It is frequently claimed that Australians live in one of the world’s best democracies. Yet in the last 30 years, we have seen a demise of power held by the people of Australia. The post war era in the West has focused on preserving and advocating for civil and political rights such as voting rights, freedom of assembly and expression. Yet, economic rights such as those relating to full and meaningful work (not labour), economic security and distribution have been eroded at best, and neglected at worst.
Economic rights are about access to resources and capabilities that promote security and dignity. They are not to be confused with private property rights nor as welfare to work strategies. The neglect of economic rights in the post war era has meant that the freedom of all Australians has been radically undermined. We now need to focus on economic rights as a means not just to restore democracy, but also as a way of fighting poverty, inequality and climate change.
Historically, the existence of the Australian state has been legitimised through the expectation that the state will provide security for its citizens. The state would provide ‘internal’ protection for its citizens through the realisation of civil and political rights. In addition, the state was to provide external protection from what ever was supposedly waiting outside our borders. For Australia, the years of World War I and II were the apex where through the discourse of global tyranny, the threat of penetration by the anarchic other, white Australia rallied under the shelter of the state. There has been resistance to and scepticism of this pact through Australia’s history for example, the Aboriginal justice movements, communism and union movements. Nonetheless, the rise of neoliberalism (or sometimes affectionately known in Australia as economic rationalism) has seen the pact between the state and its citizens decline at an unprecedented rate. We have seen the state acting not in the interests of its people, but instead in the interests of capital – not only further degrading economic rights, but also civil liberties fought hard for earlier in the 20th Century and well before.
To take a quick tour of the ‘state of affairs’ in today’s Australia, the 2014 Senate Report on Inequality, Bridging our growing divide: inequality in Australia The extent of income inequality in Australia is a good place to begin. This enquiry, containing members of diverse political persuasions concluded that, “even in a country that has experienced 15 years of uninterrupted economic growth and one of the highest living standards in the world, there is severe hardship”. The report found that the richest 20% of households in Australia now account for 61% of total household net worth, whereas the poorest 20% of households account for just 1% of the total. Moreover, despite the best efforts to make us think otherwise, social mobility and the reality for people to be able to change their circumstances is limited. The sobering reality is that there are over two million people in Australia that at some stage worry about where their next meal is coming from. One in eight Australian children live in poverty.
Specific groups of Australians suffer disproportionately. Inequality for women continues to increase with women on average earning 18.2% less than men. This shows that gender equality has a political economy inherently connected to capitalist relations of paid and non paid productive labour. Whilst Australia ranks 2nd in the Human Development Index, according to Gerry Georgatos, Indigenous Australian’s would be ranked 122nd, comparing with Indonesia, Kiribati and South Africa. Also concerning is how government policies supporting Indigenous self-determination are few while assimilationist and punitive policies are on the rise.
Such a quick tour makes the lucky country look really bleak. It shouldn’t come as much of a surprise that trends appearing in Australia are echoed in other parts of the ‘developed’ world, where inequality in the West has sky-rocketed. Poverty is not just an attribute of the Global South but is well and truly a feature of the Australian experience. At least one million Australians live in poverty. As Thomas Piketty points out,
“For millions of people, “wealth” amounts to little more than a few weeks’ wages in a checking account or low-interest savings account, a car, and a few pieces of furniture. The inescapable reality is this: wealth is so concentrated that a large segment of society is virtually unaware of its existence, so that some people imagine that it belongs to surreal or mysterious entities”1.
Furthermore, in its quest for boundless accumulation, capital has also exploited the natural world. We have to understand that whilst the capitalist project has been to naturalise ‘growth,’ behind this project lies a web of tangled exploitative social, political and ecological relations – from which many people and ecological systems have suffered.
To put it bluntly workers, especially women and Indigenous people, are paid less than their due for their labour, people have lost their democratic rights as citizens, and ecological systems have been pushed beyond their limits.
How did we get here?
How has this happened? It is impossible to understand how life for many became so unjust and insecure without going back to review how capitalism was actually designed to work. At a very basic level, we can understand capitalism as an economic system that centres around private ownership and control of means of production (resources, tools, equipment, technology). The key to understanding capitalism is the social relationship between those who own and control the means of production, and those who produce goods and services in exchange for wages. Accumulation takes place where the capitalist takes the surplus capital (profits) generated from the market place and reinvests them into generating more commodities.
