By Greg Ogle
Previous articles in Green Left have pointed out that immigration does not cause our chronic unemployment level. The consensus of academic literature, government and even business reports is that there is no relation between levels of migration and national unemployment levels.
In fact, at the micro level, migrants create jobs through the assets they bring into the country and the extra demand for goods and services they create. Even poor migrants who require welfare, language and other support create jobs: the provision of these services employs teachers, social workers and government administrative staff.
While not disagreeing with these arguments, I want to point out that they rest on an essentially Keynesian economic analysis. They see the economy as demand driven.
Government expenditure, including spending on migration programs, is a form of demand which creates both jobs and wealth. That it creates jobs is clear from the above. However, it is less obvious that such government expenditure creates the wealth to pay for those jobs.
For mainstream economics, such expenditure forms part of the national income (defined in the official statistics by the Keynesian formula of consumption + investment + government expenditure). Right-wing economists object to government expenditure because of its alleged inefficiency, but they still work within the official definitions of what constitutes production and economic growth.
Thus expenditure on government programs, including migration, contributes to economic growth and therefore eventually creates the wealth/revenue which will pay for the initial expenditure.
To be clear, in this Keynesian logic, government expenditure on welfare benefits is not included as production. However, the administration of such transfer payments is seen as productive! An administrative service has been produced and paid for. Yet this is clearly absurd: the administration of unproductive activity is not productive.
The case is made that government expenditure contributes to economic growth, not because new production and wealth are necessarily generated, but simply because it is a part of the official definition of national production. The argument is clearly circular.
Marxist economics rejects such mainstream definitions and begins from a different understanding of production. Production includes only those activities whose direct result is the creation of more goods and services than previously existed.
Thus, manufacturers who produce a commodity which is sold at a value greater than that of the inputs that went into making it are productive in the Marxian sense. By contrast, the accountants and salespeople who organise for buying and selling of that commodity are not contributing to new production, but are simply changing the ownership of already existing values.
Taken across the whole economy, "production" is the total of new goods and services created. All other economic activities have to be financed from the proceeds of that production. These other activities may be necessary or desirable, but they do not create new wealth. They are social maintenance rather than production. The amount of money available for such projects is ultimately limited by the amount of productive activity.
This has important ramifications for immigration. Government expenditure on immigration has two elements: direct transfers to migrants (welfare payments), and payments to service providers and immigration officials to run the migration and support programs.
In neither case can it be assumed that the government expenditure will result in new production (in the Marxian sense). Like any citizen, migrants' demand for goods and services may relate to productive activity (food, clothing etc), but their income may also be consumed unproductively (on health, religion, legal fees etc), or it may be invested in either productive or unproductive activity. Similarly, while the wages of immigration officials are not a productive expenditure, government provision of migrant housing may be.
This breaking of the Keynesian nexus between creating jobs and new production (economic growth) is important because where government expenditure does not relate to productive activity, it represents a consumption of existing wealth. Rather than creating the economic growth and revenue which would pay for itself, such government expenditure must be paid for by taxes on existing wealth. It is therefore a net cost to taxpayers.
These taxes come from both business and wage earners. However, when we look at who pays for this expenditure and who benefits from it, there are clear differences between the class interests of capital and workers.
While the new demand is welcome, taxes to pay for jobs created by migrants represent a cost to business — both individual businesses and business as a whole. This means that business, always trying to get a competitive advantage by decreasing costs, has an interest in minimising the costs of immigration — by decreasing the amount of immigration or by maximising the benefits it gets from importing an internationalised and skilled work force.
This was not always crucial. During the post-World War II economic boom, business happily absorbed the costs and reaped the benefits of a large-scale migration program.
However, the long postwar boom collapsed in the 1970s. Globalisation brought increased price competition (and therefore cost pressures) to business. This has focused business concern on tax levels and heightening the demand for a skilled work force — all the better if it can be imported without having to pay for the training.
At the same time high unemployment and lack of union mobilisation have undermined award safety nets. Employers now have "greater flexibility" paying wages and can move offshore more easily, thus reducing the benefits of having a super-exploitable migrant work force in industries like textile, clothing and footwear.
Thus the old benefits to business of high immigration have declined and the costs have increased. The result is a structural bias on the part of capital against immigration.
This may not translate directly into policy, but we need to recognise this bias. Capital has a structural interest in minimising the cost of immigration. An immigration program which cut overall numbers of immigrants would be in the interests of capital.
Similarly, it would be in the interests of capital to change the make-up of the immigration intake to reduce categories like refugees and/or family reunion (which cover less skilled/wealthy migrants), and to increase business migrant categories.
In short, the Liberal policy and indeed the trajectory of immigration policies over the last decade can be seen to benefit capital.
The situation is quite different for labour. Individual workers also pay the taxes which support the migration programs, but when looking at the interest of the class as a whole the money is retained within the working class — as new jobs and wages are created.
To the extent that such jobs are paid for by workers' taxes, they represent a redistribution of wealth within the working class — not a cost to it as a whole. Of course, individual workers may have stories of "migrants" getting particular jobs or resent paying taxes which go to support programs they see as benefiting others. However, in collective terms, workers have no structural interest in opposing migration.
Of course the world does not operate by a simple reduction of people to economic interests. Anti-immigration populists have some following among working-class people, just as some working-class people hold racist views which are not based on their material interests. The race and immigration debates are too complex to be reduced to any one simple cause.
Nevertheless, the structural arguments are important. They show us that labour and capital do not have the same interests in the immigration debate.
Workers have an immediate interest in jobs whether they are in productive industries or not — even "unproductive" work may still be necessary, useful and improve people's living standards. Doctors, public servants and even bankers provide necessary services to the community without producing new (capitalist) values. By contrast, capital has a financial interest only in fostering jobs which create new values, rather than those which, through taxation, represent a "cost".
Keynesian and mainstream pro-immigration economists only get it half right: immigration does not lead to high unemployment, but that does not mean that it is in everyone's interest.
Their version of the economics of immigration, like their economics generally, hides the different class interests at work. Again, immigration and greater questions of racism cannot simply be reduced to capitalism, but the class analysis is an important and often missing factor in the debate.
[Greg Ogle is in the Department of Social Inquiry (Labour Studies) at the University of Adelaide.]