally I would suggest (if he has not already done so) that Tristan read something like "The revolutionary ideas of Karl Marx" by Alex Callinicos for a different view of Marx’s ideas. It is a primer true but gives a good introduction to those ideas and their relevance

Passy “On how to deal with a housing shortage, most hotels and motels achieve an average occupancy rate of around 70% from memory. That's an awful lot of spare rooms that we as a society could mandate the owners to make available to the homeless without cost. There are also a lot of Eastern Suburbs and North Shore houses with empty bedrooms. Same deal.”

So “we as a society” could mandate?

I thought that is why we elected politicians, to mandate for us.

However I do not think any politician is going to get elected on a manifesto of “government expropriation of vacant hotel rooms”

The same applies to private housing.

I live alone in my three bedroom house.

My partner lives alone in her three bedroom house.

I can assure you, no one who is presently “homeless” will “want to live with me. I value my privacy and anyone “mandated” to live in my house against my will, will soon find “the gutter” a more accommodating option.

“The revolutionary side of his ideas actually flows naturally from his analysis”

But the analysis was flawed, hence the expected outcomes remain “unpredicted”.

Unpredicted outcomes might work in some arcane theoretical model of social revolution or evolution or when playing “sim city” but it don’t work in real life.

“I don't think increased productivity is going to save our bacon because it only increases the tendency of the rate of profit to decline”

It has worked pretty well since before the industrial revolution.

The continued development of the “consumer society” and its export from developed nations in to less developed nations is ensuring the “increased productivity” is utilized into the manufacture of more and more value-adding products, invented and created by the capitalist system, without decline in the rate of profit.

If “rate of profit” declined, the value of shares would, likewise decline. Whilst shares are regularly changing and are volatile, relative to other investment option, the long term, ongoing trend is “onward and upward”.

plerdsus “Howard Golden Age"

Howards legacy of turning around the economic health of Australia will be immortalized

Tristan Ewings “regarding the 'tendency of the rate of profit to fall': I think this is hard-wired into the logic of capitalism”

I think the evidence of history says you are talking through your bum.

What you fail to accept is one of the fundamental differences between centrally planned socialist/ communist systems and a capitalist system.

The moribund bureaucracy which causes economic stagnation in socialist systems does not exist in the capitalist system,

Where the timeline between seeing a need and responding to it, is eternal in the “socialist/communist central planning model”, the advantage of the capitalist model is to respond in anticipation to the need and thus delivers value added products whilst the socialists are still debating the agenda for the planning meeting.

“Marx is still 'spot on' in identifying the tendency towards monopoly in a 'pure' capitalist market.”

So what? The state-runs-it-all system is a absolute monopoly which has all the relative drawbacks of any other monopoly only more so because, when the state owns all, no one is able to legislate against them.

And the practical implementation of Marxism is evidenced in history. The working and every other class “consumer” was left with excuses, empty shop shelves and bread queues, which were the hallmark of Poland, Russia and all the other “workers utopias”.

“And 'commodity fetishism' remains in the sense that many consumers fail to indentify the labour from which consumables come”

What you seen to forget is

the consumer is the labour from which consumables come.

You lefties are always talking up these 150 year old failed theories as if they had been written yesterday.

"Marx" is irrelevant to the present world.

Why capitalism works and socialism does not is simple.

Whilst you socialists are talking about the theories, the capitalist is out there making things happen.

The capitalist is improving peoples lives by responding, in a practical way, to peoples wants and needs.

Socialist / communists just wallow in some self-righteous masturbatory exercise of deciding what a “social justice” justification is for mandating the homeless be forced into the private homes of the owner occupier.

Dear Passy:

I could always do to revise my Marx - but I have read the book you mention, actually... It was one of the first books I read on Marx - when I was a teenager a very long time ago...

That said, though - I agree that Marx allowed for free will - 'people make their own history, but not as they choose... But this is also contradictory - for Marx saw class struggle as THE driving force behind history...something to the effect of "all history is the history of class struggles"...played out a materialistic and historical dialectic...

But such things aside: what of ethnicity, ideology, religion etc? It is too easy to see things in the Marxian sense of ideology, false consciousness etc...

