Roads to Nowhere – Capital’s Plan A

Australia will be quite different in a few years’ time…
-Tony Abbott(2013)

The tendency is a general schema that takes as its starting point an analysis of the elements that make up a given historical situations. On the basis of that analysis, it defines a method, an orientation, a direction for mass political action (Negri, 2005, p. 27)

What does it mean to think in the conjuncture?(Althusser, 2000, p. 18)

(I have been working on this post for many months now. It has been slow going as I have only been able to commit small amounts of time to research and writing as some pretty major – and excellent – developments in my life have distracted me from my computer: namely the birth of my son who is without a doubt the major focus of my time and energy. I have been eking this piece out in half-an-hour lunch breaks at work and this I think has added to its troubled narrative. Also since becoming a father my ability to successfully construct long sentences has diminished. Perhaps this change will be seen as ‘punchy’ rather than moronic…. I also think since so much of the research of this piece has involved stepping on the terrain of dominant mainstream thought and summarising it that some of the radical elements of the critique of political economy have become muted.
Readers will probably find this piece fairly dry, structurally incoherent, and laborious but I hope useful and I intend to use it as background for more work here and political interventions published at The Word From Struggle Street.
As usual there remain far too many typos for me to be happy about but I wish to get this out in a timely matter.)

Unlike the vast majority of the Global North Australia has avoided the brunt of the global crisis of capitalism. It has been kept afloat by the mining boom fuelled by demand for mineral resources and energy in ‘emerging markets’ such as China and East Asia. It is now clear that the mining boom has certainly slowed if not busted. Growth in 2013 up unto September was ‘below-trend’ at 2.3%(Business Council of Australia, 2014, p. 6). The unemployment rate has risen to 5.9% (Australian Bureau of Statistics, 2014)

The main cause has been a decline in investment in mining construction:

Australia’s investment project pipeline is now declining from unprecedented highs, falling from an estimated $921 billion to $877 billion over the past twelve months. Importantly the component of the pipeline most associated with future activity, projects ‘under consideration’, at $159 billion is 30 per cent lower than one year ago, and 43 per cent lower than two years ago.(Business Council of Australia, 2013, p. 3)

The IMF also argues that:

…a transition phase has now been reached as the
terms-of-trade-driven mining investment boom of the past decade has peaked and the economy is moving to the production and export phase. Mining-related investment which accounted for almost half of GDP growth in the past couple of years is expected to drop sharply in the near term ….

picture 1

(2014a, p. 4)

It is this decline in investment that is so important – for the mining boom hasn’t just meant profits from the high prices of minerals. Rather it has been the expansion of mining construction that has really driven growth.

The end of the boom is unsurprising, as the global conditions of capital accumulation remain weak. The problems for capital in Australia are complex. The mining boom allowed Australian capitalism to cover up certain contradictions. High commodity prices meant that capital didn’t have to directly confront problems of productivity (in particular the slowing down of its growth – this point is debated and deserves further attention but simply put there is only so much you can get out of people) and the ability to deliver high wages was a key part of the ‘high work, high credit, high consumption’ deal that underscored many workers passive support for capitalism in a period in which capital increased its share of income (though these high wages themselves presented other problems too). Thus the end of the mining boom means that capital must seek to reorganise itself and find new avenues of profitable investment. Finding avenues of profitable investment means addressing a working class that has grown used to a standard of consumption that perhaps capital will now struggle to afford. The reorganisation of accumulation will thus involve a much broader modulation and transformation of social reproduction if it is to be successful. Capital won’t just move; society must be made to accommodate this move.

These global conditions and their impact in Australia have not gone unnoticed by those tasked to think analytically and then act politically for capital. Take for example this quote from a recent publication of the Committee for the Economic Development of Australia ‘Most agree that the peak of the resources boom has passed, which means as a country we must examine what can deliver the next source of economic growth and prosperity for Australia’(Martin, 2013, p. 5). So too in the wake of GM’s announcement of the planned cessation of Holden manufacturing in Australia voices amongst the political class have started to use this as an example of why Australia needs another round of ‘reform’. This in part explains the current celebration of Hawke & Keating – who are the very model of those who acted to reshape capitalism in Australia and facilitate another round of accumulation. For the sake of future profitability everything must change. Thus the thinkers of capital are increasingly producing arguments and plans aimed at shaping society on a whole.

Capital won’t simply let the crisis hit it and businesses won’t simply watch their balance sheets droop. Rather a variety of alternatives are being drafted and argued for. Whilst its not clear any of these will be able to fill the gap as mining construction slows (and it is less than clear if ultimately capital in Australia or globally can solve its secular crisis) these attempts will profoundly impact on the lives of all in Australia. These attempts by capital also illuminate some of the fault-lines in which an emancipatory politics could perhaps move along or emerge out of.

There has been some talk that with the end of the mining boom and the corresponding fall in the Australian dollar than non-mining manufacturing may now be more globally competitive. However this is not enough. One hand mainstream voices are identifying that for Australian manufacturing to compete on a global level than wages have to fall(Greber & Dunckley, 2014). Secondly there is no indication that this would lead to an expansion in investment that could compensate for the slow down in the mining sector. The continual collapse of car manufacturing is also a nail in this coffin.

Equally there has been a lot of media hype around real estate construction but it is hard to tell how much of this is real. Indeed nowhere more than in construction where we can see that ‘finance is cosubstantial with the very production of goods and services’(Marazzi, 2011b, p. 28) and thus it is difficult to separate out how much capital is attempting to profit from the real building of bricks and mortar, creating, securitising and trading debt or from the rises in values of properties and projects due to all the media and industry buzz about a boom. Thus we have reports on both Chinese investors champing at the bit for Australian property and also empty and unused office space piling up in Brisbane.

What capital in Australia is looking for is a ‘spatial fix’ (Harvey, 1995) – that is capital is attempting to escape from its contradictions by shifting to other industries and other geographies in the hope of finding profitable investment opportunities. Capital moves. Where capital is moving to, will move to is unclear. It is hard for anyone on the outside to assess what is real and what is bullshit. (For example is Deloitte Economics‘ prophesy of algae farming far-sighted or delusional?)

