Review of Mark Latham, Civilising Global Capital
[Workers Power Australia, March 2000]
With social democratic parties the world overattempting to reinvent themselves, Mark Latham’s book Civilising Global Capital offers a taste of ‘Third Way’ politics ALP-style.
It was the first in a spate of books marking newtrends that have emerged from the ranks of the ALP over the past eighteen months. This review marks thefirst in a series of articles in which Workers Power investigates currenttrends in the Labor Party.
March 1996 brought decisive electoral defeat for the ALP. After 13 years ofAccord politics, declining real wages and the erosion of welfare,significant sections of the working class deserted Labor at the polls. Bythe 1998 federal election, despite having clawed back some of its disgruntled voters, the ALP remained unable toregain government.
In the face of electoral defeat, the ALP commenced a process ofself-examination to decide on the future direction of the Party. Decliningunionisation rates and an increasing gap between the political and industrialwings of the Labour movement, presented the ALP with two options: a returnto traditional Labor policies of economic regulation, state interventionand centralised wage fixing in an attempt shore up its working class base; or a further shift to the right in anattempt to broaden its support within the middle class.
These alternatives represent the views of the Left and Right wings of the ALP. While the Left wing supports the return to a Keynesian-style of socialdemocracy, the Right wing – supporting the programmatic renewal ofsocial democracy – is both significant and growing.
Drawing on Blair’s New Labour in the UK, and to a lesser extentClinton’s Democrats in the US, a clear programme for a so-called‘Third Way’ for Australian social democracy is emerging from the ALP Right. It hasalready expressed itself in conflict with the existing centre leadershiparound Beazely, who ejected prominent Third Wayer Mark Latham from theshadow Cabinet following the 1998 election.
Latham’s book, Civilising Global Capital, is representative of theThird Way tendency in the ALP. It constitutes a notable attempt to providea theoretical basis for fundamental revision of ALP policy.
It’s central claim is that globalisation has changed the world in ways so significant and fundamental, that old-style ALPpolitics has lost its relevance and applicability to the changed globalenvironment. In its place he argues for a leaner and meaner socialdemocracy where labour market flexibility and‘mutual obligation’ replaces the objectives of fullemployment, centralised wage awards and universal welfare provision.
Globalisation
Latham’s work posits that globalisation is the main catalyst for therenewal of social democracy. His basic premise is that the ‘industrial age economy’ has been replaced by a new ‘information age economy’, thereby rendering the old binary opposition between Capital and Labourredundant.
This brave new world of globalisation is characterised by the internationalmobility of capital, greater integration of economic markets, and a shiftin society’s economic base from industrial age production to an information age.
Latham claims that throughout the twentieth century, the system of economicproduction and value creation has moved from machines and manpower to the useof information and brainpower. As a result, Latham claims, knowledge hasjoined capital and labour as a core factor of production.
Similarly, Latham points to important changes in the economy’s employment base.
These changes include a diminished proportion of labouremployed in manufacturing, and a greater proportion employed in servicesproduction. In addition, there has been a significant growth incasualisation, new work patterns, and an increased diversification of work and social values.
Consequently, Latham claims that ‘…with the spread of economicinsecurity and the demand for public sector support and entitlements allround, the social legitimacy of the post-war welfare state is indecline.’
Latham’s continues: ‘The stratification of social opportunityand values is being determined as much by the divide between theinformation rich and the information poor, as by conventional notions ofmaterial wealth and deprivation.’ His conclusion is that ‘the old ideologies of Left and Right,positioned around the industrial age struggle between capital and labour,do not appear capable of dealing with these issues.’
How, then, does Latham understand the new fundamental structure of the newglobalised Information Age economy? He says: ‘the political divide is now best conceptualised as a 4-plane matrix splitby the struggle between capital and labour; economic nationalism andinternationalism; the emergence of the information rich and the information poor; and the realignment of social relations betweenindividualism and community’.
In short, according to Latham the new economy is incompatible withtraditional methods of social democratic governance and economic managementembraced by the ALP. At the heart of this claim is a view of the state which has more incommon with Freidman and Von Hayek that Keynes.
Big Government
Latham claims that market failure in the 1930 and 1940s made interventionby big government into the economy and the provision of welfare legitimateand indeed desirable.
However, by the 1970s and 1980s social and economic changes had broke thesocial democractic mould by reducing the relevance of macroeconomicstrategies constructed on the premise of a closed economy: “With the transition from an industrial to an information society theeffectiveness of state planning has dissolved.”
As evidence, Latham points to a number of key developments that are said toerode the capacities of governments to provide the sorts of comprehensivewelfare programmes associated with the post-war boom.
These changes include the erosion of Australia’s tax base, the overloading of the functions and outlays of government, thechanging nature of work and production, and the loss of socio-economicstability. For Latham these indicate the waning legitimacy ofthe welfare state and the struggle of welfare ideals to meet what Lathamrefers to as the “new dilemmas of social diversity andfragmentation”.
