Joe Collins and Drew Cottle | Labor Neoliberals or Pragmatic Neo-Laborists? The Hawke and Keating Labor Governments in Office, 1983–96 | Labour History, 98

Labor Neoliberals or Pragmatic Neo-Laborists? The Hawke and Keating Labor Governments in Office, 1983–96

Joe Collins and Drew Cottle^*

The economic 'reforms' associated with the broader neoliberal agenda first found expression in Australia through the policies of the Hawke and Keating Labor Governments. This article examines the politics of this period using Antonio Gramsci's notion of hegemony. It argues that the Hawke and Keating administrations were a 'conjunctural episode' in an 'organic movement' to re-establish 'ruling class hegemony' after the breakdown of the post-war capitalist order. The period of continuous Labor rule from 1983 to 1996 represented the birth of 'Neo-Laborism', a pragmatic policy approach which sought to reconcile the problems of electoralism and 'Laborism' that had plagued former Labor governments. Their 'Neo-Laborist' agenda was underwritten by economic changes aimed at ensuring sustained growth coupled with corporatist agreements to appease organised labour. This article distinguishes the pragmatic policies of the ALP from the calculated tactics of an emerging neoliberalism.

The election of the Hawke Labor government in 1983 marked the critical moment of Australian political economy in the twentieth century. The ensuing 13 years of continuous ALP government represented an epochal shift to the period now known as the neoliberal era. Understanding this period of recent Australian history has taken on a renewed significance as the Rudd Labor government struggles to deal with the financial crisis afflicting the global capitalist system. The prevailing interpretation of the recent past will undoubtedly shape the rationale for constructing the future. In the context of continuing class struggle, the present conjuncture marks a unique opportunity for an aspirant hegemonic class and the intellectuals who are charged with leading it.

Framing 'Neoliberalism'

The term 'neoliberalism' is a dynamic agglomeration of explicit and implicit meanings which now pervades academic, political, economic and popular cultural discourse in Australia. Moreover, since the onset of the global financial crisis, the lexicon of capitalism has been revived in public debate and consciousness. Prime Minister Kevin Rudd's pejorative appraisal of neoliberalism as 'that particular brand of free-market fundamentalism, extreme capitalism and excessive greed which became the economic orthodoxy of our time' is particularly interesting given the political implications of such rhetoric.¹ Indeed, Rudd asserts that the current crisis is the culmination of a '30-year domination of economic policy by a free-market ideology that has been variously called neo-liberalism, economic liberalism, economic fundamentalism, Thatcherism or the Washington Consensus'.² However, Rudd's rousing prose is tempered by the policies of his government and the publicly expressed views of his staff. For example, five months after Rudd vilified 'free-market fundamentalism' in his famous essay, Treasury officer David Gruen assured his audience at the Sydney Institute that 'in case I am being interpreted as pouring scorn on the benefits of more deregulated markets generally as opposed to financial markets in particular, let me dissuade you from that view'.³ Gruen goes on to say that the 'broad range of pro-market and other economic reforms undertaken in Australia over the past few decades appear to have been beneficial for both the longer-term productive capacity of the economy and for its flexibility in responding to shocks'.⁴

Among the reforms Gruen referred to are the initial deregulation of financial controls and floating the dollar under Hawke, the corporatist Accord and sweeping industrial relations reforms undertaken by Keating and the continuation of labour market deregulation through Howard's Workplace Relations Act and WorkChoices. Following Gruen, Treasury secretary Ken Henry, speaking to the Australian Industry Group conference the following month, highlighted the importance of attracting foreign capital investment to assist economic recovery. Henry likened the current crisis to the Asian financial crisis and Australian foreign exchange crisis, stating that 'Australia's response to the crisis of the 1980s was to embark on a continuous program of economic reform, and this was the path that needed to be pursued now'.⁵ Ironically, the reforms implicit in Gruen's statement, and the Hawke-Keating reform program of the 1980s to which Henry refers, seemingly embody the 'free-market fundamentalism' and 'extreme capitalism' which Rudd denounced in February 2009, five months before Gruen's speech. Paul Keating was actually rated as the top individual globaliser in Leslie Sklair's study of key persons and organisations that championed globalisation in Australia.⁶ Sklair's study, which asked members of the transnational capitalist class in Australia who they believed did the most for opening up the Australian economy, found that Hawke also featured as a key individual globaliser. With regard to Keating, Sklair notes, 'the fact that almost as many business respondents cited him as cited BHP, a key globaliser, suggests that he successfully communicated this [globalising vision], by words and deeds, to the business community'.⁷ Evidently, the Hawke-Keating Labor governments were integral in transforming the regulatory environment in Australia to accommodate international trends in globalisation.

