Big business militancy – rising and it’s ok

My previous post suggested union militancy is one of the issues at stake in the defence of construction worker unionism and members' recovery of general union militancy. Union militancy is usually defined by relatively successful bargaining on wages and conditions, using strikes and other industrial action, and defying unjust laws against these workers’ rights. However, there is a bit more to it in Australian history.  Leaving aside the quality of construction industry union militancy it's clear their practice is interwoven with the mainstream media allegations of corruption. The mainstream argument and the government’s internal interference against democratic practice lump them together.

Militancy was also a feature of the recent Annual Dinner of the Business Council of Australia (BCA).

The BCA is not an industrial union. It is an association of the CEOs of 132 of Australia’s biggest corporations, just about all of which are transnational corporations, including Australian. The 2 major retailers, Coles and Woolworths, are both members, as are several major property development and construction corporations.

The dinner was also enjoyed by several guests, including the Prime Minister, Anthony Albanese, and the leaders of all the other employer organizations, including the Minerals Council of Australia which has intensified its public assault on the government in recent weeks.

The employer organizations are laying the foundations for an election campaign that wins what they want no matter whether it means a Labor or LNP majority. Although their preference is for Dutton’s LNP to be in government.

The keynote speeches from the BCA President Geoff Culbert, the Chief Executive Bran Black, and the Prime Minister, raised the reality and prospect of a strike of capital. If a minority Labor government happens, dependent on the Greens mainly, their capital strike will sharpen.

A capital strike happens when employers, especially those with transnational power, withhold and/or transfer their ongoing investment from one economy to another. A strike of capital, or its threat, is the obverse of the withdrawal or strike of labour.

In its way, it is a militant act: the employers’ version of the strike.

Capital withdrawal takes two forms. From the point of view of capitalists its a rational decision because profit prospects are poor so let's chase them somewhere else.

However, as the essence of “capital” power, it’s been used deliberately to destabilize and bring down socialist and progressive governments and to force a reluctant government to give capital more of what it wants. It was a significant factor in the defeat of the Whitlam Labor government.

As destructive as it can be in Australia there are no laws against it.

Culbert and Black explicitly referred to it in their speeches.

Culbert sought understanding for it thus:

Why would anyone want to invest in Australia where even a modicum of success is criticised?

Why would anyone want to invest in a country where a 4 or 5-per cent profit margin gets you an accusation of price gouging and a call for divestment?

His second question is probably about BCA members Coles and Woolworths, called to account last week by the Australian Competition and Consumer Commission (ACCC) for dodgy pricing practices. This is a BCA example of  “red tape”.

Their out-of-control corporate behaviour dramatically trumps the anarchy allegations against the Construction Division of the CFMEU.

Business on strike … or is it a go-slow?

Black confirmed evidence the strike of capital has started:

… I now have members – major employers – who are now actively choosing to invest overseas rather than in Australia.

Both he and Culbert imply the capital strike is recent. The evidence shows it is not.

The graphs below show 2 of the most important components of new investment by the private sector - new industrial buildings and structures plus new machinery and equipment - using the common measure known as “gross fixed capital formation”.

The first graph shows new productive investment as a proportion of GDP, the mainstream economists' way. It's very low, especially since the LNP period under Abbott and Hockey.

The second graph shows the same as a proportion of profits taken, a more sensible way of looking at it if you are not trying to hide where the real responsibility lies.

For more from the ABS, check here.

“Research and development” is another essential investment decision. The story is just as bad. Although the volume of private sector R&D has increased; as a proportion of GDP it has barely changed for 25 years. It collapsed with the 2008-9 financial crisis and then grew until damaged again by economic management under Abbott and Hockey. In recent years the volume has improved but not relative to the profits available to fund it.

Culbert and Black suggest these trends are understandable and, above all, not to be interfered with, except with tax concessions and government subsidies. Thus, their capital strike should be rewarded.

Or, at least, the public should feel empathy for the employers and never see their performance for what it is – a strike or at least a go-slow by deliberate decision. Yet, new productive investment in renewable technologies is a matter of the highest urgency.

The employers’ productive investment “strike” takes two forms, and the way Culbert and Black (and others) talk about it, suggests the prospect of a deliberate political threat is being developed.

The coded obsession: Productivity

Productivity is a prime BCA talking point. All the employer organizations and their supporters who run mainstream media, and most of their mainstream economists and political journalists are obsessed with it. They want the government to “do something about it” because labour productivity has fallen in recent years, diverting attention from the inadequacy of private investment.

Labour productivity is measured nationally using the GDP (quarterly or annual) divided by the number of hours worked. The ABS provides the data and let’s be clear, they are the hours worked almost exclusively by workers. The hours “worked” by owners and their chief managers are irrelevant.

