PASSWORD RESET

Magazine of Socialist Action in Australia

2005 SP Conference resolution

The 2005 SP National Conference is being held against a backdrop of heightened class polarization over the IR counter-reforms of the Howard government. Only a few weeks ago 250,000 workers mobilized in rallies or at mass meetings. This was almost immediately reflected in a drop in support for the Government in opinion polls.
However the incapacity and unwillingness of the union leaders (both moderate and militant) to break with Labor; have anything other than a nationalist approach
consciousness of workers is uneven. Only now, under the hammer of the
Government’s upcoming attacks, are the so-called Howard battlers beginning to
look for alternatives. Some more organized workers see protection in special
deals won by strong unions – they believe they’ll be therefore immune from the
broader attacks on the class. However the vast majority of workers (those in
weaker unions with lower pay and the majority outside unions) are beginning to
see that only a fight will protect what they have. The small but militant school
student rally we organized in June gave a taste of the growing anti-capitalist
consciousness amongst the advanced layer of youth. Under the hammer of
Government/employer attacks and the lessons learnt from struggle, a much more favourable mood will develop for socialist ideas in
Australia.

The ALP is trying to opportunistically capitalize on workers’ fears (only days
after using racism against Aborigines to help retain power, the entire NT Labor
Cabinet attended the Darwin union rally), however they are constrained by their
own support for the neo-liberal agenda of capitalism that drives Howard’s
attacks. Support for a new workers’ party will develop in the coming period,
notwithstanding a pragmatic return by workers to supporting the ALP on the
electoral arena.

The international and economic backdrop to this period in Australia is outlined
below. There are dark clouds forming over the world economic upturn, only held
together by US deficits, speculative capital, asset inflation, and massive
consumer debt in the advanced capitalist countries.

This Australian perspectives document is aimed at giving SP a guide to
developments over the next 12 months so as to give overall strategic guidance
for whatever political and organizational conclusions we may draw. For the first
time, it has been a collaborative effort with 5 comrades writing sections or
parts of sections. This itself is an important step forward for the party.

Liberal electoral victory is a setback but does not mean the fight is over

The political situation faced by the major parties in the current period is
shaped by two related factors. The first is the complete lack of broad political
representation for workers in any level of government. This is
directly linked to the second factor, being the overwhelming victory of the
ruling class in the 2004 federal election.

The 2004 election marks a significant moment in the history of working class
struggle in Australia. The Senate majority won by the ruling class through their
Liberal/National coalition heralds a huge escalation of the ongoing attacks on
workers by the ruling class. This sharp increase of power in the hands of the
ruling class is giving rise to conflicting pressures in many sections of society
including in the ranks of the major parties.

For the Howard Government this victory means not only the opportunity to execute
a backlog of counter reforms, but the need to do so while walking a tightrope. They understand, like the Marxists, and unlike the liberal left and union bureaucrats, that the election did not change the balance of class forces one iota. They have a majority and soon will have the new laws they desire. But it is an entirely other thing to win the class battles against workers necessary to implement these laws. That battle has not been won, and not even really entered into yet by the ruling class. It is important to keep one’s political head in this turbulent time and ignore both ultra-optimism on the basis of big rallies a few weeks ago or alternatively ultra-pessimism on the basis of electoral defeats and often weak-kneed union leadership.

The Coalitions’ role in the coming period will be to implement the policy demanded by
business without pushing the working class too far. The extent of the pressure
being exerted by bosses was evident the day after the election as they
immediately presented the government with a log of claims demanding extreme
deregulation of industrial relations including direct attacks on unions and
extensive attacks on pay and conditions. While Howard will come to the party
wherever possible on all this, the fact that he has watered many of their
demands down (like the number of allowable matters in awards) while going to
extreme lengths in other areas (like virtually abolishing unfair dismissal laws)
is indicative of the balancing act he is undertaking.

This balancing act has been even more pronounced since the mass rallies and mass meetings nationwide on June 30th/July 1st which led to an immediate drop of up to 10% in support for Howard. Opinion pieces in the Australian and Financial Review warn that the price of these IR counter-reforms is turning the ‘Howard battlers’ away from Howard.

