Advocating A Right to Work

I discussed in this post a history of the right to work and an advocate of ensuring a legislated right to work of UK member of Parliament from the Independent Labour Party, Keir Hardie. There were similar attempts at employing idle labour in 1848 in Paris via a politician Louis Blanc.

Blanc established Ateliers Nationaux (National Workshops) where Parisians would show up and be guaranteed work and a minimal income. The program was contentious and often there wasn’t work organised. The program was eventually dismantled and ended in the June Day Uprisings where capitalist sent in the National Guard to quell the uprising. Some 6,000 workers were killed many more injured or deported to Algeria.

The withdrawal of the proclamation of the ‘right to work’ provoked the workers of Paris to erect barricades and challenge the authority of the government of the National Assembly, an authority that was now backed by the National Guard and the new militia, the ‘Guard Mobile’(Moss, 1985: 546). It took four days (June 23 – 26) of intense street warfare to suppress this rebellion, leaving 6000 workers dead.

Quirk, The JG of 1848
Working Paper 07-14
http://www.fullemployment.net/publications/wp/2007/07-14.pdf

You can read more about the program, and the politics in the referenced working paper. I found learning about these events and the alternate forms of socialism such as Saint-Simonianism that this program stemmed form a huge lea in understanding the early development of trade unions and their rise.

In 1886 unemployment riots on Trafalgar square had the unemployed demanding the Government create them jobs.

Unemployment riots in Britain in 1886 prompted parliamentary debate featuring widespread condemnation of any suggestion of a ‘right to work’, drawing on the Paris experience, yet the early British Labour Party of the 1890s and 1900’s still championed the principle alongside universal suffrage and the Eight Hour Day. The popularity of Keir-Hardie’s 1907 Bill, and Ramsey MacDonald’s 1911 abandonment of the policy (in return for parliamentary salaries), marks a crucial turning point in the evolution of employer tactics to preserve unemployment despite the power of working people to elect governments of their choice.The capitalist ideology viewed the threat of unemployment as a productivity driver.

Quirk, V., 2010, The Preservation of Labour Under-Utilisation as an Instrument of Social Domination
(unpublished PhD)

The view that unemployment should be used as a productivity driver is documented through political economic thought of the 18th century. I’ve been reading The Invention of Capitalism by Michael Pellerman, (2000) and in it he documents this type of thinking.

A political economist William Temple in 1758 wrote;

If mankind employed themselves in nothing but the productions absolutely necessary to life, seven in eight must be idle, or all be idle seven eighths of the time. And yet they might indulge in intemperance, and sink into the beastly vices of slovenly gluttony and drunkenness.

Pelerman, M., 2000, The Invention of Capitalism, Duke University Press p97

In a similar vein a Reverend Joesph Townsend in 1786 wrote in ‘a Well Wisher to Mankind’

The poor no little of the motives which stimulate the higher ranks to action-pride, honour, and ambition. In general it id only hunger which can spur and goad them on to labour; yet our laws have said they shall never go hungry.

Pelerman, M., 2000, The Invention of Capitalism, Duke University Press p97

The above comments are not so different to the views expressed today. The unemployed are ignorant, lazy, uneducated. Poverty payments are called ‘an incentive to work’. This view stems from a psychopathic ideology that the working class need fear to drive productivity.

The Trafalgar Square riots and London Dock strikes* of the 1880s led to the election of Independent Labour Party members being elected to UK Parliament of which Keir Hardie was one (1889). The union movement surged with membership after successful strikes in 1889 of the London Dock workers and trade union councils sponsored parliamentary representatives within the Liberal Party. Records show that by 1884 ten liberal-labour candidates were elected and by 1892 a further sixteen were elected, including three socialist labour candidates independent of the liberal party, hence the Independent Labour Party. (ILP)

*The Dock Workers were successful thanks to the assistance of Dock Workers from Melbourne who sent £22,000 in support for the striking workers.

Hardie breathed life to the unemployment debate. In 1907 after frustrations at a politician John Burns to use powers given to him under the 1905 Unemployed Workman’s Act, Hardie tabled a Right to Work bill before the UK Parliament.

A number of liberal party MPs had crossed the floor to vote for the bill. Churchill ‘feeling the heat’ had William Beveridge and member of the house of Lords devise an unemployment insurance scheme and this was the ‘birth’ of the UKs unemployment insurance scheme. A concession to a legislated right to a job.

In Australia a right to work was a goal of the early Australian Labour Party with their 1898 program calling for organising the unemployed and giving them jobs. (I am in the process of verifying this source but am confident it is correct)

This almost became a legislated guarantee when in 1919 Queensland Premier Edward Theodore presented a bill to parliament the ‘Unemployed Workers Bill’ that would ensure a government job and mechanisms that would force private employers to hire idle labour. It resulted in a four year financial blockade on the colony of Queensland from London Finance and a banker Otto Niemeyer. It was settled that a scheme of unemployment insurance be implemented instead.

The upper house was a major obstacle in ensuring the bill never became legislation. The ALP had opposed an unelected legislative council and when they had the numbers in 1921, Theodore introduced the Constitution Act Amendment Bill to abolish the Legislative Council, the fifth attempt to do so. The Bill was given royal ascent in 1922. Though the goal of a guaranteed ‘right to work was unsuccessful’

The narrative of a right to work was changing because of the radicalism of the labour movement. The unemployed were literally protesting and being physically killed in their pursuits for guaranteed work. They were successful in seeking political representation (unlike the sham representation of labour/socialist politicians around the world today) and were controlling the narrative on the political discourse. A vast contrast to today were ‘progressives’ reinforce neoliberal narratives and myths on economics.

