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John Passant

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August 2010



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Who really rules Australia?

In the aftermath of the recent “consultation process”, through which Australia’s billionaire miners forced the government to back down on the essentials of their proposed “Resource Super-Profits Tax”, it was difficult to ignore the question of what happens to democracy when faced with the power of the almighty dollar.

How could the super-rich – whose claims to democratic legitimacy extends no further than the ability to don a fluorescent safety-vest and pose as a man or woman of the people – so easily force our elected representatives into line? As Clive Hamilton put it in a particularly scathing opinion piece, “it’s enough to turn anyone into a Marxist.”

The fate of the mining tax provides a clear example of what happens when a government attempts to carry through a policy that goes against the interests of a powerful section of capital.

In the absence of any propensity to call the mining bosses’ bluff and, for example, propose the full nationalisation of the industry, the Labor Party was forced to the table by a combination of media campaigning (through industry sponsored “commentators” and tens of millions of dollars in advertising), claims about threats to future investment (i.e. a capital strike) and intensive backroom lobbying efforts.

The outcome: Kevin Rudd was turfed out and replaced with Julia Gillard, who had been promoted by the industry as someone more amenable to “compromise”, and as expected, an almost complete capitulation ensued. Mining magnates 1, democracy 0.

But the example of the mining tax also provides some clues as to the much more significant and ongoing role of Australia’s business elites in setting the political agenda.

This is suggested, for example, by the complaint made by Andrew “Twiggy” Forrest at the height of the mining bosses’ campaign, that Kevin Rudd and Treasurer Wayne Swan weren’t returning his calls anymore. Which would be all well and good if the basic principle of bourgeois democracy was “one man, one 24-hour Prime Ministerial hotline” rather than “one man, one vote”. Earth to Twiggy: the Prime Minister isn’t returning our calls either!

From the perspective of the capitalist class, one of the great advantages of bourgeois democracy over, say, a direct dictatorship of capital, is that through the regular holding of elections and so on, it encourages the idea that ordinary people actually have some control and influence over the future of our society.

Hence the endless analysis of the policies of the different parties, the agonising of the media over a few million dollars here or there when in reality Labor and Liberal are agreed on all but the most superficial of details.

The mining magnates and other corporate heavyweights are content, for the most part, to play along with the charade. But the real power dynamics in our society, the dynamics that explain Twiggy’s outrage when the Prime Minister wasn’t promptly returning his calls, are never far from the surface. In fact, workers experience the reality of ruling-class power every day, primarily through the lack of control we have over the large chunk of our time we spend at work.

And this explains why, despite being bombarded with the avalanche of crap that passes for “political debate”, most ordinary people don’t really buy it.

In the current election this is reflected in the high level of cynicism about the major parties, and politics more generally. There is an underlying sense that no matter what happens in the election, for the vast majority of people it will just mean more of the same: hard work, low wages, underfunded health and education, inadequate infrastructure and so on. That’s why people can so easily relate to sayings like “whoever you vote for, the government always wins”.

For Marxists it’s not such much “whoever you vote for, the government always wins” but “whoever you vote for, the capitalists always win”. As Marx himself put it in The Communist Manifesto: “the bourgeoisie has…since the establishment of modern industry and of the world market, conquered for itself, in the modern representative State, exclusive political sway. The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”

So how does this work out in practice? Apart from the mining industry-style open revolt, there are numerous ways in which Australia’s business elites seek to ensure that their wish is the government’s command.

Perhaps the most obvious is through the provision of direct financial support to the major parties. This has been the source of some controversy in recent times. The Greens, whom business do not regard as a viable alternative government, and who therefore tend to miss out on their largesse, have been campaigning for increased transparency in this area. They have even gone so far as to set up a website,, to highlight the issue.

Donations over $10,000 are tracked by the Australian Electoral Commission (AEC). Their records show, for example, that in the two years leading up to the 2007 Federal Election, resource companies made nearly $2 million in donations to Labor and the Liberal/National Coalition (with the balance tipped slightly in favour of the Coalition).

Other donors include major players in banking and finance, developers and the ubiquitous alcohol and tobacco industries (who are particularly keen to curry favour with politicians to ensure that the “health and well-being” message is kept within its proper limits).

In Victoria, the Labor Party has established a fundraising arm, Progressive Business, as a more formal means to garner increased corporate “sponsorship”. The organisation has been a raging success, raising over $1.6 million in 2009 from a range of social events and activities sold to business as an opportunity for “real interaction” between guests and state government ministers.

