On the eve of the Budget – A few notes of orientation

Screen Shot 2014-05-11 at 11.38.33 am



Why write? My friend Dan, many years ago, said such activity could be helpful to aid the demystification of the class as part of the process of encouraging self-activity.


So why write about the budget? Because the budget is a central if not the key element in the organisation of how the state facilitates the accumulation of capital and the general reproduction of capitalist society.


It is then important that we understanding it as part of understanding the world we live in so we can overcome it.

If you look at the media you see a swirl of commentary and analysis that obscures rather than enlightens; a vast diversity of voices that for all their sharp disagreements all agreed on the very same and very narrow liberal and technocratic consensus. (It is this consensus that in the face of a small and brave act of defiance Tony Jones labelled ‘democracy’.) The media continues to be the classic ‘Ideological State Apparatus’ which works to both reproduce the dominant ideas of society and also our relationship to society – no matter how much we might try to join in on Twitter(Althusser 2008).


Within this tight ideological constellation two other mystifications are offered up. The first that of the Federal government and the Centre-Right faction of the political class is as follows: we have a budget emergency, thus unprecedented action must be taken to save the nation. The task of the National Commission of Audit was to do the work of producing the research to justify the claims of ‘emergency’ but also to offer such unpalatable solutions that when the actual budget is implemented the latter looks mild and acceptable. However as writers from Left Flank have been arguing on social media the government’s application of these tactics has been contradictory and incoherent as they are engulfed in the crisis of politics that typifies our current conjuncture.


Thus the government is finding they can’t rule by hyperbole alone.


On the other hand the arguments from the ‘Left’ in its various social democratic, socialist and activist forms has not been helpful. The Left makes two arguments: a) that the government has over-emphasised the size and impact of the debt; b) that social democratic politics of ‘Taxing The Rich’ would solve the problem and contribute to the creation of a desirable alternative society.


What’s wrong here? The government is certainly over-egging its case. Australian debt remains relatively small compared to global numbers. But it is an error to image that Australia isn’t facing a crisis of social reproduction – that is the global conditions of the economic crisis have created a situation in which the state is finding it hard to fund social services, is confronting the end of the mining boom and thus must change course to attempt to save capitalism. The room for some kind of ‘Tax The Rich’ politics doesn’t exist.


Despite its vast length the Commission of Audit makes a very simple, and correct, key argument. That in the context of the global economic crisis revenue dropped and expenditure increased.

Screen Shot 2014-05-11 at 8.22.33 am Screen Shot 2014-05-11 at 8.22.41 am

(2014, v)

That the two future scenarios that the Commission runs reflect its own ideological proclivities is true – in particular their desire to prevent both rising taxes and bracket creep. But in some ways it is too optimistic as the Commission expects good levels of economic growth. If fact what we are seeing is the end of the mining boom. Thus we need to combine the Commission’s prediction of rising costs for social expenditure due to an aging population with the very likely reality that slowing economic growth will mean declining revenue.


In short: the secular and global crisis of capitalism has impacted the state’s ability to fund social reproduction.


The Coalition’s strategy is then to reduce expenditure on social reproduction and thus push more of the costs of it onto the home and the wage (thus the paid and unpaid labour of the working class), to work to increase the supply of labour-power (hence the paid maternity leave scheme, tighter requirements for the disability pension and Newstart and the rising of the age to access the pension) and to stimulate capital accumulation through infrastructure spending. (We can use ‘home’ in two senses here: both the site of unwaged care work mainly performed by women and also as the main asset owned by workers. If the value of your home is included in assessing eligibility for pension then this will increase the pressure to sell the home to fund your after retirement – this also means less inheritances for kids.) Hockey made this very clear in his speech to The Spectator Australia.


Thus the Left is completely wrong when it moves from a critique of the government’s rhetoric to claiming that there are no challenges facing the financing of the state at all. It works to damagingly mystify our condition by once again shifting the blame for our predicament from the nature of capitalism as a global social order itself to ‘bad people and bad ideas’.


But this folly is compounded by the insanely quixotic ‘alternative’ budgets that the Left rushes to draft. Their common denominator is a call to ‘Tax The Rich’. (You can see examples of this argument from Green Left Weekly and prominent socialist blogger John Passant) Such arguments make two errors. They fail to understand what capitalism is and they fail to understand the very limited possibilities that currently exist within capitalism.