I am currently looking into Australia’s monetary arrangements in the hope to demonstrate that unemployment always has been a political choice. This political choice began to be articulated as the political push for Full Employment began to take traction. In Australia, John Curtin’s National Campaign Speech said:

“We approach the unemployment problem from the national economic standpoint and our policy, with the nation’s credit as backing, will not only remove this ugly blot on Australia’s economic life but will so advance the nation that it will contribute substantially to the nation’s defence programme. Wealth production is limited by manpower. The non-employment of manpower means the reduction of the power to produce wealth. Doles and starvation rates of relief pay sap the moral and mental fibre of those who are forced by circumstances to accept them. Industrial armies engaged in the construction of homes, roads, schools and other permanent works are sustained, just as our military armies, by production and transport armies in the rear. They are fed with the energies of field workers; they are clothed, shod and equipped with the energies of workers in factories. No hocus pocus about banking and currency systems can alter these fundamental facts. The Labor Party therefore is determined that no group of private bankers, no coterie of vested interests and certainly no instrumentality set up originally by the people for the people shall stand in the way of bringing industrial emancipation to Australia’s unemployed army (Curtin, 1937).

http://bilbo.economicoutlook.net/blog/?p=12499

Where in the past we had the vested interest of private bankers and industrial capital desiring unemployment under a sickening ideology as described above, the labour movement and the mass of unemployed began to change the narrative. This included changing narratives about money.

We can go back to 1893 with an act to implement Queensland Treasury notes. In the 1890s a series of financial crises rocked the established colonies of Australia, resulting in the now well-documented liquidation and/ or reconstruction of numerous banks across the English colonies on the continent. In Queensland, the predominant form of circulating money was, prior to the crisis, the banknotes of privately owned banking institutions present within the territory at the time. The financial crisis that enveloped the colony saw 8 out of the 11 existing banks suspend the convertibility of their promissory notes to English gold coins simultaneously, rendering their notes worthless.

This legislation was a precursor to the implementation of Australian Notes in 1910 with objections of a Senator Nelson in noting;

‘Under this Bill, the persons in the Old Country to whom we have hitherto gone for the purpose of raising money with which to develop our resources will find themselves deprived of a certain amount of profit, and their agents also may have cause for annoyance.’

We can begin to see efforts to wrestle control of the ability to issue money and thus command real resources, including the employment of idle labour was and still is resisted by the capitalist class. Fear mongering around insolvency and inflation are paraded today just as they were back in the late 18th, 19th and 20th centuries. We can see vested interests of capital thwart attempts at legislation in efforts to end the Great Depression.

The linked post above deals with changes to Australia’s monetary system from federation but I want to provide more detail over Treasurer at E.G Theodore’s attempts to create a central bank and a fiduciary note bill which will form part of the paper.

It was these events that led to the 1931 split of the ALP as Joesph Lyons (who formed the UAP) was leaking information to London financial interests, specially Otto Niemeyer a central figure in the financial blockade of Queensland in 1919 and the Unemployed Workers Bill.

In April of 1930 the Labor Government with treasurer E.G Theodore tried to establish a central reserve bank in Australia. During the second reading of the house of representatives Theodore in regards to central banking stated there were ‘three outstanding exceptions being Australia, Canada and the Argentine’ The bill’s aim was for ‘a new system for the control and organization of credit in Australia’ (House of Reps Hansard No. 18, 1930)

This was the principal aim of the creation of a central bank. It forced the private trading banks to hold accounts with the central bank and thus gave the government control over monetary policy (interest rates) and regulated the credit the private banks could issue. 

In March of 1931 the Treasurer presented to The House a bill relating to the issue of a fiduciary currency.  These fiduciary notes were to be called Treasury Notes as opposed to an Australian Note (notes issued under the Commonwealth bank act 1920 in pursuance of the Australian Notes Act 1910-1914) and differed in that there was no need to hold gold reserves in relation to their note issue. The Bill specially stated ‘Treasury Notes shall not be deemed to be Bank notes within the meaning of the Bank Notes Tax Act 1910’

The bill also made provision for Treasury Note issuance of £18million, six million of which was for the purposes of the Wheat Act 1931 and the remaining twelve million on providing employment for reproductive works.  These ‘reproductive works’ would be made by appropriations of any Acts or by means of loans to the States, local governments or other corporations approved by the Governor General.   (A Bill for an Act relating to the Issue of Fiduciary Notes, 1931)

During the second reading of the Bill Australian Labor Party member for Bendigo, Richard Keane stated ‘This Government has made endeavours to obtain money, but has been thwarted in its attempt by the Commonwealth Bank and other authorities’ (House of Representative Hansard, No.13, p.577, 1931)

The Commonwealth Bank Act in 1924 had put in place approval of note issuance (and thus the ability for Treasury to spend without borrowing) to a seven member board. With The Depression and many unemployed the Labor Government was looking for a means to directly decrease unemployment. ‘In this country we have an army of unemployed totalling about 300,000; loan expenditure has been reduced from £43,000,000 to £14,000,000, and the Government last year made a grant of £1,000,000 for the relief of unemployment.’ (House of Representative Hansard, No.13, p.578, 1931)

Keane makes mention ‘We on this side of the House take the view that, orthodox methods having failed, it is necessary to adopt what may be regarded as unorthodox proposals.’ and points to ‘…the fact that for many years Great Britain has had Fiduciary issue of £260,000,000’ (House of Representative Hansard, No.13, p.577, 1931)

Eichengreen and Temin summarise that there is agreement amongst economists that The Depression although a complex event, it was the gold standard that was the key element in the collapse of the world economy. As identified above, there were political obstructions that sought to block Theodore’s attempts and create the legislative power that would allow the government to directly employ people.

