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  Issue No 118 Official Organ of LaborNet 02 November 2001  




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Manufacturing Prosperity

Neale Towart looks at the hidden debate of the election campaign - the degree of intervention government should take through Industry Policy.


Industry policy hasn't been anywhere in the commentary on this election, except from unions in the context of closure of industry and redundancy entitlements.

The ALP has finally started really talking about its Knowledge Nation plans, showing that industry policy does not just mean smoke and steel, but also technological knowledge.

The importance of knowing and making things to many sectors has been emphasised by political economists and unions and ignored for years by governments. Tim Harcourt recently in workers online talked about exporters, but he didn't talk about any overall strategy for developing industry. Many on the right deride government intervention in the economy.

Indeed former Labor Council Secretary Micahel Costa and his mate Mark Duffy accepted the astonishing argument of Industry Commission abacuses that Japans economic success up to 1990 was in spite of, not because of, their Minstry of International Trade and Investment (MITI). Its because the Right have this problem about government interference. Interference to drive down wages and conditions is allowing the market free reign but interference to back ideas is a no-no. Of course they realize that picking winners in industry is like picking your nose, everyone does it, but no one wants to admit it.

But picking isn't the point here. The importance of industry policy, especially in high technology manaufacturing, has been highlighted in particular by political economists. Phil Toner, George Argyrous and Frank Stilwell, amongst others, have pressed the point in articles in the Journal of Australian Political Economy and in Stilwell's book Changing Track.

Toner puts it like this: "manufacturing industry has a number of inter-related characteristics which, taken individually or collectively, provide an important case for its continuing significance in the Australian economy. Firstly, there is the crucial role in technical change through high levels of research and development and product and process innovation. This innovation is not only important in raising the productivity of manufacturing industry, but the diffusion of these products to all industries economy-wide efficiency and innovation. Secondly manufacturing industry accounts for 50% of long-run productivity growth in the Australian economy. Thirdly, manufacturing has a key role in the maintenance of high wage employment."

Harcourt's emphasis on the export sector avoided the issue of the "high road or the low road" to industrial development. George Argyrous notes that "the high road is most likely to build economic prosperity through industrial cooperation and strong worker rewards.... The 'low road' relies on conflict and insecurity, control and harsh worker punishments" Which road sounds most familiar to you in the current environment?

The ALP Knowledge Nation is taking on some of these issues. Boosts to CSIRO (even if in the form of tax subsidies) and crucially the 35000 Knowledge Nation apprenticeships are nods in the right direction.

The employers and the Coalition see the way to boost employment and growth as by cutting wages and longer hours. Productivity has grown in Australia mainly by making people work longer hours, rather than because of industrial innovation or "working smarter".

Structural economic change has been swamping the Australian workplace, and the ALP and the Coalition have argued that it is inevitable but have then failed to develop policy to make the shift work for people in Australia, rather than for international capital. All of them have been committed to tariff cuts since the Whitlam era, but the Alp refused to take into account the Australia Reconstructed proposals of 1987. Indeed industry minister Button said he had never bothered with the document, which, whatever its faults was a real attempt to deal with structural change. Earlier, the AMWU had published a Policy for Industry Development and More Jobs (1984). This had analysed the constraints on Australian economic development and presented a range of proposals for industry intervention strategies.

Toner points to great array of empirical evidence that highlights the central role of manufacturing in the growth of per capita output ie it effects a wide range of people jobs and regions. It is necessary to maintain (or regain) a large and competitive manufacturing industry.

This competitiveness should come from the high road to development. Argyrous looks to Marx's aphorism that "every capitalist wants the wages of their own workers to be low but the wages of every other capitalist to be high." He argues that, contrary to popular myth, "Australian-based firms can be competitive in the production of mass produced goods, but not through the low road strategy of cheapening labour and lowering standards". Globalisation had made the high road strategy of high tech, high productivity and economies of scale even more necessary. Small scale producers of high value commodities interacting with mass producers is the role to a successful global manufacturing industry in Australia, in his view.

Neo liberal policies as pursued by the Howard government are incapable of developing a structured approach and are content to see a wind back of wages and conditions as "the solution", despite a great record of failure in this area.

Frank Stilwell sums an alternative with four central planks:

∑ policies to nuture industrial innovation as the economic benefits are wide ranging

∑ fostering industries with environmentally sustainable objectives; good for the earth good for jobs and the economy

∑ industrial clusters with a regional focus. The Nationals and Country Labor profess regional concerns but only seem interested in Telstra services rather than the dramatic rundown of much of the non-metropolitan economy over the past 20 years, the same period that has seen the national farmers push for more of the policies that have undermined the livelihoods of the people they claim to represent

∑ a new institution for the public control of investment, particularly of the vast resources of superannuation funds. Australia Reconstructed proposed a National Development Fund years ago, another plank of that document that wasn't even a blip on the radar screen.

See for further enlightenment:

Journal of Australian Political Economy; no 45, June 2000, particularly the articles by Toner and Argyrous., but also Iain Campbell on casual employment, and Don Munro on the Knowledge Economy. Also the earlier issue reviewing Australia Reconstructed after 10 years

ACTU/TDC Mission to Western Europe. Australia Reconstructed (1987)

Frank Stilwell. Changing Track: a new political economic direction for Australia (Pluto Press, 2000)

Paul Boreham, Geoff Dow and Martin leet. Room to Manoeuvre: political aspects of full employment (Melbourne University Press, 1999)


*   View entire issue - print all of the articles!

*   Issue 118 contents

In this issue
*  Interview: Flying High
ACTU Secretary Greg Combet on saving Ansett jobs, defeating Howard and wooing a new generation of unionists.
*  Corporate: Howard's List of Shame
ACTU President Shaharn Burrow runs through the litany of corporate collapses and down-sizes that have cut a swathe through the Australian community.
*  Campaign Diary: Week Four: The Battle Lines Drawn
It was a week that saw the leaders launch their campaigns, kiss lots of babies and battle for space with a Holy Jihad.
*  Industrial: Desperately Seeking Solutions
They might not call it 'industrial relations' in the spin of modern politics, but all the major parties have released plans that will affect the way we work over the next three years.
*  Economics: Manufacturing Prosperity
Neale Towart looks at the hidden debate of the election campaign - the degree of intervention government should take through Industry Policy.
*  History: War And Politics
The Conservatives are trying to wage war and win the election. The pundits say itís a tried and true recipe for electoral success. The 1940 federal poll suggests otherwise.
*  International: Globalising Labour
On the eve of the International Metalworkers Federation Congress general secretary Marcello Malentacchi argues all nations need to retain a manufacturing base.
*  Review: Security - Who Needs it?
What does it mean to be secure? Should we even need to ask? In his new book, Anthony Burke asks the tough questions.
*  Satire: Locksmith Promises "Greater Security" If Elected
A Melbourne locksmith has agreed to run for federal parliament, campaigning on the key issue of security.

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»  Activists Notebook
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»  The Soapbox
»  The Locker Room
»  Trades Hall
»  Tool Shed

Letters to the editor
»  More on Orwell
»  The Ostrich Approach

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