(Contributed)
Wayne Swann and Julia Gillard might well put on an upbeat display before the TV cameras, saying that the Australian economy is one of the most successful in the world, that the government is doing a great job and that good times are before us. This does not make it true.
There is a global crisis of overproduction witnessed by very high levels of unemployment in the advanced industrial nations and emerging economies, and in the writing-down of inventories of companies in the distribution cycle of capitalism. As permanent full-time employment disappears, the level of underemployment in the form of precarious work (casual, part-time) increases. To a greater or lesser extent, all of this is reflected in the Australian economy.
As Marx explained, there is a general falling in the rate of profit, sometimes expressed, as it was towards the end of June by the Reserve Bank, as an erosion of productivity growth. All of this presages new attacks on the people by way of calls for “increased international competitiveness” and for “workforces to become more efficient”.
Capitalist Budgets cannot overcome system’s contradictions
The recent federal budget failed to address any of these issues. This was not its purpose, for the Australian government’s function, whether Labour or Coalition, is only to serve the interests of the dominant mostly foreign owned monopolies. The budget could do no more than meet this purpose. The central problem is the irreconcilability of interests between labour and capital, the decisive components of the latter presently comprising giant banking and financial corporations and the largest and mainly multinational mining companies.
Australia’s manufacturing base continues to contract. A growing capitalist economy is one that continually creates new value. This can only come about by applying labour power to the means of production to create new goods. Our dependence on finance and services is actually the hallmark of stagnation and crisis, since it is concerned with the circulation of what has already been produced and moving money around, rather than with the creation of new surplus value.
Speculative capital depletes funds for growth
A by-product of any economic downturn is a rise in speculative activity. This has been rife for some time. It continues at a high level today and it adds its own illusion of economic growth. Key indicators of the reality of this problem are the ongoing instability of currency exchange rates, the upward movement in the price of gold (reflecting a loss of investor confidence in real production)and volatility in share prices. As capital markets dry up, there is less credit available to stimulate new production. Capital seeks refuge in speculation aided by high frequency trading of massive amounts on tiny opportunities for gain conducted in nano-seconds of exchange in so-called “dark pools”: unregulated and unsupervised trading venues that are drawing capital away from companies listed on traditional stock exchanges.
Mining boom creates instability
Mining is productive. That is true. It has another side to it as well. When over-extended, it leaches investment from other parts of the economy, notably manufacturing. This exacerbates contradictions between sections of the capitalist class and adds to the instability of capitalism. The budget does almost nothing to address this problem, other than the small and inadequate of assistance to smaller businesses.
Expansion of personal credit increases vulnerability to crisis
Consider debt. National government debt in the last financial year increased substantially, from $159 billion to $205.5 billion. State and local government debt rose from $77.6 billion to $98.4 billion. The big one is household debt that grew from $1,435.4 billion to $1,542.9 billion, despite a noticeable drop in consumption. By far the biggest proportion of household debt is home mortgages, well over $1,000 billion. Private business debt has decreased steadily in recent years, reflecting the falling liquidity or decline in operating capital mentioned above.
The huge private household debt combined with the growth of precarious employment and uncertainty over Chinese demand for resources reflects the vulnerability of the people under capitalism: debt is simply the claim that the vultures of capital have on the future income of the working class and other Australians.
Some indirect recognition of this is provided in the announced but limited handouts for families. However, this is not nearly enough to make any real difference.
Make the rich pay!
While officially the labour force increased marginally, the participation rate decreased marginally, from 65.6% the previous June, to 65.2 in April (the latest figure). Unemployment officially went down by 0.02% over the same period. Were it not for the post drought 6% rise in employment in agriculture, the unemployment rate would have actually raised significantly. The Budget’s response to this is not to work towards ensuring new jobs, but to impose even more hoops through questionable training programs and the encouragement of cheap, casual and part-time labour.
According the data provided by Business Indicators Australia, profits for mining companies have dwarfed profits form other sectors. In the last December quarter they were $18,233.5 million. Only the services sector came anywhere near this and much of its $11,476.2 million profit is accounted for by the banks. Profit for the whole of manufacturing was only $394.5 million. Profits for the whole economy were $49,229 million. The share of mining and services accounted for a whopping 62.4% of the whole, indicating a large scale shift of profits to a narrower group of capitalists.
There are no signs that the global and Australian economies will see a reversal of these trends in the short term.
Nor should working people be conned into waiting passively for “better times ahead”.
The super profits of the banks and the mining sector need to be taxed to the hilt so as to provide relief for the people and an expansion of socially useful services such as in education and health.
Waiting for government to solve the problem is not the answer. Taking the matter into one’s own hands is.
We need to be at the forefront of advancing an independent working class agenda has both immediate demands and the goal of anti-imperialist independence and socialism.
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