The Bruce-Page Government had introduced amendments in 1924 that had note issue (and thus the Australian Governments ability to spend without ‘borrowing’) placed in the hands of a seven director board, all representatives of business interests.

Niemeyer who was an offical of the Bank of England was sent to Australia who tabled The Niemeyer Plan (Parliamentary Papers 1929-31, vol.2, No. 81, p. 45) that called for 1. Budgets to be balanced at any cost in human suffering. 2. Cessation of overseas borrowing until the then short-term indebtedness had been dealt with. 3. No public works, which would not pay for interest and sinking funds on loans, to be put in hand. 4. All interest payments to be credited to a special account in the Commonwealth Bank, to be used only in favor of the bond-holders. 5. Monthly accounts to be published in Australia and overseas, showing summaries of revenue and expenditure, also state of short-term debt and loan account.

Theodore’s efforts, just as the efforts of Hardie with a legislated Right to Work and the National Workshops of Parisian workers implemented by Louis Blanc were thwarted or dismantled my capitalist interests looking at preserving a reserve army of labour. It was clear to these unionists understood the monetary systems and notions that unemployment was a political choice were taking hold amongst the working class.

Today the debate on what is politically possible is being suppressed by the likes of not only neoliberal think tanks such as the IPA or right wing political parties but alleged ‘progressive’ institutions.

Any discussion on Modern Monetary Theory is ‘underground’ while the executives of these institutes push nonsense balanced budgets or the government needing to ‘borrow’, wage subsidy schemes that don’t address the full scale of unemployment and frameworks that benefit the top 10 percent of income earners, such as Australia’s superannuation system.

When I attend economic/jobs/environment conferences this ‘underground’ talk for those of us in our thirties and under is on MMT and why it isn’t being used as a frame.

Why are we not pushing for a legislated right to work and a system of full employment? Why aren’t we using it as a frame to articulate guaranteed housing, regulating credit to make homes affordable, cancelling student debt, instituting universal free childcare? The list could go on…. We know this is possible.

In Australia we saw the government introduce temporary free childcare and the reason for the deflation stated by the ABS was that the free childcare was the cause!

Fear-mongering about debt and deficits and the inflation bogeyman isn’t cutting through. No youth is worried about any of that.

They are worried about the fact they can’t afford houses, insecure work, a lack of jobs, they are worried that their parents have insufficient savings to retire and many are thinking of selling their homes to be able to do so.

It is increasingly clear the narratives on ‘the economy’ we have been sold are false.

The young don’t want forced systems of savings under a lie that a government is financially constrained. We want decent aged pensions. We don’t need to be solved a narrative that unemployment is part of life and we need to ensure we are multi-skilled and continuously retrain to work in various industries.

We want a policy of full employment and a Job Guarantee. We want free tertiary education, universal childcare, affordable housing, crisis accommodation, social housing. We want the opportunities to settle where we choose and not have to live on the other side of the country because of secure work.

This thinking is now taking hold in the United States that equally has their own history on a push for guaranteed work. The civil rights movement in the United States called for a guaranteed right to work. (a term that is now used to refer to anti-union laws)

In a 1965 interview, Dr. King said “we must develop a federal program of public works, retraining, and jobs for all—so that none, white or black, will have cause to feel threatened. At the present time, thousands of jobs a week are disappearing in the wake of automation and other production efficiency techniques.”

https://neweconomicperspectives.org/2013/08/honoring-dr-kings-call-for-a-job-guarantee-program.html

His wife Coretta-Scott King carried on this work after his passing. Today modern day ‘Justice Democrats’ are using the frame that unemployment is a political choice, governments that issue currency can always purchase idle labour and are calling for a legislative right to a job.

I don’t understand the complexities of US history and in fact understand very little of it (I don’t live there) Though I can see they are using a framework that currency issuing governments spend first, and tax after the fact and thus can always ensure full employment.

In the same way Australia has a history of labour activists pushing for a guaranteed right to work, The USA has a history of civil rights activist pushing for a guaranteed job.

I wish to acknowledge the work of Victor Quirk who wishes to turn his PhD into a book and thus it isn’t publicly available. I am thankful he shred it with me. I have learned so much from his work. I should also acknowledge colleague Joshua Dalton who is a far better researcher than I and found so much information on the precolonial monetary system of Australia. The 1893 Qld legislation is his work.

Modern Monetary Theory and The Job Guarantee

I recently wrote an oped piece for challenge magazine It is difficult to condense what I had hoped to say into 750 odd words, so here is the ‘extended’ edition.

Modern Monetary Theory (MMT) is an incredibly complex body of work that studies macroeconomics. At its most elemental level it says a currency is a social and legal construct. Currency issuers spend via an appropriation bill and are not financially constrained, though they are constrained by real resources. A monopolist of a currency can purchase whatever is for sale in the currency it issues, including idle labour. Thus unemployment is a political choice.

