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John Passant

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November 2013



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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole

Sick kids and paying upfront


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Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. (0)

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Snouts in the trough: capitalism is corrupt

These are the notes for a talk I am doing on the corruption that is capitalism on Thursday 21 November at 6 pm in room W108 at Baldessin Building ANU in Canberra.


Comrades and Colleagues

Today I am going to start off looking at some of the egregious examples of corruption, mainly but not solely in Australia. Then I will look at corruption in the context of capitalism and argue corruption is a natural outcome of capitalism.

It is not ‘a few bad apples’ who are corrupt but people under the influence of competition, economic and political, that drives them to cheat for more money. But I am also going to make a wider argument, that capitalism is itself corrupt, i.e. that that ‘more money’ I mentioned comes from the exploitation of workers. Capitalism exploits workers by paying them less than the value of the goods and services they produce and that is the real underlying source of the wealth that business compete over and which businesses, politicians, sportspeople and others fight over. That fight includes cheating or corruption as one means of redistributing the wealth workers produce.

Ok so let’s start off with the fun bit. I am going to put a few photos up on the screen (I hope) and want you to identify who they are and their relevance to today’s talk. Sport is always a good place to start any conversation. Who is this?

Yes. It is Lance Armstrong, admitting to Oprah he and his team were drug cheats. Lance won 7 Tours de France, the ultimate competition in cycling. What drove him to cheat? Well, there was the personal enrichment. But there is more. Armstrong was part of a team that is a business and professional cycling is a business. It was win at all costs just as it is in all businesses. And of course they thought all the other teams were cheating so they too had to do it. Did you know, now that there are more stringent drug tests in cycling, the winning times are much slower than under the previous Tours of recent history?

This is Trevor Flugge. He was head of the Australian Wheat Board which bribed Iraq’s Saddam Hussein to sell wheat to his regime in exchange for oil, contrary to UN sanctions on Iraq and Australian law. They paid $290 million to do this. The Wheat Board was a single desk, which meant it bought wheat from Australian farmers and was the only body who could export it. Australian farmers benefited from this bribery. It was just business.

Flugge suffered no criminal or civil prosecutions and indeed went on to buy a company which won a government contract to re-house refugees in Newcastle. It was a complete disgrace, housing refugees in sub-standard housing over many years.

There is one thing you’ll see in many of these corruption examples, the close links, indeed a revolving door between business, government and politicians. Here’s a photo of the revolving door of powerful politician to convicted fraudster to lobbyist. Who is this?

His name is Brian Burke, former Labor Premier of Western Australia. He spent 7 months in jail for rorting travel expenses. He ran WA inc. His unconvicted crimes including making decisions beneficial to companies who had made large donations to the ALP.

After jail, he became a lobbyist and one of the most powerful backroom men in the ALP in WA. Here is a photo of another powerful ALP man. Any guesses who this might be?

Of course. This is Eddie Obeid, currently before 3 separate Independent Commission Against Corruption investigations in New South Wales. He was one of, if not the, most powerful man in the ALP right and hence the ALP in NSW. He made and unmade Premiers. Other former Labor Ministers are now implicated in the scandals.

There’s the ongoing charges against former ALP parliamentarian Craig Thomson for using Health Services Union funds to buy prostitutes, and the like.

There are other scandals involving unionists like the former head of the Health Services Union and former ALP National president Michael Williamson ($1m and still counting ripped off from union members).

Let’s look at federal politicians in a little more detail. One quarter of all federal politicians paid back over-claimed expenses in a four year period. Only one, Peter Slipper, has been charged.

Now Minister for Agriculture, Barnaby Joyce went to a mate’s wedding, Gina Rinehart flew over for his election night party, Gina Rinehart funded a trip for him and 2 other Liberal politicians to India to help sell Rinehart, he went to the Rugby League State of Origin and grand final. All on the taxpayer (and in the case of the India trip the cost of coming back on the taxpayer). Here is a photo of Barnaby hard at work at the wedding of his mate, shock jock Michael Smith.

But it isn’t only Barnaby. There’s George Brandis at the same wedding, there’s Julie Bishop flying to India courtesy of Rinehart, and on and on it goes. Of course there’s also this man.