How is it possible that Rudd, a Labor Prime Minister, can publicly proclaim his ideological disdain for neoliberalism when there is significant evidence to suggest that Labor championed neoliberal reforms? Cahill makes the claim that in many respects, the 'Hawke and Keating governments were more radical than Howard'.⁸ Connell's observation that it was the Hawke Labor government, 'shaking free of its declining party base, that made a mild neoliberalism the framework of national policy', fits well with this claim.⁹ It is from 1983 that returns on capital, or profit, begin to increase from the low of 6.5 per cent to an astounding 25.3 per cent in 2003.¹⁰ Moreover, it was under these Labor leaders that 'Australia embarked in a coherent and deliberate fashion on the state project of neoliberalism...And it was with the active support of the trade union leadership that the neoliberal state project was implemented'.¹¹ In what Connell calls a 'truly stunning transition, which makes the late 1980s the most important turning-point in recent Australian history', the federal Labor government instigated a reform program designed to keep Australia from becoming a 'banana republic'.¹² Sklair's findings, depicting Hawke and Keating as key globalisers, give further weight to the arguments that Labor pioneered both globalisation and neoliberalism. Despite this, Rudd romanticises the Hawke-Keating reform agenda immediately after denouncing neoliberalism as 'extreme capitalism'. According to Rudd, social-democratic governments today face the challenges of utilising the market to increase investment and productivity whilst implementing an effective regulatory framework which manages risk and facilitates social equity.¹³ Apparently, Hawke and Keating exemplified this ideal during the 1980s and early 1990s by pursuing 'an ambitious and unapologetic program of economic modernisation'.¹⁴ Herein lays a glaring contradiction. Prominent interpretations from the academic Left perceive Labor under Hawke and Keating as the harbingers of a neoliberal policy framework in Australia. Despite this, Rudd can, in the midst of a crisis, denounce the 'economic orthodoxy' that his predecessors pioneered whilst simultaneously praising the vision and strength of Australia's key individual globalisers and economic reformers. The structural dynamics of class antagonism examined in historical perspective are suggestive here in relation to hegemonic cycles.

Hegemonic Cycles: The Structural Dynamics of Class Antagonism

Endemic political and economic crises afflicted the global capitalist system during the 1970s. These crises were a direct consequence of structural faults intrinsic to the post-war era of capitalism. It is crucial to view this turbulent period in contrast to the relatively stable political economic formation which preceded it. The international crisis was manifested by excessive productive capacity and a decline in the rate of profit which generated widespread unemployment, inflation, fluctuating currency prices, declining values of agricultural commodities and general economic stagnation.¹⁵ In addition, the collapse of the Bretton Woods system created instability amongst the network of capitalist economies. In the domestic economy these trends induced structural change, transformed class relations and directly influenced government policy.¹⁶ These political and economic transformations in the global capitalist system necessarily precluded changes in the domestic context.

The specific factors which underwrote the excessive production and resulting decline in international rates of profit were numerous. A useful point of departure is the findings of a Brookings Institute study in 1974, which emphasised that US corporations, since 1948 had registered a fall in after tax profits from 8 to 5 per cent.¹⁷ This finding caused consternation and further investigation by western capitalist states. According to the OECD Council, the economic problems which had plagued its member states in the early 1970s were sparked by inflation resulting from US financing of the Vietnam War, which was exacerbated by wage explosions in Europe in the late 1960s.¹⁸

In 1969 Ernest Mandel concluded that the stage was set for 'the onset of a recession [to] coincide with a serious deficit in the balance of payments, compelling a government to apply a policy of deflation, for an extremely grave economic crisis to erupt'.¹⁹ The global recession which emerged in 1971 was a result of the contractionist policies enacted by metropolitan centres of capital to combat inflation.²⁰ After the US attempted to offset massive accumulated external deficits through the breakdown of the pegged-exchange-rate system in August 1971, expansionary policies facilitated a speculative boom in real estate and gold in 1973.²¹ The speculative nature of this boom combined with crop failures to further fuel inflation and resulted in restrictionist policies by late 1973. At this stage the OPEC price rise in oil occurred to further aggravate a deepening recession. The need to curb inflation and concern with a worsening trade off between unemployment and inflation prompted stimulative policies in 1975 intended to coax a moderate recovery.²² The OECD Council eventually concluded that the severe problems encountered by its member states from 1971 to 1975 were primarily caused by 'an unusual bunching of unfortunate disturbances unlikely to be repeated on the same scale'.²³ While informative, this account merely outlines what comes to be labelled 'stagflation' without identifying its underlying structural causes. The significance of this explanation is the observation, made by senior OECD economists in 1977, that there have been 'underlying changes in behaviour patterns and in power relationships internationally and within countries'.²⁴

The manifestation of underlying changes in behaviour patterns and power relations within Australia as a response to declining rates of profit are central to the broader issues of neoliberal hegemony and the historical bloc it pervades. In order to situate shifting relations of power, the material base upon which such relations exist must first be examined. To this end, what follows is a critical and selective outline of the key structural elements of Australian capitalism that directly influenced the crisis and its subsequent remedy.