To understand that statement we need to make a distinction between monetary based and non-monetary based societies. The latter doesn’t have employment or unemployment. So what causes people to become unemployed?

It is the imposition of a tax liability that is the coercive mechanism that creates a desire to earn the governments unit of account. There is a paper Monopoly money: The State as a Price Setter that articulates a ‘tax-driven’ currency from when African nations were colonised. Prior to colonisation those communities consisted of subsistence production, internal trades and didn’t have a need to use a currency. Especially a European currency. It was the imposition of a hut tax in Malawi that forced communities to sell produce to the European colonisers or become labourers.

In the absence of having a good or service to sell that the currency issuer desires you need to sell your labour to earn the currency to pay the tax. So the imposition of the tax liability creates unemployment and spending (in the right area) creates employment.

Spending then gets more complicated and we make distinctions between different types of spending, however – the currency issuers spending is the currency users income. That is an accounting statement. If the government deficit over a given period is $X the non-government surplus has to equal $X. It is a question of whether the government has spent enough and directed the spending into the right areas as to whether we have full employment.

Within the body of work that is MMT it uses a Job Guarantee (JG) as a macroeconomic price anchor and stabiliser which I will explain below.

There have been claims that the Job Guarantee is workfare. It is not. It is a voluntary offer of a job to anyone, anywhere paid at a living wage with access to all the National Employment Standards just like every other worker.

The social policy setting of the JG is the policy manifestation of a technical concept to eliminate the tradeoff between unemployment and inflation. Current orthodox economists identify a link between rising employment and rising inflation and use unemployment to discipline the inflation rate.

That link is known as the Phillips Curve and rising employment is supposed to give rise to rising inflation. When the inflation rate rises above the central banks target range they raise the rate of monetary policy to slow aggregate demand (total spending in the economy) to ‘put the brakes’ on the rate of inflation (causing unemployment). There is a theoretical limit known as the natural accelerating inflation rate of unemployment (NAIRU) that theoretically if employment is to fall below inflation breaks out.

The trade-off clearly has not happened for quite some time. And it is questionable whether the NAIRU concept and natural rates of employment exist at all. We don’t very well go down to the river and stare at a school of fish and say ‘look at that pool of unemployed fish’ Employment is a social construct and it is hard to think we have run out of things for people to do.

Inflation is a continuous rise in the general price level. Which is different to a price rise. A price rise can lead to inflation if a conflict ensures and eventually you need a way to ameliorate the conflict.

Imagine all the workers on a small island. And they work producing widgets. At the end of the year you measure the widget output as X. The X is just the measure – whether it is one million or one billion doesn’t matter. The questions are; Is there enough widgets to satisfy everybody’s needs? Does everyone have access to all the widgets they need? How do we ensure equitable access to widgets?

The general price level itself is an abstract concept. There is a curiosity in saying that total output is X but the general price level compared to one year or ten years ago is higher or lower.

Imagine labour and capital fighting over those widgets. As one increases the price, the other seeks higher wages. Inflation gets more complex than that but the point is that labour or capital will end up with a higher share of GDP as a result of inflation.

It is a question as to whether total output is enough to satisfy our domestic needs, whether we are producing that output in an environmentally and socially sustainable way and whether we have equitable access to all the real resources we need. Are we as workers getting a fair share of our productive output?

I can appreciate there is a politically unacceptable level of inflation because people don’t like it. MMT economists say you can achieve a stable rate of inflation by using a ‘buffer stock of employed’ rather than a ‘buffer stock of unemployed’. This is what the Job Guarantee is.

The reason for the fixed wage in the JG is the anchor. It sets the general price level for an economy. We as a society set a floor for wages that says one hour of labour is equal to $X and guarantee it.

All prices within an economy are a function of government spending. The initial spend determines the price level.

The automatic spending triggered by those entering the JG mean the governments spending is directed when and where it is needed most – the unemployed. It allows for the governments fiscal position to float ensuring that we remain at the very least at ‘loose’ full employment and price stability.

The Government via its legislative powers has the ability to command real resources as well (such as what it did with private hospitals over the initial covid period and make childcare free) The latter took away a financial cost for households contributing to deflation.

The ABS writes;

The most significant price falls in the June quarter were child care (-95.0%), automotive fuel (-19.3%), preschool and primary education (-16.2%) and rents (-1.3%). 

https://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6401.0?opendocument&ref=HPKI

Free childcare, cheaper fuel, cheaper education, and falling rents are advantageous to the working class.

The JG chooses to use employment as the anchor for the general price level. If the rate of inflation is deemed politically unacceptable more workers would move into the JG pool. If the rate of inflation was lower than the politically acceptable rate of inflation there is scope to have the pool smaller.

In the event of accelerating inflation the cause of inflation can never be the wages of the JG workers because by definition they are purchased from the bottom and released from the pool when a better offer is made. It is only a small part of a broader full employment agenda.

Ideally you want the pool to be as small as possible. It is not there to replace existing skills based employment. It is there to sit alongside a national skills development framework to assist those that need it in finding future employment.

Similar to the wool price stabilisation scheme in Australia, The Australian Government guaranteed the purchase of excess wool and stored them in redbrick sheds to sell when the demand picked up again. The difference being is that people won’t work to produce excess labourers.

