Bob Gould, 2009
Source: Leaflet for the 2009 annual general meeting of the NSW Socialist Left of the Australian Labor Party; Ozleft, February 19, 2009
Proofreading, editing, mark-up: Steve Painter
The crisis that burst on the world with the crash of the Lehman Brothers financial house in September 2008 is rapidly shaping as the greatest economic explosion in the history of the capitalist system. All serious commentators, including most governments, agree on that.
Nevertheless, the response of the left of the labour movement, in the Labor Party and outside, has been inadequate and limited and marked by a benign optimism that business as usual will return after a suitable period of recovery.
Anyone who claims they can predict the exact development of the crisis is a charlatan. On the far left, a certain idiot catastrophism has some currency.
It was the great Russian Marxist leader Lenin who said something like “economic crisis is no guarantee of socialist success … there is no crisis that the ruling class can’t scramble out of in the absence of an adequate socialist leadership to displace them from their control of society”.
That observation applies to the current crisis, which is very wide and very deep and contains extraordinary unique features based on the collapse of crazy new financial instruments such as derivatives, created by the ruling classes of many countries during the last mad bubble.
The right-wing populist Laroucheite sect has been handing out around Sydney, and probably other cities, a rather weird newspaper, but one thing on the front page of that paper is very useful. It is a graphic shows the asset capitalisation of the four major banks is minuscule compared with their exposure to various instruments of lending without real asset backing.
The real assets are a tiny little strip at the bottom of the graph, and the crazy exposure to the new instruments soars through the roof. The Larouchites also in passing describe how the Macquarie Bank of speculators was tied up with entities such as Lehman Brothers, and how Lazard Carnegie Wylie, the bank that employs Paul Keating, is tied in with JP Morgan.
It is pretty clear that the sanguine confidence about the Australian banking system displayed by some of our leaders is badly misplaced. A couple of weeks ago, Kevin Rudd and his staff produced a well-argued and sober analysis of the build-up to the economic crisis, published in The Monthly, which all serious socialists should read very carefully.
The rather lunatic right-wing commentariat associated with the major bourgeois newspapers have been frothing at the mouth for the past few weeks about the essay by Rudd and his staff, accusing it of being based in Marxism or Keynesianism, and other assorted epithets.
This right-wing frenzy against Rudd, the bottom line of which is that you have to stick to the free market at all costs and that eventually that will solve the problem, underlines the absolutely self-interested use of ideology by that section of the ruling class.
Their attacks demonstrate their hatred of the rest of the population, and illustrate their fantastic ignorance of almost everything. Saner fractions of the global ruling classes are displaying a very different attitude to the crisis, and a number of them are quite prepared to abdicate parts of the free market for the time being in the broader interests of global capitalism.
There have always been in the ALP and the unions two streams of thought, the Social Democratic stream, and a more forthrightly socialist stream. Rudd’s essay is the most articulate literary expression of the Social Democratic stream.
However, it begs a number of serious questions. The first is obviously the complete bankruptcy of the deregulation-privatisation model of the two previous federal Labor governments.
The privatisations have all been economic disasters from the point of view of the working and middle classes, and the population now hates all privatisations.
Privatisations have led to the fantastic enrichment of sectors of finance capital at the expense of the working and middle classes, and contributed to the current economic crisis.
Deregulation has severely limited the capacity of governments to intervene in a meaningful way in the crisis. To their considerable credit, Rudd and Swan and the other leaders of the current Labor government have at least, in a traditional Social Democratic way, produced the two stimulus packages and rather belatedly put a bit of pressure on the banks.
Despite some weaknesses in the stimulus packages, which are too soft on the banking system, it goes without saying that socialists should defend the general thrust of the stimulus packages and the government against the crazy attacks on them by the increasingly isolated right wing in Australian society, exemplified by the Murdoch press and the Liberal-National party vote in parliament against the stimulus.