Any spatial fix will also requires ‘product’ and ‘technological’ fixes – new or different commodities to be sold and transformed ways of working (Silver, 2003, p. 39). (But as we shall see below changes in the composition of production have a limited utility for capital and thus a legal-political fix is being developed). The state is the necessary facilitator of these transformations; one that will shape the regulatory regime that allows capital to move and act in the desired way. This of course is a complex problem.

 It is one thing to say that capitalism could not exist unless states did certain things, but what states do in practice, and how well they do them is the outcome of complex relations between social and state actors, the balance of class forces, and not least, the range and character of each state’s capacities.(Panitch & Gindin, 2013, pp. 3-4)

Thus these economic questions are dependent on the world of politics (if by politics we mean the debates over policy internal to the state, perhaps this would be better described as ‘management’) – just as political questions are ultimately conditioned by economics. (Ultimately the split between ‘economics’ and ‘politics’ is an obfuscatory product of capitalist social relations themselves). Thus whilst it is generally correct to understand that those at the top of the modern state are ‘but a committee for managing the common affairs of the whole bourgeoisie’ (Marx, 1993, p. 69)or in today’s language ‘Capital’s executives’(Badiou, 2012, p. 5), and it is certainly correct that the state is not a tool that the anti-capitalists can take up and wield, this doesn’t mean that who is in power and the specifics of a different governments are meaningless. Indeed it would be too reductive to understand state policy as being simply dictated by the desires of organised capital. As the writers at Left Flank have argued the Federal government is beset by internal divisions and contradictions. These divisions and contradictions are themselves products of the deeper dilemmas of capitalist-parliamentary politics.

This does raise a question about the role that ‘planning’ plays in capitalism. In the mainstream debate the political Right eschews planning seeing the Market as a system of information transmission that is greater than the intentions and knowledge of any individual participant – hence its majesty(cf.Hayek, 1960). The political Left (the tattered remains of Keynesianism and socialist though) often critique the Market as being anarchic etc. Witness the current clamouring for a ‘jobs plan’.

Marx, in Capital, creates an understanding of capitalism that shares in many respects more with the Right-wing thinkers than Keynesian planners. Marx paints a picture of capitalism in laboratory conditions which functions ‘behind the backs of the producers’ (Marx, 1990, p. 135). All the players in capitalist societies are dominated by the totality of the movement of capital and its component elements.

Whilst it is generally true that out lives our dominated by capital and its seemingly automatic movement it would be wrong to discount the importance of various attempts to shape and act in relation to the great mesh of capital circulation and accumulation. Even if our world is set to motion by the rhythms of the commodity all of us try, as much as we can, to shape the soft plasticity of it. The state is most often the strongest social actor that whilst ultimately conditioned and controlled by capitalist social relations attempts to work and facilitate them. (The state itself being a necessary expression of these very same social relations)(Holloway & Picciotto, 1977).

Thus in reality there has always been a great deal of planning, most often through the state, which is necessary for capital accumulation. The success of this planning often is determined behind the backs of all the players but these successes can be very real. The most dynamic period of capital accumulation in the 20th Century, that of the Keynesian, Fordist, Bretton-Wood’s system was reliant on the behaviour of very active states. Indeed the rise of the Asian Tigers required the close collaboration between corporations and the state to develop long term planning for industry. When it comes to technological development the state has played a key role. US military expenditure is a source of both global corporate welfare and R&D.

I do feel though it is important to balance this though by always returning to the point that capitalism is, at least in the final instance and probably before this to, largely an automatic process outside of and beyond political control. The Left in Australia whose horizon is fixated on defeating the Right rather than abolishing capitalism often overemphasises the role that policy has on the twists and turns of accumulation. It actually isn’t Newman’s or Abbott’s fault. It wasn’t Howard’s. Sure they may over-egg the numbers but the global crisis really matters. And in the context of globalised production it probably is impossible to ‘save’ the car industry. (So what then? If social democracy is not only political exhausted but lacks the material and historical conditions for its revival what then? Be realistic….#fullcommunism?)

As for how the state acts and why…. It is often an error of vulgar Marxism and anarcho-populism to see capitalists in top hats pulling the strings of politicians. Yet a recent interview on The Business certainly shows a close relationship between the Business Council of Australia (BCA) and the Federal government. As Tony Abbot said to the BCA at the 30th Anniversary celebratory dinner (perhaps with a nod and a wink) ‘I am confident that the BCA will continue to tell the Government what it should do’(2013). And it does seem that there is a very close alignment between this government and the BCA. Tony Shepherd the president of the BCA is the Chair of the National Commission of Audit after all.

Whatever the organisational, ideological and fraternal links between the BCA and the Federal government actually are they do seem to be singing from the same song sheet. Here we can see the clearest attempt to plan and facilitate a spatial fix for capital. One that is already underway: vast and prolonged expenditure on infrastructure. This is Capital’s Plan A.

‘No more taskforces. No more time wasting. Just action’

The BCA argue that:

The task ahead is to ‘manage the transition’ from an economy driven strongly by resources investments currently underway towards securing remaining investment in the pipeline and facilitating new sources of growth. Three key challenges lie ahead:
− secure what’s in the investment pipeline at lower costs
− aim to secure the commencement of viable prospective projects that are not yet committed
− facilitate new sources of growth and bring on the next wave of investment, including high quality public infrastructure projects.

To do this we need to improve the competitive environment in Australia and reduce project costs by ensuring Australia has access to skilled labour and improving project management skills and the capacity of managers to make productivity enhancing decisions, improve the efficiency of Australia’s project approvals processes and implement a better workplace relations system more conducive to good project performance and productivity growth.

We also need to work now to plan and deliver high quality infrastructure projects that will enable private and public infrastructure spending to remain over 4 per cent GDP, or a forecast $767 billion of new investment over the decade. This will enable skilled labour to be deployed onto new projects, deliver long term benefits to communities and make a significant contribution to productivity and GDP including by supporting the growth in net exports.
(Business Council of Australia, 2013, p. 3)

Tony Shepherd couldn’t be clearer:

So, my message today is a simple one. And it’s a message that everyday Australians really get:
Let’s get on with it. Let’s make decisions. Let’s get work underway. Let’s get projects done!
No more taskforces. No more time wasting. Just action. Instead of more shelf-ready reports, let’s have more ready to go projects:
• more concrete pours
• more laying of pipes and cables
• more paving of roads and runways
• more railway track and signals
• more infrastructure and more people to produce higher levels of national productivity and prosperity.

