Albanese’s industry policy: tenth time as pathetic farce

In proposing a way forward for Australian capitalism, and to divert attention from the Labor government’s successes in imposing historic real wage cuts on workers, Prime Minister Anthony Albanese has opened a shabby revival of Shakespeare’s Romeo and Juliet. Only the names have been changed to protect the guilty. Instead of the feud between Capulets and Montagues, in this version the rival gangs are protectionists and free traders.

Protectionists argue that governments need to help local capitalist production through direct financial assistance or by imposing tariffs—taxes on imported goods that compete with local output. Free traders say that the magic of markets, undistorted by government actions, will produce the best outcomes for the local population.

On 11 April, Albanese, in practice, declared himself a devout protectionist. A “Future Made in Australia Act” will package together a bunch of existing and new initiatives. Fundamentally, it’s about showering chosen businesses with cash.

The National Reconstruction Fund Corporation is central to these protectionist plans. Established last year, the corporation will invest $15 billion over six years. Not to create publicly owned operations, but to buy shares in and give cheap loans to private manufacturing businesses.

The aim is to create niche industries in Australia that will eventually be internationally competitive, by doling out money to chosen companies that process Australian-produced raw materials, make renewable energy equipment, weapons or develop innovative technologies. The corporation’s board will try to pick winners: projects that have the best prospects of making big profits for their owners.

If only the “party of labour” showed such enthusiasm for sustaining workers’ wages.

Since the 1800s, bosses and their media and economist hangers on have debated strategies for Australian capitalism. Albanese unconvincingly claimed that his big give-aways to companies are “not old-fashioned protectionism”. But they’re precisely that. And his critics are advocates of old-fashioned free trade.

But Albanese was right to say that “strategic competition is a fact of life”. Under capitalism, governments have always taken action to defend and promote local capital accumulation in the face of competition from other countries. That has involved military activity, as well as the provision or regulation of transport, electricity, water and sewerage infrastructure, and trying to ensure that there is a suitably compliant and competent workforce available for bosses to employ (exploit).

Many governments have responded with new protectionist policies to the disruption of supply chains during the pandemic and the Russian invasion of Ukraine, and because of fears that further military conflicts will undermine access to imported goods.

But the biggest driver of the protectionist shift has been the increasing rivalry between the United States and China. Presidents Donald Trump and Joe Biden have countered the economic and military rise of China, where government plays a particularly large role in directing investment, by restricting imports from the imperialist rival of the US capitalist class and subsidising domestic production.

Other countries, such as Australia, are doing the same.

The government’s recent protectionist policies have attracted criticism from the opposition Liberal Party, the Australian Financial Review and the Productivity Commission, the federal government’s economic think tank. But they have support from the manufacturing sector and, unfortunately, unions.

Protectionists promise that their approach will deliver more jobs, higher living standards, greater security and, these days, better environmental outcomes for the whole population. Free traders say much the same. But both strategies serve the interests of bosses rather than workers.

Higher prices for imports or their locally made competitors, due to tariffs, reduce workers’ living standards. Governments should spend tax revenue on our health, education and welfare rather than to subsidise bosses’ profits, which is the effect of programs like the National Reconstruction Fund.

Workers’ struggles are the best guarantee for ongoing, well-paid jobs. And such struggles are less likely if we accept the underlying assumption of both these capitalist strategies for economic development—that bosses and workers have common interests.

In 1921, Mick Considine, an Australian Marxist and member of the federal parliament who had been driven out of the Labor Party, accurately pointed out:

“It is over the surplus value that is wrung from the working class in the place where they are exploited that the importers and the manufacturers quarrel, and attempt to use the workers and the political representatives of the workers to aid them in securing their respective share of the plunder for their particular sections.”

He had the same attitude to protectionists and free traders as a dying Mercutio in Romeo and Juliet did to the Capulets and Montagues: “a plague on both your houses”.

For more on economic policy in Australia see Rick’s article “Left populism versus revolutionary Marxism”, in Marxist Left Review 24, 2022.