The poverty of social democracy



The poverty of social democracy

Civilising Global Capital: New thinking for Australian Labor
By Mark Latham
Allen & Unwin, 1998. 391 pp., $24.95

Review by Allen Myers

Mark Latham is the federal member for Werriwa, Gough Whitlam's old seat, and shadow minister for education and youth affairs. His book got some free publicity a few weeks ago when treasurer Peter Costello claimed that it offered support for the government's plans for a goods and services tax.

Several reviews of Civilising Global Capital have described it as "difficult", without further explanation, politely leaving the impression that it is intellectually challenging, breaking new ground through rigorous logical development.

PictureUnfortunately, the truth is quite the contrary. The difficulty lies in the book's turgid and pretentious language, the main function of which is to hide the reactionary and/or banal character of the thought behind it.

Thus, where an open Thatcherite says "small government", Latham dresses up the same idea as "devolution of public governance". Where someone else would say that the state collects enough taxes to fund a safety net, Latham writes, "... the vertical, coercive structures of the state are deployed in the collection of resource inputs, thereby establishing the actuarial basis of a social safety net."

Tortured analogies

Latham doesn't present a reasoned argument for any of his positions. Rather, he simply asserts something, and then repeats the assertion in different contexts. The effort to present mere repetition as the development of an argument helps to account for a lot of the obscurity of his language.

One of Latham's preferred forms of repetitive assertion is analogy, usually with historical events that he hasn't taken the trouble to understand. For example, Latham informs us — i.e., asserts — early on that we now live in an "information age". The assertion repeated by analogy later becomes: "Just as the Industrial Revolution produced new and extraordinary rates of economic growth through the mobilisation of industrial capital, the information age is based on the application of new forms of technological knowledge to the marketplace".

What are we supposed to make of such verbiage? Does Latham really imagine that before the "information age", capital normally applied old forms of technology? Or does he think that capitalist production previously didn't rely upon technological change? As for the Industrial Revolution mobilising industrial capital, this is either an empty tautology — industrial production is industrial — or it is an absurdity: the Industrial Revolution created industrial capital, so it could hardly have mobilised (pre-existing) industrial capital.

PictureOne could pursue such questions indefinitely, since Latham gives no indication of what, if anything, he means by "mobilisation". And the answers hardly matter, since in any case there is no demonstrated connection between the two halves of his analogy: what does the parallel between Industrial Revolution and "information age" consist of? newness? production? the existence of a market?

It would be no more nonsensical to assert: "Just as the Industrial Revolution produced new and extraordinary rates of economic growth through the mobilisation of industrial capital, the Age of Aquarius is based on the application of new forms of astrological knowledge to human affairs"; in both cases, there is a connection of words and grammatical structure, but none of thought.

A further, related, difficulty of Civilising Global Capital is the author's unwillingness or inability to define the terms he uses. It is typical, for example, that in a book whose entire subject matter is supposedly "globalisation", Latham's only definition of what he means by the term is a single sentence, buried in a footnote ("a tendency towards the freer flow of information, finance, production and trade between nations"). And that exceedingly insipid definition bears almost no resemblance to the way that Latham makes use of the concept throughout the book.


Latham is similarly fast and loose with "post-industrialism", "post-Fordism", "information age", "social capital" and just about every other sociological buzz word that has made it into the Sunday supplements in the last 30 years. (Indeed, it's revealing that the book, despite its scholarly pretensions, contains no bibliography.)

Of course, "globalisation" is the most overworked of the buzz words. Without bothering to investigate any specifics of this "tendency", Latham asserts that because of globalisation, capitalists can move their capital wherever they like more or less instantly, and that governments are therefore denied the possibility of carrying out redistributive fiscal policies — i.e., you can't tax the rich, because they'll go somewhere else if you try.

(The empty references to "post-industrialism" are intended to support this idea of "footloose capital": capital is no longer tied up in things like immovable factories, mines and so on; it's just "knowledge" or "information" — Latham uses the two words interchangeably — that zips around the world electronically.)

In this new era of "scarce public resources", social democracy is therefore forced to pursue its goal ("an equal society", in case you'd forgotten) through the politics of a "new radical centre". The name for this politics must have seemed perfect to Latham, for it is not new, certainly not radical and more right than centre, being aimed at cutting back access to social security: Tony Blair and Bill Clinton are the models for it.


If Latham's book were a serious investigation of socioeconomic realities rather than an attempt to put old politics in new covers, public resources could have been a useful place to begin. I may have missed one or even two instances, but I can't recall Latham using the phrase "public resources" without putting "scarce" in front of it. It would seem worthwhile to examine whether public resources have really become scarce and, if so, why.

The total of resources available to Australian society certainly hasn't declined. On the contrary: in the decade from 1984-85 to 1994-95, per capita gross domestic product, measured in constant dollars, increased by 19%. So if the government can't afford to pay for things it used to pay for, it must be taking a smaller share of GDP, because a larger share is being taken by the wealthy, thanks to reduced company tax and income taxes. (Taxes on working people have remained constant or increased.)