Capitalism is extremely exploitative as it needs to accumulate –either by keeping costs of production down (cheap resources, cheap labour) or gaining higher market prices. Australian’s history of capitalism shows this pattern, beginning with the exploitation of Indigenous labour, and misappropriation of Indigenous land and resources. Through the post-colonial period, the natural environment has been severely depleted through resource extraction and intensive agriculture, where labour and environmental safeguards have constantly been jeopardised for maximum profits.
Over the years, different theoretical lenses have tried to manage this exploitation within the capitalist system. For example, the basis of Keynesian economics is a set of policies where the state attempts to manage capital’s desire to reduce costs of labour. Neo-classical economists have assumed to ‘understand the system’, applying technical ‘remedies’ and overlooking the complexity and intersectionality of social relations. With continued economic crises springing up through Australian and world history, we can see that these methods have had limited success. The peak of such failures is climate change, something discussed in further detail later.
Moreover, since the 1970s ‘OPEC oil shock’, there has been a growing problem with capitalism’s orientation towards accumulation at any cost, and so governments were tasked with the challenge of postponing further collapses. Wage repression – meaning wages as a proportion of GDP remaining stagnant – has been a serious issue for the managers and governors of capital, as people had no more money to spend, thus throwing the careful balance of inflation and unemployment rates out. But the machine had to be kept going, so the state absorbed some of these market malfunctions through tax benefits, income support payments and social services as well as by introducing payment/indebtedness tools like credit cards. These allowed people to spend money they didn’t really have, so consuming could continue at a wieldy rate. At a macro level, the response by governments to the cracks in the capitalist system was the ‘opening up of economies’, heeding the mighty call of globalisation, which effectively created a fantasy market half solving the problem of capital at the expense of sovereign debt.
The 1980’s saw Ronald Reagan and Margaret Thatcher adopt a set of policies that for a long time were on the fringes of economic policy because of their absurdity to the economic intelligentsia.
To put it crudely, neoliberalism can be thought of as capitalism on steroids. Neoliberalism doctrine emphasises the efficiency of market competition, the role of individuals in determining economic outcomes and the reduction of the role of the state as a caretaker of the market economy2.
Yet contrary to rhetoric around neoliberalism as a ‘laissez faire’ or free market without state intervention regulating it, actually existing neoliberalism depends on mass regulation by the state3. The difference is that the state, instead of regulating for the wellbeing of the people, now regulates for the market and capital4.
In the neoliberal era, the Australian state is constantly caught in the difficulty of making Australia more attractive and competitive to capital so capital will do business and provide jobs for voters. We see this with the rhetoric of making Australia more ‘business friendly’ which translates to exploitable labour (hidden behind the term ‘flexibility’), low company tax rates (or paying no tax), and a whole host of other benefits such as limiting the ability of Australian institutions to interfere with these relations. For example, the reach of the justice system may be curtained, seen best through the trade deals like the Trans Pacific Partnership (TPP). As a result of being competitive with global markets, we see the erosion of citizen rights and the transfer of class power from the lower and middle class to the elite5. Indeed, in order to quell unease about this transition, state regulation in the neoliberal era is extremely paternalistic and punitive to citizens, the vulnerable of society being dealt the harshest blows. For example, Indigenous Australians are constantly scrutinised by the Australian state, constantly accused of scrounging off welfare and keeping themselves in disadvantage. Since Howard, the Australian state (including both Labor and Liberal governments) has dismantled any remnants of national policy supporting Indigenous self-determination and taken to using punitive techniques on Indigenous populations such as the Northern Territory intervention, compulsory income management and compulsory work for the dole. These policies continue to be implemented despite social scientists and Indigenous elders repeatedly saying these methods do not help Indigenous wellbeing, let alone dignity.