Australian capitalism from 1945 until the 1970s was an ambivalent working relationship between dominant pastoral and industrial capital, a relatively strong labour movement and a conservative state. This historical bloc was premised on a compromise that ensured relatively high real wages to sustain demand for domestically protected manufactured goods. The Australian economy in this period was structurally akin to a third-world primary exporter while its social formation resembled an advanced capitalist state. Indeed, even in 1993 the Australian export profile has been described as looking more like 'that of a Third World staples/resort economy than that of an advanced industrial economy, whose export profile is typically weighted much more towards high value-added manufacture exports'.²⁵ This is the sentiment implicit in the statement that 'ours is a middle-sized economy which is largely unable to influence international economic conditions, yet is largely subject to them'.²⁶ The levels of profit gleaned from the export of primary produce are dictated by prices dependent upon international demand. From the 1960s onwards, the percentage share of world merchandise exports by value for primary commodities decreases whilst manufactures trend upwards almost reciprocally.²⁷ There were, of course, notable exceptions such as the resources boom at the beginning and end of the 1970s, although these spikes never exceed the 1961 peak in export share. The declining trend in value of Australian primary commodities on the world market from the 1960s was a structural fault which could be exacerbated by global recession and the inevitable inflation it entailed.

In conjunction with a declining trend in price of primary commodities was the aforementioned reciprocal upward trend in price and export share of manufactures. This is critical because the growth of the domestic economy during the post-war boom necessitated an increase in imports, particularly capital equipment.²⁸ As the price of primary exports decreased, there was an equivalent increase in the price and level of imports. The downward trend in the terms of trade from the 1960s onwards peaked in 1985, when, 75 per cent more by volume of exports was needed to fund a given level of imports than in 1955.²⁹ This growing imbalance in Australian terms of trade profoundly limited the ability of the economy to absorb structural shocks. This partially explains why the economic crisis of the 1970s provoked such concern, despite a simultaneous resources boom furnished by European and Asian demand. Despite a rapid rise in export value, the structural defects of the post-war mode of capital accumulation became increasingly apparent in the context of a global economic recession.

Another structural pathology inherited from the post-war era was the precarious nature of industrial dominance. Australian manufacturing became a pivotal economic force following World War II. War provided the necessary preconditions for industrial development: 'demand for new products, the assurance of large markets, the ready expansion of capital funds, the increased productivity of labor and management, and the systematic intervention of government to overcome the various obstacles that impede the progress of individual production programs.'³⁰ As the relatively stable post-war global economic system developed, exemplified by the Bretton Woods agreement, the protectionist policies needed to impede competition were enacted to provide a favourable market for domestically produced goods. Protectionism was seen to benefit manufacturing and organised labour through impeding import competition. Conversely, export-oriented industries, namely agriculture and mining, were disadvantaged by their exposure to international markets for their goods and the higher costs of labour and imports domestically.³¹ These higher costs were, however, offset by various government supports and subsidies. In any case, the tariff wall constituted an integral part of the structural basis for industrial dominance.

In addition to protection from competing imports, Australian industry demanded vast amounts of foreign capital and labour for growth. In 1948/49 foreign capital inflow was $85.2 million, increasing to $248 million by 1958/59 and reaching $967 million by 1968/69. Estimates claim that foreign capital accounted for around 10 per cent of capital formation throughout the post-war boom. Aside from its quantitative significance, foreign investment was qualitatively critical during this period as it was strictly directed toward the most profitable sectors of the economy to maximise returns. In this sense, 'it possessed a weight and influence in the economy greater than its size alone would indicate'.³²

This influx of foreign capital required sufficient labour to exploit. The labour required for expanding private industry and public works was imported selectively during successive waves of post-war immigration. Jock Collins' analysis of the post-war immigration programme identifies four key aspects of the state initiative. The three million, mostly unskilled, immigrants were a source of cheap labour particularly important to the manufacturing sector. While facilitating upward mobility for indigenous workers, immigrants were frequently excluded from the parliamentary political process and effectively disenfranchised. They deepened fragmentation within the working class, essentially providing a buffer for indigenous workers in areas of low wages and unemployment. In all, these factors facilitated the ideological creation of the typical indigenous worker as middle class, 'middling' in an office. Data from the 1971 census corroborates the hypothesis that the majority of immigrants were unskilled workers utilised in alienating manufacturing labour. 48 per cent of Yugoslav born males, 37 per cent Italian born and 48 per cent Greek born worked in manufacturing industries, compared with 19 per cent Australian born, 28 per cent British, 35 per cent German born and 10 per cent US born migrants.³³ Moreover, 75 per cent of Greek born, 62 per cent of Yugoslavs, 46 per cent Italians and 38 per cent Maltese migrants who entered Australia in the 1968 migrant intake were unskilled migrants.³⁴ Thus, the occupational distribution of migrants also accords with Collins' claim of the upward mobility of indigenous workers facilitated by migrant labour permitting a deepening fragmentation among workers and engendering the ideological creation of a racially superior middle class. Despite this fragmentation, the labour movement of this period was sufficiently equipped to demand concessions from the ruling class in the form of relatively high average wages.

By the 1970s Australian manufacturing was marked by concentrated ownership, declining rates of profits and subsequent low rates of reinvestment and technological innovation.³⁵ Moreover, according to Mandel, the Kondratieff long wave cycle which peaked with the technological and scientific advances of World War II had slumped by the late 1960s, retarding productivity and rates of profit.³⁶ Thus, considering the profit driven nature of the foreign capital which initially funded industrial expansion, declining rates of foreign investment during the 1970s were to be expected. In addition, the masses of unskilled migrant labour imported to expand industry during the post-war boom was, by the 1970s, receiving relatively high wages as a result of a strong labour movement conditioned by two decades of full employment. Marx's law of the tendential fall in the rate of profit is critical to note here. Marx explained that 'the progressive tendency for the general rate of profit to fall is thus simply the expression, peculiar to the capitalist mode of production, of the progressive development of the social productivity of labour'.³⁷ In other words, as the organised labour of the post-war period was able to maintain real wages, rates of profit would inevitably decline. The overall consequences were a decline in rates of profit within a key industry necessitating restructuring along more profitable lines.