Creating this sense of urgency is of obvious importance to the construction industry, especially given the maturing of the construction phase of the mining boom.(2013, pp. 1-2)

What is so impressive (is that the right word?) about the BCA’s plan is the totalizing vision of the infrastructure spending and the changes they call for. Here most clearly we can see the function of the capitalist state as a planner to facilitate accumulation.

A side note. On a global level there is a similar push for increased expenditure on infrastructure as a way to stimulate demand and growth. Infrastructure construction is key to the G20’s and the IMF’s plans to do just this (cf. G20, 2013, 2014; International Monetary Fund, 2014b, 2014c).

What does the BCA want out of increased expenditure on infrastructure?
There are three clear objectivities: increase aggregate effective demand, increase productivity through a reduction in ‘turn over time’ and the creation of new sources of income for business.

There is of course a very serious, important and often distracting debate in Marxism about the ultimate cause of the tendency towards crisis in capitalism. This is often summarized as one between over-accumulation and under-consumption. In short the issue at stake is if the problem is that there is too much capital which can’t find suitable profitable investment due to a declining rate of profit or if there is too little income in the world to purchase the commodities produced by capital at a level to sustain profits. Whatever position one takes on this debate it is clear that one of the barriers facing capitalism in this conjuncture is a shortage of aggregate effective demand. The democratization of financialisation post-1970s could be seen as a kind of privatized Keynesianism(cf. Marazzi, 2008, 2011a, 2011b). Levels of consumption were sustained in the North, indeed were intensified, through the vast expansion of credit.

The crisis blew this apart. So far various forms of stimulus (such as unorthodox monetary policy) and have functioned as a form of economic anti-gravity machine keeping all the balls in the air at the cost of shifting risk onto the balance sheets of the state. As the creaking grows, as there is a more obvious over-capacity in China due to a lack of demand in the North, then the demand for resources in Australia slows. This means that construction of new mines also slows and thus the projected contribution to growth from mining construction and its flow-ons will also slow.
picture 2(Business Council of Australia, 2013, p. 9)

What the BCA is trying to do then is to organize the next most obvious alternative for large-scale construction projects – infrastructure. The state is being called on to step in and finance or at least act as the guarantor for projects to keep the profits rolling. Quite simply construction companies and related industries want someone to hire their services and buy their commodities. This is what is meant by the BCA’s desire to ‘‘manage the transition’ from an economy driven strongly by resources investments currently underway towards’ securing remaining investment in the pipeline and facilitating new sources of growth’(2013, p. 3).

The decline in resources investment is projected to directly impact on GDP through a fall in real private engineering construction spending from $98 billion to $80 billion over the next three years, or a cumulative $39 billion.
Furthermore, the slowdown in resources investment will have wider structural ramifications for the economy. Around one in ten workers in Australia is estimated by the Reserve Bank of Australia (RBA) to be employed in servicing resource extraction and investment. Of these workers, one third is directly involved in resource extraction, while two thirds are involved in providing business inputs from business services, construction services, manufacturing, transport and other services.
Increasing infrastructure investment will prevent a larger decline in activity, but only if a sufficient set of high quality projects can be planned and funded. (2013, p. 7).


As a result of the decline in resources investment Deloitte sees GDP growth will be below trend for the next three years (i.e. below 3 per cent per annum over 2012− 13, 2013− 14 and 2014− 15).
The most affected sector will be construction, and in particular, engineering construction. Deloitte estimates that engineering construction grew strongly and contributed over 40 per cent of GDP
growth (not the level) over the expansion years of 2009− 10 to 2012− 13. Now that investment is peaking Deloitte expects engineering construction to subtract 14 per cent from GDP growth over the next three years.
In real terms, the contribution of private engineering construction to GDP will decrease from $98.8 billion in 2012− 13 to $80.4 billion in 2015− 6. Over three years this equates to a cumulative fall in real output from that sector of $39.1 billion. (p. 15)

Secondly the BCA links infrastructure investment with increasing productivity. Shepherd calls for ‘more infrastructure and more people to produce higher levels of national productivity and prosperity(2013, p. 2).’ Productivity sounds like a neutral good – who wouldn’t want to make more from less? But in the context of capitalism productivity always means a more efficient way to accumulate value. What an increase in infrastructure construction can lead to is both reduced costs per unit for capital and a decrease in ‘turn-over time’ (Marx, 1992a, pp. 203-204). That is the time from spending on a product from it’s manufacturing to being distributed and sold. The shorter the time the quicker the money can return and be invested again and thus the profit made on a quantity of money increased. Improved infrastructure means that commodities are transported more quickly, labour moves more quickly, orders can be placed and fulfilled faster etc.

Also this could potentially reduce the costs of distribution. A reduction in the costs of distribution would reduce the costs of commodities and thus make products made in Australia more competitive on the international market and thus perhaps increase these commodities’ market share. Also this is the path to increasing profits through ‘relative surplus-value’: that is producing products at less than their usual cost and thus making an extra-profit (Marx, 1990, pp. 429-438). This is especially important as the continuation of a relatively high Australian dollar continues to make Australian exports more expensive on the global market.

Thirdly infrastructure development is seen by the BCA as a way of increasingly the opportunities for making profits – not simply for the companies building the infrastructure also as an ongoing sources of generating income. Thus Shepherd wants infrastructure spending to be spend on projects on the basis of ‘full cost recovery’ and ‘private sector ownership’ with income being generated due to the following:

We should maximise payments from users wherever possible and follow Infrastructure Australia’s requirement that proposals for road projects must include a tolling component.
Where user charging is not viable, governments will need to continue paying for infrastructure on behalf of current and future users.
(Shepherd, 2013, p. 4)

What chutzpa!

But it’s not all smooth sailing for capital. The BCA argue that what is stopping this road to accumulation is that infrastructure construction in Australia is too costly. The BCA identify three ‘drivers’ of cost: ‘problems with planning, design, scheduling and procurement’, ‘unpredictable and unnecessarily complex and prolonged government regulatory processes’ and the ‘workplace relations system’ (2013, p. 23). The high costs of infrastructure production in Australia reflect the current and past popular opposition to capital and the ability of people in Australia to either force through regulation or maintain collective power.