Tony Abbott claimed travel expenses for his tour around Australia flogging his book, Battlelines. He claimed expenses for attending his good mate Peter Slipper’s wedding. The same Peter Slipper now charged with offences for allegedly abusing taxi vouchers for a tour of Canberra wineries. Abbott also claimed expenses for a fun run. Anyone spot a pattern here?

There are no police investigations, no raids on the offices of those politicians involved. On the other hand when the CFMEU tried to enforce safety standards on Grocon at Myer Emporium 1000 police were on hand to attack the picket and help scabs to get in.

Why the different treatment? Well, police reflect the class nature of society. They are an arm of the capitalist state. Their enemy is workers and others not part of the one percent.

But there is something else too. What is missing is mass radical mobilisations around any major issue let alone for political transparency and honesty. What is missing is an engaged working class citizenry. Instead we have major sections of the working class disengaged and disillusioned. The union leadership bears a major part of the responsibility for this with its embrace of Labor’s neoliberalism over the last 4 decades and capitulation to the Liberals’ neoliberalism.

It is also true that there has been no police investigation into parliamentary rorts because Labor have not pushed the issue. Why not? Because they are up to their eyeballs in the perks and rorts too.

As the discussion of Trevor Flugge shows, it isn’t just pollies and ex-pollies who rort the system. Business does it too, driven by the need to best their competitors by fair means or foul.

Competition knows no laws but its own. The one law is beat your opponents and make more profits anyway you can.

Who is this?

It is Wal King, former head of building firm, Leighton Constructions. Here is a little meme on his retirement which gives an idea of his wealth.

Leighton Holdings is an international company and Fairfax investigations uncovered company files which ‘expose plans to pay alleged multimillion-dollar kickbacks in Iraq, Indonesia, Malaysia and elsewhere, along with other serious corporate misconduct.’

‘Among the most explosive of the company files is a memo handwritten on November 23, 2010, by then acting CEO David Stewart.

‘The memo says Leighton International’s managing director, David Savage, revealed during a meeting that he and Wal King knew a $42 million kickback was paid to a company in Monaco nominated by Iraqi officials who selected Leighton for a $750 million oil pipeline contract.

“I asked did Wal K approve this? And he said yes,” Mr Stewart’s memo says.’

Wal King is being investigated. He won’t be alone. He won’t be a one-off among the bourgeoisie. He is not the one bad apple in Australian capitalism. What drove King and Leightons to allegedly bribe and have plans to bribe people? Because it wins them the contracts and profits they want and need to survive at the expense of their competitors. That drive exists in every company. Profit is its raison d’etre.

Do you know who many Australian business people have been investigated let alone convicted in the last 13 years for bribery? According to the OECD exactly none. So apparently Wal King is alone, and his case has only come to light after investigations by Fairfax journalists, not ASIC. BTW, he hasn’t yet been charged with anything. As the Paul Hogan tax case shows if you have bottomless pockets you can often exhaust investigations and prosecutions.

Australia is not unique in this regard.

The immediate superficial cause of or perhaps trigger for the GFC was the bundling together of housing loans and their on sale to investors. But what the clever banks did was mix in NINJA loans (no income, no jobs) with other more seemingly reliable housing loans to hide their inherent instability. Some of you may have heard about the settlement that the big US bank JP Morgan Chase reached recently with the US Justice Department.

The Bank has agreed to pay $13 billion after acknowledging it misled investors about the quality of its mortgage-backed securities. .

Before we get too carried away, the havoc the GFC wreaked on US workers and European workers is immeasurable. Unemployment in the US hit double digit figures and is still high. In Southern Europe youth unemployment is over 50% in some countries. Wages are lower now than before the GFC in real and in some cases absolute terms in much of the US and Southern Europe.

It was and is US workers who pay for the bank bailouts with jobs losses, wage cuts or loss of meagre social services. And $13 billion is only 40% of JP Morgan’s $21 bn in profits in 2012, which was reduced by $23 bn set aside as reserves for just such a settlement and other costs.
Has any Wall Street executive been jailed for their crimes? No, not one.

By contrast there have been, as of 17 September 2013, 7765 Occupy arrests. Occupy started off as the Occupy Wall St Movement in response to the crooks of Wall St and the consequences of their actions and government bailout and became an international movement against the one percent.