The JG ensures ’loose’ full employment as workers are drawn in and out of the JG pool rather than ending up unemployed. It can be thought of as a trasintionary arrangement for those that need it.

In a similar way to how the Commonwealth Employment Service worked, the unemployed person would have a case manager that held their CV and attempted to match that person to a job but rather than having that individual lay idle, they have the opportunity to maintain and enhance their skillset while seeking better employment working actively with their case manager to match them with an appropriate job.

A Job Guarantee is designed to create work to suit the individual. It is administered at the local level but funded by the federal government. The workers within this program are free to unionise and advocate whether something should be classed as a JG job. They are free to take part in determining what the living wage should be.

The work would be of public benefit and assist the JG worker in up skilling and finding work in the private or public sector. It is there to enhance the individual’s well-being and provide a public purpose. It is not used as a punitive system of punishment.

The types of work that can be done are limited only by our imaginations. We could pay musicians to give workshops on band dynamics, pay them to create and assist in the organisation of community festivals, we can have arts programs where artists can paint murals in public spaces and aid others in their own skill development. Surfers could be paid to pass on surf life safety skills and teach others how to identify and avoid rips. They could take part in sand dune rehabilitation. There is massive potential to enlist thousands of unemployed in ecological restoration and plant trees along with other flora to mitigate against climate change while they undergo study in a related area.

The advantage workers have, particularly those at the bottom who often hold little, if any bargaining power is that the JG sets the floor for wages. Private employers would be forced to compete with what we as a society determine to be the absolute minimum socially inclusive wage. It allows us to redefine our concepts of productive employment by including jobs that currently go unrecognised but provide value to our communities.

Most importantly the JG allows the most disadvantaged in our society an opportunity to engage in paid employment which would lead to recognition in the community, and vastly improved self perceptions and a more prosperous society.

Thinking About A Green New Deal

This post follows on from the post ‘(Not) A Green New Deal being Proposed in Australia’. In that post I outlined the origins of the original New Deal, gave a brief overview of what the original New Deal was and followed on with a summary of what a Green New Deal is in the USA, it’s intellectual underpinnings and how that informs policy options.

I critiqued The Australian Greens proposals of their version of a GND (Which to date don’t seem to exist so I critiqued their policy page) and how their flawed macroeconomic understandings lead to flawed policy proposals. For example The Greens concept for support for coal workers isn’t specific, there is mention of a future work commission and looking into how technological change will impact jobs. Unlike the GND that outright says;

Ensure a just transition for communities where the fossil fuel industry holds significant control over the labor market. This includes not only training and wage replacement programs for fossil fuel workers themselves, but also investment in the businesses and workers that previously served them.” [emphasis added]

Reading further about the GND, it draws parallels that the mobilisation required is on a similar scale to WWII.

“In fact, as the U.S. prepared to enter World War II, our economy lacked the capacity to build the ships, tanks, airplanes and other armaments and munitions that would be needed, or to produce needed inputs like steel, aluminum, rubber, concrete, and other essential materials in adequate quantities. Many were skeptical whether the country could “gear up” fast enough to avoid losing a war that it had neither sought nor prepared for.”

And very forthright answers the how will you pay for it question as follows;

What a nation can do and can build is ultimately limited only by the size, skills, and creative energies of its population; the capacities of its companies, organizations and governments; and its available natural resources.” 

There is nothing in the GND that links any of the expenditure required to taxation. Unlike most political parties that say “If everyone paid their fair share of tax, we’d all get a fair go at living a decent life.”

Modern Monetary Theory will tell you limits to spending at the Federal level, by the currency issuer, is constrained by available real resources (including labour) and ecological constraints. All Federal Government spending is new dollars and taxation removes spending power. It is not a proposal for unlimited spending.

Often when we think about ‘the economy’ we define it as an abstraction to our own reality. An entity that we need to serve in order to prosper. Terms like ‘cost’ are applied to public spending. When your mind is buttressed by the analogy ‘a currency issuing government is like a household’ – you think in terms of taxes needing to ‘pay for’ a particular public service.

I prefer to think about a cost in terms of the real resources required to implement a particular policy. The NBN is a good example. All manner of numbers where thrown around in order to justify a reason to roll out an inferior network, and the justification was the government would save dollars and needed make a commercial return.

The cost in rolling out a broadband network isn’t financial, it is the real resources. We need fibre, labour and IT infrastructure. The NBN isn’t a cost, it is a tremendous benefit. It provides employment in the construction phase and gives Australian households and industries huge opportunities.

The ridiculous notion that a government needs to make a commercial return is based on the notion that profit is a means to measure efficiency. The Federal Government is the only entity that never needs to be concerned with insolvency, savings is the act of forgoing current expenditure to spend at a later date. It applies to a user of a currency.

Last week I was listening to a lawyer speak at some training and he was speaking in relation to assisting people with disabilities and he said something along the lines of ‘it is the idea we give up something to help somebody else less fortunate’ the implication is he was referring to taxation. I thought to myself, ‘well we don’t have to give up anything’. Provided we have medical professionals, a system in place to help people, and the ability to build the equipment needed, everyone else doesn’t have to sacrifice anything. I haven’t lost anything as a result of the NDIS being in place. The issue becomes if we didn’t have sufficient physical resources (including labour) and then needed to make choices about who got assistance.

