Austerity (noun):1. Enforced or extreme economy. From the Greek, austēros, meaning “harsh” or “severe”.2. Merriam-Webster Word of the Year, 2010.
The conversion of the present ALP federal government from new-era Keynesian stimulus apostles to sovereign debt doom merchants did not take place overnight, but if it happened anywhere it was in Toronto at the G20 meeting exactly a year ago. As police staged a violent crackdown on dissent in the streets costing $1 billion, finance ministers were convincing each other that the time for stimulus was over and the cost of the crisis would have to be borne by the working class and the poor.
Suddenly “austerity” was all the rage and a crisis caused by greedy bankers and financiers was transformed into one caused by how “we” had “all” been living beyond “our” means — as evidenced by excessive government spending, bloated pension benefits and overpaid public servants living off the taxpayers’ largesse thanks to their all-powerful (yet strangely dinosaur-like) unions. Despite the fact that stimulus packages had been heavily geared towards socialism for the rich, stabilising financial institutions and other corporate interests by taking bad debts onto the public balance sheet, it was not long before these debts were ideologically repackaged as the result of government profligacy. The task now was to curtail that extravagance through public sector cutbacks, limitations on workers’ rights and restructuring of pensions.
This was the message Wayne Swan returned to his new Prime Minister with, in modified form thanks to Australia’s escape from the worst of the crisis and its relatively low public debt. But it was one reinforced at every turn — in Treasury’s little Red Book for the incoming government, by commentators keen for a swingeing new “reform agenda”, by financial markets keen to make clear who was in charge (most grossly after the floods), and by the PM herself, keen to make a mark as a great neoliberal reformer.
Social polarisation, hollow partisanship
The displacement of a crisis of capitalism into a crisis of sovereign debt necessitating harsh austerity is playing itself out most clearly in Europe and the United States. The end result is social polarisation at an entirely new level as ordinary people pay for the crisis. As I argued last time, the economic crisis may be spreading unevenly across the globe, but the world economy is so integrated that it is impossible to completely avoid being drawn in by contagion, let alone to indefinitely dodge heightened competitive pressures produced by the crisis more generally. In this context any program to increase Australian capitalist competitiveness will inevitably mean significant attacks on the working class, and there’s nothing like using a crisis as an opportunity to drive “reform”. This explains why so many pro-austerity commentators talk of Budget cuts and market reforms as an “insurance policy”.
A focus on sovereign debt ties in with the Holy Grail of neoliberal governance — breaking public sector union resistance — seen as a key obstacle to efficient administration. There is also a neoliberal narrative that argues that public spending “crowds out” a potential resurgence in private investment. Much as has been the case in the US, the structure of Australian government finances and centralised taxation arrangements means that state governments have taken the lead on deficit reduction. For conservatives like Barry O’Farrell in NSW this means a direct confrontation with the public service workforce. But for Tasmanian ALP Premier Lara Giddings, weighed down by proportionately bigger budgetary problems, it means large-scale jobs cuts and school closures. Each time the language is the same mantra of past government “overspending” with no reference to the realities of squeezed revenues in an economic slowdown, let alone any historical perspective on how taxation is much less progressive than it was 10 or 20 years ago. This doesn’t even begin to address the fact that public sector debt is a very small problem in Australia when compared with private debt [see Graph 1] and yet nobody in the mainstream is talking about the latter.
For Gillard, Treasury and the RBA, the strategy is a bit different. However, whether it is “market mechanisms” in the public sector (e.g. the “efficient price signal” in public hospitals) or welfare crackdowns or just plain squeezing of public services, the underlying logic is similar. The last people expected to pay will be the most wealthy and powerful economic actors. But it is vital to grasp that the social polarisation this causes in the real world, in the form of greater inequality and hardship, will not be directly and immediately reflected in the world of official politics.
Indeed, the willingness of politicians to drive the effects of the crisis onto ordinary people explains the peculiar machinations among the political elites at federal level, including the rise of a hollow partisanship where almost complete policy convergence is obscured by Sturm und Drang theatrics, demanding of the masses that they take a side or the heavens will cave in. It is this blackmail that tells progressive voters that unless they back (and even spruik for) Gillard’s reactionary policy mix, Abbott will only deliver worse. It is a reformist politics hollowed of even the promise of progressive reforms, where a right-wing thug like Abbott can appear to attack the ALP from the Left on anything from a carbon tax to asylum seekers.
None of these political moves eliminates the more fundamental problem for all the mainstream parties — that austerity policies will further undermine their social and electoral bases, leaving them more vulnerable to sudden swings in public mood and unable to maintain internal stability and coherence. It is in this manner that the economic crisis creates a political crisis, one that cannot be solved without understanding its roots in a process of social polarisation. This is precisely the point that George Megalogenis misses when he points to the disparity between the false hysterics of the mainstream debate and the apparent lack of Greece-style economic woes. His inability to understand the class dimension of Australia’s neoliberal reform era leaves him effectively lining up behind that elite project, rather than seeing it as the material basis for the degeneration of official politics.