Bob Rowthorn's three dimensional 'capital squeeze thesis' on profits in the early 1970s is germane to this analysis. For Rowthorn, worsening terms of trade with primary producers, expansion of public expenditure in the welfare state and a rise in the share of GDP in favour of labour were to blame for the decline in rates of profit during this period.³⁸ This essay has analysed the first and last of these dimensions as structural pathologies originating in the post-war period. Worsening terms of trade and increased labour share of profits constituted the critical structural basis upon which 'underlying changes in behaviour patterns and in power relationships' within Australia evolved.

Between 1968 and 1981 real wages exceeded the increase in rates of labour productivity and resulted in the decline of overall rates of profit.³⁹ This conclusion is a reflection of Marx's law of tendential fall in the rate of profit as a function of the social productivity of labour.⁴⁰ Declining rates of profit induced pervasive economic crisis in the 1970s. As trends in real wages and productivity reversed from 1982 onwards, a reciprocal trend in rates of profit materialised, facilitating the boom from 1992 onwards.⁴¹ Between 1980 and 2000 the total wages share fell from 60 per cent to 54 per cent while profit share rose from 17 per cent to 24 per cent.⁴² In 2008 profit share of GDP reached 27 per cent, an increase of 3 per cent, whereas wages fell to 53 per cent.⁴³ The inverse relationship between wages and profit share of GDP is consistent with an increase in the rates of profit from 1982 onwards.

The rate of profit in the post-war era peaked in 1969 at 16.2 per cent and steadily declined to a low of 6.5 per cent in 1983.⁴⁴ This mirrors the trend in real wages outgrowing productivity levels from 1968 to 1981. Levels of wage growth, labour productivity and rates of profit are inextricably linked to the structural viability of Australian capitalism. Indeed it would seem that, with regard to hegemony, the ability to manipulate and control the levels of exploitation was the critical determinant of the situation after 1992.

The agent of historical change in the wake of the crisis-ridden 1970s was the Australian ruling class. Prior to 1979 the ruling class consisted of dominant domestic manufacturing capital, declining pastoral capital, an emerging comprador fraction and stable domestic finance capital.⁴⁵ After 1980, manufacturing and agriculture had been effectively dethroned by resurgent mining and construction capital allied with ascendant finance, property and business fractions.⁴⁶ Thus, the ruling class profile during the 1970s was a conflicting mixture of new ascendant fractions together with established industries in decline.

Yet even in the midst of an earlier global economic crisis the Australian ruling class demonstrated its ability to mobilise in spite of its inherent fractional conflicting interests. In 1977, remarking on the dismissal of the Whitlam Labor government in 1975, Connell made the claim that,

There is hardly a clearer case, in the recent history of 'western democracies', of the way a threatened ruling class is able to mobilize fragments of state power, business connections, financial resources, and the legitimacy given them by the dominant culture, in a campaign to remove an offending government.⁴⁷

It seemed that Whitlam's redefinition of 'equality' and his subsequent egalitarian focus on middle Australia, among other things, had offended the ruling class.⁴⁸ The examination which follows Connell's claim effectively illustrates the contours of hegemony during the period and outlines the mechanisms of control which permitted effective ruling class mobilisation. A salient feature of the argument is the chronic infighting within the ruling class.

The example offered by Connell is the various conflicts surrounding the resources boom in the early 1970s. By 1970/71 minerals accounted for 25 per cent of exports, in stark contrast to wool, which had fallen to 12 per cent from 65 per cent in 1950/51.⁴⁹ Within a decade, mineral and energy exports grew from 10 per cent of exports to over 50 per cent.⁵⁰ Connell examines the events surrounding the collapse of Mineral Securities Australia Ltd. in 1971 and infers that three distinct patterns of conflict emerge. Under conditions of mild expansion there is administrative conflict where firms jockey for marginal advantage. When there is a sudden expansion of opportunity, innovation, entrepreneurship and risk-taking come to the fore. Then, under conditions of contraction or decline, hostile behaviour ensues, or as Connell puts it, 'the knives come out'.⁵¹ The period examined contained all three patterns of conflict in quick succession according to Connell. In the context of economic crisis where both opportunities for expansion and conditions of contraction and decline co-existed, ruling class relations in the period prior to 1983 were increasingly tense. Nevertheless, class mobilisation in response to perceived threats to fundamental needs, such as accumulation of profit, was possible as the Whitlam dismissal demonstrated.

