The carnival is over - World Economic Forum 2017

Contributed

The recent World Economic Forum (WEF) in January 2017, was, by comparison with their previous meetings, a rather drab event. It was shunned by many influential figures who had more pressing engagements and who chose to stay away from the annual bean-feast in Davos, Switzerland.

Behind the scenes, however, the 'more pressing engagements' fell into two categories: previous economic directives issued by the forum have proved spectacularly unsuccessful and incorrect; their ability to subsequently monopolise main political agendas has seen the body pushed to the periphery of any meaningful dialogue.

There is no evidence, however, those associated with the WEF intend changing the economic theories to which they aspire.

The 2017 WEF will be remembered by many observers as the think-tank gathering which was shunned by many people. The elite body just did not attract the conga-lines of habitual conference goers usually associated with the annual event, who either stayed at home or attended other, similar meetings elsewhere. (1) The WEF, founded over forty years ago, to formulate global economic policy would now appear to have seen much better days.

About forty Australians are known to attend annual WEF events although their contribution is rarely acknowledged on official websites and media releases. (2) Despite claiming travelling and hotel expenses from various organisations and government departments their contribution has yet to be clarified. (3) Davos, Switzerland, it should be noted, is not a cheap tourist destination but caters for the top-end of town.

Following the WEF extravaganza one of the Australian delegation, Greg Medcraft, chairman of the Australian Securities and Investments Commission (ASIC) was also booked to travel onto France for further high-level meetings with 'fellow European regulators'. His noted managerial specialisms include long-term investment and balancing technological innovation with financial stability. (4)

The WEF official website provides an introduction to the glitzy world of technocrats and proclaims the organisation is 'impartial', 'not for profit' and a promoter of 'global public interest'. There are also numerous references to softer-style diversionary politics which include charitable work, gender issues and environmental concerns although not a single mention about exploitation.

While riding high on the triumphalism of capitalism and imperialism of the so-called New World Order (NWO) of the 1990s the WEF today, however, does not have much to prate about. The global environment they are largely responsible for creating with others can hardly be viewed as an achievement: the continued implementation of economic policies of deregulation, privatisation and liberalisation have had the opposite effect of what was intended. It has also not been a good advertisement for so-called free trade agreements (FTAs) which form part of the same package. (5)

The policies have not stimulated economic growth through expansion of world trade nor have they increased living standards for the vast majority of people.

The global economy is slowing: reliable source material from the World Bank show it failed to exceed 2.4 per cent growth in 2016 and was hindered by 'sluggish growth, low commodity prices, diminished capital flows and weak global trade'. (6)

World trade flows and container traffic never recovered from the global financial crisis (GFC) of 2008, and fell by more than half to about an average of 3.5 per cent per annum during the 2012-2014 period. They then declined still further, falling at around one per cent a year to last year. While a slight increase has been recorded in recent months it is regarded as only temporary. (7) Other sources, including the World Trade Organisation (WTO) record 'trade growth' as slowing from 2.8 per cent to 1.7 per cent' last year. (8)

One speaker to the WEF, John Chambers, executive chairman of CISCO Systems actually stated 'some 40 per cent of large companies would disappear in coming years' as a warning of even harder times looming with whole industries collapsing. (9) In Australia, by the end of this year the entire car industry together with 80-90 per cent of the component sector will have closed, affecting an estimated 200,000 workers in related and linked employment. Whole areas of the country will be economically decimated as unemployment becomes the norm.

Those in regular employment also have often not received wage-increases in line with the cost-of-living for years. Even official WEF research has been forced to accept the 'annual median incomes in 26 advanced economies fell 2.6 per cent in the period between 2008 and 2013. (10)
   
In Australia, only 91,500 new jobs were created in 2016 and the national economy has been slowing for many years. Those new jobs recorded tend to also be casual and often part-time with few, if any, entitlements for workers. There are 740,000 unemployed people officially looking for any work together with a further 1.1 million searching for 'more work than they can get'. (11) In New South Wales, Australia's largest state which includes Sydney, Australian Bureau of Statistics (ABS) show only 1,100 new jobs were generated last year. (12)

The economic rationalist theories which have created these problems were also not new or original. They grew out of the Chicago School of Economics which dominated the thinking of decision-makers during the 1920s. The theory was based on an assumption the basic factors of production, labour and capital, should be allowed to operate in an unfettered manner without government interference to enable growth and sustainability. Competition was regarded as an economic stimulus.

The theory was, however, discredited following the Wall Street Crash of 1929 and eventually discarded after the Second World War with the development of state enterprises to regulate economic growth and provide stability. For over the three following decades advanced, industrial economies experienced economic growth with notable rising living standards and increased opportunities for most working people.

Organisations such as the WEF, however, became major advocates of the former economic rationalist theories throughout the 1970s which subsequently became vogue thinking during the following decade. While initially being implemented by right-wing governments, the theory was also adopted by social-democratic parties such as the Australian Labor Party (ALP) which was swept along with the tide, either unable or unwilling to speak out. The notion of nationalisation of industry and services to protect jobs has disappeared from living memory of most Australian voters.