You can apply that thinking to our education system, the energy sector and our healthcare system. The issues facing private healthcare is a good example. It’s being billed as a ‘crisis’ by private insurers. In the story linked to we see a health insurance representative stating:

“Now, my idea is I should be able to opt out of Medicare, take the pressure off the public system and taxation as a funding mechanism and take care of my own lifetime healthcare costs.

I believe I should have that option and I think inevitably, that Medicare, as an insurance scheme, is retained for the vulnerable and those who would otherwise not be able to take out appropriate levels of cover.

This is a strategy in place to drive more people into the for-profit healthcare industry as customers decline. The industry associates public spending as a cost. Any government committed to public healthcare, would look at the data of declining private health insurance, realise as citizens we’ve made a decision to be covered by a public healthcare system, and use this opportunity to employ the medical professionals made underemployed and unemployed in that sector and boost the resources in the public system.


Orthodox economics is full of language and metaphors that try to convince us that despite having sufficient real resources we can’t deploy them for a public purpose.

Ultimately we do have limited resources and need to make choices, For what purpose do we deploy our labour power, what is the most efficient way to use our real resources to provide the services our society desires? What do we leave for the public sector and what do we allow as an activity in the pursuit of profit? Limits to spending from any source, are inflationary which depends on the nations productive capacity.

The GND proposal for dealing with inflation is;

“Were inflation to return as a threat for the first time in half a century, furthermore, there are time-honored ways of preempting it. These include not only taxes and bond issuances, but also “macroprudential” limits on bank over-lending and financial market speculation.”

Macro-prudential rules are the rules that banks lend under. Like all western countries, Australia has a system that benefits the finance industry and has placed our households amongst the most indebted in the world.

A GND in regards to finance would mean understanding loans create deposits, giving private financial institutions the ability to create credit gives bank an incomparable power over the rest of the economy. Banks should be publicly owned an democratically controlled. The public banking sector should not replicate the profit seeking model of the private sector. The only functions a bank should perform is to facilitate payments and provide loans to credit worthy customers. A strong public banking sector needs to be instated that adheres to the below mentioned rules:

  1. Financial Institutions should only be permitted to lend directly to borrowers. All loans would have to be shown and kept on their balance sheets. This would stop all third-party commission deals which might involve banks acting as “brokers” and on-selling loans or other financial assets for profit. They should not be permitted to speculate as counter-parties with other banks.
  2. Banks should not be allowed to accept any financial asset as collateral to support loans. The collateral should be the estimated value of the income stream on the asset for which the loan is being advanced. This will force banks to appraise the credit risk more fully.
  3. Banks should be prevented from having “off-balance sheet” assets, such as finance company arms which can evade regulation.
  4. Banks should never be allowed to trade in credit default insurance. This is related to whom should price risk.
  5. Banks should be restricted to the facilitation of loans and not engage in any other commercial activity.
  6. Banks should not be allowed to contract in foreign interest rates nor issue foreign-currency denominated loans.There is no public sense achieved in allowing them to do this.
  7. Social, labour and environmental criteria should be introduced to determine how the banking system allocates credit. 

I would go further and advocate “All Australian deposits should be guaranteed and private banks should NEVER be bailed out through public expenditure but instead have assets taken over by the Federal Government and nationalised.” Credit issuance should be seen as a public good.


A Green New Deal in the USA also recognises;

Where the original New Deal kept people of color — particularly Black people — subordinated as a servant class vulnerable to economic exploitation and instability, the Green New Deal will bring the employment, business ownership, and wealth- generating opportunities that these communities need in order finally to have full and unfettered access to our economy and our political processes.

The civil rights movement in the USA fought for Guaranteed Jobs. Martin Luther King’s infamous ‘I have a dream speech’ was at “The March on Washington for Jobs and Freedom

This article about Coretta Scott King outlines why she fought for a system of guaranteed employment.

“Four days after her husband’s murder on April 4, 1968, Scott King returned to Memphis to support the city’s striking sanitation workers. She marched with an estimated 50,000 people before concluding at a rally at the Memphis city hall. Amidst drizzling rain, she reminded her audience of the terrain they had traversed and the journey ahead: “We moved through . . . the period of desegregating public accommodations and on through voting rights, so that we could have political power. And now we are at the point where we must have economic power.”

In 1974 Scott King co-founded the National Committee for Full Employment/Full Employment Action Council (NCFE/FEAC) to fight for legislation that guaranteed jobs for all Americans. Guaranteed jobs for all who wanted them—regardless of race or gender—had long been a goal of Scott King’s and the black freedom movement.

The GND looks at indigenous rights issues;

Where indigenous rights have been previously neglected or pushed aside, the Green New Deal will affirm treaty rights and respect the claims that Native Americans have to tribal lands as sovereign peoples.

This is an opportunity for an Australian framework to recognise the rights of its Indigenous peoples. Which not only includes recognition of their voices but active participation and an ability of self-determination.

“…we believe that Aboriginal people and Torres Straight Islanders will be able to refocus their energies on the everyday requirements for self determination. Importantly this will include participation in the labour market and, for many, forms of employment that occur on Country in ways that strengthen and add contemporary value to Indigenous forms of knowledge.”

