
Issue No 66		11 August 2000

LaborNET	Ask Neale	Tool of the Week

Economics

A Progressive Alternative

By Andrew Scott

Andrew Scott outlines a policy approach for an ALP Government that aims to deliver social as well as economic progress.

In my book Running on Empty: 'Modernising' the British and Australian labour parties, recently published by Pluto Press, I say that the clash between 'modernisers' and 'traditionalists' in the Labor Party is part of a wider debate between the advocates of inexorable, scientific 'progress' and those who question whether this so-called 'progress' represents in reality an advance in the human condition at all.

The term 'progressive' is often counterposed to 'conservative', but, as Raymond Williams has said, 'it is certainly significant that nearly all political tendencies now wish to be described as 'progressive' ... [which] is more frequently now a persuasive rather than a descriptive term'.

Since he said that, the conventional indicators of 'progress' have come under increasingly substantial criticism.

The Gross Domestic Product (GDP) has been exposed as a narrow, flawed and misleading measure.

The real electoral backlash at the 1996 election against the 'modernisation' of the Australian Labor Party, followed by the rise of support for Pauline Hanson to the point where her Party gained one million votes at the last national election, is in large measure a protest against the notion that the particular kind of economic 'rationalist' change which has been imposed over recent decades does, in fact, represent real social progress.

So what do I mean by a 'progressive' economic policy?

I mean one which brings social as well as economic progress, and, crucially, one which tackles inequalities at home and abroad as well as boosting overall output: a policy for wealth redistribution as well as wealth generation.

We keep hearing today that the 'new economy' is displacing the 'old economy'.

Some Labor spokespeople are saying we must pursue new industries and forget about old ones.

But the dichotomies are not really so clear-cut.

The oversimplified contrast between "new" and "old" jobs, for instance, causes the substantial overlaps between the new information technology industries and what has conventionally been called "the manufacturing sector" to be lost sight of.

It misrepresents the nature of the choices ahead for the Australian labour movement.

Much of the newness, much of the technological change which has been occurring in modern economies is in fact within the manufacturing industry.

As well as being careful with our choice of words we need to be accurate about keeping things in proper historical perspective.

Some Australian Labor identities deal with ideas they don't like - like "the present strong focus in Labor policy on public funding for education" by just dismissing them as "old politics".

This is symptomatic of a wider pattern in so-called Third Way thinking, which has prompted British commentator Nick Cohen to express alarm at the readiness of one think tank associated with Tony Blair's New Labour to pronounce the end of just about everything.

"In just four years , it has declared 'the end of politics', 'the end of unemployment', 'the end of social democracy', [and] 'the end of 200 years of industrial society'".

It hands out "death sentences like Judge Jeffreys with a migraine" , he says.

So what is an accurate historical perspective on past, present, and future Labor policy.

In recent times, Labor frontbenchers have indicated a number of policy directions.

They have correctly committed the Party to an increased immigration intake as part of a forward-looking population policy.

They have also emphasised in their speeches the need to boost public expenditure on education, to reverse the scandalous slide in public and private support for research and development under the Howard government, and to invest more in skills.

We need to boost public expenditure on education because if we do not there will continue to be not enough up-to-date books in University libraries or access to the new technologies, the up-to-date computers and software programs, for the very many who cannot afford them at home.

But as well as now needing to attach dollar commitments to the 'Knowledge Nation' rhetoric to give it some real policy substance and credibility Labor ought to know from its own experience of government in the 1980s and early 1990s that investment in skills by itself is not enough.

The endless emphasis on skills and training in the 1980s and 1990s manifestly did not stop high unemployment. Displaced workers definitely do need appropriately designed and sensitive programs of reskilling but even more they need infrastructure development and public sector job creation aimed at expanding community facilities and services in their regions.

The ALP's reluctance to accept this stems in part from the fact that it has largely opted out of the tax debate since 1996-7, presenting no comprehensive fairer alternative solution to Australia's revenue shortfall even though it is obvious that we could do something clever and popular to create a more progressive tax system if we made the political effort.

Partial "rollbacks" of the iniquitous GST will not in themselves be enough to move us anywhere near a fair and equitable taxation system, one which is also adequate to fund the social expenditures now required.

Labor has also unfortunately failed to unchain its mind from the imprisoning assumptions of neo-liberal economics, such as opposition to deficit financing.

ALP leaders have committed themselves to running future large budget surpluses, despite the fact that, as the American economist Professor Robert Eisner has demonstrated, the apparent size of a government Budget deficit for a given financial year is, in its real economic effect, reduced greatly in size (and often turns out to be a surplus) once adjusted for the effect of inflation.

This means that we are likely to have a Labor government which will be reluctant to either tax or spend.

Eisner believes that the economic dragons nations should be attempting to slay are not mythically measured budget deficits. The real economic troubles we face are those of poverty, income inequality, and a failure to invest in human capital and public infrastructure.

Perhaps we do not so much need to move 'Towards a New Economy', as this session is titled, but rather we need to adopt new, broader and more accurate measures of our existing and in many cases long-standing economic activity.

And that means looking beyond official data to get an accurate picture of activities not included in market transactions, such as housework, research, and the volunteer services provided by nonprofit institutions like museums, schools, and churches.

We also need to face up to the fact that the public sector has been run down too far.

The ALP should strongly affirm that Australia can no longer afford to have such a lean public sector at a time when economic stimulus is needed in order to boost jobs (including for the hidden and mature age unemployed) as well as in order to rebuild community infrastructure and to reduce inequalities.

What people must realise in discussing government expenditure is that every cut has a consequence. Every time public outlays are reduced to appease world financial markets, real social injury results in the towns and suburbs and regions of this country. Public sector spending is the main means of narrowing the gap between rich and poor.

Furthermore, a key factor in the rise of unemployment is that the absolute number of jobs has been falling in the public sector. Direct job creation, particularly in regions of very high unemployment, should therefore now be back on Labor's policy agenda.

Proponents of the so-called "Third Way" have been quiet about the fact that the Blair government in Britain has been steadily losing support from core supporters since its electoral triumph in 1997, as Ken Livingstone's election as Mayor of London has just shown. This serious fall in support is because Blair has failed to fulfil those core supporters' hopes for different policies that will substantially tackle the dilapidation of public services and entrenched regional and income inequalities.

'Third Way' advocates also tend to be silent about the fact that some social democratic governments in European countries are pursuing much more progressive political agendas than Blair and Clinton, adding to the comparative historic achievements of the Left in those nations which we should still strive to catch up to.

Any incoming ALP government should examine more closely the different attempts by the left of centre political parties in other western nations to deal with the end of the economic "golden age" since the early 1970s and the widespread resurgence of neo-liberal ideologies since the late 1970s; and should identify more fully and learn from the fundamental differences between the experiences of social democratic parties in individual Western European nations during this period of crisis.

There has been widespread dismay at the backward shift to the destructive 1980s style economic policies in the ALP's upper echelons since the 1998 election gains, particularly given that those gains were won on the basis of a shift away from the economic policies of the 80s.

The ALP's reversion has included the aggressive promotion of so-called "free" trade.

The ALP trade spokesperson has even criticised the Howard government for not promoting so-called "free" trade enough.

Labor zealots for further unilateral tariff reduction are obsessed with proving their purity by outdoing the rest of the real world.

They consistently fail to see or adjust their position to the realities that the US and Europe simply are not reciprocating by really reducing trade barriers, and that they are not going to.

The Australian people on the other hand can see these realities and they want a more pragmatic and commonsense approach to international trade accordingly.

Is the push by the Australian Manufacturing Workers Union (AMWU), led by Doug Cameron, for 'fair' rather than so-called 'free' trade a progressive economic policy?

If we regard attempts to eradicate exploitation of child labour as necessary for real progress in this world, then the answer must surely be yes.

Doug Cameron has said that he "will take a very strong position to Labor Party conference".

He says that:

I don't see this as about going back, I see this as about Australia engaging with the rest of the world. You see President Clinton, his Trade Officer, Barshevsky, the Canadians, the Europeans, all are now looking at the question of core labour standards in trade...[This is a] question of trade not being simply an economic outcome...trade has to deal with the issue of labour, slave labour, in Burma, the issue of child labour in areas such as Turkey, in Pakistan, these are areas that the rest of the world is saying has to be addressed...this is an issue of human rights...[in] Brazil, three and a half million children...have got no access to education, because they are in workplaces, doing work for employers and trying to make profits for them...there are some core labour standards. The core labour standards are the right to belong to a union, the right to collectively bargain and that should be a human right everywhere...I'm not saying we rule out trade with anyone. I'm saying that what we should, as a nation, say that we want those nations that we are trading with to protect their environment, look after the social values and the standards of their workers...And if they are not prepared to take that, I think it means that we will come under more and more pressure to reduce our wages and living conditions here...I'm very concerned about APEC [the APEC timetable on free trade by the year 2010, in other words, about nine and a half years from now].. I'm very concerned that the manufacturing industry will be opened up to a hundred and fifty million workers in China, who have got no basic rights. I want to make sure we've got apprenticeships, I want to make sure we've got an engineering industry in this country.

Australian critics of the "fair trade" push have attacked it as a smokescreen for "protectionism" and as merely motivated by self-interest of workers in developed countries rather than real concern for workers in developing countries.

This is exactly the same rhetoric which has always been used against trade unions trying to enhance minimum wages and conditions: they have long been attacked as self-interested and pricing the unemployed out of work.

If trade unions had ever believed this they would never have won minimum wages and working conditions domestically. If we believe it now we will never move towards achieving minimum labour standards internationally.

The so-called "free" traders see themselves as being the true progressives in the trade debate.

Yet one official document recently circulated by them in the ALP titled "A Progressive Trade Policy" did not even mention the goal of eradicating child labour. It has been left to the AMWU to bring this and other crucial issues, like environment and labour standards in general, to the forefront of the trade policy debate.

Those who criticise a fairer and more balanced approach to trade are simply not concerned about inequalities or doing anything to overcome them.

Further, they fail to see the desire for accountability, and the affirmation and reassertion of democracy, which has been part of the protests at the elite world economic forums held in Seattle, Davos, and Washington within the last year - and in a few weeks time to be held here in Melbourne.

The evidence is abundantly clear from public opinion polls that most Australians do not support privatisation, so-called "free" trade, or the job losses and community disintegration caused by radical economic restructuring.

The ALP should be reflecting this public opinion in its policies.

But the fixated "free" traders think they know better than the people. Anyone who opposes their particular point of view is, by definition, a 'populist'.

In my view, we cannot have progress without democracy; a progressive economic policy must be one supported by, not based on a denial of, the people's will.

Labor's economic dries appear more concerned with defending the view that Labor was always right in the 80s and 90s on economic policy than with mapping out a truly progressive economic policy for the people the ALP is meant to represent for the new millenium.

They have inserted into the new draft platform for 2000 - a document which is supposed to be a blueprint for the new millennium - not once but twice, a new, backward-looking and jarring paragraph that reads as follows:

"The direction Labor pursued in the 1980s and 1990s of...internationalising the economy and reducing protection cannot and should not be reversed".

What should be in our platform instead is a positive emphasis on the economic policies which the Australian labour movement needs to pursue now to meet the challenges of the new millennium:

A recognition for instance that:

Manufacturing today is increasingly based on knowledge and skills;
That knowledge intensive manufacturing has been identified as the largest and fastest growing area of international trade;
That this includes many activities at the leading edge of industry research, such as telecommunications, biotechnology, pharmaceuticals, automotive components and food processing;
And that the world's most successful economies and regions are those which understand these activities and take advantage of them.
One such country is Ireland. Unlike the hands-off economic policies favoured in most of the English-speaking world, the Irish government in recent years has pursued interventionist policies of public investment to promote new manufacturing industries; and its unemployment rate has fallen particularly fast as a result.
Another country which has achieved very low unemployment without the exploitative wage-cutting approach in the United States, is the Netherlands.
Both are models which should inform Labor's policy approach.
The task of tackling inequality is one which the ALP now needs to focus on fully.
The research which recently appeared in the Australian newspaper confirms how Australia has become dramatically more unequal as a result of the economic and policy changes of the 1980s and 1990s. Predictably however the sponsors of the research could not bring themselves to actually support any policy changes which might stop this trend continuing.
A Labor government will need to stop this trend continuing and to do so it will need to reclaim all available policy instruments.
This means contesting the mythology that globalisation and new technology have cut off most progressive democratic political options including the continued comprehensive provision of welfare on a basis of need.
Dean Baker, Gerald A. Epstein and Robert Pollin are the editors of a collection titled Globalisation and Progressive Economic Policy published in paperback last year by Cambridge University Press. The contributors to this book challenge mainstream thinking about the nature of globalisation, emphasising that capitalist market processes, left to operate freely, tend to generate injustice, insecurity, instability, and inefficiency.
Taking account of the realities of globalisation, they propose alternatives to neo-liberal orthodoxy: policy measures that counter the destructive features of markets and promote equality.
These are the kind of policy measures, this is the kind of new approach which it will be politically essential for the next Labor government to undertake.
Critics of the Left's more measured approach to 'globalisation' say we are rejecting an "internationalist" policy.
Internationalism does not mean surrendering to global capital.
Internationalism is in fact a philosophy which the Left has long embraced, from the dispatch of volunteers from around the world to fight against fascism in the Spanish Civil War; through our solidarity with the British miners' strike in the 1980s, when many of today's fair-weather friends of Blair's New Labour had no interest in, only derision for our comrades in the British labour movement; to today's burgeoning world-wide activities against the negative effects of "globalisation".
The true meaning of internationalism for those on the left of centre is achieving international solidarity between the workers of the world.
Much of what is presented as inevitable globalisation is really enshrining pro-capitalist, neo-liberal policies on a world scale, it is about globalising corporate power.
As social democrats we should be concerned instead with internationalising workers' power, workers' rights and people's democratic power.
In his book Neo-Liberalism or Democracy? : Economic Strategy, Markets, and Alternatives for the 21st Century, published last year, Arthur MacEwan asks whether it is true that there is no alternative to the neo-liberal ideology of free trade, deregulation of markets, and government abandonment of social programs?
Must we accept, in the name of globalisation, the relentless pressure to reduce wages and cut social spending?
Can poor countries pursue no other route to development but opening their economies to global forces?
He sets out to explore these questions.
In doing so, he subjects central tenets of modern economics to trenchant criticism. He argues that current policies are delivering neither sustained economic growth nor many of the other fundamentals of people's wellbeing.
He also argues that it is possible to construct a democratic economic strategy that produces growth and equity, while protecting the environment and securing local communities.
The ALP needs to construct, develop and implement such an approach here if it is to possess a genuinely progressive economic policy:
A policy for social progress and justice;
A social democratic philosophy which stands as a stark alternative to free-market liberalism so that voters in Australia can have some real choices again between the two major parties.
Only by offering this clear alternative can Labor hope to solidly rebuild its core vote.
A Progressive Economic Policy for Labor in Government is a speech given by Andrew Scott to the Unchain My Mind forum : New social-democratic ideas for Labor in government jointly organised by Pluto Press Australia and the Australian Fabian Society, Thursday, 27 July.
Andrew Scott is the author of 'Running on Empty'. He is a lecturer at School of Social Sciences and Planning, RMIT University. Email:[email protected]

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Issue 66 contents

Interview: Shifting Sands
Michael Crosby Joint Director of the ACTU Organising Centre talks to Workers Online about the changing nature of union power, 'use it or lose it' coverage and how the ALP will have to deal with a transformed union movement.

Unions: Mission Possible
From Cambodia to Kyrghyzstan, from Malawi to Mozambique, this is one nurse who accepts certain missions where life is on the edge, and she loves it.

Economics: A Progressive Alternative
Andrew Scott outlines a policy approach for an ALP Government that aims to deliver social as well as economic progress.

International: Unions Back International Seafarer Deal
Shipping union representatives from 56 countries have decided to back a pioneering international collective bargaining agreement with ship employers.

Politics: Apolitical Myth
Over the last ten years one story about public interest in politics has found resonance, especially in the US. It suggests that people are no longer interested in political issues. Researchers from the Demos Foundation put this claim under the microscope.

Satire: Elaine Nile retires citing victory in "War on Masturbation"
There were emotional displays and many tributes paid today as Elaine Nile, Christian Democrat MP of 12 years standing, announced her retirement from the Parliament.

Review: Pure Shit
The 1970s Aussie drug classic, Pure Shit - a 70s Australian style Trainspotting - is being dusted off for a one-off showing at the Chauvel.

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