What’s class got to do with it? The debate over $150k families & ‘middle-class welfare’

You may have thought there’d been a debate on class carried out in the mainstream media and more widely since Budget night last Tuesday, but you’d be wrong.

Instead we’ve seen a partisan debate where both sides agree on the principles of deficit reduction, the erosion of progressive taxation, the need to limit collective public provision and the absolute centrality of big business shifting the costs of the global economic crisis onto less powerful groups. Their only disagreement, with one eye on their respective voter bases, is who among the vast majority of people who are not capitalists should pay.

The debate heated up here in Sydney over the case of the Hadfields, a facility manager and forklift driver with a small son, whose combined pre-tax income is $153,000. They portrayed themselves as struggling because of very high cost of living circumstances and the loss of certain cash benefits delivered by the Howard government through the ALP’s decisions to means test them more recently. The response by many people on lower incomes has been revulsion at their upper middle-class “bleatings” as part of a wider debate about exactly who is “rich” in Australian society. This comes against the backdrop of the ALP and Liberals tying themselves in knots over trumped-up accusations notions of “class warfare”.

In a very clear contribution, blogger Matt Cowgill has summarised the actual spread of incomes in Australia, which conclusively demonstrates that the Hadfields exist high in the income spectrum in Australia. Indeed, in 2007-8 the median gross family income was around $67,000, nowhere near the Hadfields’ situation. Game, set and match, it seems. The Hadfields are well-off whingers and part of the upper middle class at the very least, deserving of loss of benefits and a reality check.

In truth, however, this is an argument played out purely within the narrow terms set by neoliberal ideology, an ideology that has gained purchase because of the material effect of economic, social and policy changes that have hollowed out terms like “class” to the point that their original meanings are forgotten and they only serve to distract from what is really going on.

This is because while gross income is an often-used proxy for class it is often forgotten that proxies aren’t causes and that what is true across a population is often untrue when applied to individual cases. It fails to take into account a whole range of more important social relations that determine people’s material experiences, not to mention the wider social context in which these relations play out (and in which incomes are spent). It reduces class — a social phenomenon — to the level of atomised individuals and their payslips. But, most importantly in the current debate, it conveniently ignores the role of one particular class — the capitalists — in the creation and maintenance of these social circumstances, including the dispersion of incomes. Because with the honourable exception of the Greens taking pot shots at banks and mining magnates, this is not really an argument that touches the class structure of society at all. Rather, it is about how the crumbs from the table are to be redistributed.

The focus on incomes distorts the true picture firstly because of variations in costs of living for different people (influenced by such factors as geography, personal work situation, access to social supports, etc). It is even more inaccurate because it doesn’t take into account property ownership, not just housing but more significantly the ownership of capital that can provide recurrent income (which often doesn’t even get counted as personal income — certainly not the taxable type — because it “part of the business”).

Beyond the issue of property ownership is the set of power relations that underlie it, and which therefore means that ownership confers not just wealth but power. Going beyond existing understandings of class before him, Karl Marx argued that they were mistaken in seeing class inequality as a distributive question. Rather, class was a social relation that revolved around social groups’ relationship to society’s “means of production” (its ability to make stuff, whether through mental or manual work or a combination), and that unequal distribution of wealth flowed from this fundamental relation rather than causing it.

This is important because it informs how those who control capital are able to live life and exercise power in a huge variety of ways closed off even to well-off middle class people with similar headline incomes. At one level this is obvious in terms of their hugely disproportionate ability to influence government policy, which then shapes distributive questions of the sort being fought over last week. But this is just the tip of the iceberg. Because virtually all of society is organised around their imperatives, to accumulate capital by making profits in the context of inter-capitalist competition, those imperatives shape every policy, institution, legal norm and debate that occurs in society in ways that are not usually direct or conscious.

The issue of this difference bears looking at in more detail because it goes to the question of well-paid workers like mining workers in Queensland and WA who are making wages bigger than even Mrs Hadfield. Despite their high pay and expensive fly-in / fly-out arrangements, their bosses are still raking in massive profits and these workers have minimal control over their conditions of work. These issues are much more important than whether they get one of those family tax benefits or other “middle class welfare”. Look at the issue of health, for example. The famous Whitehall studies of social determinants of health (robust and replicated in a variety of settings) found that top Civil Service bosses as a social group had significantly better cardiorespiratory health outcomes than technical experts on marginally lower pay but also with much less control over their work process. Those lower down the scale suffered much higher rates of morbidity and mortality.

But there is a second aspect to the issue of control of circumstances that more directly relates to the current imbroglio. Neoliberalisation has driven a shift in state function towards promotion of the interests of private business and a shift to more provision through individual consumerism. While overall state spending has continued to rise in relation to GDP, it has been redirected to enforce these doctrines. Cheap or free universal collective provision paid for by high corporate tax rates and progressive taxation has been eroded in favour of marketisation of services, the destruction of universality through means-testing and targeting (always more harshly applied to the poor than the rich, but the source of many resentful arguments over its arbitrariness), and the flattening of the tax scale with a concurrent move towards inherently regressive “broadening” through consumption taxes. Thus, even for many on quite high incomes, this means far less social and personal security. Whether they take on private health and education and pensions for their security or not, almost everyone feels less secure as a result.

Thus, neoliberalism has intensified inequality not only through labour market reforms that have created greater income dispersion but through tax, public services and welfare policies that are both atomistic and redistributive upwards. The policies directed to partially ameliorate this situation have also tended to be centred on individual circumstances rather than repairing social problems — cash handouts as opposed to public service provision, etc. — and thus only intensify the resentments between different subaltern social groups. This was Howard’s temporarily effective cruel genius, mollifying key sections of his cobbled-together constituency. But it was even cleverer because most of the social democratic Left had already been suckered into ditching universality, progressive taxation and collective state provision by Hawke and Keating, those “progressive” neoliberal apostles. This explains why some on the Left have been so quick to join the current debate, because it fits within the neoliberal frame, a battle over distal effects rather than proximal causes, and one that leaves the richest and most powerful in the drivers’ seat.

The big problem for the ALP, in attempting to paint a picture that everyone must share the pain of deficit reduction equally, is that these shifts are in the context of a budget that overall simply continues down the neoliberal path. As the Australia Institute’s Richard Denniss argued this week:

[T]he budget papers are full of real information about the real priorities of the Government. It shows that we spend far more on defence than on education. It shows that we spend far more on subsidising fossil fuel use than we do on tackling climate change. And it shows that we are one of the richest countries in the world, with one of the lowest levels of government debt. We are also now the lowest taxed country in the developed world.

But what the budget doesn’t show, and never will, is why despite all these advantages we have convinced ourselves that we cannot afford to reduce indigenous disadvantage, invest in aged care or invest as much in public transport as we do on roads.

The reason that the budget will never provide the answers to such questions is that they have nothing to do with economics and everything to do with who we are as a society.

As long as it is not hijacked down the road mapped by the major parties, it is here that one positive could come out of this week’s debate: The recognition of growing social inequality could lead to greater questioning of how society is run and in whose interests. That will require us on the Left to articulate a program that goes beyond accepting that all we can do is fight over the crumbs thrown to us.