These issues require a transformation of the operation of the state and the various rules it creates that set the context and smooth the operation of capital – and it is changing these rules that the BCA, as a political actor, is setting about doing.

Shepherd argues that the entire way that the decisions are made about infrastructure should be changed: ‘In short, wherever possible, remove government from the investment decision and leave it to private investors. Governments’ primary role should be to set policy and regulations that support this approach’. What this means is that private companies should be able to develop, pitch and implement new infrastructure programs. Shepherd provides the examples of ‘when Aurizon announces it is exploring a new rail investment in Queensland, or Telstra announces an investment in 4G networks or someone decides to invest in a wind farm, these are private decisions driven by long-term market signals’(2013, p. 4).

On the other hand however, despite this clarion call for a fairly neoliberal model of decision making – to use Foucault’s (2008) precise definition of the term – in which the state functions mainly to organise and discipline rules of market operation in the next breath he calls for the state to work to stimulate long term demand.

We need the states to produce 15-year rolling infrastructure plans, with zoning and planning approvals in place so projects are ready to go, with the ultimate aim of attracting private investment…

Increased funding from the Commonwealth should be supported by a 10- year infrastructure funding agreement with the states, which sets out:
• the federal spending envelope
• requirements to maximise user pays on every project
• innovative mechanisms for providing support, for example availability co-payments or loan guarantees
• eventual transfer or sale to the private sector wherever practical. (pp. 4-5)

But how will this be payed for? It is crucial to note that whilst in opposition the Coalition had a very obvious position on debt in government this has become more complex. Equally the BCA itself is certainly not simply part of the austerity party – rather it makes the argument that debt needs to be split between good debt which is spent on stimulating demand and bad debt spent on social programs. This should give us an insight into how debt operates. Whilst it is important to reject the Keynesian arguments made by the vast majority of the Left that questions of debt are simply ideological it is important to also take into account the subjective factors involved in how debt functions. The real problem if you are a debtor is not if you can or can’t pay your debts but if you can or can’t borrow more. What often determines this for states is the assessment of credit rating agencies. Is it possible that these bodies have also accepted the need for demand stimulation and thus are going to view debt produced to do this in a positive light as long as it is coupled with social discipline applied to labour and welfare?

Secondly the BCA identifies regulation, which they see as slowing down the time of investment. ‘Inefficient government approvals processes particularly those relating to environmental and planning approvals at the state and commonwealth levels of government, have a major impact on the cost of delivering resource projects’ (2013, p. 24). Of particular concern to the BCA is the overlap of state and federal regulation around environment regulations – or what has become know in the parlance of the bourgeoisie ‘green tape’.

But it is the workplace relations system that is the main target of the BCA’s ire. The core problem for them, as a political force for capital, is the power organized labour have to increase wages and conditions:

The current workplace relations system enables unions to use the agreement negotiating process to ramp up high terms and conditions as project proponents are having to meet deadlines at critical stages in the project start-up and delivery. It also limits the capacity to achieve productivity offsets to balance wage levels, partly by enabling unions to prevent project proponents from using contractors and other arrangements to manage workforce numbers and deployment through the different stages of a project in line with workforce demands. (2013, p. 25)

It is up to the reader to discern how much the wages in mining industry are due to the collective struggle of labour and how much they are due to the general shortage of labour-power caused by the mining boom itself. Either way the BCA peg the future of both current projects and future infrastructure on increasing productivity i.e. on increasing the ratio between output and wages. The BCA is particularly grizzly about the non-wage costs of Fly-In-Fly-Out-Workers (this very phenomena should be understood as a testament to the recalcitrance of workers to give up their concept of a good life for work):

For example, one company that provided data for this study estimated that total labour rates (e.g. accommodation for FIFO workers) on remote Australian projects are around three times what you would see in the US Gulf Coast, but labour productivity performance is such that 80 per cent additional time was required for the equivalent amount of work i.e. Australian labour productivity is 55 per cent of US Gulf Coast productivity.(2013, p. 26)

Capital often responds to its challenges through revolutionizing the organization and composition of production. But the blockages to Capital’s Plan A can’t be solved simply be this way, rather they require a political-legal solution.

Capital’s Plan A requires the state to both facilitate investment itself and secondly to wipe away or manage social, regulatory and wage restrictions. These restrictions can be understood, should be understood, as the impact of working class struggles even if they exists in residual form. What stands in the way of Capital’s Plan A is us.

The state as guarantor

How much of Capital’s Plan A is being taken up by the state at any level? There is an incredible level of internal incoherence and division within the Liberal- National Coalition combined with a willingness to wield state power and attempt to reshape society. This itself reflects a broader political malaise. Indeed contra Leftist nightmares of a unified ‘neoliberal’ Right steamrollering over us any analysis of mainstream thinking shows the capitalists and capital’s ideologues and organisers are expressing a deep confusion. This confusion is forced on them by the material reality of the general crisis. A scan of speeches from the World Economic Forum shows leader after leader calling for both a reduction in debt and an expansion of stimulus as capital tries to move North and South at the same time to reduce sovereign risk and keep demand stimulated. The recent impact of the tapering of QE has thrown capital and its actors into a wobble.

Thus we can’t simple expect any level of government to pick up the BCA’s recommendations wholesale. Yet that said we are seeing key elements of it unfolding. These elements relate to how increased investment in infrastructure will be funded and facilitated and how the popular blockages to capital, namely the resistance of labour and community (two of the working class’s faces) can be minimised, brushed away and repressed.

On the first point Treasure Joe Hockey is planning the leading role, committing to a project of expanded infrastructure spending and seeking creative ways to finance it.

Indeed the Australian Financial Review reports that ‘the government was preparing an about-face on the economy, looking to boost infrastructure to starve off a post-mining boom investment slowdown that could push up unemployment’(Tingle, 2013).

The Australian reported in October 2013 that Joe Hockey was both seeking to increase spending on infrastructure but also was investigating becoming the guarantor on private debts used to invest infrastructure. He was also investigating if state debt due to infrastructure spending should be accounted for separately from other debts. He also argued that assets should be sold to fund spending on infrastructure.