By the time Hawke was elected, the deep structural inadequacies of the Australian economy were obvious. Of equal, or possibly greater, importance for the new ALP government was the very public and explicit reinforcement of a fundamental truism of capitalism: the state may be an arbiter, instrumental or relatively autonomous; nevertheless, the ruling ideas are in every epoch, the ideas of the ruling class. Whitlam's dismissal bore testament to the fact that the state in capitalist society must regard the economic goals of capital as critical political objectives. This lesson was not lost on those in government after 1975. The Australian Financial System Enquiry demanded by the Fraser administration demonstrated the anxiety of the state regarding the dynamic structure of an evolving mode of capitalism. Created in 1979, the Campbell Committee, as it became known, published its final report in 1981. The key suggestions were removal of state regulation of interest rates; dismantling exchange controls and floating the dollar; and relaxing barriers for foreign banks to enter the market.⁵² The ALP, presumably adhering to its traditional advocacy of financial regulation, opposed the findings of the report. This was evident in their campaign policy platform and stated in a resolution at the 1982 party conference.⁵³ After the election of Hawke in 1983 though, the summary policy recommendations of the Campbell Committee were swiftly implemented.

The domestic pressure to float the dollar and relax controls on the banking industry was led by the banks themselves. It was cogently argued that the macroeconomic utility of state-determined interest rates was undermined by the emergence of powerful non-bank financial institutions (NBFIs). Credit to fund detrimental speculation was readily available through building societies and finance companies. Moreover, the banking sector had been in steady decline since the 1950s. Banks only held 40 per cent of assets owned by financial institutions in 1983 compared to 67 per cent in 1953.⁵⁴ Finally, Australian banks bemoaned the fact that foreign banks were permitted mobility, and hence investment opportunities, denied to them by long standing regulatory legislation. This aspect of their case was exacerbated by the federal government's use of market determined prices for its securities to finance budget deficits in 1979.⁵⁵ These arguments formed the basis of a strong lobby from the banking sector imploring the government to act accordingly.

Industrial relations reform was embodied by the Accord struck with the Australian Council of Trade Unions (ACTU). The Accord was an agreement negotiated between the Hawke government and the ACTU in 1983 demanding wage restraint and industrial harmony in return for a political commitment to promoting full employment, welfare services and industrial revitalisation.⁵⁶ By this stage the need to restrain wages in order to resolve the problems of wage growth and productivity was accepted by both sides of Parliament. Fraser had already attempted similar actions with a 'wage freeze' and failed. Furthermore, industrial action also became identified as a hindrance to increasing rates of profit. The ACTU was motivated by factors such as the loss of over 200,000 jobs in manufacturing in the early 1980s, attributed by Keating and business interests to militant wage campaigns by metal workers in 1981.⁵⁷ In addition, declining union membership, the demise of the shop-steward system as a result of the move away from centralised arbitration and the changing demographics of the working class facilitated by transformations in modes of production meant that peak union representatives were increasingly out of touch with the concerns of those they claimed to represent. In this sense, the Accord represented the subordination of working-class interests, manifested by wage growth, to the interests of capital.

In return, the ALP restructured industry along more profitable lines. The Labor response to sectoral unemployment, such as in textiles and clothing which registered dramatic losses of 46 and 44 per cent respectively between 1968 and 1983, was the industry restructuring program.⁵⁸ This program lasted from the 1980s into the early 1990s and entailed inducing private involvement through letting tenders, tax breaks, the establishment of performance criteria or the regulation of land-use and charges.⁵⁹ The point to note about the state initiatives is the explicit endorsement of private industry. Whereas in the post-war era the state pursued public works on behalf of expanding industrial interests, the Hawke-Keating governments restructured industry to increase productivity in favour of private firms. If the financial reforms and reductionist policies are brought into focus with the Accord, it becomes evident that the state, whether by coincidence or design, had facilitated the subordination of the labour movement to the interests of the ruling class.

Hawke and Keating: Labor Neoliberals or Pragmatic Neo-Laborists?

There is a common misconception that Hawke and Keating orchestrated the epochal shift in Australian political economy from a Keynesian welfare state to neoliberalism. As Cahill and Connell have suggested above, Hawke and Keating represented a radical departure from ALP traditions and enacted policies that transformed the regulatory environment whilst alienating sections of its electoral support base. Moreover, the magnitude of these regulatory reform programs is widely considered as monumental. Ian MacFarlane, a Director of ANZ and former Reserve Bank Governor,⁶⁰ claims that the 1980s represented a 'fundamental change in direction of economic policy'.⁶¹ Meanwhile, Chief Economist for HSBC, John Edwards,⁶² has expressed the view that the period of Labor government from 1983–96 was 'the most dramatic period of economic reform since the World War II Curtin government, and it fundamentally changed the framework of the Australian economy'.⁶³ These accounts are correct in implying that the period of ALP government from 1983–96 represented a watershed in Australian political economy. Hawke and Keating were indeed radicals, they did shake free of a declining party base and they certainly did orchestrate fundamental restructuring of the Australian economy. However, the charge of accessory to neoliberalism levelled against them is misleading and based largely on circumstantial evidence. Moreover, it has hindered the theorisation and articulation of counter-hegemonic thought and action during the neoliberal epoch.