In place of the old welfare state based on the principles of universalprovision and equality of opportunity, Latham argues for a new welfarestate based on “reciprocal responsibility”.. In a statement which in form and substance could have come straight outof Peter Costello’s or Jocelyn Newman’s economic rationalistcatachism, Latham suggests that:
“Under conventional forms of social democratic welfare, Governments haveprovided a minimum level of income supportas one of the rights ofcitizenship, without regard for the responsibilities citizens must exercisein their use of this support. Policies aimed at social capability, however, need to replace this passiverelationship with active forms of welfare. This means entrenching a senseof reciprocal responsibility throughout the work of the welfare state…it makes the welfare state a two-way rather than a one-waystreet.”
To bolster this argument, Latham calls into question the entire pursuit ofequality. His key argument here is that ”increased diversity ofsocial values, economic outcomes, cognitive skills and social relations,make it difficult to conceptualise and attain equality”. The pursuit of equality is notonly difficult to attain, but can have positively negative consequences.
Firstly, it allegedly eliminates diversity. “Whereas in the past,left of centre parties often aspired to eliminating the differences betweenpeople, a revised social democratic project now needs to accommodate socialdiversity – in work skills, family types, social values and interests”.
Secondly, “History shows that the compression of income levelsand assets, purely for the sake of material equality, can take away someimportant incentives for the exercise of personal responsibility andendeavour”.
In other words, social welfare provision leads to dependence and ‘dole bludgers’. Hence welfare should be stripped back to a minimumin order to provide an incentive for people to get off welfare.
Now with all this talk of minimal state intervention reciprocal responsibility and the new global economy, one could be forgiven forthinking that Latham was merely taking up the cudgels for the economic rationalist right. But this would be to slipinto old ways of dividing up politics into left and right categories, whichwe should move beyond to embrace Latham’s ‘Third Way’which occupies the ‘Radical Centre’.
So what is the programme of the new radical centre that the Third Wayistsembrace? Latham gives us a clue at the outset of his book: “Blair’s New Labor and Clinton’s new democrats are fraternal parties, with fresh set of social democraticvalues – the values of a new radical centre.”
And here is the nub of the transformation that Latham is proposing for thestate in general and the Australian Labor Party in particular. He is for astripped down welfare state, modelled on the Blair and Clinton model, whereindividual responsibility is invoked to justify cuts to the living standards of the majority.
Ideas
Despite the fashionable rhetoric and rhetorical gestures, there is nothingnew in Latham’s ideas. They represent a compendium of ideas drawnfrom a multitude of rightwing theorists both new and old. As such, the book is somewhat eclectic andintellectually lightweight, full of unsupported assertions and befuddledarguments.
For example, the fundamental economic premise of the book - thatglobalisation and the information age has displaced industrialism – is left totally unsubstantiated. No doubt it is true that information andinformation technology have become increasingly important. But it is stillthe case, even in advanced imperialist countries like Australia, thatmaterial things have to be produced to satisfy peoples wants and needs.
Thus despite the contemporary importance of information, which incidentallyhas always been a key ingredient of capitalist economies, more than aquarter of Australia’s workers are still employed in manufacturing, and the vast majority of thecountry’s GDP is generated in primary and secondary industries.
If Latham’s premises are left unsubstantiated, so too are hisinferences and conclusions. Nowhere in his book does he demonstrate why the sort of welfare regime he proposes, is necessitated by globalisationand the information age.
Rather, he simply makes the highly questionableassertion that ‘government overload’ and diversifying values mean that governments can no longer do what theyused to do.
The conclusion: cut welfare spending, devolve government functions, andplace more responsibility back on individuals. In a word, do just asgovernments have been doing for the past two decades, but do it faster andmore effectively.
We can see then, that Latham’s actual ideas function as a political rationalisation for the continuederosion of the social wage, and the minimisation of state intervention.These are old ideas, many deriving from eighteenth and nineteenth centurysocial thought.. Thus there is not much of interest here.
What is of interest is not so much the books ideas, but the fact that sucha book could be written by someone in the ALP, and someone who until veryrecently was on the shadow cabinet.
This testifies to and expresses several things about the ALP. It testifiesto the decline of the Keynesian paradigm, which sustained Labor throughoutmost of its history. Furthermore, Latham’s book expresses the continued rightward drift of the party, and thegrowing weight of the middle class within its ranks.
Although Labor for now and the foreseeable future remains a working classparty with a working class base within the labour movement, books such asLatham’s threaten this, and threaten what remains of the welfaregains that workers have fought for, for generations.
Socialists should defend these gains against the likes of Latham, while notgiving one iota of support to the reformist Keynesian programme which manyin the Labor party see as the alternative to Latham’s vision. The real alternative is the overthrow of capitalism, not itspreservation on a Keynesian basis, nor its ‘civilising’ onthe basis of a spurious ‘Third way’.