Depending on the level of the contribution, such “real interaction” extends to a seat next to the Premier at the Progressive Business annual dinner. This is what coal industry executive Alan Blood got for his $10,000 “gold sponsorship” at the 2009 event.

The pay-off to business from such activities is clearly revealed in a recent article in The Monthly by Mark Aarons, who was a senior adviser to the NSW Labor government from 1996 to 2006. In the article, “The Hollowmen”, Aarons comments on the business connections fostered by the Party: “a culture had grown up involving the cosy deals between the party machine and the ‘big end of town’, in which political favours became the quid pro quo for donations to ‘head office’.”

Nevertheless, financial support alone does not guarantee a suitable “return”. After all, Australian trade unions have donated at least $100 million to the Labor Party in the last decade. And suffice to say this hasn’t stopped Labor putting in place anti-union “WorkChoices-lite” industrial laws, or continuing their support for the Australian Building and Construction Commission.

Contrary to what the top officials in the ACTU seem to believe, the real power of the union movement derives solely from workers’ ability to withdraw their labour, thus cutting off the ruling class’s profits at their source. And similarly, in the case of the ruling class itself, their influence in society is much more about their role as the source of the capital needed for production to take place.

This is what allows them, for instance, to play a more or less direct role in the operation of the state itself. The public service, which plays a major part in shaping government policy, is presented as an independent body working “in the public interest”. But in reality it has never done any such thing. For a start, the upper levels of the public service are staffed by people who are firmly rooted in the ruling-class culture.

In previous decades this may have primarily been through attendance at the same (private) schools and universities, membership of the same clubs and so on. These days, senior officials are likely to themselves have worked as CEOs or directors in the private sector, or to have an eye on appointments to such positions in the future.

As Tom O’Lincoln and Rick Kuhn explain in Class and Class Conflict in Australia: “In the early 1990s the chief economists employed by both the Master Builders and the rival Housing Industry Association were former public servants. The four partners of Access Economics were all ex-Treasury, as were the chief economists of Citibank, Merrill Lynch, BT Australia and the NAB.”

Similarly, the current Secretary of the Victorian Department of Premier and Cabinet, Helen Silver, was appointed to the position after a stint as a senior executive at the National Australia Bank.

The mentality of public service executives is shaped by these connections. They may bandy around terms like “stakeholder engagement” and “community consultation”, but when it comes to developing policy, the thing that matters most to them is what they’re saying about it the board rooms. And these days, to ensure that policy advice is in tune with what “the community” is saying, key figures from the corporate world are often all but invited to write the policies themselves.

The role of the Business Council of Australia (BCA) provides a clear illustration of this point. The BCA was established in 1983, bringing together CEOs from Australia’s 100 leading corporations. It was set up as a means for the super-rich to “contribute directly to public policy debates”.

In this it has been highly successful. As the sociologist Michael Pursey recounts, “in the 1980s, those with an ear to the ground in Canberra already knew that, with senior Treasury and central agency officials, the secretariat of the BCA was writing national budgets sometimes almost line by line.”

Perhaps the most blatant example of the BCA’s role in “contributing to public policy debates” came in 2005. In November of that year the Howard government put its WorkChoices legislation through Parliament. Earlier in the year, on 15 February, the BCA had released a document entitled BCA’s Workplace Relations Action Plan for Future Prosperity. Strangely enough, there are some pretty striking similarities between them. Essentially, all the government had done was to translate the BCA’s proposals into the appropriate legislative form.

Of course, all this raises the question of why the capitalists don’t always get things entirely their way. Given all the networks of power and influence that exist as a permanent feature of bourgeois democracy, how is it that a government can come to pursue something like the “Resources Super Profits Tax”?

Broadly speaking, there are two main reasons why this occurs. First is that the capitalist class is far from forming a completely cohered and united block. They are, as Marx famously put it, “a band of hostile brothers”, with individual capitalists and sections of industry seeking to advance their interests at the cost of others. The role of the state as “the manager of the common affairs of the whole bourgeoisie” is to mediate the conflicts and come up with something that is in the interests of the capitalist class as a whole.

The mining tax is a clear example of this. The vast majority of revenue raised was to be used to fund a cut in the rate of company tax, to invest in productivity-boosting infrastructure projects and other thoroughly “business friendly” initiatives. Only a tiny minority of capitalists stood to lose out from this arrangement. But unfortunately for the government, they happened to be an immensely powerful minority.

The second reason why governments sometimes do things that aren’t completely aligned with ruling-class interests is that unlike the business elites they have at least to pretend, at times, to be responsive to public opinion.

