The trouble with “Howard’s Battlers” and “Tony’s Tradies”

The progressive movement has painted itself into a corner.

The “class struggle” between labour and capital at the start of the 20th century was pretty clearly delineated between “workers” and “bosses”, and the union movement reflected that.

That delineation has become less clear, though, as “capital” has become democratised. The number of people that are either self employed, run a company, own some financial or real assets that produce revenue or have some sort of passive income has sky rocketed.

Particularly in Australia where the contribution of small business to total employment is nearly half of all jobs, the line between “worker” and “boss” is becoming blurry.

I think that the problem the labour movement generally and the Labor party in particular face is that their messaging is all based around industrial relations, rather than the underlying struggle between labour and capital.

As more people are either a “worker/boss hybrid” or are close to someone who is (for example a worker in a very small business with an owner they are close to or respect, or have a small business owner in the family) the rhetoric about how regulation around the worker/boss dynamic is required to fix the rise in inequality is counter to the experience of an increasing fraction of the labour force.

I believe that this is the cause of the “Howard’s Battlers/Tony’s Tradies” phenomenon: these are working class people who should definitely be voting for a progressive government, but who in no small number wind up voting for the coalition because they’re more aligned with the needs of “small business” (at least in their messaging!)

Additionally to this we still have people talking about “Socialism” vs “Capitalism“. When progressives say “Socialist” they really mean social democracy, and when conservatives and libertarians say “Socialist” they mean dictatorship.

What we have, therefore, is a continuing struggle between labour and capital underpinning an increasingly semantically confused landscape of people talking furiously at cross purposes.

I would like to suggest some clarifying terminology:

The Struggle Between Labour and Capital is Inescapable

We should recognise that the struggle between Labour and Capital is mathematical, and not social. It is the very nature of capital, as a component of an economic system that amplifies the value of labour, to have compounding returns while labour’s returns are linear UNLESS the gains in productivity afforded by capital are socially distributed.

Our libertarian friends would say that such a distribution is an immoral violation of property rights, but that’s only because their sense of history only goes back as far as their own maturity and they neglect to realise that “We can view all commodity production as social, beginning with commodities that were already socially produced in order to combine them in some manner to produce a (usually) different set of commodities.” (source: http://www.levyinstitute.org/pubs/wp_647.pdf).



As such this is not inherently a class struggle. The fact that this used to be a class struggle was a coincidence, it is simply a struggle between the lucky who find themselves in possession of compounding returns, and the unlucky. 

Forget “Workers” vs “Bosses

We should therefore think not about “Workers” vs “Bosses” but “returns to labour” vs “returns to capital”. It is not bad that some people find themselves in possession of compounding returns. It encourages innovation that someone can apply their labour to the design of a machine, and then pay others to run it for them. However it would discourage innovation if the first person to do so were allowed to monopolise all resources to the extent that they could prevent any additional innovation that might threaten their position (100% returns to capital) — this can also be seen in the corruption of the political process to *GRANT* rights to compounding assets to those who already own them (such as tax breaks for capital gains, negative gearing, financial deregulation, subsidies for mining and so on).

Likewise it encourages innovation to distribute productivity gains throughout the labour force, because more people can make use of their creativity to design new forms of capital to further improve productivity, but it would discourage innovation if everyone had to agree on what those projects would be and have a stake in ownership and decision making around those activities (100% returns to labour).

Thus it is clear that in order to have an innovative society, we must allow some accelerating returns to capital such that people may be able to withdraw their labour as a result of their previous contribution to productivity and innovation (and with an expectation of legal protection of that property), while still ensuring that everyone applying their labour in a linear fashion still has the ability to make a contribution and be rewarded for doing so. If we allow 100% returns to *EITHER* labour or capital, then we stifle innovation.

Forget “Socialism” vs “Capitalism

Likewise we should not be thinking about “Socialism” vs “Capitalism” but about public purpose vs private purpose. The rise of public/private partnerships for infrastructure projects such as main arterial roads, or private monopolies such as airports, has been a gift to big finance. The rise of state owned enterprises such as the post office and the NBN has seen public money being paid in outrageous amounts to CEOs who should really be on high level public sector wages.

The fact is that you can’t simply install a “profit motive” and expect it to produce an increase in productivity in the absence of competition. The charade of public tenders is supposed to convince us that, for example, 3 consortiums bidding for the construction rights to a toll road are engaged in a “competitive process” that will produce a superior result to public spending, but it’s a complete fallacy. Unless we can decide in 10 years that we want to *SWITCH* providers, then there is no actual competition involved. These projects are public goods, that should be undertaken as public purpose projects with public money.

As we have seen the size of corporations over the past 40 years approach the size of some governments, we have seen that it was not the fact that organisations were public that made them bureaucratic, merely that they were so large and complicated. Anyone having to deal with Telstra now, for example, who used to complain about dealing with Telecom in the 80s, wouldn’t notice a dramatic difference between the state run bureaucracy versus the privately run one.

Anyone who has had to deal with the administrative side of Google or Facebook, would find it eerily similar to dealing with the ATO. If we attempt to abolish public purpose spending through privatisation, ie. 100% private purpose, all we do is create private bureaucracies that are just as problematic as public bureaucracies but without any capacity to vote them out!

Likewise, we can’t eliminate private purpose. If people see that something is not ideal, they need the freedom to experiment with solutions to those problems without the need to get permission from a central government. Where those activities have implications for others in the community (such as medical treatments) governments must of course step in to regulate the production and distribution of those goods, but we must have a thriving private sector. Eliminating either the public purpose OR the private purpose necessarily entails totalitarianism (as such I think that true Socialism/Communism at the “statist” end of the spectrum is no better than Anarcho-Fascism at the libertarian end of the spectrum).

The Humble 4 Quarter Matrix of Political Economy!

If we start thinking about balance along these 2 axes: Returns to Labour vs Returns to Capital and Public Purpose vs Private Purpose, we can start to have real discussions and make real political decisions about how we would like our society to function instead of condescending each other in Facebook comments.

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