Howard is also under internal pressure as some of the proposed changes come up
against the interests of individuals within the Coalition ranks. He is facing
opposition from some Nationals over the sale of Telstra and over his push to
create a single national industrial relations (IR) system. Queensland Nationals
leader Lawrence Springborg is providing vocal opposition, arguing that passing
IR power to the Commonwealth will be a disaster when there is a change of
federal government. This argument was echoed by Queensland Liberal Senator-elect
Barnaby Joyce who called the proposed changes “stupid”. It is also likely that
pressure will be felt by Christian Family First Senator Steve Fielding as
Howard’s extreme attacks draw opposition from church leaders.

Friction within the government also broke into open debate around the issue
of mandatory detention. Five Coalition MPs supported two private member’s
bills aimed at modifying the mandatory detention system. This was been called an
“unprecedented rebellion”, and came amid revelations of a crisis in the
Immigration Department. Opposing forces are in play on this issue as on one hand
employers in certain industries are calling for the loosening of immigration
restrictions in order to bring down the price of labour, while on the other, the
hard right elements recognise the historic benefit this policy has been to the
coalition’s electoral success. Limited retreats placated the oppositionists inside the Liberal Party, but growing public outrage led to even further retreats, with almost the entire tops of the department sacked by Howard.

While the internal coalition conflict gives an insight into the new and changing
factors at play in this period, it is important to avoid all illusions that these
conflicts at the top provides a way out for ordinary people. They reflect pressures building up below, they cannot be a replacement for mass action and a workers’ political alternative.
Sudden changes in conditions will always lead to such conflicts and it is unlikely that, with an opportunity to push their agenda so far forward the ruling class will allow these ructions
to hold them back.

It is a gauge of the level to which the Labour Party and
ACTU are removed from the working class that they are looking at these
relatively small rifts as a major part of their retaliation campaign. As
socialists we are clear that the best way to really oppose this attack is
through a broad militant industrial campaign and the creation of a mass workers’ political party.

Workers can force union leaders to lead fight
Needless to say if ripples are passing through the ranks of the coalition, waves
are passing through the opposition parties and the left as the Labor Party,
unions, organized workers and young people, and the progressive middle class
feel the effects of the electoral defeat last October. As the shock of the result wears off,
the ability of these different sections to recover and prepare for the onslaught
is indicative of the extent to which they are aligned with the interests of the
working class.

Unlike some ultra-left groups we not only see the bureaucratic, pro-capitalist, industrial policemen (women) side of the union tops, but also the fact that as leaders of workers’ organisations they are forced to reflect the workers interests to some extent. This is especially so as sections of the ruling class, represented politically by the Howard government, have made a major shift from using the union bureaucracy and industrial relations industry to pacify workers and sell cuts to workers towards an attempt to smash the basis of effective trade unionism and their old method of social control, the IR Commission.

This has led the unions, to one degree of enthusiasm or another, to organise the mass rallies of a few weeks ago. On other method of analysis than Marxism, which is dialectic, seeing the contradictions, and opposed to one-sided barren analysis (eg unions leader = bad = never fight) can understand this period that is opening up.
The movement is still yet to rebuild since the Accord years of Hawke / Keating
during which tame unionism became the established and enforced norm.
Consequently, the Accord years saw a huge flow of wealth from the pockets of
workers to those of the bosses as over $20 billion dollars per year was
redistributed from wages to profits. Meanwhile in most unions, the delegates’
structures, were left to wither on the vine or were consciously dismantled as
deals were sealed between the ACTU, government and bosses over the heads of the
membership.

Since the Accords, most unions have continued to operate in much the same tame
way, running scared of the bosses courts and appealing to the state ALP
governments to ‘do the right thing’ rather than organise the membership to stand
up and fight. This has all contributed to the low levels of unionism (24%) and
the high levels of casualisation (27%) and job insecurity in Australia today.
The biggest strength of the Australian ruling class, and the main weakness of
the union movement, is the inability of the leadership to take advantage of
recent economic upturn to recover the losses that have been made in the last 30
years

The union movement in Australia is dominated by the influence of the ALP. A party that has fully embraced the neo-liberal ideology and today is no more than a second eleven to John Howard’s coalition. The trade union bureaucracy in most cases agree with, or see no alternative to neo-liberal trickle down effect theories.

The question of a correct program will be important in the next period. Unity in
the union movement should not mean waiting for conservative leaders to see the
light. The left unions need to be prepared to lead with or without the call from
the ACTU or Labour Councils.

In the unions, while many leaderships are part of the process of selling the
cuts, the organisations themselves remain workers’ organisations based in the
workplaces and still open to the possibility of rank and file action and
organisation.