Flea, J et al. The Uluru Statement: A First Nation’s perspective of the
implications for social reconstructive race relations in Australia, International Journal of
Critical Indigenous Studies, Vol 12. No. #1, 2019
https://ijcis.qut.edu.au/article/view/532/704

The GND in the USA also recognises;

Where the New Deal often excluded or underpaid women in ways that kept them financially dependent, the Green New Deal will expand economic security and opportunity for women, so that they have the means to support themselves and their families, even into retirement.

This within an Australian context requires to look at enhancing maternity leave provisions, include stay at home parenting with a paid salary, and reviewing our superannuation system. A system that has skewed wealth to a relative few, has not provided for many Australian retirees (We have the highest rates of pensioners living in poverty in the OECD) and set up under the non-sensical notion that a currency issuer needs to save when it can always spend.

It is why we should look at enhancing the aged pension and scrapping our system of superannuation.

It fails to meet the standards of a retirement income system. It is costly and inefficient, unnecessary, and incredibly unfair. The age pension system is by far the most economically efficient retirement income system. Scrap superannuation. Expand the age pension. Boost the economy.

Conclusion

The Green New Deal (or whatever else you choose to call it) is a mammoth undertaking that within the USA is not only about a transition to a zero emission renewable energy sector. It is about a redistributive agenda that brings power to the most marginalised within their society.

I’ll close with a quote from Noam Chomsky in the book Understanding Power.

“Look, part of the whole technique of disempowering people is to make sure that the real agents of change fall out of history, and are never recognized in the culture for what they are. So it’s necessary to distort history and make it look as if Great Men did everything – that’s part of how you teach people they can’t do anything, they’re helpless, they just have to wait for some Great Man to come along and do it for them.” 

Any political and economic transformation is going to require a movement willing to take action to bring in that change. That means political demonstrations, strikes, being able to refute ‘junk economics’

and movements that use a coherent framework to bring about a working class, unified agenda.

The Right to Work

I’ve finally finished the site design and colour scheme. It took me much longer than expected as it proved more difficult than expected. Alas, I have a final design. Today’s topic is a continuation from my post Full Employment Demise and is a history of ‘The Right to Work’

The right to work movement has its origins in the 14th century. Now a days, within a USA context, it is a term used for anti union laws under the guise of a right to not be a member of a union. They are laws designed to limit organising and collective power.

Work on a a lords land circa 14th century was usually for a subsistence living and the surplus value of your labour (literally your harvest) was the property of the lord. The peasants that occupied the land were not its owners. Agrarian property was controlled by a class of feudal lords. Their were limits on travel for working people, ‘Villeins regardant’ were usually granted plots of lands to farm for a subsistence and these plots along with those on them could be bought and sold. ‘Bordarri’ who were usually tradesmen/artisans were usually granted a cottage to live in exchange for their labour. Conditions of servitude were inherited and you were bound in perpetuity. Under capitalism the exchange value disguises the use value of your labour and the capturing of surplus value by the capitalist class is more opaque.

There was growing demand for wage labour (most likely because of the leaving of taxes demanded a necessity for the sovereigns currency) Waged-labour was more cost effective than feudalist servitude as it absolved the owners of needing to house and feed their workforce. There was less direct need for surveillance and motivation came from the workers needing to obtain income.

As waged-labour became more common there were a series of laws through Britain and the rest of Europe to preserve distress amongst the unemployed. The notion that it ‘built character’, ‘unemployment acted as a motivator and increased the productivity of the working class’, and it limited what the capitalist class saw as ‘excessive wages’ as workers competed for scarce work.

There were laws that under the guise of ‘providing for’ or to ‘assist’ the unemployed acted as a mechanism for forcing the unemployed to take any job at any condition. Elizabethan poor laws, such as the system of Speemhamsland, which was a sliding scale payment tied to the price of grain, designed to mitigate against rural poverty but ended up as a wage subsidy and resulted in increases in the price of grain, leaving the poor no better off.

There were also workhouses during the 19th and 20th century. The unemployed would be required to work in dangerous conditions, usually in a factory, for their below subsistence welfare payment. Conditions were often so pernicious, it resulted in death. It is similar to today’s modern day mutual obligation requirements under our welfare system. Welfare recipients are required to undergo Work for the Dole or Community Development Program (CDEP) for their below subsistence payment. It is mandatory and there have been cases of workers dying as a result of the conditions. The CDEP is often work for a private for profit corporation.

By 1848 during the Second Republic of France and the idea of a ‘right to work’ had gained traction having been popularised over the proceeding decade by Louis Blanc. The abolition of unemployment was a goal of the Parisian workers who had backed the Second Republic. ‘National Workshops’ were established where unemployed Parisian workers could show up and be paid. The scheme was contentious and had divided the cabinet, that resulted in a chaotic scheme. Many within cabinet wanted political reform not necessarily social reform such as the elimination of unemployment and wealth redistribution. The municipal engineers organising the work resented the use of unskilled labour. Often there was no planned work for the idle workers they would be paid one and a half francs a day to do nothing or two francs when work was given. The program started at approximately 14,000 workers and within half a year and expanded to 117,00 workers.

False promises were made to expand the program throughout The Republic however, the ‘right to work’ was withdrawn which led to what is known as ‘The June Day Uprisings’, warfare amongst the national guard and the workers which left thousands of protestors dead.

The ‘right to work’ movement reached the political discourse in Britain in 1889 and became a goal of the Independent Labour Party. Ken Hardie an ILP member in parliament breathed life into the unemployment debate. His maiden speech to parliament called for a policy on employing the unemployed.

