Well, this is all happening very fast. And pretty much simultaneously. As the Morrison government announced an unprecedented degree of direct state support for the private sector, largely targeted at wage support, the Victorian and NSW state governments brought down a series of legal restrictions on everyday social life that can only be described as totalitarian.
Quite possibly it is a rational totalitarianism, but totalitarianism it is. The coincident moves have brought support and praise from the most unlikely places.
The state governments’ measures — which have been asserted, rather than argued or extensively justified — have been praised as firm and decisive, often as a sort of love letter to nu-style hard man Dan Andrews
The federal subsidy/stimulus scheme, meanwhile, got giddy calls that socialism was here, and that neoliberal economics was dead and buried for ever.
Let’s pull that all up a bit. As your correspondent noted a fortnight/a hundred years ago, the nature of the crisis tilts towards a socialist conception of society, and an acknowledgement of such.
But the purpose of the government’s new initiative is not to further that, but to hold it off at all costs — by using enormous amounts of money to preserve capitalist socio-economic relations in as static a form as possible. The switch from no wage subsidy to an overwhelming one is simply a switch of method brought about by a rapid change of circumstances.
One would presume that came about because on the weekend, both Qantas and Virgin told the government that they were more or less cactus, and half a dozen other major franchises and groups made the same throat-clearings about their viability. They possibly also got a message from the Australian Council of Trade Unions (ACTU) and Labor that the show of national unity was soon to be wrapped up, and politics would recommence.
The government had been relying on hopes and prayers all last week, hoping that consumer capitalism could wheeze along until we flattened the COVID curve, and some modicum of their “have a go, get a go” ideology — the idea that capitalism has some logic of fairness, reward and punishment buried deep within — could be preserved.
So having held it off for as long as possible, it clearly made sense to go superbig, to make it very simple and comprehensive. But both the notion that this is some form of socialism, and that it has retired “neoliberal economics” for ever, needs to be knocked on the head.
This is state capitalism on a vast scale: public money pumped into private corporations with absolutely zero concessions — or even demands — on changes to the share of capital, control of money and the workplace, conditions of work, etc.
Such a move has a contradictory effect. It’s true that in certain circumstances it makes actual economic-nationalist/socialist solutions, for industries which are both essential, but no longer have a viable market, such as airlines. But it also holds off any sort of crisis that would force a change in social and production relations in a genuinely post-capitalist direction.
Thus, the Morrison government has insisted on — and the ACTU appears to have acquiesced in — payment of the wage subsidy via private companies, rather than as a direct payment to workers.
Sure, there are safeguards in place to ensure that companies don’t take the money and sack people anyway (though this will happen). But there aren’t any to ensure that companies don’t take the wage subsidy and use money that would otherwise have gone to wages for other purposes, such as labour-reducing automation.
Without a change in the way the economy is managed, wage subsidy in this form remains a socialisation of capital’s losses, and an abolition of its risk.
Nor should left-Keynesians conclude that this move has blown “neoliberal” economics of deficit reduction and austerity out of the water. Such economists repeatedly fail to understand the persistence of such a mindset among the general public.
The paradox of economics is that while the microeconomic myth that a national economy is just a household economy writ large is wrong, it looks right to most people, and corresponds to deep-seated notions of reward and punishment. And while the macroeconomic approach of managing aggregate demand and money supply is right, it looks nuts — a weird Escher picture world in which you can create money you’ll never have to pay back because the growth that money created winnows the capital sum to an amount of no importance.
That is weird and screwy to many people who don’t work in abstract intellectual milieux, and that’s part of the persistence of centre-right political dominance for decades.
People and classes who would benefit from such policies recoil from them because they appear to annihilate personal responsibility and hand control of life to technocrats. Such policies could persist in the post-war period from the ’40s to the ’70s, because people weren’t voting on the policy mechanism per se; it was a left-right struggle over ownership of production, not over the abstract methods by which it is managed.
So in that respect, and absent countervailing political force, a state capitalist initiative such as wage subsidies — indeed, it barely reaches the conditions of state capitalism; it remains subsidised neoliberalism — is a downpayment on a return of moralising virtue economics and a new round of austerity in future years.
Left-Keynesians, MMT enthusiasts and Labo(u)r’s tame intellectuals may point out that, in principle, the principle never needs to be repaid. But global money markets don’t see it that way, and like to use government debt as a pretext for manipulation, even in times of cheap money.
If there’s a global credit crunch in the future — and I mean, what are the chances that the world could change radically over a matter of weeks, I know, crazy, right? — then a peripheral state like Australia will be in the same squeeze as Greece. Global capitalist politics will then determine global capitalist economics, not vice versa.
Furthermore, as we come out of the COVID crisis, class economic divisions relations will re-emerge, between the high-waged and low-waged/precarious/benefit dependent, and those with property/investment/super and those without.
The restarting of a consumer/service/entertainment capitalism, via a post-depression/recession raised profit rate will only occur, within current frameworks, by driving down wages and conditions, and creating a reserve pool of labour by the slashing of benefits. Don’t be surprised if many of the “all in this together” crowd vote for a new austerity to this end, the top 65% or so ganging up against the lower third.
The radical possibilities of this moment are not to be found in initiatives which reinforce a commodity economy in its existing relations, but ones in which decommodified forms of relation and production are introduced and new forms of social authority of capital along with them. Debt and mortgage reduction, rent relief and other such measures are more radical in this regard — one reason, perhaps, why some Laboristas have been so sluggish to push for them.
Something as simple as a six-month eviction suspension is, in that respect, genuinely communist (genuinely communist, not vote-for-Joe-Biden communist) on a small scale, because it abolishes, for a time, some property rights. More to say on the strange twists all this might take later in the week, but the short take is that unless we can push unions, Labor and other groups to demand a qualitative transformation of work, economy and social relations, this opportunity is going to be lost. Ha! As if there were any other type of opportunity.
Here there is only space to observe the paradox we are in. As the federal government pulls out all stops to preserve the capitalist content of social relations, state governments are using their powers to draw the basic form of social relations — basic sociality — into direct state control, via capricious and under-legislated policing.
Whatever the arguable necessities of such, it is also obvious that this is performative politics to make up for the sluggish application of more moderate regimes earlier on — the lack of testing and contact tracing, and the dozens or more avoidable deaths that will result from the Ruby Princess disaster.
What is disconcerting is how many in the political/media elite and the wider knowledge class have supported these measures utterly uncritically, and without a demand for scrutiny of state reasonings. Indeed, support of totalitarian state response has become a counterfeit form of solidarity — supplanting the anti-state, anti-market solidarity we will need in this crisis.
Still ‘n all, whichever one of you had the nationalisation of Qantas by Thursday in the sweep is looking pretty good right now…