Even in the militant unions or as SP has described them ‘class struggle
leaderships’ political weaknesses still remain this is seen in the pro-ALP
stance by all the ‘class struggle’ unions with many saying our main goal is to
get Labor elected next time around so as they can wind back Howard’s IR reforms.
SP will continue to give critical support to these militant unions on an
industrial level but also continue to argue that they need to break their links
with the ALP and develop an alternative political and economic program to the
pro big business politics of the ALP.

Labor, Greens no alternative. Workers need a new party

The Labor Party was demoralised by the Federal election result. Far from presenting clear opposition to the impending attack they have been reduced to public faction fights, as exemplified by the Victorian State Labor conference which, instead of policy discussion,
involved a six hour televised slanging match. This division has been further
displayed in the various positions members of the Labor Party are putting
forward. Despite even elements with the Coalition being opposed to the
succession of state IR power to the Commonwealth, NSW Labor Premier Bob Carr was
reported at one point as being willing to hand over his state’s industrial
power. (Historically communist trade unionists had a pragmatic approach to Federal and State awards; whatever at any one time gave the best wages and conditions for their members, they went for. Today, in NSW, State awards are better than Federal awards in some industries and therefore Howard’s move, if successful, would led to cuts for workers).

There has also been a predictably unclear response from Labor leader Kim Beazley
and shadow Industrial Relations Minister Stephen Smith. Although they are
voicing opposition to the changes, they are doing so with arguments that have no
substance as they don’t pose any real ideological alternative. On 26 May in Kim
Beazley’s response to Howard’s announced proposals, Beazley actually argued that
it was the Hawke Labor government that should be credited for scaling back
workplace regulation- attacks that achieved the same purpose as those presented
by Howard! He said (in part):

“.the productivity that we saw surge off the Labor Party’s reforms (sic). The
productivity was a product of flexibility in the workplace. The fact that
individual employers had the opportunity to sit down with their workforces,
relatively free of external influences, and settle the issues with their own
employees in a way that suited their own workplaces.”

This from the leader of the party that is taking millions per year in
money from worker’s pockets through the trade union movement (eg $5 million in 2002/03). Stephen Smith also betrayed Labor’s real position by refusing to provide assurances that a Labor government would roll back the changes if it gained government. These
statements, mixed with pro-union rhetoric are the result of a party that is
dominated by the right but is trying to cover all its bases.

All this comes as no surprise as Labor has long ceased to provide an alternative
to Howard’s neo-liberalism. The important question now concerns the extent to
which Labor are still perceived as an alternative. We understand that just as capitalism will always find an escape route in a time of crisis if there is no alternative ready and able to overthrow it, so also the ALP – while now a pro-capitalist party – will still be able to make electoral gains at times in the absence of an alternative. However, the recent fall in support for Howard since the workers’ mobilisation saw a smaller rise in support for Labor, reflecting the unease amongst workers with the ALP alternative.

On one level the 2004 election was seen as a relative victory for the Green Party. They won
two extra Senate seats bringing their total to three. This is yet another
example of the disaffection of a large section of the middle class and many
working class activists with the two major parties. The Green Party emerged from
the election as the clear third party in Australian politics, benefiting from the collapse of the Democrats. However their 750,000 vote was less than the 1 million predicted by Bob Brown and the fact that they no longer hold the balance of power in the Senate is a big blow to the profile of this media-driven, non-activist party.

Since the election, the Green Party have kept a low profile and have
made only limited comment in the public debate surrounding Howard’s neo-liberal
attacks. This is in keeping with both their status as a parliamentary rather
than broad campaign based party, and their unwillingness to address industrial
(class) issues head on. This unwillingness can be contributed to their
pro-capitalist economic policy and their limited base in the organised working
class. While it is likely that the Greens will intervene in the coming battle,
due to their class nature they are unlikely to take a leading role. Although
they are still seen by many voters as a left wing alternative to Labor, it is
likely that, as with the Labor Party, their inability to represent the interests
of workers in the coming period will reveal their true nature.
It also needs to be recognized that the Greens are a diverse party both across Australia and within each state, with still some good left wing elements and activists.

These factors combine to make putting forward the arguments for a new workers
party key in the coming period. Even before the new round of bosses’ attacks
comes into force it is becoming easier to raise these arguments in sections of
the organized working class. Even more importantly we will see a growing anti-capitalist consciousness amongst young workers and students in particular. Every blow from Howard on behalf of big business will hammer away illusions in the capitalist system, and heighten interest in the ideas of socialism.