Most notable is how neoliberal and libertarian thinking attribute poverty and the need for support to be the fault of the individual. Such sentiment holds that welfare creates dependency, and so policy should target vulnerable groups with conditionalities and sanctions ’for failing to act in an autonomous, responsible manner‘6. Creating categories of the deserving and undeserving poor sets up a mechanism whereby citizens ‘self police’ – “citizen internalizes and acts upon the norms structuring and embodied in the state, which, under capitalism, means (re)configuring oneself as a rational actor capable of responding to the market”7. The individual taking responsibility is essential and the desired subjectivity in a neoliberal society.
It is also worth noting that this dramatic shift has not been entirely the province of far right economic rationalists and neoliberals. It has also occurred on the watch of the social democrats who have been neutral at best and complementary at worst towards the economic stream flowing fast towards the right. In an essay in The Monthly Kevin Rudd laid out his vision for social democracy to save Australia’s politics, “[it is…] the battle between free-market fundamentalism and the social democratic belief that individual reward can be balanced with social responsibility”. Yet the social democratic belief in restoring a balance within capitalism was an illusion and neglected the unequal social and ecological relations under capitalism. While the Rudd government managed to deter the brunt of the Global Financial Crisis from Australia, he only preserved business as usual, that being rising inequality and ecological destruction in the name of economic ‘growth’. The unprecedented surge in inequality and the changing climate is not just evidence of the failure of neoliberalism and economic rationalism, but also of the failure of social democracy.
By taking a neutral stance on capitalism, social democrats have been swept along with the current of the right. What is needed is concerted action and strategy to forge a current in the opposite direction.
Where does this leave us?
We have to see that the ‘economy’ is not a stable or inert system but instead bound in politics, assumptions and relations of power. Historically, the study of the economy rested in political economy – fought between the heavyweights of Marx, Smith and others. They did not call themselves economists, but political economists, understanding that all studies of economic systems were political and bounded in power. Somewhere along the line, about the time of the introduction of neoclassical economics, we swallowed the pill that the economy is synonymous with capitalism and that this is a rational and central fact in all matters of development. In doing so, we have forgotten that the ‘economy’ is highly political. Through the neoliberal process, the state has become entwined with the interests of capital, severely undermining its ability to ‘represent the people’. What this has meant is that the rights (both economic and civil) of the average citizen have been severely depreciated. The state does not respond to the needs of its citizens, let alone the needs of ecological systems. It has become what Jackson calls the ‘conflicted state’:
“On the one hand government is bound to the pursuit of economic growth. On the other, it finds itself having to intervene to protect the common good from the incursions of the market. The state itself is deeply conflicted, striving on the one hand to encourage consumer freedoms that lead to growth and on the other to protect social goods and defend ecological limits”8.
The Australian state finds itself looking upwards towards the ‘big end of town’, and all those obliging voters who still believe there is a future in protecting elite interests. Guy Standing has called these the salariat, the comfortable and the secure. What should be noted is that the number in the secure career class, and mobility to join this class, is rapidly reducing. In the opposite direction, precariousness of the workforce is fast increasing. Casualization, underemployment, increased workplace ‘flexibility’ are all rising (creating a new and growing social class that Standing calls the ‘precariat’). This means that our democratic rights have been dramatically reduced. As Standing points out, these processes have “eroded the democratic principle that each citizen has an equal right to vote and an equal weight in the process”9.
The unfortunate situation is this: without a state to protect us, and with our economic security radically undermined, our ability to be politically and socially engaged in issues such as ecological and social justice is jeopardised.
Power and rights that were fought for in the 19th and 20th centuries is quickly dissolving right in front of our eyes.
The challenge is to endure against what Neil Howard calls “unrivalled discursive power”. No one will explicitly put their hand up and say ‘I am for environmental degradation or exploitation of vulnerable people’; everyone is against it. Yet responses to our challenges mostly reproduce the status quo of maintaining and managing the capitalist system. Very few have the courage to actually make inroads against the inherent instability under capitalism. Two common examples of the reproduction of insecurity in the name of progress are the promotion of green industries as a technological fix for ecological degradation and reforming the welfare state. Neither are enough to deal with the challenges we face.