Two things (“factors”) can increase the need for more hours worked: the quality of the productive equipment – buildings and other productive structures - and the quality of management in the labour process.

If either or both are poor more hours are required from workers to produce and distribute goods and services efficiently.

If machines and equipment are less reliable or not up to date with competitors elsewhere, or if industrial structures require more maintenance relative to the competition, more working hours are required relative to the increased volume and revenue.

The answer of course is more and better productive investment, including skills formation.

Yet, as we see in the graphs, productive capital investment is the problem, and the message from the BCA and the MCA is that we should accept and excuse employers for their failure to invest. The real message is that corporate Australia cannot be trusted.

At a deeper level, stagnation – as shown in GDP and other indicators - is the global trend that started before the pandemic and, in the Australian context, was inherited by Labor from previous LNP governments.

A startling contradiction

And here is the striking and startling contradiction: when employer productive investment increases, adding to that portion of their new wealth, the tendency will be for the profit relative to both established and new investment, plus wages, will fall.

To prevent that, the only answer is to reduce wages relative to the new profit taken, that is to increase the rate of exploitation.

That explains their focus on reversing Labor’s recent changes to labour law: to reverse workers’ rights to multi-enterprise bargaining and “same job-same pay”.

Thus, from the point of view of workers and their unions, there are 3 angles to the mainstream discussion of productivity.

First, productivity is code for profitability - increasing the rate of profit-taking - not just its volume.

Second, employers claim they are entitled to NOT invest productively (and thus gamble in the money markets instead). Then, the government should step in and help them with publicly funded subsidies, low or zero-interest loans, and bigger tax breaks, with no red tape.

Third, employers admit, in effect but not explicitly, that their society remains fully dependent on the industrial performance of the workers and the associated exploitation of the working class.

“Populism” and workers’ and civil rights

That brings us to our final point about the rise of the new BCA and MCA militancy.

Their militancy includes an attack on “populism”, as they call it, and that is associated with the opportunity available from the allegations of corruption in the Construction Division of the CFMEU to attack the militancy and relative determination found in construction industry workers and others like them.

Culbert defines collective determination to raise living standards as “self-interest trumps national interest”; employers as “the nation” not “minority interests”; those that oppose them as the “minority interests”. Opposition is re-named as “scapegoating of business” and “has to stop.” Instead, business organizations must be permitted to reprise the demands of the noughties (and last century’s 70s) to win the changes that rescue productivity – profitability: “reforms” to “tax, workplace relations, regulation and red tape.”

Black pretends business understands the crises with 5 questions that are left unanswered until more policy detail is provided in the future. They cover the cost of living, the housing crisis, net zero by 2050, “the growing care needs of Australians”, and “a skilled workforce for the future”.

The 5-point list provides code for embedded journalists and their use to mask the specific demands that dodge their culpability for the crises we are all dealing with. The “populist” answers on the other hand are “red herrings”, asserted without any detail.

The only answer is productivity improvement without any analysis or explanation of their failure in production technology that requires more working hours to produce and distribute to meet society’s requirements. And the pathway to productivity means “less red tape and regulation”, “more flexible workplace laws”, and “a more efficient tax system”.

Specifically, Black says

“Abolishing multi-employer bargaining must be seen as a priority in this regard.”

He concludes with the usual shibboleths that define corporate control of society as the only way to establish the future.

Shibboleths because the evidence is overwhelming their system and corporate control of it has produced the crises of our times.

How should the left respond?

The capital strike is a serious problem for any Labor government majority or minority, but it is also a problem for the movements and campaigns leftwards of it.

The big business objective is 2-fold: push Labor into retreat from its already inadequate programme or replace it with the LNP and, defeat forms of social and industrial militancy that fight more intense exploitation of people and environment, and associated war-making.

In our present, we want right-wing Labor, under Albanese, to do more and better in the battle for housing, unemployment benefits, and other living standards issues. We want Labor and the Greens to prioritize mutual effort to produce the legislative changes that will make a difference for the majority and nature.

In all the disjointed movements of the left, there are shared elements that can be turned into a common programme that helps the majority and keeps the LNP out of government.

That is the “populism” that drives big business to protect and sharpen the capital strike.

For many active in the various movements the “capital strike” is a new and barely understood problem. So, to start with, the left within each must intensify the effort to study and discuss the problem, preferably together in a unifying process for all the movements; that is the union, peace, women’s, environmental, social welfare and LGBTQI.

In that process, the ingredients for a common programme can be found leading to a longer-term strategy that continues to push back against the likes of the BCA and the MCA. Winning the next election on our terms becomes a moment that provides continuing momentum by defeating the LNP rescue effort and Labor’s conservatism.