Global Economy – storm clouds gather
Business is always thoroughly sound and the campaign in full swing , until the
collapse suddenly overcomes them. – Karl Marx

Everything is rosy and going well with just the possibility that something may
bring it crashing down. This seems to sum up what economists are thinking about
the world economy.
Official forecasts are for strong economic growth but there are some worrying
possibilities for the future as well. These include recession or near recession
conditions in many Eurozone countries (those countries of the European Union
that have adopted the Euro currency), concerns about the way the US economy
could go and concerns about speculative activity especially that of Hedge funds.

Recent data from Italy shows that its gross domestic product (GDP) fell by 0.5
% in the first quarter which follows on from a 0.4% decline in the quarter
before that , officially putting it into recession. France until recently one of
the strongest Eurozone economies could soon go the same way with manufacturing
output down by 0.3 % for the first three months of the year followed by a
further 0.9% drop from February to March . The Netherlands is also in recession.
While the Eurozone as a whole is growing 0.5 % in the first quarter and 0.2 % in
the quarter before that there are concerns that this could be reversed because
of higher oil prices and the increase in the value of the Euro against the US
dollar.

The US economy appears to be slowing with real GDP increasing at an annual rate
of 3.1% pa in the first quarter of 2005, down from 3.8% pa in the last quarter
of 2004. These figures may indicate that the US economy is still recovering from
the recession of 2001 , but employment figures show a different picture. There
are 22,000 fewer private sector jobs than in March 2001 when the recession
started and real wages have fallen in the past six months. Since the start of
the recovery in the last quarter of 2001 real wages have only increased by 5.3
percent whereas even with the jobless recovery in the early 1990’s there was a
8.1% growth in wages and generally the average increase for all economic
recoveries lasting 11 quarters or more (from 1947 to 1982) has been 18.3%. This
indicates that growth has not been sustained by increased employment and rising
wages but by very low interest rates and an expansion of debt.

The latest figures also show that US consumers have started to tighten up on
spending. Retail sales fell by 0.5% in May , the biggest drop in almost a year
the expected figure was a drop of 0.2% and producer prices had the biggest drop
in 2 years falling by 0.6% in May. This weak consumer demand may hit corporate
profit growth and lead to fewer interest rate increases. Job growth slowed down
sharply in March, non farm payroll jobs grew by 110,000 having increased by
243,000 in February. It is estimated that about 200,000 jobs need to be created
just to keep employment stable given population growth. The University of
Michigan’s measure of consumer confidence fell to 92.6 in March from 94.1 in
February.
Industrial activity also slowed slightly with the Institute for Supply
Management’s manufacturing index dropping from 55.3 to 55.2%.

What this means is the US economy may be beginning to slow down which would
have a severe negative impact on the rest of the world including Australia as
the US economy accounts for 21.1% of Gross World Product (GWP).

Another major concern is that of the trade deficit of the US. The US imports
more goods than it exports creating a trade deficit, this deficit has to be
balanced by foreign investors funding the difference by lending money to the US,
the growing size of the deficit has the foreign investors worried and they are
starting to withdraw funds from the US thus lowering the value of the US
dollar. At present the US current account deficit is about 6% of GDP and the US
takes in about 75% of the worlds combined current account surpluses. If the US
had to balance its current account deficit by exports alone it would have to
increase revenues by 70 % over 2004 levels. (Not a likely prospect) The current
account requires an estimated capital inflow of between $1.5 and $2 billion per
day to finance it. In 1982 the US had net foreign assets of about 7% of GDP
today it has net foreign debt of about 25% of GDP , a figure that will rapidly
increase if current trends continue. It has been
estimated that if the US nominal GDP grows at 5.5% and the current account
deficit remains at 5.5 % of nominal GDP the net foreign debt ratio will begin
to approach 100%. Clearly at this point and presumably at some time before
something would have to give. The current account deficit in 2004 was 6%.

Other ways that the US could balance its international accounts would be a drop
in imports but this means that Europe would loose export markets as well as
loose on the value of foreign asset holdings . (As a drop in imports would mean
a relative decline in the value of the US dollar). At the end of 2004 the US
dollar had fallen 35% against the Euro for the 3 previous years with the value
of dollar US assets held by foreign investors being $11 trillion , if it falls
in value further it would amount to de facto default not in the sense of failing
to service a debt but by wiping out the value of large amounts of foreign
assets.