In the UK, likewise, millions of working people and voters were eventually confronted with the nauseating spectacle of Labour Prime Minister Tony Blair being responsible for implementing policies which were merely a continuation of the previous Conservative governments. There was little to choose between the two major parties.

Such political leaders do not tend to publicise economic statistics for obvious reasons.
Using reliable data to assess the economic malaise is not, however, difficult to find: the term general domestic product (GDP) growth is a primary indicator of the health of an economy and used to measure production and growth. It can be relatively accurately measured as seen below: 
                           
                              GDP GROWTH %      2007          2016          % OF FORMER    
WORLD:                                                   5.571         2.936         52.78 %
AUSTRALIA:                                            4.547         2.695         59.27 %
OECD COUNTRIES                                 2.692        1.705         63.34 %
NON-OECD COUNTRIES                        9.150        3.391         37.10 %
DYNAMIC ASIAN ECONOMIES              6.698        2.800         41.80 %     (13)

It is, at first glance, difficult to establish why the economic rationalist policies responsible for the decline have been in continuous use for so long, until studies of who has benefited come to light. Those dominant social classes with access to ruling state power can clearly be seen to govern only from a sense of self-interest, they show no greater responsibility toward society.

A recent report on global wealth during 2016 revealed it has grown by 1.4 per cent from the previous year. While comparatively small, it was not evenly shared. Ordinary people have seen no increase in personal wealth since the GFC. The top one to ten per cent of the wealthiest people by contrast also continue to own a staggering 89 per cent of all global assets. The bottom fifty per cent of the population of the world own less than one per cent of similar assets. (14) And the inequalities continue to widen each year.

A salient point lingers: those who do not learn the lessons of history have to repeat them over and over again. Those on the receiving end of such injustice will continue to suffer exploitation until they unify around a common-cause to deal with the problem in an appropriate manner. The question of suitable organisation, likewise, remains. Until such time societies, the world over, will continue to be trashed by politicians and financiers. 
         
1.     Senior executives ditching Davos,
        The Australian, 18 January 2017.
2.     Senior executives give Davos the cold shoulder,
        The Australian, 18 January 2017, with reference to Sharan Burrow, former president,
        Australian Council of Trade Unions, now representing the Brussels-based
        International Trade Union Confederation.
3.     Davos attracting fewer leaders,
        The Australian, 17 January 2017.
4.     Senior executives ditching Davos, op.cit.
5.     Davos must deal with an anti-globalisation revolt,
        The Australian, 18 January 2017.
6.     Global Economic Prospects, The World Bank, 10 January 2017.
7.     Trade war fears firm despite lift in volumes,
        The Australian, 16 January 2017, see also,
        World trade growth near stalled,
        The Australian, 2 January 2017.
8.     Trade Policy, World Trade Organisation, 9 December 2016.
9.     Captains of industry see inside,
        The Australian, 19 January 2017.
10.   Concern over impact of automation on jobs,
        The Australian, 20 January 2017.
11.   Job figures sap 'growth' drive,
        The Australian, 20 January 2017.
12.   Ibid.
13.   GDP Growth, OECD STAT., Economic Outlook, 100, November – 2016, see also,
        GDP and GDP Growth, Main Website: Department of Foreign Affairs and Trade,
        Canberra, Australia, which provides volumes and percentages showing the decline.
14.   Global Wealth Report, 2016, Credit Suisse.

Smash Abbott's "class war" budget - build unity in struggle!

Vanguard June 2014 p. 1 
Bill F.

Australians have been shocked and angered by the federal government’s vicious budget. In only a few days thousands poured onto the streets to demonstrate their determination to tear down this budget and the government that lied its way to power in order to implement austerity attacks on the people.

On behalf of the “Big Business” Council of Australia, the foreign and local corporate monopolies, the banks and mining corporations, the government stepped up its brutal ‘class war’ attacks on the working class, the poor, the aged, the youth, the sick, people with disabilities, Indigenous Australians, in fact anyone except a handful of parasitic corporations and banks bloated with the stolen mega profits created by the labour power of workers.

Cut to the bone

Public anger and disgust are spreading as more hidden details of the budget are exposed.

The people are incensed at the blatant lies they were fed prior to and during the election campaign.

The Australian people are appalled by the extent and savagery of the cuts to health, education, social welfare benefits and government jobs, by the attack on young people already struggling to find jobs, by the plan to increase the retirement age, by cuts to Indigenous services and environmental programs, by the brazen attack on people with disabilities and the outrageous medical co-payment scheme and increases in the cost of medicines and medical tests; all measures that will inflict more hardship, poverty and suffering.

These attacks are only a prelude to more coming from the Commission of Audit: extending the GST, abolishing the minimum wage, individual workplace agreements, pushing down wages and conditions, scrapping penalties, eliminating job security, crushing unions, deregulating the labour market and financial institutions even further, more privatisation.

This is an attack by international monopoly capital that is beset by a major economic crisis not seen on a global scale since the Great Depression of the 1930s.