The ‘Tax The Rich’ approach seems to imagine capitalism as simply a society built around a large division of wealth. There is a small pile of wealth here, a big pile over there, the state needs some more so why don’t we take from the big pile to fund state programs as the big-now-smaller-pile will probably still be big enough to fund pretty good lives – they can afford it.


But capitalism isn’t simply a society of wealth division it is a society where the division in wealth arose out of the process of capital accumulation. In a capitalist society, despite is complexity and historical specifity, the key organising dynamic is the movement of value to valorises itself, to accumulate capital, to turn a sum of money into a greater amount of money. ‘Value therefore now becomes value, in process, money in process, and as such, capital’(Marx 1990, 256). M-C-M’ is the organising dynamic of our lives.


If the state was to raise taxes in a way that threatened the ability of capital to do this at a competitive rate then capital would simply move elsewhere: something relatively easy given the level of financialisation and globalisation of the capitalist economy. (Of course capital’s flight into liquidity works to shift and intensify the very internal contradictions it is attempting to escape) (Holloway 2003).


Thus if the fantasy scenario of the Left came true – a Left government that within capitalism raises taxes – the most likely scenario would be capital flight that throws the economy, and thus our lives, into chaos until policy shifts. The example of the Mitterrand government should be instructive (Panitch and Gindin 2013, 196-197). Such arguments fail to fully grasp the domination of capital, and how much of the broader terrain of our lives is our caught up in and organised by its endless movements.


‘Do we need any further proof that Capital is the Real of our lives, a Real whose imperatives are much more absolute than even the most pressing demands of our social and natural reality’(Žižek 2009, 80).


Of course such delusions rest on the following foundation: that for the Left the social democratic compromise of the post-WWII period defines so much of their horizon (socialism being for them public ownership plus workers’ councils). This ignores that such a compromise was only possible due to a specific historical conjuncture (the vast post-war surplus in the US, the threat and reality of class struggle, the hyper-exploitation of the Global South) and that this compromise was broken by us by the vast mass struggles against its limitations and restrictions (cf.Midnight Notes Collective 1992, Caffentzis 2013, Varoufakis 2011, Prashad 2012).


In our current conjecture this simply just isn’t on the agenda. Capitalism has no apparent room for reformism.


My argument might strike many as both confusing and demoralising – what then can do done?


In the context of the continual stagnation of capital, the risings difficulties of the state to fund social reproduction and the Coalition’s attempts to stimulate demand by sacrificing all for massive infrastructure investment we shouldn’t just let our lives become fodder. We can, and therefore we must, struggle. But it is idiotic and unhelpful to enter into these struggles arguing that the problem arises from the Coalition, from ‘neoliberalism’ or from the nastiness of the political Right. It is idiotic and unhelpful to enter into these struggles arguing that some kind of alternative within capitalism is possible, that a different government or set of policies offers any desirable or possible alternative. Rather we can see that it is a systemic and global crisis we face and a radically other form of society is the only viable possibility, however unrealistic that may seem right now. Fix your eyes on a ‘communist horizon’(Álvaro García Linera quoted in Bosteels 2011, 227).



In Brisbane a rally opposing the budget will be held on Sunday 18th May 1pm in Queens Park


Althusser, Louis. 2008. On Ideology. London New York: Verso.

Bosteels, Bruno. 2011. The Actuality of Communism. London & New York: Verso.

Caffentzis, George. 2013. In Letters of Blood and Fire: Work, Machines and the Crisis of Capitalism. Oakland, CA: PM Press.

Holloway, John. 2003. “Capital Moves.” In Revolutionary Writing: Common Sense Essays in Post-Political Politics, edited by Werner Bonefeld, 161-169. Brooklyn, NY: Autonomedia.

Marx, Karl. 1990. Capital: A Critique of Political Economy. Translated by Ben Fowkes. Vol. 1. London: Penguin Classics.

Midnight Notes Collective. 1992. “The New Enclosures.” In Midnight Oil: Work, Energy, War 1973-1992, edited by Midnight Notes Collective, 317-333. Brooklyn,NY: Autonomedia.