Is this declining tax on the rich inevitable because of globalisation? The evidence indicates otherwise: the total tax take by all Australian governments is about 10 percentage points less than the average for OECD countries. This means that taxes could increase by more than $40 billion a year without Australia being undercut by competition for "footloose capital".

What this points to is a reality of which there is not even the slightest hint in Civilising Global Capital: globalisation is not some unavoidable objective phenomenon; it is the political program of multinational capital. Multinational capital does not intend to be civilised by anyone — least of all by tame social democrats adapting their program to its program.

The question of how public resources become scarcer also invalidates Latham's attempt to use the banal "public common" argument as a basis for his anti-social security proposals. The argument is one of the stocks in trade of what Marx called "vulgar economics"; it attempts to explain an aspect of capitalism by a fictional analogy with a totally non-capitalist situation.

As summarised (not invented) by Latham, there is a public common on which there are "public grazing rights for all herders ... It is, therefore, in the interests, narrowly defined, of all herders to maximise their grazing." Therefore, there is overgrazing, the common is ruined, and all herders lose. Therefore (take a deep breath) access to provision from the "welfare state" must be curtailed.

Aside from the stretching of the analogy across different social systems, it fails because a public common is normally not expandable; feudal peasants can't incorporate parts of the lord's domain into the common unless they can first defeat him in battle. By contrast, the funds that the state makes available for social welfare can be adjusted upwards, just as in recent years they have been adjusted downwards; and while there are limits, this can usually be done without a civil war.

Moreover, if we deal with real public commons rather than the mythical one of the analogy, these have existed in many parts of the world for centuries without being overgrazed and without requiring a police force to limit the herders' use of the common, for the simple reason that in most pre-capitalist settings, herders feel no motive to increase their herds beyond the scope of their needs.

It's only when the market becomes dominant that there is a drive for an infinite increase in herds — now seen as commodities. That usually leads to the common being transformed into private property; so perhaps the real, if unintended, lesson of the analogy is that public welfare can be assured only by abolishing capitalism.


Latham's attack on social security is quite explicit and is multi-pronged. This is a political offensive as well as an economic one: he wants to eliminate not only material support for the disadvantaged but also usually low-cost measures such as affirmative action for victims of discrimination.

The other major specific anti-welfare proposal Latham advances is the requirement for social security recipients to repay assistance they receive, in much the same way that university students are levied through HECS.

The political role of opposition to affirmative action is clear: to create scapegoats for the decline in social security and general living standards being planned by the "new radical centre".

Justifying his program of cutting back assistance to the disadvantaged requires Latham to conjure away the reality of capitalism's institutionalised inequalities. This he attempts through repeated assertions of the bizarre claim that "globalisation" and "post-industrialism" have abolished the class struggle (a pity no-one told Chris Corrigan). For example:

"For more than two centuries the politics of the Western world has been argued out through issues of ownership, the binary of industrial capital versus standard skill labour ... In the new economy, however, social mobility and opportunity rely more substantially on the dynamic possibilities and distribution of knowledge-based skills."

One would think that Latham had never heard of Bill Gates. Far from the "information age" breaking down the social dominance of ownership, capitalism is finding new ways of establishing an ownership monopoly over both the means of accessing information and the information itself.

There is very little of either social mobility or opportunity in the reality behind the "post-industrial" fantasy. Most "knowledge workers" are just as exploited as workers in other industries; where they are not, this is the result of skills shortages that are very temporary.

Latham in fact devotes a major chapter to a program that would help to ensure that any such shortages were quickly overcome. This is what he calls "lifelong learning" and other proponents sometimes refer to as creating a "clever country".


Education, of course, is both an individual and a social good, and the focus on "lifelong learning" will no doubt be used to give Latham's politics a progressive veneer. But what is really intended here is not education in the abstract, not individuals or groups pursuing self-improvement or the advancement of knowledge.

What it's all about is forcing workers to take responsibility for retraining themselves to meet the changing needs of employers — and then paying for the retraining through HECS.

This doesn't stop Latham from pretending that more education for everyone, combined with a few paternalistic "place management" programs in areas of high unemployment, will result in the jobless all finding work providing services to the workers at the top of the "information age", especially if sacked workers can be persuaded to put their savings into forming cooperatives. This does not rise even to the level of putting bandaids on the wounded; it is more like trying to put them on the drowning.

One could go on at much greater length about the reactionary semi-ideas in this book, such as its unabashed economic nationalism, which Latham doesn't notice contradicts his claims about "globalisation" and "footloose capital".

However, perhaps it's best to close with Latham's tax proposal, which so excited Peter Costello. Latham calls it a "Progressive Expenditure Tax". In reality it is a reactionary form of income tax. The tax would be levied only on income that was not reinvested (including in savings accounts) — i.e. on income presumed to have been spent on personal consumption.

In short, it would abolish all income tax on capitalists, aside from the trivial amounts of personal expenditure they weren't able to include on the company expense account. It would also, if strictly implemented, result in the most horrific crash, as all possible funds were channelled into investment while consumption was curtailed to the maximum.

The idea is thus as stupid as it is reactionary — an apt summary of the entire book.

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