What you say about "the proletariat winning the battle of democracy", though, is a critical facet of Marx's analysis...Some feel that Lenin substituted the Party for the working class...and hence his criticism of socialists, such as Kautsky, who criticised him on the issue of democracy... But one thing here: You make a good point:that Marx's "dictatorship of the proletariat" is not "totalitarianism" but rather the exercise of democratic rule by the proletariat... This should go even further though - and also recognise liberal rights...

After all - is not human liberty just as important as democracy?

more later - thanks. :-)

Passy: just another couple of points... You suppose that any attempt to win capital share for the working class would fail because of capital strike...History shows, however, that there are many instances of workers achieving collective capital share...either in pension funds, or (briefly) in Sweden with 'wage earner funds'..., and through support for social expenditure-provided partly for through corporate taxation...

Admittedly in Sweden there was massive retaliation against the 'Meidner wage earner funds'...but a more modest variant on this may imaginably provide a 'foot in the door' presuming a long struggle by 'the Left', organised labour etc...

If sustained democratic struggle could not deliver we never would have seen the rise of the social wage/welfare state in the first place.

The trick, though, is to respond to 'the fiscal crisis of the state' that Habermas talked about...mobilising workers and citizens to maintain and/or reclaim gains that are under threat by the neo-liberal variant of capitalism...Difficulty arises, though, attempting this while working within the logic of capitalism, and expropriating collective capital share to compensate for a shrinking wage share of the economy...Also problematic is the right of individuals to invest their money as they choose...While the wealthy ought be subject to a raft of progressive taxes, under these circumstances the best we can achieve is a 'mixed democratic economy'...(more of this later if the thread's still going...)

In other countries, also, there are much more progressive pension funds... Finally, there are other options - such as supporting co-operative enterprise through tax breaks, support and discount loans...

nb: the task ought not be underestimated - we are talking about years and even decades building a response to neo-liberalism...Building a'counter-hegemonic historic bloc'.. Wars of movement(see Gramsci) typically occur in vaccuums,leading to the destruction of liberal-democratic consenus, and the onset of desperate tactics,violence,terror... Far better a democratic 'war of position'..through liberal and democratic channels...

*"Marx" is irrelevant to the present world.*

Exactly. Today there is something like 1.2 trillion$
in super fund invesments, owned by Australian workers.

Thats enough to buy the ASX. Look up the share register
of Australian banks, miners etc, the top 20 are nearly
all Super funds. The more money these companies make,
the better off and richer, workers become. The "them"
and "us" story is just about gone, as if these companies
don't make money, workers will be the biggest losers,
given that they largely own these companies.

Inflation is not a result of the CPI. The CPI is an indicator of inflation - a bad one at that because of many elements are not included in the calculation.
To STOP inflation all the government needs to do is to stop printing money (including electronic money).
But then they would not be able to spend at the rate that they are now doing and that would upset the voters.

Tristan

I've regarded Adorno and Habermas as obscurantist dilettantes, but Gramsci is different.

I don't think you can use Gramsci's arguments to support the slow reform of capital argument. He was a revolutionary. I am also not sure that his thesis is correct. I'd have to think some more about it but it seems to me there are sharp periods of class struggle (eg May 68 in France, or 53 in East Germany, 56 in Poland, 68 in Czechoslovakia, 80 in Poland) which were not the result of long slow battles but rather sudden upsurges in struggle catching all sides by surprise. Maybe the slow 68 in Italy over the period 66 to 70?

I might have to go back and re-read him. It's been sometime.

"Why capitalism works and socialism does not is simple"

Care to point out a few shining examples of "pure" capitalism Col? Where there is no level of central planning whatsoever and everyone is better off for it? Where absolutely everything that is needed to sustain a modern society (there's that dirty "s" word you lot like to claim doesn't exist but does) is owned by private enterprise - and this works a treat?

I can't think of any off hand but I know one that comes closer than Australia and I have been there, the good ol' U.S of A. I did NOT like much of what I saw, the poverty and inequality was appalling. And we don't even need to talk about the state of their "superior" economy now do we?

Any talk of a properly functioning society (collection of self-interested individuals?) without some level of central planning, redistributive policies and abstract-but-oh-so-important concept of social justice is every bit a masturbatory excercise as one where absolutely everything is owned and controlled by the state.