“…we ought to have some permanent machinery to deal with the unemployed, the conditions of which should be twofold. In the first place it should be elastic. Labour should be organised in what he might call skeletal battalions, which might be filled in times of distress to their full strength, and which might go down again to skeletons when employment was plentiful. In the second place, the employment should be of a temporary character, and not such as to induce the recipients of it to remain in it in preference to seeking employment elsewhere”

The right to work and having the government act as an ‘employer of last resort’ gained traction across the political spectrum over this period. The choice for policy makers was, admit they had the capacity to employ the unemployed during downturns and they could set up works to to do or they could leave the unemployed to face destitution and misery, risk electoral defeat or a social revolution. The conservatives came with a counter offer found in the works of a conservative member of the House of Lords, William Beveridge in Unemployment: A Problem of Industry.

Beveridge argued in 1909 though unemployment was a result of the capitalist system it was only necessary to eliminate frictional unemployment and provide relief for the unemployed through unemployment insurance. The conservative alternative to Labour’s ‘Right to Work’ was a system of labour exchanges between the public and private sectors and and a contributory unemployment insurance scheme. By 1911, this was the system in place in Britain.

In 1919 E.G Theodore, Queensland Premier with the Australian Labour Party attempted to pass the Unemployed Workers Bill. The goal was to place the full resources of the State and Local Government in the hands of a council dedicated to the elimination of unemployment. The State Government would undertake major works to increase the number of jobs, there were powers that would order private employers that could assist to augment their projects, while local authorities would delay or expedite programs to deal with the seasonal variations in the number of jobs available. The councils role would be to undertake research and commission vocational training. Welfare payments were to be transitional while employment was being organised.

Naturally there were objections from the capitalist class towards this goal. Headlines described this system as a ‘loafers paradise’ by The Courier Mail

“The so-called “Unemployed Workers” Bill and its extraordinary provisions were widely discussed in the city yesterday. Needless to say, the measure was very strongly condemned as a premium upon idleness…”

Mainstream media warned of communist atrocities and the perils of socialism. The bill never passed but we saw a shift in the language used by opponents of full employment. Whereas in Hardie’s 1908 bill we saw opposition to full employment, laying open the capitalist class opposition to a system of full employment by 1919 arguments were around how methods of achieving full employment were flawed.

Much of the ‘economic’ theories being used (Quantity Theory of Money;late 19th early 20th century, Loanable funds theory;circa. 1930s) were funded by industrialist and used as justification on why full employment was ‘unachievable’.


Throughout history there have been different ‘monetary systems’ in place. Today we operate under a ‘fiat’ system. (Literally Latin for by decree). A fiat monetary system is one where a sovereign power issues its own currency and floats it on an exchange rate for trade.

The monetary system in use during post WWII was a gold standard. Governments would specify a particular amount of gold specie in return for the currency that they issue. Thus currency was limited by the supply of gold.

During war periods the gold standard was often suspended. This allowed a government to spend without concern toward the gold supply. During the Napoleonic wars Britain entered a period know as ‘The Restriction’ which suspended the gold standard and they invested in building their navy and colonising half the world. Similarly the gold standard was suspended over WWI and WWII.

During times of war, it is ‘normal’ to have all real resources, including labour in use. There is often a shortage of raw materials and labour power. Hitler used a fiat system to build Germany’s military. Japan avoided a Great Depression because the Japanese Prime Minister, Takahashi Korekiyo, took Japan off the Gold standard in 1931, and introduced a major fiscal stimulus with central bank credit. (Jargon for issuing money without issuing a bond)

The Great Depression was largely a result of insufficient spending, being tied to a gold standard and opposition to full employment by the capitalist class. Full employment policies have enormous political consequences as the threat of unemployment is taken away. It ensures workers have higher bargaining power, politically we have more power to ensure greater provisions of public service, which erodes capitals claims on national income.


The period of WWII in Australia saw full employment in Australia. As I mentioned in this post. Australia experienced a period of a full employment policy were unemployment seldom rose above two per cent. The work of J.M Keynes and his General Theory influenced most western policy towards achieving this goal. Full employment was defined as more jobs advertised than demanded (Beveridge curve) and Keynes ‘pump priming’ was used to ensure aggregate demand (total spending) was sufficient with this goal. Keynes very clearly articulated unemployment was a result of insufficient aggregate demand. (Spending in total)

Pump priming is a mechanism where you stimulate the economy enough to increase the marginal propensity to consume and the additional spending reaches enough to generate full employment.

Conclusion

The right to work was once a goal of workers movements in France, Britain with the Independent Labour Party, and an early goal of the Australian Labour Party. It sat alongside universal suffrage and the eight hour day.

Systems of unemployment insurance were compromises over policy goals of guaranteed employment. Today the workhouses of the 18th century are back in a modern form (WftD, CDEP), the pernicious nature of making unemployment so unattractive so the unemployed take any available job, no matter how atrocious the conditions.

Full employment policies were introduced post WWII though didn’t use a system of guaranteed jobs and provided unemployment insurance while workers waited for work to be created. However, there was a clearly defined goal of ensuring more jobs than work demanded. Today definitions of full employment are pathetically defined.

The next post will look at how a fiat currency can always be used to employ all available labour using a Job Guarantee as a buffer stock mechanism and changing the definition of productive work!