Panitch, Leo, and Sam Gindin. 2013. The Making of Global Capitalism: The Political Economy of American Empire. London & Brooklyn, NY: Verso.

Prashad, Vijay. 2012. The Poorer Nations : A Possible History of the Global South London, Brooklyn, NY: Verso.

The National Commission of Audit. 2014. Towards Responsible Government the Report of the National Commission of Audit Phase One: Commonwealth of Australia.

Varoufakis, Yanis. 2011. The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy. London & New York: Zed Books.

Žižek, Slavoj. 2009. First as Tragedy, Then as Farce. London & New York: Verso.



7 thoughts on “On the eve of the Budget – A few notes of orientation

Add yours

  1. I think you misunderstand the nature of Australian capitalism in the global context, and where profit rates in Australia are compared to those in much of the rest of the globe. That isn’t to deny that the creeping Great recession may swallow up China and Australia, a point I make on my blog too, and one I argue is behind the preemptive strike by capital in this Budget against a further deterioration in (uneven) profit rates here.
    Taxing the rich is a call to arms, to relate to the millions of workers who know they are bearing the burden of capitalist society and that the rich and capital aren’t. Saying that doesn’t in the slightest imagine taxing the rich will fix capitalism. Your argument can just as easily be portrayed as saying that workers shouldn’t fight for higher wages because capitalist accumulation will be threatened.
    As I make clear in my article on Neoliberalism and the Henry Tax Review 8(1) Journal of the Australasian Tax Teachers Association 117 (http://www.asb.unsw.edu.au/schools/taxationandbusinesslaw/atta/attajournal/Documents/JATTA2014vol8no1%20-%20Passant.pdf), tax is an after the event redistributive tool at best. Winning back more of the surplus value workers create through strikes etc is a better solution within capitalism, which itself will have consequences for capital accumulation. I don’t see genuine socialists arguing against strikes for better pay, defence of jobs, safety on site etc.
    It also doesn’t rule out calls for taxing the rich as part of attempting to talk to workers about capitalism and struggle, nor for pointing out how and why Labor (and of course the Libs) won’t do that in any meaningful way.

    1. And to be 100% clear. Do you think taxing the rich is a possible and desirable policy within the confines of capitalism? Or do you think that it actually isn’t it is just a useful talking point to connect to ‘the workers’? If the latter what is the relationship between lying to people and fostering collective self-activity?

  2. As I say in my article on Neoliberalism and the Henry Tax Review (http://www.asb.unsw.edu.au/schools/taxationandbusinesslaw/atta/attajournal/Documents/JATTA2014vol8no1%20-%20Passant.pdf):
    One result of the 3 decades of neoliberalism in Australia has been that income and wealth inequality in Australia have increased since the 1980s.55 According to the OECD ‘[i]ncome inequality among working-age people [in Australia] has been rising since 2000 and is today above the OECD average.’56
    At the same time the tax and transfer system in Australia has become less able to address this growing income and wealth inequality. The OECD has found that in Australia now ‘…taxes and benefits reduce inequality by 23%…’57 The increase in inequality is a pre-tax issue,58 suggesting its resolution will occur in that pre-tax environment, that is in the workplace in the battle over wages.59
    Class struggle for better wages and thus great equality can then flow through to demands for greater equity and equality, including in tax.

  3. 1) Chart 1 needs to indicate the method of “real” dollar calculation and the year to which “real” dollars have been normalised, even if its a quotation. If its CPI then the graph is simply shit (measuringworth.com and ABS on the history of wage-price series in Australia both have detailed descriptions of what CPI-type measures measure, and what they can’t.) CPI measures the socially average wage as normatively re-constructed by ABS against the momentary value of money expressed in consumer commodities. Not the correct measure for social reproduction by state intervention, which should be normalised against GDP per capita. This is simple to rectify, I could do it myself, but I’m not busy with Audit.

