Debt in the banana republic

Debt in the banana republic

An exploration of the reasons for austerity in Queensland, Australia and a critique of those arguments that would reduce the cause to one of 'ideology'.

( For non-Australian readers the title refers to jokes about the nature of Queensland, based on its history of agricultural production and its experience under the Joh Bjelke-Petersen National Party Government that ruled from 1968 till 1987)

Since their election Queensland’s LNP government has unleashed a wave of attacks on the conditions of workers and communities. These attacks include at least, the planned reduction of 20,000 public servant staff and the capping of wages, defunding of NGOs in the community sector, the intensification of the government’s power to ban strikes and restrict industrial action and notably homophobic policy that targets Queer organisations and has seen the watering down of civil unions and the removal of surrogacy rights for Queer parents (and unmarried heterosexual relationship shorter than two years). This constitutes a profound reorganisation of what we could call social reproduction.

All of this has happened in a context in which the government is claiming that the state is in some kind of financial crisis and thus they are compelled to make these changes whether they desire to or not. Crucial to this was the formation of the Queensland Commission of Audit (QCA) who investigated the state’s books and declared that the ‘in recent years, the Government of Queensland (meaning the previous ALP governments)embarked on an unsustainable level of spending which has jeopardised the financial position of the State’(Queensland Commission of Audit, 2012: 1). The QCA then suggested a thorough going policy of austerity which seems to function as the Government’s blue-print.

What is going on? Why is this happening?

The most coming understating provided from the Left is to dismiss the notion that any kind of debt crisis exists and argue that these attacks are ideological. Socialist Alternative for example claims that ‘the debt scare is a total fabrication to drive the LNP’s political agenda’ (Giles, 2012). Alex Scott the secretary of Together, the main public sector union, also think that this debt crisis is a ‘spun-up, non-existent problem’(2012: 2). This means that that these changes are solely driven by the bad ideas that the LNP have, and are not connected with, and perhaps harmful to, the actual material economic conditions of the state. Such an argument is often coupled with notions of returning to the era of Joh and the implied reactionary culture, cronyism and corruption. Simply put they are arguing that big bad right-wingers are destroying the state because they are big bad right-wingers.

This argument is similar to that marshalled by the ALP and Trade Union leadership during the campaign Work Choices and is also a pretty bad mangling of the word ideology. Ideology is most often used to describe different kinds of sets of ideas as if they were so many ‘cans of soup’ (Leslie, 2012). Ideology can however mean so much more – it can mean the condition that ideas take in a class society, and thus all of us, as much as we are in that society, are ideological (Althusser, 2008, Marx and Engels, 1973). In this sense by saying that Campbell Newman’s government is somehow especially ideological, it ignores the ideological nature of everyday life, and also depressingly reinforces the idea of some non-ideological pragmatic normality. This is one of the founding myths of liberal capitalist society itself. Also if the problem is ‘ideological’ the solution is simple. Just campaign for a different, nice, non-ideological government of technocrats (the ALP?) to keep on sailing the good ship of state.

There seems to some powerful evidence for this view. The Workers’ Audit has shown how the much touted claim of a looming debt of $100 billion is simply a projection based on an a series of assumptions (Workers' Audit, 2012) and the government’s posturing the Queensland is somehow in a similar situation financial to Spain, or is the ‘Spain of Australian states’ is laughable(Ironside and Caldwell, 2012). Yet there is a deficit, though the size of this depends on what form of accounting you use. ‘The operating balance of the government in 2010-2011 was a small deficit of $1.5 billion, but the QCA’s fiscal measure changes this figure to a deficit of $7 billion (p29).’ The cause of this is not, as the government and QCA claim previous ALP mismanagement but rather the effects of the current global financial crisis. The state government financed its superannuation contributions and other liabilities through investments in the Queensland Investment Corporation with predicated returns of 7% but the 2008-9 budget reveals that this dropped to only 2%. This, coupled with declining revenue from coal royalties, Federal GST funding and house and car sales, produced the current deficit (Workers' Audit, 2012). One of the effects of this was the down grading of Queensland credit rating to AA+. Whilst this still signals a solid economic position it does increase the cost of borrowing. My core contention then is that yes, whilst the LNP claims are exaggerated, the state of Queensland is experiencing a version of a global phenomenon: a difficulty affording the levels of social reproduction previously taken as normal. The declining returns from the twin effects of the crisis, the bursting of the financial bubble, and a drop in income from worsening global conditions, is compelling this move towards austerity. This is fundamentally a politics of class: the level of social reproduction is being forced down, and the costs of it pushed more and more onto the shoulders of the working class as a whole.