It is quite clear that the stimulus packages, which are already softening the impact of the economic crisis on the real economy and on ordinary people, and to some extent are saving jobs, will not, even in the medium-term stop the unfolding of the crisis.
Rudd and Treasurer Wayne Swan have the skill and political acumen to warn the population that unemployment is likely to increase.
There are some obvious demands that should be put forward by traditional socialists in the face of the inadequacies of the model outlined by Rudd in his very useful Monthly essay.
The first demand is the permanent and comprehensive nationalisation of banking, insurance and the finance industry. Sober sections of the global ruling class are already tacitly accepting the possibility of bank nationalisation with the rather surreal proposition that the banks should be given back to the rentiers when the crisis lifts.
They have Buckley’s chance of persuading populations anywhere that handing banks back to the capitalists would be a good idea.
In my view the second pressing demand in Australian conditions is the nationalisation of the whole of the mining industry, which is central to the Australian economy and too important to be left to the crazy fluctuations of the world capitalist economy.
The current move of private Chinese capitalist corporations to take over major Australian mining concerns underlines the immediate importance of the nationalisation of the mining industry.
The third demand at the federal level should be the immediate nationalisation of major industrial concerns that go bust. Bringing important sectors of the economy into the public sector is not such a novel idea even in more “normal” times. The Singapore government, for example, owns Singapore Airlines, a powerful and successful competitor in world airline markets.
The Chinese government owns the major Chinese banks. Hugo Chavez nationalised the vital Venezualan oil industry years ago, which has given Venezuala very considerable leverage in the world capitalist marketplace.
The lesson of all this is that some sectors of the economy are all-important. If Chavez had nationalised the grapefruit industry nobody would have noticed, but Venezualan government ownership of the oil industry gives Venezuala great leverage in the world economic market and has even calmed down the sectors of the US ruling class that would like to destroy the Chavez regime at almost any cost.
Another important demand in the federal sphere is that there should be no further privatisation of public assets.
Serious Social Democrats such as Rudd and Swan, who belong to the tradition of trying to regulate and preserve the capitalist system in a humane way, can’t be expected to take up these demands wholesale, although circumstances as they develop may lead pragmatic electoral political realists like them to take up some of these matters in due course.
It falls upon the traditional socialist wing in the labour movement to play its proper role, and it should prosecute the above demands with the utmost vigour in the labour movement and society at large.
A week is a long time in politics, and this year is an immensely long time in current conditions. At the last annual general meeting of the NSW Labor Left we were just beginning a campaign against electricity privatisation, and Premier Morris Iemma and Treasurer Mick Costa were ruling the roost in the state ALP.
We have come a certain distance since then. The stubborn resistance of the unions to the privatisation eventually produced a differentiation on both right and left in the state parliamentary ALP, and it is to the considerable credit of a minority of the parliamentary left that their stubborn determination to cross the floor if necessary, repeated loudly, eventually triggered the parliamentary explosion that removed Iemma and Costa, although the way it happened was semi-accidental.
Unfortunately in that battle, the left ministers kept repeating a mantra about being bound in some way by cabinet solidarity, which they continue to repeat in the new situation with a new premier and a badly fractured right faction in the ALP.
Unfortunately, from the Labor electoral point of view, all of the parliamentary chop-chop has damaged the party electorally in NSW and the bourgeois press relentlessly attack the state ALP, while yesterday’s subjects of press ridicule such as Reba Meagher become today’s heroes to the reptiles of the press.
Mick Costa’s stellar rise as a right-wing commentator in the Murdoch press and right-wing critic of the federal and state Labor governments is an example of this process. Happily, from the Labor point of view, all the print media is going down the gurgler, sometimes by as much as 5 per cent a quarter, as the younger generation get all their news from the net, and the older generation watches TV.
The right-wing commentariat, which now includes lots of Labor renegades in the print media, are largely talking to each other rather than the rest of the population, which explains in part the continuing opposition to all privatisations by most of the electorate despite the furious consensus of the print media that it is the only possible thing to do in what they claim is the interests of the nation and common sense.