I heartily concur there Fozz - if we define socialism as government intervention, then we're not dealing with opposing systems at all, rather, a sliding scale.
Either extreme end is unpleasant - a healthy mix is essential.
Some government intervention is not the kiss of death as die-hard economic libertarians would have you believe.

What's frustrating, is that this mantra of free market absolutism is frequently taken as gospel.

It's bulldust. The only reason why the free marketeers are able to get away with it, is because too much socialism has been proved to be a failure. I'm not denying that.

But I am saying that a high level of government regulation is NOT a kiss of death for an economy, and as an example, read this article in TIME magazine on how Denmark is the world's third most competitive economy, but has high taxes, but generous health, education and welfare provisions.

http://www.time.com/time/magazine/article/0,9171,1684528,00.html

I know Denmark's system won't work for all of us - but it's living proof that the free market mantra is not the only way and having a system that ensures a reasonable degree of health care, welfare and education does NOT mean an ailing economy.

Simply compare Denmark to the US and tell me which system's delivering better results for its people.

Dear Passy,

I've tried to read Habermas directly, but it makes really dense reading. In fact, I find it ironic that Habermas - for one who emphasises communication - is so difficult to think with..

So instead of tackling him directly, I've read about him instead. But from what I've read - concepts like 'legitimation crisis', the 'public sphere', 'system and life world', 'colonisation of the life world'... are relevant and important...

re: Gramsci - I agree there's no doubt he was a revolutionary... But what is revolution? And what is the difference between reform and revolution?

What of 'revolutionary reforms' as argued for by the Eurocommunists? Gramsci's idea of a 'war of position' is important here...

Though the struggle 'ebbs and flows', there are sometimes upsurges, sometimes troughs... There is a struggle for hegemony at the level of civil society that goes on... And it goes on at the level of what Habermas called 'the public sphere'..., through popular culture, art, media, music, counter-culture...

And there are compromises sometimes when neither side has the stomach for violent confrontation...

The hope is to have a perspective and strategy that lends itself to a multi-pronged strategy for social transformation... and for there to be a succession of strategic compromises in a long process of change - at both the level of state and civil society...

And importantly - although Nicos Poulantzas was a structuralist - he makes a good argument that the 'logic' (let's say 'process') of class struggle 'imprints' itself on the state. The state is not an 'instrument' of class oppression - it is contested ground - riddled with contradiction...

This is not necessarily a bad thing either... Personally I think that liberal democratic consensus is to be treasured...

But democracy does not justify oppression - for instance, workers in France have a right to stand up to the Gaulists regardless of whether or not the government has a mandate... Social AND liberal rights need be fought for together..

Fozz “Care to point out a few shining examples of "pure" capitalism””

Your question is a loaded one

Pure capitalism is a bit like the perfect market, it does not exist.

Since “markets” were first formed and itinerant workers and farmers produced goods for sale and exchange, no really pure ”market” has operated. No pure capitalism prevailed.

However, “Capitalism” does not exclude the role of government it never has.

What we see in the capitalism versus socialism is the separation of the means of production and assets into private hands, away from government versus the collective ownership of production and assets exclusively by government.

Government can then exercise, free of bias, its pivotal role as the arbiter or referee of the conduct of capitalists in the market,

Rather than government having the vested interest in the market as a capitalist proprietor. A role which represents governments conflict with its role as arbiter.

I would observe the role of the successful capitalist in history has often accompanied the compassion of philanthropy which even today is demonstrable in the Bill Gates foundation and the foundation which owns the lions share of Warren Buffets Hathaway Holdings.

This trait of philanthropy and concern for others is the product of capitalism. Governments cannot be philanthropic.

Governments cannot exercise compassion. Governments can only treat all as equal and not in accordance with their individual needs, as a philanthropist can.

As for the abstract comparison of capitalism to socialism,

The average Citizen of USA can be compared to the average citizen of North Korea.

In the centrally planned socialist model, on a per capita basis there are

Fewer wealthy people
Fewer middle class people
Fewer personal liberties
Fewer people allowed to make their own travel arrangements
Zero people entitled to challenge the authority of the state.
Fewer people living beyond the age of 50
Fewer people living in adequate housing
More people starving to death

The democratic role of government is to reflect the will of the people, not to outlaw peoples ability to acquire control of or deploy private wealth or productive resources.