A knotty problem

The question lurking in the background is what is the relationship between capital accumulation and the state, specifically the actions of an elected government? Or in more common language what is the relationship between ‘economics’ and ‘politics’? In the dominant narrative of our society economics and politics are two separate spheres (often expressed as the difference between ‘the market’ and ‘the state’) with economics being a world of timeless scientific laws and politics being the realm of ethics and ideals, linked always to parliament and surrounding activity. Economics is normally seen as trumping politics, as if it is the existing reality that defines and limits what humans can consciously do.

We see this understanding of the world being deployed right now. The government and the QCA (2012) argue that the economic situation is bad therefore we must embark on austerity. Whilst social democratic opponents argue that the economic situation is not as bad, or should be solved differently, therefore the government policy is bad policy(Quiggan, 2012).

Unfortunately much radical thought also accepts this split between ‘economics’ and ‘politics’. Orthodox Marxism, drawing on a particularly reading of the ‘Preface’ from Marx’s A Contribution to The Critique of Political Economy (1970) made a certain reading of the world in which economics constituted a ‘base’ which determined the ‘superstructure’ of which politics was a part of (such a reading is difficult to sustain if one goes past the ‘Preface’ and reads the rest of the book). The limitations of this approach led more innovative Marxists to flip the polarity and argue for the autonomy of the political (cf.Holloway and Picciotto, 1977: 81). Despite the heated debates between the two positions both maintain the constitutive split between economics and politics and like bourgeois thought understand economics to be relatively mechanical and driven by its own innate mechanics.

The effect is that radical voices also recreate the bourgeois understanding of what crisis is. It becomes a simple numerical question – if the numbers are bad enough then yes, it’s a real material question, if not, well it’s just ideology. What this forgets is that crisis is not a mathematical equation, it is a crisis in a relationship of domination, which is perhaps expressed in numerical terms. This is the heart of a real critique of capitalism. Capitalism is a society in which domination takes the form of the transformation of wealth into commodities which are exchanged for, and organised through, the accumulation of value. Value necessarily finds its expression in money(Heinrich, 2012: 63). This then appears as a numerical question, when it is a social question, of which its numerical expression is part of a relation of domination.

This then helps us grasp the apparent difference between economics and politics. This split arises because of the particular nature of domination and class struggle in capitalism. Capitalism is a specific form of social domination, in which this domination does not take the appearance of direct exploitation between say lord and serf, but rather appears to be the automatic movements of the economy. This is experienced as ‘real’ – the movement of interest rates, the circulation of commodities, if capital invests here or there, all shape our lives. But this movement is one of a process of fetishism, of a ‘definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things’(Marx, 1990: 165). In a very real way this is what class struggle is – the struggle of capital is to enforce its domination that takes the form of the ‘economy’ through the transformation of wealth into commodities, the centralisation of the means of production into the hands of capitalists, the imposition of money and the transformation of the an increase mass of people into workers, into those with nothing but their labour power to sell. This is most obvious in the opening acts of capitalism, in primitive accumulation –‘and this history, the history of their expropriation, is written in the annals of mankind in letters of blood and fire’(Marx, 1990: 875). But it takes place all the time, every day, everywhere(Holloway, 2002, 2010).

This also necessarily gives rise to another space called the ‘political’ tasked with overseeing and coordinating the general conditions and problems of capital accumulation whilst simultaneously being directed and ruled by them. ‘The abstraction of relations of force from the immediate process of production and their necessary location (since class domination must ultimately rest on force) in an instance separated from individual capitals constitutes (historically and logically) the economic and the political as distinct, particular forms of capitalist domination’(Holloway and Picciotto, 1977: 79). The split of human activity into the apparently autonomous forms of economy/market and politics/state is part of how capital rules and through their very seeming difference are completely bound together.

Thus perhaps we can start a new approach to the understanding the activities of current LNP government – how much does the restructuring of the Queensland state express the problems that capital is having in maintaining and increasing domination more generally and how does the state government attempt to solve them?

The state and social reproduction

The state then is one of the ways the social reproduction is maintained in capitalism. Capitalist social relations are produced in two ways, in part capital reproduces itself through the function of capital as capital but also needed are all those forms of activity that might not in themselves directly produce commodities and accumulate surplus-value but are necessary to reproduce all that is necessary for capital accumulation to happen. This involves a lot of distinct activities, which change with time and importance. It could be things like building roads and maintaining water quality, but of special interest are all those activities that are necessary to produce the most important commodity of all - labour-power: our ability to work. The exploitation of labour-power is the secret of capital accumulation. But the ability to work is not something fixed, it’s a living potential of our bodies (Virno, 2004: 83). It takes a lot to reproduce this potential; it’s what we spent most of our wages on. And it has to happen both individually and socially. It involves everything from education and learning specific skills, to a hug after a bad day of work. It involves imprisoning those that break the rules, and inculcating the majority of the population into the dominant forms of ideology(Althusser, 2008). It not just our ability to work that has to be reproduced but our willingness to work too. At different moments of history this reproduction has been organised a number of different ways. The dominant forms are the state, but also the family and specifically the work of women in the home (Dalla Costa and James, 1975, Fortunati, 1995) and also charities and philanthropy. Whilst these domains appear separate they are twisted together and are terrains of, and shaped by, class struggle. The revolt of women against being confined in house-work has for example, compelled many previous tasks of social reproduction and care out of the home, and sometimes into profit-making industries themselves based around services and the prevision of care (Federici, 2006, Precarias a la Deriva, 2006).

Since the end of the WWII a certain provision of welfare and state services was the ‘deal’ that capital offered to workers in the North in return for restricting their struggles within the framework of capitalism and increased productivity in the workplace ( both often overseen by the Trade Unions and Left-wing parties)(Midnight Notes Collective, 1992). This deal was broken by the ‘indiscipline and insubordination of the proletariat which in the workplaces “came together” with the emergence of a multitude of new proletarian struggles (by women, minorities, unemployed, etc.) in the sphere of distribution leading to an exploitability crisis of labour power and to a legitimacy crisis of the capitalist state and its institutions’(Ta Paida Tis Galarias, 2010). What we call neoliberalism ( there’s that fuzzy term) was capital’s response to these struggles – which involved in part a flight of capital from rebellious workers to both new geographies and into increased investment in finance capital and direct counter-attacks and the imposition of discipline through increases in unemployment and misery. The new form of capitalism that arose from this involved a new organisation of social reproduction. This involve at least the increased funding of social reproduction through financialisation – we can see this in our daily lives in how as more costs were pushed on to us for health, housing, education etc. they had to be paid for by credit. Important as well in the Australian case was the development of superannuation – that retirement would no longer be funded by pensions provided through state revenue but rather a proportion of workers’ remuneration would be forced to become capital and part of global flows of investment.

States and corporations also increasingly became dependent on financialisation and the constant creation of speculative bubbles to make up for and delay the consequences of an inability to impose and realise a sufficient high rate of profit(Ta Paida Tis Galarias, 2010). In this sense financialisation was a response to the inability to reproduce the capital relation at sufficient intensity, to achieve sufficient forms of domination. Financialisation merely delayed and intensified the crisis in capital (cf.Holloway, 2002: 194-203 , Midnight Notes Collective and Friends, 2009). The explosion of this financial architecture thus exposed the very contradictions that were masked, intensified and delayed by financialisation. The bailing out of banks necessary to continue the circulation of money-capital meant the creation of a sovereign debt crisis, which globally states are attempting to push down onto workers through unleashing waves of austerity.

Of course the conditions in Australia, and the finances of Qld, are nowhere as near bad as those of say Spain or California. The continuation of the (perhaps wobbly) mining boom means a generally positive (if you like that kind of thing) level of growth and low unemployment. Yet that doesn’t get around the fact that the crisis has caused a problem for the provision of state services. In a textbook sense there is of course nothing particularity wrong with a state having debt at this level. But we don’t live in a textbook. We live in a world where there are constant worries about another crash or crisis and speculation about major risks of looming and reoccurring liquidity crises (that is a shortage of the availability for credit)(World Economic Forum, 2012). The state is thus in a bind: it has to balance multiple different tensions necessary for capitalism to function - how can it afford to provide social services, where will it get income from, how can it maintain a good credit rating so it can borrow more when necessary, how can it do all this in a way that maximises the opportunities for capital to accumulate? There is a difficult question about how much politicians, the ideologues of capital and capitalists themselves really explicitly understand these questions. While I can prove no direct correlation, the Business Council of Australia’s(2012) submission to the last Federal Budget calls for a similar policy of austerity so the government can be ready to step in with stimulus and bail-outs whilst removing as many pressures as possible on capital accumulation.

This is the problem the LNP government is trying to address. Public service cuts are either a forcing down of the provision of services or forcing less workers to do more work. The privatisation of service provision, the slashing of grants, the establishment of global budgeting or the formation of independent schools will also put downward pressures on workers’ conditions, and also perhaps generate opportunities for capital to turn these into direct points of capital accumulation. The new industrial relation laws will work as a weapon against even defensive industrial action. What is just as important, but harder to notice, is how the removal of state provision means that cost will be directly forced onto the wages of workers themselves. Indeed the second wave of reforms the QCA calls for explicitly argues that the ‘community who are able to access alternative services (meaning private health and education) are encouraged to do so’(2012: 203). Also much care work will still take place, but it will happen more and more in the home, and that still means on the shoulders of women. In this way we can understand that the bigotry towards Queers by the LNP government has a certain rationale behind it, not only does it satisfy the reactionary vote they rely on, it also works to reinforce the traditional family and use peoples’ love for each other to provide unpaid largely female care work to capital.

This is a class attack, an attempt to lower the level of social production and push more of the weight on to workers’ paid and unpaid labour. Now of course all this is happening with a certain LNP flavour, who are undoubtedly using the moment to settle some old scores – but we should also not forget that the that the ALP was attempting to address the same problem by selling off assets such as Queensland Rail. This is a real contradiction for capital. This means that those of us organising against this attacks can’t simple argue for a change of government policy – rather even saying ‘No’ compels us to start asking deeper and more radical questions.

Originally published in, and wonderfully edited by the good people at, Mutiny

reblogged from with sober senses

photo taken from Why conservatives love sacking public servants used under creative commons

References

Althusser, L. 2008. On Ideology, London New York, Verso.

Business Council of Australia 2012. B.C.A. Budget Submission 2012–13: Preparing for a Better Future.

Dalla Costa, M. & James, S. 1975. The Power of Women and the Subversion of the Community, Bristol, Falling Wall Press.

Federici, S. 2006. The Restructuring of Social Reproduction in the United States in the 1970s The Commoner: A Web Journal For Other Values, no. 11 Spring 74-88.

Fortunati, L. 1995. The Arcane of Reproduction: Housework, Prostitution, Labour and Capital Brooklyn, NY, Autonomedia.

Giles, S. 2012. L N P Needs to Be Punished through Mass Strike Action [Online]. Socialist Alternative. Available: http://sa.org.au/index.php?option=com_k2&view=item&id=7436:lnp-needs-to-be-punished-through-mass-strike-action&Itemid=392 [Accessed 10th August 2012].

Heinrich, M. 2012. An Introduction to the Three Volumes of Karl Marx's Capital, New York, Monthly Review Press.

Holloway, J. 2002. Change the World without Taking Power: The Meaning of Revolution Today, London, Pluto Press.

Holloway, J. 2010. Crack Capitalism, London, Pluto Press.

Holloway, J. & Picciotto, S. 1977. Capital, Crisis and the State. Capital & Class, no. 2, 76-101.

Ironside, R. & Caldwell, A. 2012. Premier Campbell Newman Calls Queensland 'Spain of Australian States' and Claims State Is on Verge of Bankrutpcy [Online]. Available: http://www.couriermail.com.au/news/queensland/premier-campbell-newman-calls-queensland-spain-of-australian-states-and-claims-state-is-on-verge-of-bankrutpcy/story-e6freoof-1226434445262 [Accessed 10th August 2012].

Leslie, E. 2012 Ideology and Misery 28 April 2012 Available: http://backdoorbroadcasting.net/2012/04/esther-leslie-ideology-and-misery/ [Accessed 8th August 2012]

Marx, K. 1970. A Contribution to the Critique of Political Economy, Moscow, Progress Publishers.

Marx, K. 1990. Capital: A Critique of Political Economy.Vol. 1 London, Penguin Classics.

Marx, K. & Engels, F. 1973. The German Ideology Part One, New York, International Publishers.

Midnight Notes Collective 1992. The New Enclosures. in: Midnight Notes Collective (ed.) Midnight Oil: Work, Energy, War 1973-1992.Brooklyn,NY: Autonomedia.

Midnight Notes Collective and Friends. 2009. Promissory Notes: From Crisis to Commons [Online]. Available: http://midnightnotes.org/Promissory%20Notes.pdf [Accessed 28th March 2010].

Precarias a La Deriva 2006. A Very Careful Strike- Four Hypotheses The Commoner: A Web Journal For Other Values, no. 11 Spring, 33-45.

Queensland Commission of Audit. 2012. Interim Report [Online]. Queensland Commission of Audit. Available: http://www.commissionofaudit.qld.gov.au/reports/interim-report.pdf [Accessed 10th August 2012].

Quiggan, J. 2012. Queensland Isn’t Greece or Spain (Crosspost from Crikey) [Online]. johnquiggan.com. Available: http://johnquiggin.com/2012/08/01/queensland-isnt-greece-or-spain-crosspost-from-crikey/ [Accessed 9th August 2012].

Scott, A. 2012. Queensland Finances: The Truth. Union News: The Journal of Together, [Accessed].

Ta Paida Tis Galarias. 2010. Burdened with Debt: 'Debt Crisis' and Class Struggles in Greece [Online]. Available: http://libcom.org/library/burdened-debt-tptg [Accessed 11th August 2012].

Virno, P. 2004. A Grammar of the Multitude, Los Angeles, CA & New York,NY, Semiotext(e).

Workers' Audit. 2012. Workers' Audit No1 [Online]. Available: https://www.facebook.com/notes/workers-audit/workers-audit-no-1/100810233400417 [Accessed 10th August 2012].

World Economic Forum 2012. Global Risks 2012 Seventh Edition, Geneva, Switzerland, World Economic Forum.