The fate of WorkChoices provides an illustration. The Labor Party saw an opportunity to ride into power on the back of the working-class mobilisation against the laws. In promising to “tear up WorkChoices” they went directly against the ruling-class’s agenda. But of course, promises made by politicians in such circumstances are, in the absence of continued pressure from below, inevitably viewed merely as pragmatic manoeuvres to be discarded once the serious business of government begins.

And thus it was in the case of the mooted “tearing up” of WorkChoices, which ended up looking much more like a case of light editing.

Real power in our society has little to do with which party is in government at any particular time. On the ruling-class side, real power rests on the possession of capital, the expansion of which is the raison d’être of capitalist society as a whole.

When push comes to shove the capitalists can simply threaten to “take their business elsewhere”. This was the essence of the campaign against the mining tax. And it is a tactic that, in extreme cases, can be used to bring down an entire government. One need only recall, for example, what happened to Gough Whitlam.

On the working-class side, real power rests on our ability to organise collectively to resist the capitalists’ agenda by hitting them where it hurts the most: at the point of production, which is the origin of all the wealth and power that the ruling class enjoys today.

It is only through strikes, protests and other actions that the working class can force itself onto the stage of history – to pose a challenge to this system in which the ability of a small minority to make a profit trumps concern for the environment, for refugees and for the suffering and oppression faced by so many people today.

As the radical historian Howard Zinn often said, “What matters is not who’s sitting in the White House. What matters is who’s sitting in!”

This article, by Simon Olley, first appeared online in Socialist Alternative.



Comment from Dee
Time August 17, 2010 at 10:08 pm

17 August 2010 – Robot call from the Chamber of Commerce in Brisbane – these are the people who support those poor and hard-done by mining companies

Comment from Marco
Time August 17, 2010 at 10:58 pm


I would like to add a couple of comments to this post.

Regarding the Gillard coup d’etat: have you noticed how much emphasis the Coalition (and their media mouthpieces) puts on blaming the “shadowy” trade union Labor apparatchiks on Rudd’s downfall, and how much they try to disguise the participation of the miners, even though the miners themselves euphorically and openly boasted about it?

But, what to me is way more telling: Labor does not deny this, even though they must know this “grey men” accusation (and concurrent whitewashing of the miners’ part) hurts them in the polls.

They don’t denounce the media, or the apathy of the rest of big business who stood to gain from the RSPT, or the political pressure put on them by the Coalition. Why?

The only explanation I can find (other than the usual suspicion of incompetence and imbecility) is that both Labor and the Coalition understand this episode as a big, ugly spot on the face of their precious bourgeois democracy. One that is better to leave behind as soon as possible, before too much unpleasantness comes to surface.

The other comment I would like to add is the following:

Bourgeois democracy has the advantage, from the capitalists’ point of view, that it works as the proverbial “shit fan”: no politician is really responsible for anything, because they were put “there” by “us”: it is “we” who are screwing things up. From the moment a politician gains power, all real opposition is swept under the carpet and ignored.

I’ll give you an example. A few weeks ago a National Times blogger published a rather moving eulogy to the Australian soldiers killed in Afghanistan. In it the author said that “the soldiers were there [in Afghanistan] because WE told them so”.

And, you might find it tragicomic, but I got the impression he was being sincere.

As I got the same impression, a few days later, when an Afghanistan veteran wrote an article, where he also claimed that Aussie troops were in Afghanistan acting on OUR behalf: on behalf of all Australian people!

So, those people that have been opposing this monstrosity from the very beginning are completely forgotten. There was never any opposition to the invasion of Afghanistan or Iraq!

“We” (?!) voted for Howard (?!), he sent the troops there, and “we” are responsible.

That is the ultimate manipulation of public opinion and history: people actually swallow that tripe and regurgitate it spontaneously, no thought whatsoever required.

Comment from betty
Time August 23, 2010 at 3:39 pm

A million Australians protested about Australia’s involvement in Gulf war.
We no longer have subscription in Australia.
Defence personel joined voluntarily, and are paid huge wages, and superanuation. I contend the money and bonuses they will get, is the reason most defence personel join in the first place. No one is forced to join the Army Navy or Airforce and then volunteer to serve overseas.
I am not responsible for the troops or the deaths. the Greens have won this election because Labour didnt listen to the protesters.
Ask the troops why they went, I bet most went for he money, and don’t think they will be the ones killed, and, had little thought for the civilians they might kill as part of their job description.
Like the war on drugs the war on terror is a no win bullshit.

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