"Pure capitalism is a bit like the perfect market, it does not exist"

We might well say the same thing of "pure" socialism. As turnrightthenleft pointed out, it is about getting the balance right between individual freedom and social justice.

To this end, there are some things that are better of left in public hands. Publicly owned monopolies can function to the benefit of all, private monopolies are much less likely to. You and I already had this argument a year or so ago when I pointed out that circumstances in my area combined to prompt the part-privatised water board to attempt to hike water prices by up to 1200% - at a time when water was abundant. Only government intervention prevented this.

Your list of the sad results of the excesses of socialism are not apparent in some countries with a fairly high degree of socialist type policies, such as the Nordic countries. They are however, starkly apparent in that great home of capitalism, the U.S. Social safety nets are all but non-existent in some states and everyone is left to fend for themselves whether they are capable or not. Too much capitalism and not enough socialism in the mix creates a degree of poverty and exploitation that I found quite shocking. If you watched the stars filing into the Kodak theatre last night, you will not see the crowd of beggars that are normally around the building - I think they shoo them all away in case they make the oscars look bad.

But yes, socialism can become distorted. Just look at the benefits of the medicare levy, much of which goes to the well off or the half-billion plus transferred to wealthier private schools who have absolutely no need of such largesse.

Many of the well off rail against socialism yet are happy to accept this welfare (please, please do not try to call it a tax break or something else that it is not). Would they willingly give it up? Fat chance methinks.

First-there are different interpretations of socialism and capitalism.

Some see socialism as a 'command economy as state monopoly', and capitalism as 'a system in which there is a clear capitalist class-as 'ruling class'...

Firstly(for capitalism-I believe a market economy in which individuals have the right to invest as the choose - is, in a sense, capitalist...But as such it is NOT incompatible with my understanding of socialism...

My interpretation,(for socialism)is: a social and political system which uses a mixture of social ownership and control, and other forms of collective ownership in pursuit of economic/political/social justice...Also, it involves intervention by the state in markets (inc labour markets) in the public interest - and again also support (through progressive taxation) for a progressive social wage and welfare state...

Socialism can entail a 'mixed democratic economy' with strategic use of 'natural monopoly', socialised infrastrucure, pension funds and the like...And also the use of Government Business Enterprises (GBEs) - to provide for competition in markets which would otherwise involve collusion, corruption, oligopolistic practices...And finally, it can involve strategies such as promotion of co-operative enterprise - which need not involve state ownership...

Ideally (to me), socialism also involves a breaking down of a clear class system - even if the market economy is supported.

Some would call the social democracy instead of socialism...And it could be useful to press the point of semantics...As far as I can tell, Catholic objections of socialism are, after all, based on the Marxist definition...

For me, as it seems with others, socialism and capitalism can co-exist...A socialised sector as part of a democratic mixed economy can involve a 'social market' - in which people are free to invest as they choose - and, indeed, where they are encouraged to invest democratically in collective enterprise...

And now - two important points: Sometimes 'natural monopolies' improve the cost structures of industries - and the provision of infrastructure...At other times the dynamic of competition should be supported because it leads to innovation...But under such circumstances-as long as Australian enterprises respond in a competitive market - strategic socialisation can be justified.

Got to ask Col Rouge why he doesn't go to The United States - the land of the free or back to Margaret Thatcher's britain. Oops dear margaret, a chemist buggered the economy.

Tristan

Part of an article from Socialist Alternative June 2005.

[Bernstein] made two main arguments...

The first was that capitalism had developed the means by which it could overcome or mitigate the inherent conflict between workers and bosses, in the form of legal trade union activity and campaigns for parliamentary reforms. Hence, society could "evolve" towards socialism without the need for revolution.

His second argument was that capitalism, through the use of credit and the creation of cartels and trusts, was able to offset the tendency towards crisis that Marx had identified.

Luxemburg ridiculed the idea that capitalism could be reformed out of existence, likening the prospect to "chang[ing] the sea of capitalist bitterness into a sea of socialist sweetness by progressively pouring into it bottles of social-reformist lemonade".