The winners in the budget

This budget unashamedly declares its complete service to interests of the big end of town. The Abbott government has taken its cue from the big business Commission of Audit to move more public funds from public health, education, and people’s services and spend more on infrastructure that facilitates the profiteering by mining and construction corporations – roads, ports and railways, for the transport of freight.

Simultaneously, preparations are made to crush the people’s resistance to the savage austerity. Hard won democratic and workers’ rights are systematically taken away.

What next?

These attacks, together with the lies and deception that preceded them, will not be forgotten or forgiven by the Australian people. The Coalition government will pay, and there is some chance that their budget measures will be bogged down in parliament and that they may even be kicked out if a double dissolution election is held later in the year.

While Labor and the Greens may hope things go this way, it will not prevent further attacks on the people.

This is because the unelected architects of Abbott’s budget will still be there – the corporate monopolies in the “Big Business” Council of Australia who fashioned the razor-gang Commission of Audit, the big business apologists in the Productivity Commission, and the mass media barons who beat the drum of globalisation, de-regulation, privatisation and union-bashing.

This gang want further attacks on wages, penalties and working conditions. They endorse the US-sponsored TPP trade deal that will destroy any vestige of economic independence and further increase the cost of living for the people, destroy jobs and public services.

They support the US military ‘pivot’ that threatens to drag Australia into a disastrous war with China.

They pull the strings while Abbott and Hockey are their puppets. 

No choice but struggle

For the people’s movement to grow and be really effective, ultimately it will need to take on the puppet-masters, it needs to be broad-based and capable of drawing in all sections of the people.

It must not be claimed or dominated by any particular group but must embrace as many as possible around the common goal of smashing this evil budget and take the next step of demanding and fighting for a decent life for the working people.

As Vanguard stated in back in February, “Waiting for a Labor government is no good. Working people will have to make a stand. They will have to find ways to get conversations going in their workplaces and communities, to get people organised to protest and to put demands on the government and the big business bosses. Demands not just to “back off”, but to “get out of our way”.

Whatever happened to neoliberalism?

Vanguard February 2014 p. 8
Verity M.

Bourgeois economists  have gone quiet on neoliberalism of late which does not mean  it has been abandoned as an economic and political strategy to make the working class pay for a system in crisis.

Neoliberalism builds on and reinforces the requirement that capital and the state act in tandem to restore profit certainty and the preservation of the system. 

The primary role of the state is to ensure that favourable conditions exist for the investment of the surplus workers  have created for capital.  If that means privatising public assets or importing workers either to break strikes as in the 1998 waterside workers'  struggle or to create a surplus supply of workers as a means of controlling wages then so be it.

We are already seeing a new spate of privatisation of public assets as the states are being urged to sell off 'old' assets such as wharves to pay for new infrastructure which will undoubtedly be handed over to private developers.

Privatisation is not just about getting some cash in hand to ameliorate the impact of high government debt; it is also about ensuring that capital has state-created spaces for the realisation of profits. 
 

(Above: Australian postal workers are the next to be sacrificed on the altar of austerity measures)

Productivity is another sacred cow, usually measured in amount produced per working hour.  Productivity, closely related to profits, can be increased by improved technology, better methods of organising the workspace etc but the cheapest way is to have workers work for less.  Productivity is also measured by profits realised out of the surplus accumulated from the labour of  workers.

Workers and the general population receive concessions and the occasional handout when things are going well but the needs of capital will always take precedence over the needs of the people.

Neo liberalism, applied to varying degrees depending on the immediate and long term needs of capital, becomes apparent in times of economic crisis and less obvious in the good times (for capital that is) but it is always there: a system of applied economics incorporating in particular, wage control, destruction of working class organisations and privatisation of public assets.

A decline in profit as is the case in economic crises cannot be tolerated.  Profitability  has to be restored and continually increased.  Profits decline for a variety of reasons - overproduction, under consumption resulting from wage cuts. and people's loss of faith in the economic system and the inherent tendency of the rate of profit to fall as  explained by Marx.

Profits tend to fall as technology replaces workers.  It must make a lot of sense to capitalists to replace labour with machinery which works long hours without complaint and doesn't go on strike, but unfortunately (for capital) only human labour can produce what Marx called surplus value derived from free labour time which makes up the bulk of profit- just one of the many contradictions that bedevil capitalism.

Cutting wages and public services will always be the first option of capital with the blessing of the state.  We are currently being groomed to accept the necessity of wage ‘restraint'.  Employers organisations are all over the media telling us that the basic wage of 'like' economies is much less than ours; promised improvement in child-care workers’ wages is being reviewed while the conservatives’ own newspaper The Australian tells us that if car workers want a job they should accept the wage the company can afford or move on, all being reinforced by a manufactured budget crises.

When the economy slows and profits decline governments are called upon to legislate change and they invariably do so whichever parliamentary party holds office.  Workers are well aware of the threats to their organisations and to their job security.  Fortunately, or unfortunately for the powers that be, workers are many and the powerful are few, and they will be widely supported in the struggle for a truly just society and a people's democracy that serves the majority of the people.