Firstly, the promotion of green industries alone is not enough to deal with ecological and social insecurity. While technologies may slow the rate of environmental destruction (although it isn’t clear if this would be enough to stop climate change’s worst case scenario in time), they do not support the long-term security of labour. Green industries are just as vulnerable to the forces of the neoliberal economy as any other. Instead the growth economy needs to evolve to a slow growth economy. Promoting economic rights can help make this happen.
Secondly, the Australian social security system is not sufficient to deal with inequality. The system may have been progressive at the time of its conception in its ability to redistribute wealth – through tax concessions and social security payments. Yet, against the backdrop of contemporary social and ecological insecurity, it has become clear that Australia’s social security system is limited and unable to deal with the existing precarity, let alone the growing precarity of Australian citizens. For example young people are finding it harder and harder to obtain secure jobs (14.2% of 15-24-year-olds and 20% of 15 to 19-year-olds are unemployed). These are young people in most cases with training or degrees. There is something very wrong when these young people, suffering from a structural issue in the economy, are blamed as not looking hard enough. They are subjected to the punitive force of the Australian welfare system – filled with rhetoric about who is ‘deserving’ and who is not. The state uses the means test as a political lever to decide which vulnerable population to target with their oppressive lens. Interestingly though, tax concessions are not thought of as welfare in the mainstream. We only hear of the ‘deserving’ and ‘undeserving’ poor connected to those receiving welfare payments. Those receiving tax concessions (including superannuation funds, business tax breaks and negative gearing) escape such scrutiny. This shows further how the mechanisms used by the state to redistribute wealth play an important role in the structuring of social relations and discourse within the population.
Australia’s social security system does not provide a progressive answer to the need to secure economic rights for citizens or curb the growth paradigm driving climate change. It has become a tool for government to discipline the vulnerable, and does not provide economic security.
What this means is that for those who see the need for a progressive radical agenda for climate and social justice, our path is a tricky one. We cannot reproduce old ways of managing capitalism. Instead we must unpick the system that has radically undermined our ability to be free. We must confront capitalism. This is a system that has needed insecurity to function (for example, the need to have some unemployment in the system). Insecurity is a core part of the Australian capitalist economy. Built on the backs of stolen labour from Indigenous workers and violence as the pastoralists colonised Australia, the oppression and exploitation of our rights continue. The intersectionality of this oppression affects us in different ways, the unpaid labour of women, the exclusion of the ‘undeserving poor’, the rejection of Indigenous self-determination, the degradation of education, the limited opportunities for young people to find meaningful work.
To confront capitalism we must work on providing economic security through the realisation of economic rights.
Economic rights – rethinking the global economic order
Citizenship has historically involved the promotion of civil and political rights with less focus on economic rights. The tragedy is that the neglect of economic rights has meant the downfall of rights more broadly. We must work now towards securing economic rights through radical distribution, providing avenues for meaningful work and ensuring real economic security. In an increasingly insecure world, economic security would mean that people are not worried about keeping food on the table and a roof overhead. It would mean that all people have access to good health care, are able to reclaim time for leisure and nurturing our relationships and have the education to engage in political struggles that affect our lives. Economic rights are urgent in restoring democracy and meeting the ecological challenges we face.
One model that could lead towards providing real economic security is Universal Basic Income (UBI). This has been a policy of the Australian Greens since the 1970s and is at the fore of contemporary left policies in countries like the UK, Greece, Spain, India. Universal Basic Income is a simple idea which has garnered support over the centuries by scholars and intellectuals from Thomas More in his 1516 Utopia, Thomas Paine, Abraham Lincoln, Henry George, Bertrand Russell, Franklin Roosevelt and Tony Atkinson. Universal Basic Income unconditionally provides every resident (children and adults) of Australia a regular subsistence wage. The amount is not enough to make you rich, but it is enough to keep a roof over your head and food on the table. It also is enough to keep your head above water in the increasing times of job and wage insecurity or to see you through a period of wanting to try a new idea and be innovative. It would keep people from having to go to the lucrative ‘pay-day’ lenders and other exploitative avenues that keep vulnerable people in insecure situations. Furthermore, it would value the work of non-paid productive labour – a burden held most by women and Indigenous people, particularly those Indigenous people living on country. The idea is that every individual would still be able to work while avoiding the means-testing that leads to high marginal tax rates and poverty traps. You would get your subsistence wage, and continue to work. The Universal Basic Income could be funded through abolishing the exorbitantly expensive Centrelink, from general revenues, and from tax reform including higher taxes on capital (instead of labour), maximum income tax on the top 1%, and eco-taxes (taxes on ecological bads) and/or income from resource depletion and emissions certificate auctions.