The idea that the ALP laid the foundations for neoliberalism should be disconcerting for those on the Left. Leaving aside the debates about where the ALP fits into the political spectrum and the fundamental problem of the role of the state in capitalist society, the ALP currently represents the only formidable alternative to the Liberal Coalition in Australian Parliamentary politics. In terms of political representation for organised labour, whether instrumentally as witnessed during the Accord or structurally via the organisational association of Labor and the unions, the ALP is the better of two evils. It seems almost nihilistic to view the longest period of continuous ALP government as merely the political manifestation of 'an historic victory of capital over labour'.⁶⁴ This is the implication of those accounts which couple the class-based project of neoliberalism and the ALP. Such views denote the ALP as instigators of, or at least accessories to, ruling class mobilisation and linger on the observation that labour has been considerably weakened in the process. In this context, political action is deemed hopeless and the realities of the contemporary economic environment are used to reinforce this conclusion. This is why attempts to identify weaknesses within the framework of neoliberal hegemony and the corresponding opportunities for counter-hegemonic action have focused upon culture, ideology and discourse. When political alternatives have been discussed, the difficulties of escaping the neoliberal path-dependency of the state is emphasised and the blame is placed squarely on the political and industrial wings of organised labour.⁶⁵ The critical appraisal of historical and contemporary political economy aimed at improving the position of the Left in the context of continuing class struggle should not be predicated upon discussions of ideology and culture coupled with a defeatist notion of political and economic action. Reality provides no clear distinctions between political, economic, ideological or cultural phenomena and neither should those who endeavour to make sense of it. One way out of this intellectual rut is to construct a critical reappraisal of the Hawke-Keating period which challenges the nihilistic view that the period of ALP government from 1983–96 sanctioned the marriage of heaven and hell, social democracy and neoliberalism.

Challenging the unity of neoliberalism and social democracy under Hawke and Keating is not aimed at making apologies for the ALP. There is no denying the correlation between the sweeping economic reforms enacted by the ALP and the subsequent decimation of organised labour power in Australia. Consider Bramble's observation that the first seven years of the Accord resulted in a sharp redistribution of wealth from labour to capital. This was manifested by dramatic falls in award wages and a 20 year low in the wages share of national income.⁶⁶ Moreover, the intensification of work practices, increasing casualisation and the suppression of real wage levels were the explicit policy goals of industrial relations reforms aimed at improving Australia's economic competitiveness on the global stage. The sustained reductions in tariffs which facilitated subsequent disinvestment in unprofitable manufacturing industries led to significant job losses and worker dislocation. In addition, the few manufacturing interests that survived were generally dealing in high value-added goods which usually required less labour, especially of the unskilled variety. Without looking too much further, it is evident that policy reforms enacted during the Hawke-Keating period benefited capital over labour both explicitly, with regard to industrial relations, and implicitly as demonstrated by the effects of tariff cuts. The point is, however, that these radical reforms were carried out with the formal approval of the peak representative body of organised labour, the ACTU. When the Accord was struck, the class goals of capital expressed in radical neoliberal ideology did not inform the Caucus or the ACTU agenda. Rather, Hawke and Keating reasserted the traditional laborist ideology within a drastically transforming political economy. The result was Neo-Laborism, the pragmatic regulatory logic which reconciled the conflict between laborism and electoralism which had plagued all former ALP governments in office. Whitlam did not pursue redistributive policies and opted for social reforms instead, earning his administration a rather pejorative comparison to bloated simpleton twins from Alice in Wonderland. Hawke and Keating escaped this fate by instigating precise social reform programs in conjunction with stimulating economic growth that would initially provide the illusion of wealth for all.

The first step in reappraising the 1983–96 ALP regime is to repudiate the myth that Hawke and Keating constituted the political wing of the 'neoliberal coalition' or 'neoliberal power bloc' which mobilised in conjunction with the radical neoliberal movement to instigate the construction of a new consensus hegemony.⁶⁷ This line of argument is based on the assumption that Hawke and Keating were in cahoots with an aspirant group of capitalists and an obscure group of radical intellectuals whose interests coalesced around the dissemination of neoliberal ideology which legitimated particular modes of accumulation. This hypothesis is given weight by seminal polemics like Doug McEachern's Business Mates: The Power of Politics in the Hawke Era and Michael Pusey's Economic Rationalism in Canberra: A Nation Building State Changes its Mind. McEachern chronicles the affinity between key figures within the ALP and dominant business interests during the Hawke era to mount a powerfully suggestive argument which strikes at the heart of the central ideological tenets of social democracy, laborism and socialism which underwrite the Australian Labour movement and its political wing.⁶⁸ Pusey's empirical study of the federal bureaucracy is guided by Habermasian conceptions of the state in asserting the pervasive grip of economic rationalist ideas, somewhat synonymous to neoliberal ideology, among those who constituted the steering mechanisms which guided the political relationship to the economy. Pusey draws the distinction between the older generation of federal bureaucrats trained in liberal social sciences, possessing historical memories of the Great Depression and war service and thus being attuned to the rationale for the welfare state; and the new generation, trained in neo-classical economics and suffering from a 'trained incapacity to learn from all later experience'.⁶⁹ Both McEachern and Pusey provide sound arguments which are validated by thorough empirical research. Political elites during this period openly flaunted their association with business and a technocratic economic rationalism deeply influenced the federal bureaucracy. Nevertheless, neoliberal policies had featured in the Whitlam tariff reductions in 1975 and then also with Fraser's wage freeze in 1982. However, Whitlam and Fraser's historical proximity to Howard would ensure that neoliberalism would not tarnish their reputations.