The picture I am trying to paint is of a system driven by the need to make a profit and reinvest that profit in more means to make more profit. It is also a system which paints success in terms of money and how much you earn. Now for most working class people they will remain working class people on wages that are enough to provide them with the basics of life. So some working class people might try to cheat the system to get a bit of extra money. The system cracks down on them.

Union leaders and Labor politicians are not members of the working class. They are better paid than workers. The role of union bureaucrats is to retail the price of workers’ labour power to the bosses. The role of Labor parliamentarians in government is to manage capitalism, in essence how to make the Gina Rineharts and Wal Kings of the world more profitable.

Mixing in the circles of the bourgeoisie and seeing the personal rewards the bosses get tempts some of them to cheat to mirror those rewards over and above the rewards they receive for their intermediate role in capitalism.

For the bourgeoisie the aim is not necessarily personal enrichment. It is to make profit, to make more profit, the ultimate driver of capitalism.

Let’s now look at how the system itself is corrupt.

There is one question to ask. What is it that the corrupt business people, politicians, union officials and others are actually fighting over, are actually stealing? Where do the profits, the funds in union accounts, the politicians ‘expense payments fund come from?

In a nutshell the wealth they are fighting over through competition, whether legally or illegally, is the wealth we workers create. So it is more than that some bad apples corruptly win profits or improve their financial position. The capitalist system itself is corrupt. It exploits workers. What does that mean?

Well in looking at where profit comes from, we Marxists argue that it is labour which is the source of all value or capitalist wealth. How so? Not to go into too much detail, what is it that 2 totally different commodities have in common? When they exchange on the market? Labour.
When we work we sell something to our employer for a wage, a price. This something is a commodity and is paid at its value, that is the amount needed to provide for its production (food, clothes, housing, education, transport), reproduction (the kids), and an amount historically and morally determined.

What does capital buy when it employs us? Is it our labour? No, because that happens once we are put to work. What the boss buys is our labour power, our capacity to work. They buy it at a rate around its value, the amount needed for us and our kids to survive OK.

Let’s say that is $1500 a week. Yet what happens when we work for the boss. Let’s say we make commodities for sale on the market and we make say $2500 of commodities. That extra value, that extra $1000 we create is our unpaid labour. Now extrapolate that across society and for all labour used to make commodities (goods and services) for the market. Millions of workers in Australia are beavering away making what Marx called surplus value for the boss because we are paid less than the value we create for the boss. The boss ends up with this surplus value because they own the factories, the land, the machines, our labour.

Surplus value in the market and afterwards becomes profit, interest in the hands of banks, dividends, rent in the hands of landlords, wages for us and tax for the capitalist state. It is that surplus value that the corrupt companies and individuals fight over. All they are doing is using methods to win their share of surplus value greater than so-called fair competition or fair work might produce or their contribution in capitalist terms might justify. Thus company bribery for example both reflects competition and undermines it. This is because it reflects the drive to make a profit but does so on an unequal playing field (assuming that only some companies are able or willing to bribe).

In other words capitalism exists by exploiting workers, i.e. by paying them less than the value they produce.

There is another sense in which capitalism is corrupt, and that is in who gets the rewards. Over the last 40 years, since the global collapse in profit rates and the rise of neoliberalism, inequality in almost all developed countries, including Australia, has increased. In Australia for example 12.8% of people live in poverty, and that includes over 17% of all children.

Australia is a very rich country in which no one should live in poverty. The problem is intractable and getting worse. But to fix up poverty we’d have to take a little bit off those who live off our work. The logic of capital accumulation will not allow that.

So to summarise, rorters on the system either reflect the drive for personal enrichment or profit that the system gives number one priority too. But the system itself is corrupt in the sense that it only exists by exploiting workers and not rewarding the working class for the value it produces.

The solution to corruption is a democratic society in which production is organised by the vast majority of people, we workers, the people who produce the wealth and will do so for the benefit of that vast majority, that is to satisfy human need, not to make a profit. That my friends is socialism.



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Comment from Byon
Time November 22, 2013 at 7:15 pm

A good series of articles you’ve posted recently. Thanks.

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