What is attractive about Universal Basic Income is that it is a mechanism towards social and environmental justice.
A Universal Basic Income secures economic citizenship for people and in so doing would firstly create real freedom for all peoples within society – freedom from exploitation and rising economic insecurity, and freedom to live a life people value or have reason to value.
Secondly, a Universal Basic Income would ensure the further development and consolidation of democracy as people having a secure base can undertake activities to contribute to their citizenship. Thirdly, a Universal Basic Income would help the fair distribution of resources, and fourthly provide ecological justice and inter-generational justice. On this last point – some critics of Universal Basic Income have thought providing a subsistence wage would increase consumerism. But Universal Basic Income is a subsistence wage, just enough to meet basic needs, not enough to supplement household disposable income.
On a broader scale, transitioning to a low-carbon, slow growth economy is not a small matter of a technical fix and policy prescription for getting economic incentives right within capitalism. Instead it is a transformation of whole patterns of social life in terms of work, family, transport, community, food, housing and leisure. The economic rights gained through Universal Basic Income are what precisely gives people the freedom to innovate towards this paradigmatic shift. Economic rights are not just about the distribution of wealth, but also about the distribution of time and opportunities. This allows human freedom in its fullest sense, to explore, create and connect with each other and our ecological surrounds, while not being tied to the endless drive for profit and economic growth.
Universal Basic Income should not be taken as a panacea. Instead, it should be implemented as part of a broader suite of social and economic policies that help our transition from pro-growth economics to slow growth economics. The point is: the Australian economic model needs a radical overhaul. Australia’s version of capitalism needs to be rethought to deal with climate change and mass inequality. Securing economic rights for all Australians must be at the heart of this innovation. We must confront the structural oppression and injustice inherent in the system we have. This has not been aptly done before, and now the people and our environment are suffering.
With the end of Australia’s minerals boom, rough times are ahead if we continue on the obsessive growth, ‘what ever it takes’ path. We have a chance to provide leadership and innovation in rethinking how we proceed. The focus must be on hybridity instead of market logic, and social and ecological justice instead of growth. Courage to do something new is captured in the well-worn quote of Einstein, “Problems cannot be solved with the same mind set that created them”. Securing economic rights starting with Universal Basic Income is an idea whose time has come. It is a way forward.
For further discussion on the ideas presented in this essay, see the following responses:
Piketty, Thomas. 2014. Capital in the Twenty-first Century: Belknap Press, pg 259 ↩
Palley, Thomas. 2005. “From Keynesianism to Neoliberalism: Shifting Paradigms in Economics.” In Neoliberalism: A Critical Reader, edited by Alfredo Saad-Filho and Deborah Johnston. London: Pluto Press ↩
Cahill, Damien. 2014. The end of Laissez-Faire?: On the durability of embedded neoliberalism: Edward Elgar Publishing ↩
see Standing, Guy. 2011. The Precariat: The new dangerous class. London: Bloomsbury; Harvey, David. 2005. A Brief History of Neoliberalism. Oxford: Oxford University Press ↩
Harvey, David. 2005. A Brief History of Neoliberalism. Oxford: Oxford University Press ↩
Lawrence, Rebecca. 2005. “Governing Warlpiri subjects: Indigenous employment and training programs in the Central Australian mining industry.” Geographical Research 43 (1):40– 48, 41 ↩
Burchell, Graham, Colin Gordon, and Peter Miller. 1991. The Foucault Effect: Studies in Governmentality. Chicago: University of Chicago Press 1991:10-1 ↩
Jackson, Tim. 2009. Prosperity without growth: Economics for a finite planet. Abingdon: Earthscan, pg 167 ↩
Standing, Guy. 2011. The Precariat: The new dangerous class. London: Bloomsbury, pg 263 ↩