The Hawke and Keating Labor governments pioneered Neo-Laborism, not neoliberalism. Neo-Laborism, like neoliberalism, is the disfigured offspring of an existing ideological paradigm which had previously been discredited and then reconfigured according to the aims of those who intended to exploit it. Neoliberalism represented the aims of aspirant sections of the Australian ruling class asserting their dominance in the wake of a protracted war of position which featured the growing strength of labour and culminated in the economic crisis of the 1970s. Conversely, Neo-Laborism represented the counter-hegemonic aspirations of radical sections of the Australian labour movement acting opportunistically and pragmatically within the context of political and economic instability indirectly caused by their ascent to power during the post-war period. It is acknowledged that the aggregate outcomes of this period of Labor government demonstrated the participation of the state and organised labour in a concerted effort to restore ruling-class hegemony at the expense of labour. This observation highlights an obvious contradiction with regard to Neo-laborism being defined as representative of labour interests. However, when these outcomes are examined with regard to structural influences, political motivations and historical context, the incongruous relationship between motivational logic and the corresponding results becomes a source of hope instead of despair. If the Hawke and Keating Governments are perceived as conjunctural episodes within an organic movement to construct ruling-class hegemony, the post-neoliberal historical bloc may provide fertile ground for a radical alternative political economy.

Joe Collins is an Honours student at Charles Sturt University. He has co-authored articles for the Journal of Social and Economic Policy and Labour History, and published co-authored refereed conference papers in the proceedings of the 2009 Australian Political Studies Association and the International Gramsci Society's conference Capital in Crisis. In 2009, he presented papers to the New Marxian Times conference in Boston, Massachussets, and the Business and Labour History Group at the University of Sydney.
<joe_e3@hotmail.com>

Drew Cottle teaches politics and history at the University of Western Sydney. One of his abiding research interests is the political economy of capital.
<d.cottle@uws.edu.au>

Endnotes

^*� This article has been peer-reviewed for Labour History by two anonymous referees.

^1.� Kevin Rudd, 'The global financial crisis', The Monthly, February 2009, p. 20.

^2.�Ibid., p. 22.

^3.� Michael Stutchbury, 'No market reform on Rudd's recovery road: the PM bags the deregulation of the past 25 years but claims he wants to boost productivity', The Australian, 28 July 2009, p. 14.

^4.�Ibid.

^5.� David Uren and Matthew Franklin, 'Henry Warns of Second Shockwave', The Australian, Tuesday 18 August 2009, p. 4.

^6.� Leslie Sklair, 'Who are the globalisers? a study of key globalisers in Australia', Journal of Australian Political Economy, vol. 38, 1995, p. 18.

^7.�Ibid., p.20.

^8.� Damien Cahill, 'The contours of neoliberal hegemony in Australia', Rethinking Marxism, vol. 19, no. 2, 2007, p. 229.

^9.� Raewyn Connell, 'Moloch Mutates: global capitalism and the evolution of the Australian ruling class 1977–2002', in Nathan Hollier (ed.), Ruling Australia: The Power, Privilege & Politics of the New Ruling Class, Australian Scholarly Publishing, Melbourne, 2004, p. 33.

^10.� Simon Mohun, 'The Australian rate of profit 1985–2001', Journal of Australian Political Economy, vol. 52, 2003, p. 88.

^11.� Cahill, 'The contours of neoliberal hegemony in Australia', p. 228–9.

^12.� Connell, 'Moloch Mutates', p. 4.

^13.� Kevin Rudd, 'The Global Financial Crisis', p. 25.

^14.�Ibid., p. 25.

^15.� Drew Cottle, 'Looting the lucky country: economic restructuring in Australian capitalism', in National Fightback Conference, Canberra Fightback, Canberra, 1987, p. 1.

^16.� Bob Catley, 'Australia in the world crisis', in G. Duncan (ed.), Essays in Australian Politics, Edward Arnold, Melbourne, 1978, p. 223.

^17.� Michael Pusey, 'Econo-rot', in Peter Craven (ed.), The Best Australian Essays 2003, Black Inc., Melbourne, 2003, p. 133.

^18.� OECD Council, Towards Full Employment and Price Stability, OECD, Paris, 1977, p. 344.

^19.� Ernest Mandel, Decline of the Dollar: A Marxist View of the Monetary Crisis. Monad Press, New York, 1972, p. 103.

^20.� Catley, 'Australia in the world crisis', p. 232.

^21.�Ibid., p. 232.

^22.�Ibid., p. 232.

^23.� OECD Council, 'Towards full employment and price stability', pp. 16–17.

^24.�Ibid., pp. 16–17.

^25.� Stephen Bell, Ungoverning the Economy: The Political Economy of Australian Economic Policy, Oxford University Press, Melbourne, 1997, p. 82.

^26.� Stephen Jolly, 'Australia Reconstructed: A Socialist Response', Australian Marxist Bulletin, Summer, 1988, p. 3.

^27.� Bell, Ungoverning the Economy, p. 83.

^28.� Jolly, 'Australia Reconstructed', p. 3.