As Luxemburg put it, "whoever opts for the path of legal reform, in place of and in contradistinction to the conquest of political power, actually chooses not a calmer and slower road to the same aim, but a different aim altogether".

The main aim of trade unions, Luxemburg argued, was to "regulate capitalist exploitation within the market relations", by improving workers' wages and conditions, but not to overthrow the system of wage labour altogether. So a struggle limited by the unions would only result in a society characterised by more equitable distribution of wealth between workers and bosses. Revolution opens the prospect of a society without class divisions of any sort.

The state. As Engels outlined in 1898, the state is a product of irreconcilable class divisions, the means by which "the most powerful, economically dominant class" goes about "holding down and exploiting the oppressed class". As such, its main function is to maintain capitalist order, not challenge it.

And if reformers go too far against the interests of capital, Luxemburg was also clear about the consequences. She described how "as soon as democracy shows the tendency to negate its class character and become transformed into an instrument of the people, the democratic forms are sacrificed by the bourgeoisie and its state representatives."

Chile September 11 1973 comes to mind.

In September 1973 Pinochet overthrew the elected government of Allende and immediately rounded up all public servants, executing one third, exiling one third. Pinochet installed Milton Friedman's Chicago school acolytes who ran a text book free market economy that bought Chile to its knees and universally spread hardship through all sections of society except the military junta. It was a grim and grey state in 1978 with curfews from sunset to 8am.

Now I know some people claim that the military junta only killed 3000 odd people. That's laughable, ask the current President of Chile whether those figures are creditable.

What was your point about Chile exactly?

Billie

I was trying to say Allende was a socialist who saw parliament as the road to socialism. The paragraph before, with Luxemburg predicting the ferocious response of the ruling class to such a process, indicated the futility of a peaceful parliamentary road to socialism. The ruling class will junk democracy if their profit system is threatened. Chile proves the point, and to be frank the inadequacy of social democrats like Allende to even understand that, let alone prepare, organize and mobilise for the counter revolution indicated that illusions in a peaceful parliamentary road are personally and politically deadly.

I think the same may well play out in Venezuela too.

Billie “go to The United States …. back to Margaret Thatcher's Britain. …. a chemist buggered the economy.”

Did live in USA for a couple of years, married a Texan but it did not work out. USA is OK.

They do have a different take on politics, not that I understand the difference between a democrat and a republican, they are both like the UK conservatives, which gives the USA a significant advantage in terms of stability of political policy and direction.

If I was so enamored with the idea of living in UK I would have stayed there, I was making great headway in my life there but had this hankering to be out of the rain.

I moved to Australia to improve the things which affected my life which were not part of me or within my range of exercisable choices, like the weather. I also considered it a better place for my children and grandchildren to develop and grow.

I have, as many do, regrets for not being able to run down to London or over to Europe for a weekend but as we all know, every decision we make comes at a price.

As for Margaret Thatcher’s political leadership. I recall at the time she was elected to her prime ministership, the socialist’s manifesto was considered more left wing than the Italian communist party, with the nationalization of the insurance and finance sector and political commissars in all newspaper and broadcasting offices.

“ buggering the economy”. She pulled the UK back from the brink of take over by the world bank, due to the bungling incompetence of previous socialist puppets who kow-towed to their union masters.

She sorted out the South American despot in the Falkland islands.

Margaret Thatcher negotiated with the EU and produced a legacy which Tony Blair failed to acknowledge as he received the financial benefits, during his term, of work done by a real stateswoman (rather than the limp wristed populist panderer, which Blair was and Brown is an even weaker representation of)

You asked, billie, you have now been told.

I basically agree with Tristan's definition of socialism. Furthermore, I too see no reason why it should be incompatible with capitalism. Socialist or social-democratic (call it what you like) policies are necessary to curb some of capitalism's natural tendancies. Capitalism is a very successfull system. However, it is also an unfair and exploitative system unless offset by such policies and by counterbalancing influences such as trade unions.

"USA is ok". Not for many, many millions at the bottom end Col. The USA is a first-rate example of a country that has largely abandoned social safety nets, leading to a level of poverty and hardship that are not apparent to anywhere near the same degree here (or over the border in Canada). Once again, it must be pointed out that dismantling social safety nets has not prevented the U.S from sliding towards recession.