An organic crisis is a topsy-turvy situation where, in Gramsci’s words, “At a certain point in their historical lives, social classes become detached from their traditional parties. In other words, the traditional parties in that particular organisational form, with the particular men who constitute, represent, and lead them, are no longer recognised by their class (or fraction of a class) as its expression.” It is this situation that the Australian Left faces today, one where looking to the traditional Left-Right party divide for orientation is a source of confusion rather than clarity. Getting beyond this is a first step, but what then?
Beyond the Left’s ‘strategic perplexity’
In a perspicacious recent speech, the French Marxist Stathis Kouvelakis has referred to the “strategic perplexity” of the European Left in the current crisis. The social democratic Left, much like the ALP, has merely capitulated to austerity politics. But the anti-neoliberal “Left of the Left” has largely resorted to putting the general anti-capitalist argument (“we shouldn’t pay for their crisis”) while unable to make ground intervening in concrete political debates. This would allow a response that is not only about “resistance” but aims to politicise a movement’s outlook. One exception has been the Greek electoral coalition Antarsya, “which defended a platform including defaulting on the debt, exiting from the eurozone and nationalising the banks, and was rewarded with a significant electoral success in the last local and regional elections.”
Kouvelakis also praises his colleague at King’s College, Alex Callinicos, who has argued for the need to find concrete demands flowing from the specificities of the crisis in each country. For example, while debtor-led default and exit from the Euro may be apposite in Greece, they don’t apply to the situation in the UK. Nevertheless, the scale and ongoing nature of the crisis means that a political response is desperately needed if ruling class attacks are to be beaten back. Any such response would need to start with opposition to all regressive cuts, paid for by increased taxation on corporations and the rich in the first place. Yet it would need to link such policies to alternative strategies around other areas of social need that austerity politics either neglect or worsen. Such a strategy would need to reject the idea that there are class-neutral, technical solutions to the crisis, instead devising policies with an openly class character.
For example, when union leaders accept the case for a carbon price even when it may hit their members it is because they lack a program of action based on an alternative set of class interests. Yet such regressive and ineffectual policies will only undercut working class support for serious climate action. It is not enough for an Australian “Left of the Left” to simply oppose market approaches to carbon abatement; rather, it needs to take a leaf from the UK Coalition Against Climate Change’s One Million Climate Jobs Now! trade union initiative to advocate for massive public works program to create jobs in rapidly constructing renewable industries along the lines of the Beyond Zero Emissions report, as well as mass public transit options and other immediate measures. Even as he pragmatically capitulated on a carbon price, CFMEU head Tony Maher recently flirted with the idea of state intervention along the lines of WWII. A non-market climate response of this type is something that Left Flank has tried to push into the public debate, building on the ideas of local thinkers like Leigh Ewbank.
And it is here that the ambiguous role of the Greens becomes more apparent. At times mounting piecemeal opposition but unable to articulate a consistent anti-neoliberal alternative, and at other times suggesting more serious reforms, the federal Greens risk both acting as Left cover for austerity and crowding out the political space for alternatives. While the NSW party’s response to O’Farrell’s agenda has been impressive, the Tasmanian example is a worrying portent. The grotesqueness of the state Greens’ position comes in statements that reduce the budget “crisis” to the result of government “spending sprees” and take credit for convincing Labor to embrace a “new fiscal strategy”, as well as demanding that departments not be allowed to go one cent over budget delivering services.
It is in part because of these contradictions that Greens have been unable to consistently articulate a program that could win them greater support inside the working class despite the crisis of political representation created by Labor’s neoliberal turn. Even in the climate action movement the party turned the post-Copenhagen questioning of market-based measures into an argument that activists had to fall in behind the party’s interim tax proposal, scotching any chance of developing a new politics that transcended failed elite strategies.
The recent imbroglio over the BDS shows that the conservatives who lead the party nationally are using the current conjuncture to achieve their long-term goal of breaking left-wing influence (concentrated in NSW and WA), playing along with the Murdoch media’s campaign in order to shift the internal balance of forces sharply in their favour. But the party’s Left has no distinct programmatic alternative to the Right, and has refused to build a coherent Left current within the party. For the Left outside the Greens it was vital to take sides in this battle because of the important role the party plays in social movements and wider politics. Yet that kind of partisanship is also not enough by itself — and this post has been an attempt to put the rudiments of strategic rethinking in the public domain for discussion.
This is the second of three parts. The first (mainly written, like this one, before the May federal Budget) looked at the long-term economic problems that lie behind both neoliberalism and the age of austerity. The final part will focus on the return of resistance around the globe.