Nevertheless, at the moment the state government seems to be in a deep electoral hole. The determination of the government to continue with further privatisations, such as the retail side of electricity, the utterly inhumane privatisation of prisons, the financially incomprehensible sale of the State Lotteries, and even the potentially electorally disastrous privatisation of the long paddock — the stock routes in the bush —, will prove electorally disastrous for the Labor interest in the coming election.
From a socialist point of view it is totally unprincipled for anyone on the left to support any of the further privatisations, particularly semi-surreptitious privatisations sheltering behind so-called “commercial in confidence” considerations.
Apart from being unprincipled, these further privatisations are electoral poison for the ALP.
Electorally, the ALP in NSW needs a bit of creative thinking. All the reactionary rubbish about credit ratings for governments has disappeared in the past few months like snowflakes in summer.
People are looking more and more to governments to protect their interests. If the NSW government were to make a U-turn, a big public statement and hullaballoo, that all privatisations and privatisation processes were suspended because of the global crisis and the impossibility of getting a decent price for any of the assets, and the pressing need to protect the interests of consumers and workers employed in the industries, there would be an immediate positive electoral response.
There would be a stunned squeal from the reactionary media, but this would have far less impact electorally than the favourable electoral response of the population. Labor would rise sharply in the polls.
The government need only point to the example of electricity privatisation in Victoria, including the privatisation of the retail part, to make that point loud and clear.
The private owners of Victorian electricity have starved infrastructure development, leading to blackouts, and the role played by the collapsed power lines in the disastrous Kinglake bushfires is obvious for all to see, and is going to be the subject of class actions in the Victorian courts.
It is beginning to emerge that if the class actions proceed successfully, the Victorian government will have to pick up most of the tab because of guarantees given to the private companies.
All recent privatisations have been like that, and the current ones proposed in NSW will be no different. So much for “commercial in confidence”. It’s quite clear for anyone with eyes to see that a considerable lobby for privatisation exists, including former Labor luminaries who have taken jobs with a number of the highly speculative economic entities that have caused the crisis.
These entities are driven by their collapsing balance sheets to try to grab whatever they can get in favourable privatisations to calm their investors or get new investors.
The extraordinarily virulent attack on John Robertson by a certain now politically retired Labor leader, has to be seen in the context of pressure for further privatisations in which the commercial entities looking for business use all their human assets to achieve their desired result.
There can be little doubt that all sorts of pressures are being exerted, and strings are being pulled to allow privatisations to proceed. But enough is enough!
Unions affected by the further privatisations are responding in their own way in defence of their members’ interests and those of the public. The logic of events will probably fairly rapidly lead to another general union mobilisation in NSW against further privatisations, despite all the strings that are being pulled.
The reaction to the new premier’s announcement that he was proceeding with the sale of the retail electricity was an example of what the left should not do.
I have been told in a rather embarrassed way by some of the players that the left executive met before the Administrative Committee meeting at which the unacceptable compromise was accepted, but that clearly did not lead to anyone on the left at the Admin Committee voting against the premier’s position.
The only person who did so was Ben Kruse from the right. In my experience, and my reading of Labor history, a left should act like a left.
Sometimes accommodations, arrangements and deals are necessary in the political process. Anybody who doesn’t realise that is hopelessly naive and should not be in working-class politics. But nevertheless arrangements, accommodations and deals should never violate basic socialist principles.
In my view, opposition to all further privatisations is a basic Labor and socialist principle to which the Left must stick, and takes precedence over other considerations, such as who gets what job.
Tonight’s meeting of the left should strike a blow for basic socialist principles and the interests of Labor’s electoral future in NSW by making opposition to all privatisations a matter of Socialist Left policy, and call on all SL supporters and associates, at every level, including the parliamentary and cabinet level, to oppose the privatisations currently proceeding.