It is not only the US current account deficit that has economists concerned
other factors include the very low rate of personal savings (down to 1% in 2004)
which previously over the last 30 yrs averaged 7%. Also of concern is the US
governments’ growing budget deficit which is the difference between its spending
and its income receipts from taxes, it was in surplus in 1998 but the 2001
recession , tax cuts and increased military spending have pushed it deeply into
the red.

Speculative activity has also surged in the global economy. As an example global
turnover in foreign exchange has increased to an average global turnover of $1.9
trillion per day in April 2004 up by 36% at constant exchange rates compared to
April 2001. Also trading in derivatives has increased sharply to $1.2 trillion
per day in April 2004 up 77% at constant exchange rates from April 2001. Only a
small fraction of this money is needed to finance cross- border trade of goods
and services most of it is to trade in securities and increasingly to gamble on
currency markets themselves. This growing dominance of financial activity over
production and trade points to a deep rooted crisis within world capitalism.
Massive global overcapacity in most major industries has resulted in saturated
markets and falling prices for many manufactured goods. Scope for profitable
investment in production has not kept pace with the accumulation of capital.
During 1980’s and 1990’s exploitation of
workers every where intensified, existing inequalities were widened
dramatically increasing the share of wealth taken by the capitalist class. At
the same time squeeze on wages, cuts in public spending and stagnation in most
under developed countries restricted growth of effective (money backed) demand.
Unable to get sufficient profits from productive investment, the rich have
turned to speculation in the finance sector. Money is churned to make money,
skipping the intermediate stage of producing useful goods and services.

Hedge funds while not the biggest players in currency trading are often the head
steers leading the herding activity of speculators, leading the stampede in
times of intensified volatility. The number of hedge funds has been growing
rapidly doubling in the last 5 years with about 9,000 internationally
controlling about $1 trillion dollars in assets, which they have used to borrow
about $1.5 to $2 trillion dollars effectively giving them control of $3 trillion
dollars. This is only about 4 to 5 % of total global investment assets but Hedge
funds have a disproportionate impact on markets. Hedge funds tend to concentrate
on using riskier strategies like leveraging, short selling and derivatives
trading. They buy and sell much more frequently then other financial
institutions, in the US and UK their activity accounts for as much as 40 to 70%
of daily trading in equities. Hedge funds thrive in volatile markets, one tactic
they use is to follow rising or falling trends in security prices, betting that they will later be able to profit from eventual
corrections in over or under priced securities, this often amplifies the swing
increasing market volatility. The combination of activity and search for
volatility means that Hedge funds can sometimes become the marginal price
determining investors i.e. effectively they can drive prices up or down way out
of proportion to the amount of funds they control. The growth of hedge funds and
other speculative investors is not just the result of irresponsible investors it
is a symptom of capitalism’s contradictory logic- Capitalists are after as much
profit as quickly as possible and damn the longer term consequences.

Global speculative surge is still rising , excess liquidity (ability to buy or
sell quickly without significantly affecting price) is growing. This is fuelling
even greater excess of speculative investment with hedge funds leading the
charge, in particular acquisitions and mergers via junk bonds – high yield and
high risk company bonds – and emerging market debt. With low interest rate in
the US, Japan and Europe speculators have been pumping cash into government and
company bonds in (emerging market) countries like Brazil, Russia, Columbia and
Turkey. The low interest regime on which the current bubble rests won’t last
much longer. How it will end is unpredictable. A collapse of one or more Hedge
Funds could trigger a financial crisis, a sharp fall in the US dollar could
force higher US interest rates bringing a fall in assets prices and a downturn
in the US economy. Without an expanding US market China’s investment and
property boom would collapse. The end of the debt –
financed US consumer boom would mean the end of the global party. A growing
number of capitalists e.g. Warren Buffet are gathering cash waiting for such a
market correction.

Australia – small boat in stormy economic oceans
All of this of course greatly impacts on Australia and its economy especially as
its is a commodity producing nation

China for example is the worlds second largest economy (based on Purchasing Power Parity, on Gross Domestic Product (GDP) it is the 7th largest ) and is one of the worlds
top consumer of products e.g. Cement (40%) mobile phones (166 million 11% of
world total) and iron ore (35%). It is also one of the biggest producers of many
items including steel (30% world total) beer , rice and textiles (28%). By 2003
China had become critical for the overall gross domestic product growth in its
neighboring countries. China has taken its place alongside the US in shaping
global trade and the two are closely linked with the US being China’s top
trading partner. The boom in resource poor China is effecting international
energy markets hugely. China is now the second largest global consumer of
energy. Increased earnings from iron ore and coal sales to China will lift
Australia’s GDP by 2% a year.