As he flies out today to a summit in the US to meet his global counterparts, Mr Hockey told The Australian he was “prepared to be innovative” to overcome the constraints on federal spending.
The plans will depend on how the new projects would add to Canberra’s contingent liabilities, which already exceed $800 billion and are taken into account when ratings agencies consider their AAA rating on commonwealth debt. Mr Hockey will meet ratings agencies in New York to discuss their views after he attends a Group of 20 gathering in Washington, where infrastructure finance will be one of the priorities.
“There’s very little room for governments to move right around the world, so everyone needs to be more innovative with private investment in infrastructure,” he said in his first major print interview since taking office. “In many countries the road-blocks are political – the concept of user-pays for infrastructure or the privatisation of existing infrastructure are politically difficult.”
The federal government has already promised $11.5bn for new roads but wants to add to the list by developing a national construction program overseen by Infrastructure Australia, which will be expanded to check the costs and benefits of each project.
Behind the plan is the idea that more construction could shore up the economy if the nation’s growth slows down over the next few years, justifying the use of federal support to build projects that add to productivity. (Crowe, 2013).

Thus the state governments have been offered incentives to privatise assets and then direct these funds towards infrastructure spending(AAP with a staff reporter, 2013). The details of this remain very vague yet Hockey announced that the Federal government was looking at selling $130 billion worth of assets.

Mr Hockey said the government was finalising a deal with state counterparts to prioritise assets and businesses that could be sold to private investors.

“There is potentially $130 billion in privatisable assets in Australia, maybe more,” Mr Hockey said, pointing to utilities and transport networks as obvious candidates for sale
(“Hockey prepares for asset sales,” 2014)

And state governments seem willing to commit to this strategy. Whilst the Qld government has deferred any major privatisations to after the next election facing news about rising unemployment the state Treasure Tim Nicholls said the following:

We have choices ahead of us if we are going to be able to invest in job creating infrastructure,” he said, referencing the asset sales
“conversation” the government plans on launching with the public in the coming months.
(Remeikis, 2014)

As I write Nicholls has just committed to spending two working days a week travelling the state trying to convince people that privatization of assets is necessary to fund infrastructure (Wardill, 2014).

Joe Hockey has requested the Productivity Commission ‘undertake an inquiry into ways to encourage private financing and funding for infrastructure projects’(2013). There has also been some talk of ways to securitise and trade debt related to infrastructure construction (though I can’t find any references to this right now). The formation of a Productivity Commission inquiry is more confirmation of the central role that this technocratic organisation plays in the construction of policy and thinking through capital’s knotty problems.

All of this presents a very different approach to debt than the stock-standard line advanced by the Coalition in the lead up to the election. Their commitment to balancing the budget is less important than stimulating growth. Indeed this is reflected in the surprisingly ambivalent position of the Treasurer at the launch of the MYEFO.

This doesn’t mean that spending on social reproduction won’t take a hit in the upcoming budget. Rather I suspect we can expect cuts to state spending on social reproduction whilst there is increased expenditure on infrastructure with the former paying, in a way, for the latter.

We can thus then see an outline of a project of increased state expenditure on infrastructure. Infrastructure constructed through public-private partnerships and ultimately privately owned funded either directly by the state, perhaps through privatising assets or cutting other spending, with the state acting as guarantor on private corporate debt. There is also the possibility, shadowy at the moment, or various forms of securitising this debt, and thus stimulating the financial sector of the economy.

Barriers and policy solutions

But capital doesn’t face simply a clear path ahead.

If we think about infrastructure construction here capital confronts two barriers to its plans. These two barriers are two faces of the working class. Firstly that of the resistance and power of building workers, possibly one of if not the most militant sections of the class; secondly the opposition to development (often based on ecological, Indigenous and community struggles for a different kind of urban, suburban or rural place). It is in this context we can understand some particular manoeuvres of the State at both Federal and state level to dissipate and dissolve these oppositions.

Workers in construction are one of the most unionised and militant in the country. The mining boom has also increased demand for skilled blue-collar labour. It is the conditions and culture of these workers which is now facing multiple and serious attacks.

We then need to take into account the specifics of the construction trade and the history and reality of class struggle. Historically it was building workers during the Green Ban struggles that made possibly the most advanced and practical critique of capitalism ever seen in Australia. In 2011 only 9% of the workforce was in construction(Australian Bureau of Statistics, 2011). Yet days lost to industrial disputes in the industry hover just under 50% of days lost in all other industries.

picture 3(Independent Economics, 2012, p. 15)

I have heard Humphrey McQueen talk previously that the nature of the building trade means the capital has limited options in using technological revolutions of the processes of production to decompose the strength of the building workers. Capital has limited ability in using technology to set the pace of work as it can in manufacturing, fast-food or a call centres. It can’t escape the class – building capital has to confront labour face to face. Whilst undoubtedly there has been an increase in expenditure on fixed capital (I assume like huge cranes) and there are certain capitalist fantasy about pre-fabricating houses, capital in the building industry relies perhaps more than most on forces exterior to the work-place to attempt to discipline the labour. Indeed the current Minister for Employment Senator Abetz admits as much in a recent speech to the Master Builders Association of Victoria(Abetz, 2014).

It is with that in mind we can best understand a raft of legislation at both a Federal and state level aimed at building workers and the construction industry unions. Currently the media campaign over building union corruption has been used as pretext the Federal Government to launch a Royal Commission into unions. (Since however the original news report was co-authored by Marcus Strom, a correspondent for the Weekly Worker, and a prominent ALP and Media, Entertainment and Arts Alliance member, I suspect that there is more going.) (Some readers may voice objects that in the following section I am not critical enough of unions but please bear with men – a discussion for another time.)

The most obvious of these attempts is the reinstatement of the Australian Building and Construction Commission(ABCC). Christopher Pyne, who is the Minister for Education, introduced the legislation with typical ruling class mouth frothery stating ‘For many years, the building and construction sector provided the worst examples of industrial relations lawlessness.’ (“Building and Construction Industry (Improving Productivity) Bill 2013 Second Reading SPEECH,” 2013)
Though the examples given of this lawlessness are fairly innocent:

In November 2012, the Little Creatures brewery site in Geelong suffered a violent dispute where picketers were accused in court documents of making throat-cutting gestures, threats of stomping heads in, workers being told they were dead and of shoving, kicking and punching motor vehicles. On social media, a union member also threatened to boycott a local store for providing food to the workers on site.

