Karl Marx used the headline phrase to describe the massive social impacts of early industrial capitalism. He borrowed it from Shakespeare who had Macbeth explain how it was that witches on the moor had vanished “into the air; and what seem'd corporal melted as breath into the wind.”
As the days go by, so it is with much of the ideology and even the institutions of contemporary capitalism. The privatisation of financial institutions, essential services, transport and infrastructure which occurred in the 1980s and 1990s now seems absurd. It was built upon economic and social theories which were evidently wrong and are increasingly irrelevant.
For example their theories don't explain how and when banks should be brought under public ownership; there is no chapter on that subject. Yet some of the world's biggest banks are being brought under public ownership. Reconstructing the global financial system will in many cases require this to be done not least to replace private managers responsible for massive losses by shareholders and to create adequate confidence. How this is done is crucial.
As the Global Unions' Washington Declaration said, “It is unacceptable that governments nationalise the losses of financial capital and let financial institutions privatise the profits.” The Rudd Government's stimulating packages and bank guarantees have been necessary and timely. The PM's recognition of the sins of Wall Street and neo-liberalism are welcome, but the prognosis is schizophrenic...public regulation is encouraged but democratic public ownership and control is still anathema in his policy firmament. Those whose jobs, incomes and retirement savings now face the consequences of the global economic crisis deserve more profound answers and alternatives. A crisis can produce desperate and authoritarian responses as well as it can produce democratic and collective solutions. The Left needs to propose realistic alternatives which are socialist in direction and which maximise the scope for community and labour campaigns.
Alternatives are being proposed. Australian unions are adopting the approach of the Washington Declaration to call for a “Green New Deal” to create jobs in alternative energy and public infrastructure. The Declaration said the crisis “marked the end to an ideology of unfettered financial markets.” Unions are calling for investment in industries they know best. The Education Union calls for public investment in public schools and TAFE and endorses the Washington Declaration which itself called for 18 million more teachers to be trained world-wide to meet universal primary schooling needs by 2015. The Manufacturing Union notes that Australia's low level of national government debt compared to other countries provides the basis for significant public borrowing with a focus on green industries. The union calls for a war on unemployment, for new regulation to protect jobs and for the defeat of free market solutions of employers and a coalition of unions and community movements to campaign for new directions.
An important part of such a coalition are those in formal politics such as Christine Milne, the Australian Greens Deputy leader, who in this edition proposes massive investment in renewable industry and sustainable housing, in part funded by payments to enable the shift from carbon pollution to sustainability. The source of funds for the alternative solutions proposed here is critical. Financial institutions are essentially paralysed or on strike as a result of a the crisis. However, Australian superannuation accounts now amount to over $1 trillion usually invested across a balanced portfolio. These accounts have seen significant losses in retirement savings in the past year, with more projected. From the Rudd Government there has been no response apart from promised increases to the basic pension within an overall review of social security payments, and one-off payments from the stimulus packages. The government has said that it cannot guarantee super fund account balances, because they are linked to the market.
But it is a legislative requirement that at least 9% of workers' earnings are directed into super funds, a rate which should rise in annual 1% increments to 15% over the next five years to be adequate. This regulation means that the Federal government has more responsibility for superannuation accounts than it has for the interests of private banks. Retirement incomes are a government responsibility which can't be ducked by resort to discredited market theory.
Instead of being a dog in the manger on this issue, the Federal Government could act for the common good to better protect retirement incomes and savings from the impact of the falling share market, could allow those funds to play a greater role in an economic recovery and could target investments which begin to shift the economy to sustainable industries.
The sale of government infrastructure bonds to employee super funds could be mandated. We hear the PMs analogy with wartime; instead of War Bonds, we should see Green Job Bonds. Such bonds would be a way of the government extending protection to at least a part of the super fund accounts of employees, and also guarantee a positive return on these bonds, of say 5% over a fixed term.
If industry and public sector funds alone put 20% of their assets into such infrastructure bonds, this would make almost $60 billion available for Green Jobs. Investing government-guaranteed funds can't be handed over to those enjoying cross-directorships with companies which could benefit and who are to blame for many of the policies which caused the crisis in the first place. Neither will opaque public bureaucratic processes serve the purpose. New mechanisms for public ownership and control are needed which are transparent and serve the goals of increasing social and equity and community influence. We need to build a financial system which supports a real economy rather than speculation, investment in innovation in sustainable industries, education and skills for the new economy and a public housing strategy which links to public transport nodes.
These issues are not theoretical in these times, they are essential or “corporal” as Macbeth might have said. “Australian Options” will continue to give priority to publishing contributions on these issues.
Source: Australian Options, Issue 56, Autumn 2009, pp. 1-2.