    2) People who hanker for free education within capitalism, for nationalisation plus works councils*1 mistake why reform took place. The Award System wasn’t a triumph, it was a position of acceptable defeat from Meat Workers, Miners Federation, Rail Unions, Radical Labor, NSW Trades Hall factions, the Vic Socialists and the IWW wanting to bring the whole system down. The Award system was a trap. Legal trade unions was a trap. Full employment was a trap. Wage indexation was a trap. Free secondary education was a trap. Free higher education was a trap. Medicare is a trap. These are all concessions wrung from struggle that we didn’t want in the first place. The chartist manifesto wasn’t for one man one vote one value because they liked parliament: they wanted to take parliament to outlaw capitalism.

    When our horizon is communism, and if we fail, we get pap shovelled down our throats that make living in our own filth of commodities more bearable—and we just might win. When our horizon is pap we’re just left with the shit and we’ve ruled out winning. The horizon of inflicting pain on the boss over the wage is the abolition of the wage, not being thrown—as my wage is—another beer or play station game or half day of rent to shut me up. Unlike a tax on the rich, a fight for higher local wages involves organising and composing working class strength that directly acts. Begging the greens for a tax on the rich reorganises the working class into appeals to the bourgeois state. I know which one I want to put my energy into, and which one has the remotest chance to succeed in abolishing capital.

    *1 The effective limit of Australian workers’ participation debates, the industrial democracy debates in academia in the 1970s was the potential introduction of bipartite plant works councils, and the fantasy of workers councils obeying a nationalised capital is the same again with red bosses. No thanks mates, you can keep your wage-labour trap. The debate in the class for workers control was about mobilising power to put pain on and break capital.

    1. Thanks Sam
      Last night Arlo pulled a big book on the basic practice of statics out of the shelves. Apart from being conked on the noggin by such a book being an apt metaphor for stats as far as I am concerned maybe he was trying to tell me something.
      I agree with the rest of your comments

  4. Dave, you write that the post-WWII era was a “compromise was only possible due to a specific historical conjuncture (the vast post-war surplus in the US, the threat and reality of class struggle, the hyper-exploitation of the Global South) and that this compromise was broken by us by the vast mass struggles against its limitations and restrictions”.

    I don’t see how that period represented a “compromise” any more than other periods, except at the level of institutionalised class representation gaining recognition via-a-vis the state, which is something that predates that period anyhow. Rather, it was the massive expansion of capitalist accumulation, in part predicated on destruction of capital in a series of advanced industrial nations in the Depression and WWII, as well as the constant diversion of capital towards unproductive (mainly military) sectors that allowed the system to maintain some social stability (i.e. a temporary dampening of the system’s usual inbuilt tendency to crisis and breakdown caused by it own development of productivity). If we are frank, the threat of *social* class struggle (c.f. “political” struggle within well-defined institutional limits) was low-level in most of the West until the latter years of the boom, when the boom was starting to unravel. Further, the one area where perhaps struggle did impact on the functioning of rich (imperialist) nations was the anti-colonial struggles, which *limited* “hyper-exploitation of the Global South”.

    Even if we reject my take and argue (like Jehu) that the post-WWII era represents the state stepping in to prop up a capitalist system that can no longer achieve the same profit rates as times past, the arrangement still has little to do with any kind of “compromise”.

    Finally, the “compromise” (I see it as a mainly political “settlement” on the state’s terms) was shattered much more by the breakdown of the accumulation model that had briefly appeared to iron out the system’s problems than any social struggles. If there had been not a single May 1968 (and indeed Australia’s social struggles were piddling compared with that event) there would still have been the need for a restructuring with the coming of the crisis of valorisation. Not a crisis caused by struggle against the limits of that valorisation process; rather, a crisis caused by the process itself.

    The reason I raise this is that the call to “struggle” needs to sit alongside the real problems the state faces in ensuring the conditions for the reproduction of capitalist social relations precisely because those relations — when they start to break down under their own steam — destabilise the basis of the state’s existence. Given we stumble into the current crisis with an already-existing crisis of politics, the question of how we deal with the state becomes more acutely posed.

    Hence “tax the rich” becomes a demand for propping up the state (of course to “do nice things” in the Left’s imagination). We should be ever more careful to think of demands that start with what people need, not the state financing mechanism to achieve those social ends. When social struggles on a large scale emerge, the “tax the rich” crew will be the ones saying that the best way to mobilise the people is to focus them on mobilising the state. That way lies defeat.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: