If you are someone with power and privilege in a state capitalist society such as Australia, it is vital to maintain class consciousness for yourself, while eliminating it in others. It is particularly important that the broader community does not see themselves as a group exploited by an inequitable economic system. Class solidarity and a concern for others must be driven from their minds.
However, occasionally things go awry for the ruling class, especially when working people and the precariat sense the system is rigged against them. In the language of critical theory, a “legitimation crisis” becomes possible as people withdraw their support for an economic system that appears to be stacked against them.
When this occurs, the business community is forced to invoke the language of class war, normally a taboo subject, but portray itself as its innocent victim, not its perpetrator.
In 2013 when former ASX Chairman and prime ministerial advisor Maurice Newman castigated the Abbott Government for not cutting government expenditure sufficiently, he claimed that in Australia under prime ministers Rudd and Gillard, “class warfare [was] particularly aimed at business” and largely to blame for the current economic malaise. He did not explain how disparities of wealth and income remained overwhelmingly favourable to the class he represents despite it being subject to such an unfair political attack.
Playing the victim by reversing the respective fortunes of capital and labour comes easily to our business leaders. “We have become a business-bashing, closed-for-business country,” claims Business Council of Australia chief executive Jennifer Westacott, without providing evidence of either malaise. Ms Westacott was yet again advocating tax cuts for business without disclosing how many of her members actually pay the full nominal rate of company tax.
The economic system is supposed to favour the wealthy elites: that is normal and natural. Even the mildest departure from this orthodoxy represents a threat to the integrity of the entire economy, and must be successfully thwarted.
Anticipating a backlash against tax reform in the 2016 budget which was intended to favour the wealthy, Michael Stutchbury in the Australian Financial Review dismissed the “faux class struggle” to come as “absurdist”, “romanticised” and “outdated”. The subordination of labour to the rule of capital was simply restoring the natural order. There was no need for a discussion of the uneven effects of the proposed reforms because this would only encourage nostalgic visions of workers’ rights, profit sharing and anachronistic ideas about antagonistic classes.
Opposition leader Bill Shorten complained that the May 2016 budget offered tax relief for the wealthy but nothing for those on less than $80,000 a year. In response, Prime Minister Malcolm Turnbull said “Labor is setting itself up for a war on business; they are setting themselves up for some kind of class war.” This charge was endorsed by conservative Murdoch journalists Dennis Shanahan and Paul Kelly, who claimed “Labor runs a class warfare campaign”. Questioning the fairness or equity of reform proposals constituted a war against the primary beneficiaries of the status quo.
Writing in the same newspaper, academic Peter Van Onselen argued that “Bill Shorten’s campaign had entrenched itself in an ugly class war, seeking to stoke resentment at Malcolm Turnbull’s wealth in the name of discrediting his economic agenda.” Instead, Turnbull should presumably emulate Churchill who wrote after World War 2 that “our power placed us above the rest. We were like rich men dwelling at peace within their habitations.“ It’s the natural order of things.
The Australian Financial Review went further, with a front page headline warning from Treasurer Scott Morrison that “class warfare will ruin the country”. Without explaining how or why this would occur, Morrison said “Australians are over this class warfare, they are over the us and them.” Class disparities, if they ever existed, have apparently been consigned to history. At the very least, the subsequent election result would suggest they have not.
According to a poll at the time, 84% of Australians across party lines believe social classes still exist in the country, and identify with one of them. Nor is it just corporate tax cuts which reinforce a sense of separate treatment amongst Australians. Weekend penalty rates, private and corporate tax avoidance, tax havens for the wealthy, and the funding of private schools, are just three concerns which remain inextricably class-based issues. Others include health insurance, negative gearing and funding for the arts.
This is the context for government hostility to an online article by ABC journalist Emma Alberici, who argued – contrary to government claims – that company tax cuts would not lead to employment gains, greater investment or wage increases: they would not “trickle down” to workers but instead be pocketed by business executives and shareholders. In the article, Alberici highlighted the hypocrisy of leading business advocates for corporate tax cuts who headed up companies which didn’t actually pay any company tax, and noted that the effective tax rate paid by most companies was considerably lower than the official marginal tax rate.
Alberici’s sin, resulting in government pressure which saw her article taken offline by the ABC, was not just exposing the paucity and hollowness of Mr Turnbull’s arguments for corporate tax cuts. Her major crime was exposing the illegitimacy of an economic model colloquially known as “trickle down economics” but more accurately described as an “upward flood” of wealth. This is the system people are supposed to think of as normal: part of the natural workings of the market. Questioning this, even by implication, is apostacy, and must be squashed and punished before too many people get the same idea. As the billionaire investor Warren Buffett conceded, “there’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
Risible efforts by Treasurer Scott Morrison on ABC TV and Judith Sloan in The Australian, failed to identify any significant errors in Alberici’s piece justifying its censorship. But then that’s not the point of these attacks. This is a political battle, not an empirical one. What’s important is that questioning the legitimacy and fairness of the economic system is beyond the bounds of thinkable thought. There are no classes or class warfare, despite Buffett’s unfortunate honesty. There is no structural unfairness. Those concepts are old thinking, confined to the margins in left wing trades unions and the humanities departments of our universities. To sustain this narrative, both Alberici and her heresy had to be directly attacked.
It’s too complex
Those who rule state capitalism in the modern era cannot properly explain it or describe how or why it functions, let alone maintain the system on a stable basis. The world economy, especially global finance (which dwarfs global trade), is now far too complex for understanding and rational management.
The system is crisis-prone and the crises cannot be predicted, averted or explained. There is no higher capitalistic logic and no immutable laws directing events or providing the capacity for stable government. All other analytical approaches are similarly exhausted. Bipartisan support for neoliberal policies has delivered inequitable outcomes which increasingly reinforce popular perceptions that the system is structurally unfair.
These challenges, and many others including multilateral action on climate change, are exacerbated by the absence of global economic leadership. There is no longer a dominant or hegemonic state, which can co-ordinate global responses as the United State did for most of the post-war period.
Despite extraordinary efforts in the corporate press to deny it, the domestic economy remains bifurcated along class lines. Companies and wealthy individuals can artificially reduce their tax burdens with complex accountancy schemes and lower tax thresholds introduced by conservative governments. Opportunities to exploit globalisation and maximise profit opportunities around the world with secretly-negotiated investor rights agreements masquerading as trade deals (eg the TPP), remain the exclusive province of transnational capital.
The casino economy encourages non-productive, high risk and short term speculation because moral hazards ensure taxpayer bailouts will be provided by governments when large corporations and banks overreach and endanger the system for everybody. It’s what Keynesians such as John Kenneth Galbraith often referred to as the socialisation of cost and the privatisation of profit.
Meanwhile it is the harsh winds of market forces for the rest. Worker insecurity, a declining profit share, growing disparities of wealth and income, and a sense that the economy is structured by the elite for the elite, are now widespread community concerns.
It is therefore unsurprising that we are witnessing xenophobic fears suggesting “they” are taking our country away from “us”, and other grievances which are heartfelt and real even if their alleged causes are mistaken or unknown. Coupled with a dysfunctional political system, it’s a toxic mix.