My definition of socialism would be something like the democratic rule of the working class through its own institutions so that production is planned and occurs to satisfy human need, not make a profit.

This makes my definition incompatible with Tristan's and others on this site, since I can't see socialism co-existing with capitalism. The two are antagonistic, with socialism being the rule of the majority - workers - and capitalism being the rule of the minority - the bosses.

Thatcher- who defended Pinochet to his bitter end, referring to him as a friend, and consistently denying his crimes against his own people.

Thatcher- who gave the order to sink the General Belgrano when it was retreating and was already in Argentinian waters. A military and maritime crime.

Thatcher- whose son was found guilty of money laundering.

Thatcher- who rather than being proud of her working-class upbringing, was ashamed of it; and spent her time in office punishing those who committed no crime other than to be that same working class.

That Thatcher.

*the democratic rule of the working class through its own institutions so that production is planned and occurs to satisfy human need, not make a profit.*

You of course forget, that profit is basically irrelevant in
this exercise, as waste in planned economies is usually so
large, due to lack of efficiency, that the reduction in costs
is far larger then any profit, which you think is evil.

The most powerfull people today are the working class, ie consumers.
They vote with their wallets every single day, democracy in
action, every single day. Deny them choice, by your obsession
about profit and you deny them being able to vote with their
money.

Bill Gates didn't become rich by giving consumers a bad deal,
he became rich by giving people a better deal then was being
offered before. I could not give a rats arse if he became
rich, if I was better off due to his innovation and competitive
prices, compared to what others were offering.

Passy

Chile is a good example. Documents reveal that the trucking strike which helped to bring Chile to its knees economically was financed by the CIA to protect US business interests in that country after failing to influence the result of the election in 1970. The nationalisation of industry and the increase in democratic rights in Chile caught the attention of those owners of capital, US power brokers who are not really interested in democracy.

More information here:

http://en.wikipedia.org/wiki/Salvador_Allende

Fozz

Great post - Socialism - a word that people are scared of without really understanding how some of the principles are necessary to provide such a safety net as you talk about.

Free market economics is flawed - creating a situation where monopolies control prices. There is no such thing as a perfect or pure capitalism or level playing fields for one, but more importantly it concentrates the power too much with the owners of capital and very little with the owners of labour (vital to production). There has to be a balance.

Capitalism works for a good reason, its based on results, not bogged
down about good intentions. Anyone can compete and consumers get
to choose and vote with their Dollars. Thats the reality.

Now in Cuba, we might well think that Comrade Sassy is a wonderful
person and appoint him/her as Minister for computer software.
In reality we could well be wrong and comrade Sassy could well
be well intentioned, but in terms of software development, actually
be a dill.

Comrade Sassy might well spend a fortune of State funds, developing
software, but comrade Sassy, despite the best intentions, could
well be wrong. Yet we would be stuck with the results, good or
bad. No wonder the system is a failure.

Ideology just does not matter, results matter. As a consumer
I want the right to choose, not be dictated by well intentioned
dreamers. If people make a profit or not, I really don't care,
what matters is results.

So let me vote every day with my wallet and let those who want
to sell me something, focus their attention on my needs.

If they make a profit or not, I really don't care.

No wonder socialism has been such a failure. The focus is
all wrong, as Sassy has shown.

Passy - I grew up believing in revolutionary socialism. My father was a delegate for the BLF and a member of the communist party. As I have grown older, my veiw has shifted somewhat although I still consider myself to be basically socialist and will never be anything other than a lefty. I agree with you that capitalism and socialism are fundamentally antagonistic toward one another but I don't think this prevents them from co-existing. Like Yin and Yang, they are opposing forces that can balance one another. Of course, there is no perfect steady balance and both camps will endlessly argue for expanding rights/freedoms for their lot.

I can see a greater role for direct intervention by government. Letting the market run completely free can have the effect of limiting or preventing choice because of it's natural tendancies to monopolize and ologopolize. In areas that are vital to the functioning of the nation, there should be strong and strict regulation or actual investment by government or both. The oil industry might be an example (yes - we should be looking strongly at alternative technologies). Australia produces between 75 and 90%, depending whose figures you use, of our own oil needs right here on our own soil with the probable capacity to suppy 100% for decades. Yet we are forced to pay the global price for an increasingly scarce resource that is still in abundance here as far as our own small needs go. Given that without cheap energy, civilization as we know it simply stops, we could have a national oil industry owned by governement that does not need to turn a gigantic profit - it's existence would be justified by ensuring a fair price for energy that a market run by a handfull of enormous cartels does not. The benefits to the country - including the righties cherished market economy - would be great. To insist that government can "never interfere in the market for the good of the market" is simply untrue.