(“Building And Construction Industry (Improving Productivity) Bill 2013 Explanatory Memorandum,” 2013, p. 2)

The reestablishment of the ABCC warrants closer attention. In short it allows the establishment of a Commission with increased powers to limit industrial action and punish those who organise it and the Commission has increased powers to coerce testimony.

As the Explanatory Memorandum reads:

Chapter 5 prohibits unlawful industrial action, which includes bans on working, employees failing to attend work or employers locking out employees. This Chapter applies only if the unlawful action or unlawful picket has a connection to a constitutionally-covered entity. Any person is able to apply for an injunction to restrain a person from organising or engaging in unlawful industrial action or an unlawful picket in relation to building work.
(“Building And Construction Industry (Improving Productivity) Bill 2013 Explanatory Memorandum,” 2013, p. 3)

Interestingly the ABCC also has powers against ‘unlawful picketing’ that I assume applies not just to employed construction workers but others that come out to struggle in solidarity. Restraining orders can also be taken out against people participating in this activity (“Building And Construction Industry (Improving Productivity) Bill 2013 Explanatory Memorandum,” 2013, p. 19).

The establishment of the ABCC gives the commissioner the power to set a building code. I haven’t been able to find the details of this code but I think we can assume that it will follow the Queensland ‘Queensland Code of Practice for the Building and Construction Industry’ which is part of the ‘Building Construction Compliance Branch’. This is an attempt to lock out militant union practices from state funded infrastructure projects.

Despite the cold bureaucratic language of the Code itself the Attorney General and Justice Minister framed the introduction of the code in clear class war terms. A media release from his office stated ‘Major public projects will no longer be held to ransom by militant unions under new implementation guidelines.’ It then proceeds to quote him saying:

Queenslanders should not have to see their hard-earned tax dollars wasted on such arrogant, irresponsible industrial disruption….My message to the building and construction unions is simple: Queensland will not tolerate bullying, intimidation and unlawful industrial action.
Similar reforms have already been introduced in Victoria, and New South Wales will implement its new guidelines on the same day as ours.
The building and construction industry is one of the four pillars of the Queensland economy, and it is vital we ensure industrial best practice to unlock activity, attract investment and create jobs. (Bleijie, 2013)

What is so interesting is that despite this directly confrontational language the Government is aiming at the union through the contractors. The code of practice sets out guidelines for what is necessary to win the contracts for large (over $2 million) state funded infrastructure projects that I assume are the big-ticket items, the real money spinners, for building capital. It sets the industrial relations conditions that contractors must enforce for them to win these contracts. This means that contractors must submit a Model Workplace Relations Management Plan that details their commitment to the Code and then the BCCB will check and enforce their continual compliance. Much of the content of the code is aimed at undermining the organizational and cultural presence of unions and also determining how disputes are conducted.
An example of that contractors ‘may not permit ‘no ticket, no start’
signage; ‘show card’ days; or any other practice which implies that union membership is anything other than a matter for individual choice, including employers unlawfully encouraging or discouraging employees to join a union.’ (Building Construction Compliance Branch, 2013a, p. 15)
The second element is aimed at toughen up the contractors in relation to the unions – they ‘must take all steps reasonably available to them to prevent or end unprotected action occurring on or affecting the projects, including taking legal action’ and ‘report any threatened or actual industrial action that may impact the project, project costs, related contracts or timelines to the BCCB (or nominee) and the Client Agency within 24 hours and provide regular updates about the steps being taken to resolve the threatened or actual industrial action’ (Building Construction Compliance Branch, 2013c, p. 12).

What is so interesting about this is that the code involves the government imposing on companies wishing to win state tenders rules about how to manage their own relationships with workers and the unions. This is the state working to discipline labour by disciplining capital. Thus the punishment for not complying with the code after winning a tender are as follows:

a) a formal warning that a further breach will lead to severe sanctions
b) referral of a complaint to the relevant industry organisation for assessment against its own professional code of conduct and appropriate action
c) reduction in tendering opportunities at either agency or government‐wide level, for example, by exclusion of the breaching party from tendering for government work above a certain value, or for a specified period
d) reporting the breach to an appropriate statutory body
e) publishing the breach and identity of the party
(Building Construction Compliance Branch, 2013b, p. 3)

Added to all this is the recent introduction to Federal Parliament of the Fair Work Amendment Bill 2014. This legislation deserves attention in its own right as well as it aims to both limit union rights of entry and to increase ‘flexibility’. This bill will further undermine the right to strike by ensuring that ‘protected industrial action can only be taken if bargaining for a proposed agreement has commenced. This amendment will mean that industrial action cannot be the first step in the bargaining process, restoring a balanced and harmonious approach to enterprise bargaining.’ (“HOUSE OF REPRESENTATIVES PROOF BILLS Fair Work Amendment Bill 2014 Second Reading SPEECH,” 2014, p. 6)

Of particular interest to us here is the provisions in relation to “Greenfield agreements’ – that is Enterprise Bargaining Agreements for new large-scale projects. This seems to be intentionally designed to facilitate resource development and infrastructure construction by minimising union power. The Explanatory Memorandum for the bill directly cites the BCA’s concerns about ‘risks’ dissuading investment in such projects(“Fair Work Amendment Bill 2014 Explanatory Memorandum,” 2014, p. ix)

Greenfields agreements can be vital for the commencement of major new projects, as investment funding is often contingent on settled labour
arrangements being in place. The bill will ensure that these agreements are negotiated subject to good faith bargaining requirements and in a reasonable time frame. These amendments are another step to demonstrate that ‘Australia is open for business’.

They are essential if Australia is to encourage future investment in new resources projects. The bill will remove the effective union veto power over greenfields agreements under the current arrangements that have enabled them to frustrate the making of these agreements by seeking exorbitant wages and conditions or refusing to agree at all.
As the former government’s Fair Work Review noted, in somewhat understated language, these practices ‘potentially threaten future investment in major projects in Australia’. This is bad for jobs and bad for the economy.
(“HOUSE OF REPRESENTATIVES PROOF BILLS Fair Work Amendment Bill 2014 Second Reading SPEECH,” 2014, p. 6)

We can also see an increase in state power aimed at smashing pickets and blockades. For example he Victorian government has just enacted legislation strengthening police powers against picket lines and protests. As New Matilda report The Summary Offences and Sentencing Amendment Bill 2013:

…expands the grounds under which police may require anyone to move-on from a public space, including “causing a reasonable apprehension of violence in another person”, “undue obstruction to another person or persons or traffic”, and “impeding or
attempting to impede another person from lawfully entering or leaving premises”.