^29.� Bell, Ungoverning the Economy, p. 4.

^30.� Ronald E. Walker, The Australian Economy in War and Reconstruction, Oxford University Press, New York, 1947, p. 133.

^31.� Dennis Woodward, Australia Unsettled: The Legacy of 'Neo-liberalism', Pearson Education Australia, Sydney, 2005, p. 6.

^32.� Catley, 'Australia in the world crisis', p. 230.

^33.� Greg Crough, Ted Wheelwright and Ted Wilshire (eds), Australian and World Capitalism, Penguin Books, Ringwood, Vic, 1980, p. 46.

^34.�Ibid.

^35.� Catley, 'Australia in the world crisis', p. 230.

^36.� Robert Catley and Bruce McFarlane, Australian Capitalism in Boom and Depression, Alternative Publishing Cooperative, Chippendale, NSW, 1981, pp. 104–5.

^37.� Karl Marx, Capital: Vol. 3, Penguin Books, New York, 1981, p. 319.

^38.� Bob Rowthorn, 'Late capitalism', New Left Review, vol. 98, July-August 1976, pp. 59–83.

^39.� Mohun, 'The Australian rate of profit 1985–2001', p. 88.

^40.� Marx, Capital: Vol. 3, p. 319.

^41.� Mohun, 'The Australian rate of profit 1985–2001', p. 88.

^42.� Pusey, 'Econo-rot', p. 134.

^43.� Christopher Lloyd, 'Australian capitalism since 1992: a new regime of accumulation?', Journal of Australian Political Economy, vol. 61, June 2008, p. 40.

^44.� Tom Bramble, 'Thirteen wasted years: Labor in power (1983–96) and its accord with the unions', in Kenneth Wilson, Joanne Bradford and Maree Fitzpatrick (eds), Australia in Accord: An Assessment of Australia's Incomes Policy Experiment during the Hawke-Keating Years, South Pacific Publishing, Melbourne, 2004, p. 4.

^45.� Georgina Murray, Capitalist Networks and Social Power in Australia and New Zealand, Ashgate, Hampshire, 2006, p. 11.

^46.�Ibid., p. 45.

^47.� R.W. Connell, Ruling Class, Ruling Culture, Cambridge University Press, Melbourne, 1977, p. vii.

^48.� Catley and McFarlane, Australian Capitalism in Boom and Depression, p. 11.

^49.� Catley, 'Australia in the world crisis', pp. 87–8.

^50.� Lloyd, 'Australian capitalism since 1992', p. 35.

^51.� Connell, Ruling Class, Ruling Culture, pp. 108–9.

^52.� Shaun Goldfinch, Remaking New Zealand and Australian Economic Policy: Ideas, Institutions and Policy Communities, Georgetown University Press, Washington DC, 2000, p. 158.

^53.�Ibid., p. 158.

^54.� Dennis Woodward, Australia Unsettled: The Legacy of 'Neo-liberalism', p. 49.

^55.�Ibid., p. 49.

^56.� Judith Brett, 'Ideology', in Judith Brett, James Gillespie and Murray Groot (eds)., Developments in Australian Politics, Macmillan, Melbourne, 1994, p. 14.

^57.� Boris Frankel, 'Beyond labourism and socialism: how the Australian Labor Party developed the model of "New Labor"', New Left Review, vol. 221, January-February 1997, p. 8.

^58.� John Mangan, 'Australian manufacturing: de-industrialisation or restructuring?', in Robert Castle, Don Lewis and John Mangan (eds), Australian Studies: Work, Leisure and Technology, Longman Cheshire, Melbourne, 1986, p. 53.

^59.� Bramble, 'Thirteen wasted years', p. 18.

^60.� Damien Cahill, 'Labo(u)r, the boom and the prospects for an alternative to neo-liberalism', Journal of Australian Political Economy, vol. 61, 2008, p. 322.

^61.� Ian MacFarlane, The Search for Stability: Boyer Lectures 2006, ABC Books, Sydney, 2006, p. 36.

^62.� Cahill, 'Labo(u)r, the boom and the prospects for an alternative to neo-liberalism', p. 322.

^63.� John Edwards, Quiet Boom: How the Long Economic Upswing is Changing Australia and its Place in the World, Longueville Media, Double Bay, 2006, p. 26.

^64.� Mark Berger, 'Up from neoliberalism: free-market mythologies and the coming crisis of global capitalism', Third World Quarterly, vol. 20, no. 2, 1999, p. 453.

^65.� Cahill, 'Labo(u)r, the boom and the prospects for an alternative to neo-liberalism', p. 333.

^66.� Tom Bramble, Trade Unionism in Australia: A History from Flow to Ebb Tide, Cambridge University Press, Melbourne, p. 158.

^67.� Cahill, 'The contours of neoliberal hegemony in Australia', p. 228–9.

^68.� Brett, 'Ideology', p. 12.

^69.� Michael Pusey, Economic Rationalism in Canberra: A Nation Building State Changes its Mind, Cambridge University Press, Sydney, 1991, p. 6.

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Labor Neoliberals or Pragmatic Neo-Laborists? The Hawke and Keating Labor Governments in Office, 1983–96