In Australia GDP grew by 0.7% in the March Quarter taking the annual growth
rate to 1.9% much less than the predicted 3% growth from the May budget. At
present domestic demand is slowing, household spending is softening, business
investment is peaking out and there is some winding back of dwelling
construction. Import growth is still outpacing export growth and that is slowing
down growth in the economy. The March trade deficit was $2.7 billion. Further
bad news was the Australian Industry Group Performance of Manufacturing Index,
it had its lowest May reading for 3 years and production fell for the first
time in 3 years. As well retail sales fell by 0.5% in April 2005. The April
trade deficit narrowed to $1.3 billion in April. A big factor in this has been
large increases in resources contracts with iron ore and coal being about 40%
more expensive in April. Also higher interest rates in March meant tighter
budgets and therefore less spending on imported goods. It still
however is the 42nd deficit in a row.
While most market indicators show that the economy is slowing the job market
figures are steady at 5.1 percent in May 2005 this may be because employment
data tends to lag behind the rest of the economy. The governor of the reserve
bank Ian Macfarlane even went so far as to say it was hard to believe that
employment was growing so quickly while the overall economy was slowing. Like
many industries the mining industry is also affected by shortage of skilled
labour. This could have major consequences for the economy given the mining
sectors current impact on the economy. Mining is Australia’s top export
industry , accounting for 40% of goods sold overseas.

Again it appears that the manufacturing sector in Australia is experiencing
problems . For example two Victorian manufacturers of car parts ( Trico and
Autoliv) have told their 660 workers that their jobs will go within 18 months.
Many of these jobs will go to China and Korea.

Reserve bank figures published recently show that credit card debt is still
showing moderate growth , the average balance now being just under $2600, the
statistics are also showing that the debt is growing at a much slower rate than
at the beginning of the decade.

Macfarlane has also stated recently in a speech on 14/6/05 that interest rates
would remain on hold because of slowing economy and that world economy is now
driving domestic growth. In particular he stated that China’s demand for iron
ore and coal increased real income by about 1.5 % of GDP in each of the last 2
years with more to come. Both Macfarlane and treasurer Costello are referring to
this slow down in the economy as a ‘healthy’ correction.

In summary the Australian economy is very much driven by export markets of
commodity goods like iron ore and coal. Its domestic markets are slowing down
so it is depending even further on these exports continuing for continued
economic growth – even if slow economic growth. What this means is that any
impact on the global economy will be greatly felt in the Australian economy. At
present consumer spending is still greatly financed by debt and this debt is
still growing albeit at a slower pace. Such spending is not sustainable so it
will not be able to protect the Australian economy from the effects of problems
from the global economy.

While capitalists have been unwilling to share the fruits of the profit making
with the working class there is no doubt that they will happily share the burden
of any collapse or correction.

The ruthless application of neo-liberal policies of privatization,
downsizing, lengthening and intensifying of working day and cuts in wages have
been the order of the day across the globe as capitalist profits have soared.
Globalisation and technology and the combination of the two have worked to erode
the bargaining power of workers. Cheap and abundant sources of labour are
opening up over a whole range of service previously not thought to be accessible
across the globe e.g. computer programming, accounting , legal services etc.

A fighting union movement and New Workers Party – only solution for workers
The downward pressure on wages is ever present from across the globe regardless
of local conditions. Ultimately however this cutting of wages and therefore
cutting of the working class share of production, cuts the market. The ability
of working people to buy back the goods they produce is undermined by threat of
economic slump or recession. Measures like extending credit or a drive to sell
to the world market are only temporary fixes which are
not sustainable. Neither is cutting wages and living standards, there is a
certain limit which if exceeded means that the working class cannot maintain
itself, reproduce and therefore provide future profits for capitalists.

Two factors have helped lead to the enormous building up of wealth of the
capitalists. Firstly the lack of fighting combative trade unions in Australia
and globally prepared to counter the ruthless plans of big business both in
Australian and internationally. Secondly the absence of a mass radical workers
party. Capitalists no longer have to fear the threat from mass political parties
of the working class. The ALP as has been pointed out many time is merely a
second 11 for the Capitalist class. What is needed is a worker party prepared to
look after the interest of working people not the bosses and a fighting trade
union movement prepared to counter the bosses offensive.