Matt Wilson, a lawyer with Rob Stary Lawyers who has experience in defending activists, says the new bill relates to “fairly broad scenarios … It increases the subjective process conducted by police officers, as to
whether those categories or scenarios justifying the move-on powers have been met,” Wilson told NM by phone.

He is also concerned about the abolition of many of the protections currently in the act for people protesting or picketing.

“The exclusions relating to political process, as they relate to summary offences, move on powers previously — that changes,” he told NM. “The mindset changes: now a rally will be the same [to the police] as any other large group of people … there is no protection relating to the nature of the activity. That distinction is gone.”

The act also allows police to apply to a magistrate for an “exclusion order”, a ban from any public space for up to 24 hours for those repeatedly disobeying move-ons. Anyone breaching the exclusion order risks two years jail.

Wilson says the new laws are also likely to bleed through into restrictions on bail regarding protests. (Brereton, 2014)

Such legislation is also aimed at ecological, Indigenous and community protests and blockades.

Equally aimed at such struggles are attempts to undermine what ideologues of capital critique as ‘green tape’: environmental and planning regulation.
I think it is best to imagine this green tape as both the left over residue of previously stronger environmental struggles and the State’s attempt to address the manifold ecological impacts of capitalism. That is the stronger struggles of the past have forced the state to take into consideration these concerns. Added to this has been the realisation by the state of the negative externalities (to use their dead language) of much of development.

The most obvious example of the latter is the decision to allow dumping of waste from a coal port expansion onto the Great Barrier Reef. Key to this has been a new approach taken to ‘streamline’ environmental approvals agreed at the Council of Australian Governments (COAG):

COAG agreed deregulation would remain a key goal, with all states – including Labor administrations – resolving to put in place the Coalition’s plan to streamline environment approvals with one-stop-shops at state level.
Under agreements in place, the states will do all environmental assessment work on major projects. NSW and Queensland have gone further, agreeing to sign bilateral agreements to assess and approve projects.(Packham, 2013)

The Federal government has entered in agreements with state governments to devolve regulation to them. This will surely speed up the process of approval. For example The Queensland government is ‘is committed to reducing red tape by 20%’(“Greentape Reduction,” 2013). Anecdotally I have heard from friends that work in industries that do ecological impact statements that the grounds they have to assess developments have shrunk a lot under the current state Newman government.

Points of Opposition, Possibilities of an Offensive?

The theory of proletarian organization must always move within a continual re-elaboration of the phenomenological analysis of the structure of workers’ needs. Whenever the party has won victories, these have been made possible by the formidable ability of its vanguards to grasp the real nervous system of proletarian interests at that given time. (Negri, 2005, p. 46)

Capital’s Plan A needs to raise finance, discipline labour and brush aside ecological, Indigenous and community oppositions. Here we should follow Tronti’s advice and flip the polarity (Tronti, 1964).

If seen from below what this reveals is that this proposed transformation in accumulation of capital faces multiple lines of contestation: the struggle of building workers in the work place, oppositions over the impact of development on the built environment, place and ecology and opposition to the privatisations necessary to fund all this infrastructure. Cuts to social reproduction force this labour back into the home and thus increase the burden of unpaid labour carried out mainly by women. Opposition to such cuts is also opposition by women to the continual constriction of their lives.

These oppositions represent in some form a desire, a collective desire, for a different kind of society, a different kind of life, than that enforced by capital. Partial struggles contain, as a seed, as an embryo, both the total contradictions of society and more radical visions. They expose society’s ‘conflictive bone’ which exist under the ‘thick consensus’ of dominant politics and threaten to blow it all apart (Badiou, 2009, p. 95). A serious struggle, that is one that breaks with the rules of political-legal normality not only summons up and stands on new relationships of collectivity and common between the participants, but speak to the general condition of all of us, even if it is confined to one geography and workplace.

We have seen: a social revolution possesses a total point of view because – even if it is confined to only one factory district – it represents a protest by man against a dehumanized life, because it proceeds from the point of view of the particular, real individual, because the community against whose separation from himself the individual is reacting, is the true community of man, human nature. (Marx, 1992b, p. 419)

Now perhaps none of these points of resistance are a ‘social revolution’ but they do sketch out out the contours of social antagonism. The recent struggle in Melbourne against the East West Link is on one hand a specific and local antagonism, on the other hand it is a spanner in the works of capital in total, just as the community of struggle formed around it is a beacon to the class as a whole. Also by grasping the centrality of infrastructure to Capital’s Plan A we can understand the fury that the state, police and media have launched against those that defy them.

What can we see amongst these points of opposition, what are the proletarian interests – interests which may, which should, go beyond what is deemed possible by the expressed rules of capitalist society? As always what is needed is a thorough process of investigation, a workers inquiry, without it we can only speculate. Yet still such speculation isn’t worthless or avoidable.

These different points of struggle are different points of the face of proletariat. But currently these faces are isolated. This isolation, even the isolation of the militant construction workers, doesn’t bode well facing the amount of state power current governments are willing to wield. It is common for anti-capitalists of all stripes to make calls for unity – but such calls often fail to take into consideration that substantial heterogeneity of the working class in Australia. This is the incredible differences in types of work, conditions and pay intermeshed with hierarchies of ethnicity, gender and sexuality and different legal status of citizenship and migration. There is no singular experience of work that calls people together and which all can see themselves in.

As always the question is ‘what is to be done?’ And as always I don’t know – and I doubt most others do either. How do we circulate these experiences of struggle so a greater critical mass is created? How do we address the internal inequalities amongst workers? What organisational forms would this take? How can the truth of each struggle take larger shape?