I don't think many would argue that a pure Socialist State is the ideal for Australia (we are not yet evolved enough for that) and other Socialist States have failed (for many reasons which I won't go into here).

While not perfect, Capitalism within a Social Democracy does function but if we left the running of the country to purely free market economics there would be no social net. Like it or not there have to be some regulatory powers to curb some of the excesses of capitalism, we cannot rely on altruism alone to create the sort of society we want within a capitalistic framework.

For example, it took no time for some businesses to take advantage of the newly implemented WorkChoices to eradicate penalty rates, meal breaks and shift allowances in some industries. This had a marked impact on those in the lower paid sectors who could least afford to lose real income. In a social democracy it is not unreasonable to provide some regulatory mechanisms such as with award and minimum wages to protect workers.

We have public hospitals and public schools. I don't think society would be better off if we made health and education victim to the corporate sector. Although we are doing that in part in the tertiary sector to our long term detriment.

If we took an eclectic approach to governing and rid ourselves of these left/right labels and accept that there is not a one size fits all approach. It is possible that we can put to best use some aspects of socialism and capitalism to make the system better in what some have called the Third Way where there is am mix of market and interventionist policies. See link:

http://en.wikipedia.org/wiki/Third_Way_%28centrism%29

If workers became shareholders in their workplace, for example and received a share in the good times, just as a sales person might gain a bonus or commission, this would do more for the profitability of industry than exploiting unfair IR laws for short term advantage.

Passy - I respect Rosa Luxemburg for remaining steadfast in her support of liberty as essential to the task of building socialism... And I know that it can be dangerous to pursuit radical reform in the face of a hostile state apparatus. But take the case of Chavez: given a support base at the level of the state apparatus of violence/coercion - even the distinction between reform and revolution is harder to make - the two concepts fuse...

In Germany during the time of the revolution of 1918-19 - the very opening that allowed the communist to make a play for state power - was the fact that a support base developed amongst the police force. But in a country without any liberal consensus - where all liberal rights were foregone as a consequene of total war - the situation degenerated into political terror and violence.

And even in countries with liberal traditions - it is important to have units within the state apparatus who are willing to defend liberal tradition in the event of division within the state apparatus itself. But again - even in this scenario - the state is not a 'fortress to be stormed' or a mere 'apparatus of violence serving the every whim of the ruling class'.

The very idea of 'putting an end to the system of wage labour' altogether is also a very prickly question. What about wage earner funds, pension funds, superannuation? Such funds are owned overwhelmingly by workers and ordinary citizens... Yet they still operate within a 'capital-labour' dynamic...

My position is that no stratum of society should wield such cultural, economic and military power which is arbitrary and total...

more coming....

Passy - just a bit more...

Marx's 'dictatorship of the proletariat' should not be understood as totalitarianism...It is, rather, about the working class 'winning the battle of democracy' and using the state apparatus to pursue cultural, economic and social change.

But even here - if the liberal consensus and the 'balace of power' within the state degenerate - then you might well see the kind of violence suffered in France during the Jacobin terror. Far better for a long term, strategic struggle for state, cultural and economic power - where balance of power and liberal tradtion prevent terror from filling the vacuum....

And again - as said before - there should not be a cohesive 'ruling class' that emerges from the overwhelmling ownership of the means of production of a self-conscious minority...But at the same time ordinary citizens should be able to invest as the wish - and the product is an 'overlap' of wage labour and capital...

And this is the sense in which socialist principles and orientations must learn to live with an economic system in which workers and citizens invest as they wish - but where progressive taxes and programs for economic democracy build socialism on this 'overlap' - and which strategic social and democratic ownership...

Anyway - perhaps here could be a point of further discussion... Assuming 'overlap' - what is the best kind to 'democratic mixed economy' - including government business enterprise, public infrastructure and services, collective consumption, welfare, and private democratic ownership and control. (eg: co-operativism) What's the best mix? And how do we get there?