The struggle at the new Lady Cilento Children’s Hospital has often been cited by the Queensland state government as an example of the kind of industrial action that needs to be stamped out. I was involved in one of the few formations that attempted to carry out solidarity with the struggle. In truth we functioned as a group of aging ‘Lefties’ that developed a relationship with the union bureaucracy and functioned as some kind of gig organising and sandwich making auxiliary. In our reflections afterwards we realised that whilst our work had been worth doing we had not been able to move beyond this dynamic and didn’t really know how to. Our point of orientation had been the union rather than the workers and we hadn’t done much to establish real commonality nor establish many (any?) new relationships and solidarities with the workers themselves. I assume when it kicks off somewhere that we again will find ourselves in this situation. What would it look like, and what would we need to do, to move towards a more open and radical class formation?

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20 thoughts on “Roads to Nowhere – Capital’s Plan A

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  2. Dr_Tad

    Really important work for Marxists to be engaging in. Congratulations, Dave Eden, on putting this together.

    A few quick thoughts, but so much rich material to digest:

    (1) As I’ve raised with Dave previously, I think there is a danger in talking about “Capital” as if it is something other than “many capitals”, interacting with each other in determinate relations of exchange and competition. Therefore the opinions of some key peak lobbies, government commissions or Treasurers can come to seem to be the proxy for some kind of Australian national capitalist hive-mind.

    (2) The relationship of the state to production is ambiguous, as is the relationship of the state to politics (or “the political”). Both Panitch/Gindin’s and more clearly “autonomist” approaches seem to be mobilised. This, I think, leads to an underplaying of how much politics constrains the state’s ability to simply carry out the will of leading state bureaucrat opinion, and how much the state is willing to ignore various “economic” arguments in favour of securing the interests of the state itself (i.e. there is more than one way for the reproduction of capitalist social relations — and concomitant accumulation — to occur on a national basis without the system breaking down, and so there are more possible plans than the BCA’s “Plan A”).

    (3) I think Dave makes too much of the anti-union rhetoric he quotes, which is (as far as I can see) mainly from members of Right of the political class. This tends to hype up the apocalyptic threat of what are now very weak and passive union organisations in the service of quite specific political interests — i.e. gaining further advantage over a decaying Labourism. High construction labour costs have had much more to do with a boom in the industry than any residue of “militant unionism”.

    (4) The terminology of “social reproduction” is used too loosely here. I think most of the time Dave means to say “social reproduction of labour power”, which is a much narrower concept. I think it is worth considering how some of the cutbacks in direct public provision are not just directed at cutting labour costs, but commodifying provision combined with a big and inefficient public subsidy for private providers, and how this can cause costs to rise (think of how much the US healthcare system costs the capitalist class there, but also how sectional political pressures prevent the efficient resolution of these problems). Just saying things are much more messy and difficult to fix than simply pushing costs onto workers.

    (5) Maybe I missed it, but there doesn’t seem to be much consideration of Australia’s biggest debt problem, which is tied up in private mortgages and the associated financial industry. The potential problems unleashed by a direct attack on workers’ wages in this context must surely weigh on political and state bureaucrat minds.

  3. Richard Bailey

    Great piece Dave. I want to make a brief comment on the example of the hospital workers and your solidarity at the very end. I think there you site molecular example of a persistent dilemma we always face, union or workers, inside or outside. Most on the left battle with this dilemma for a while and end up taking an inside job and settling for at best a week reformist agenda. What I would really like to see thought through more is how we can collapse this binary and attempt to occupy positions inside strategically, that is with genuinely revolutionary agenda.

    I’m working for the NTEU these days and doing unions 4 refugees work there and in a cross-union group in Sydney. I’m working with a handful of great comrades informally sharing ideas on how to most effectively navigate this terrain, but it is damn hard work. I would love to expand that network so we could kick strategies, experiences, stories etc. around and work together wherever possible. Would it be possible to do something like that without getting sucked into the black hole of sectarianism? Maybe not, but it really feels like we need to try something.

  4. (Congrats Dave).

    Thanks Dave. The High Wage, High Unemployment, High Debt, High Prices
    reconfiguration of Australia really came together in order to cut the
    balls off the period of Unrestrained Wages and Prices Growth. And did
    it boy. Elsewhere and at another time, I described this as “the fully
    sick plastic lifestyle.” Neoliberalism had a slightly different
    complexion in Australia, where the arse end of manufacturing got some
    beautiful double shifts in exchange for doubly shitting on their
    children. But does the change in mining capitalisation signal an end
    to this system? Up until the mid 1990s, the conception that a heavy
    union movement was necessary to control the factory floor existed, and
    that we could Buy Australian Infrastructure our way out of the
    impending death of the AMWU. So this moment has previously and
    successfully reconfigured within the scale we’re talking about: fully
    sick plastic culture survived the death of the Accord.

    What makes now different? I think there’s some useful news in terms
    of the reproduction of labour power. Unlike 1990, the skill
    composition of the class has changed to a position where tertiary
    training and education is commonplace. I feel that the effect of this
    has been wage flattening and skills averaging. “Skills” are now
    recomposed as specific capacities to perform duties, rather than
    trades or professions. I think unemployment and skills dilution and
    “specific duty” skills and forced workforce entry delay and education
    price are a link that the face of the class at work and unemployment
    all face. And that seems pretty interesting. It shows the attack on
    the building unions as an attack on generalised labourers: an attack
    on the general labourer, the general carpenter. And this relates to
    skills related unemployment, why university and TAFE graduates are
    unacceptable to capital: degrees and advanced diploma and cert IVs
    present generalised labour, labour capable of doing any carpentry, not
    just nail nailing. Whereas specific skills lock a labourer into
    periodic unemployment: and without an assembly line, political power
    off the factory floor is required to reduce general labourers into
    specific button turning labour power.

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  9. I have nothing to base this on, but to me the crisis in capitalism seems just something all systems must face without adequate mechanisms of constraint, or worse, with positive feedback loops. Unfortunately, standard economics (I was going to say ‘normative’, but on investigation am now thinking ‘positive’) appears openly hostile to constraint, and constructed to avoid it. I guess ‘market forces’ is an exception, but one operating at a micro-level. Economists look like they assert evolution/biology theories in their desire for scientific authority, but without commitment or understanding. Unconstrained systems must be self-isolating and inherently unstable; I’d think extinction would normally result.

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