Sorry for dropping out of discussion a couple of days - hoping these posts will kick start debate again.

Tristan, I would like to see more direct state ownership/control of critical areas - " the pillars of a modern society" if you like. Energy (both fuel and electricity generation) and water would be high on my list of priorities.

Private monopolies or near monopolies on such things are not only exploitative but they can hold a nation back,these players generally having little interest in the future of society/the nation (unless they think it might negatively affect their bottom line). The water board in my area is privately run. 80% of all the water was being consumed by huge industries. A severe and prolonged drought almost ran the dam dry. The big plants, fearfull of running out of water for their processes spent megabucks on water recycling and seawater cooling systems. Then cyclone Beni dumped a phenomonal amount of rain on the area, almost filling the catchment. Water was now abundant - but the big industries had spent so much money on alternative water technologies that they were not inclined to simply abandon them and start buying vast quantities of water again. The water board issued a public statement: people needed to understand that water was business and business must profit. Residents would be slugged with price rises between 300 and 1200%.

We were up to our necks in water yet it was to be more expensive than gold because "business must profit". So much for supply and demand. The state government intervened, fortunately. This is one example of the failure of privately held monopolies of crucial resources to allow social justice. It would have nearly killed the town if they had gotten their way.

cont' later

Tristan

Luxemburg spent her political life in the SPD until the last few years and then the SPD murdered her.

She also supported the Bolsheviks, recognising the democratic nature of the revolution. All power to the Soviets was not an empty phrase, but in a country in which the working class was 4 million compared to a peasantry of 100 million, that power could only survive if revolutions in Europe succeeded and could then provide material support to the workers' government.

Developments in Europe at the moment seem to indicate a break with the traditional parties of the left. Die Linke in Germany won 6.4% of the vote in one of the states and the SPD is now thinking about negotiating with it to form a Government. It stands for traditional "left" values, or is, rather, an amalgam of various currents to the left of the SPD.

In Cyprus the election of a communist party member as President represents another interesting development. I think his comment about managing capitalism in a humane way says it all about the dilemma (or contradiction as Marxists put it) he will face. Capitalism is an exploitative society, like feudalism. You work partly for yourself and partly for the boss. This exploitative relationship means that only through defensive measures which begin to become attacking measures (such as union activity for better wages and conditions) can you "humanise" capitalism. But anything that interferes with the drive for profit and with profit rates will ultimately be unsuccessful if it is not backed with a political understanding that what you must do is overthrow that exploitative relationship, and of course gain majority support for that among workers.

One point on your article. There is $60 bn in tax expenditures which are disguised grants. They go overwhelmingly to business and the well off. Superannuation itself accounts for $30 bn.

I think any attack on inequality in the Australian context has to attack these disguised expenditures. Treasury every year puts out a booklet detailing these expenditures.

Tristan

There have been attempts in the past to set up a party to the Left of the ALP.

The State smashed the Industrial Workers of the World with draconian measures.

The Communist Party built up a minority following in the working class, but its prospects historically became fatally flawed as it embraced Stalinism.

The New Labor Party came and went. The Socialist Alliance was an unsteady mix of radical left groups.

The Greens are home for many leftists voters. They are socially progressive but hardly economically radical.

I think a better way forward is what Lenin argued for many years ago in very very different circumstances - the steady building of a revolutionary party committed to the self emancipation of the working class.

Given the small size of the radical left in Australia, and the fact that at this stage we are talking about ideas and not actions, that means I think most work being done on campuses to recruit among people open to a wide range ideas and not yet weighed down with the responsibilities that wage earners have.

This doesn't mean abandoning the working class. It just recognises its quietude at the moment. Small groups still involve themselves in day to day struggles when and if they can, but they are on the sidelines, not an integral and leading part of the struggle yet. That will not always be the case.

When the next upsurge in struggle comes and workers break to the left economically and politically that steady work will produce some results.

I am not counterposing this to the idea that there currently exists a space to the left of the ALP for some form of "true" labor party. But I think that group will be hard to organise and coalesce around a set of ideas and practices, and in all likelihood in times of great social upheaval will itself (or parts of it) move to the radical left.