Published: The Vanguard, Vol. 13, No. 48, December 16, 1976.
Transcription, Editing and Markup: Paul Saba
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It is a law of capitalism that capital moves to wherever the rate of profit is highest. Capitalism is a system of production for profit: for the accumulation of more capital. Companies therefore produce only the products that give them the greatest profit, and they try to set up their enterprises whenever the most favorable conditions for making maximum profits are to be found.
The welfare of the people is simply trampled on by the profit-hungry monopolies: their search for profits is a ruthless rampage that leaves a trail of misery, ruin, hardship and poverty. This is how capitalism works.
In Australia capitalism takes the form of imperialism, the decisive and leading sector of which is U.S. imperialism. The multi-nationals of other countries are also active here under U.S. imperialism’s leadership, while Soviet social-imperialism is attempting to move in and take over as the U.S. declines. It has always been the imperialists’ claim that they have “developed” Australia. They have even tried to justify their exploitation of the working class by saying they are “providing jobs”. And insofar as imperialism has built up industry and constructed factories it is to some extent true that it has developed capitalism in Australia. (Though all the work has been done by the workers and working people.) The claims of the mining industry to have developed Australia, however, are largely a cover-up for the multinationals’ (like Hamersley and Utah) piratical plunder of Australia’s mineral resources – a process that un-develops Australia and robs us of our natural wealth, not one that develops us at all.
The Australian people, led by the working class, have naturally rebelled against the exploitation of workers, by imperialist and local traitor comprador capitalists. They have demanded and fought for decent wages and living conditions, and they have demanded the nationalisation of the multi-nationals as part of the struggle for national independence and socialism. They have also bitterly opposed plunder of our natural resources by the Japanese and U.S. pirates and their increasingly blatant attempts to split the Australian nation up to make the grab easier.
The response of some companies to this rebellion, and their response to the general crisis and decay of capitalism in Australia, has been to shift their operations elsewhere. They thus openly admit that capitalism has ceased to “develop” Australia even in a capitalist way, and they intensify the un-development of Australia that is already being carried out by the mining pirates. Most of the companies move to the countries of South East Asia – Indonesia, Singapore, Malaysia, the Philippines. The rate of profit in these countries is higher than in Australia. This is largely owing to the poverty of the people, suppressed by fascist dictator governments which attack the people’s attempts to improve their wages, working and living conditions. It is also due to the way the treacherous rulers of these countries pander to foreign businessmen in the effort to entice them to exploit their people: tax concessions, subsidies, duty free zones and all kinds of government assistance, from laws to prohibit strikes to the use of the army and police to break them up when they occur – all this is part of the attraction of South East Asia to members of the capitalist class in Australia.
Since 1969, 41 manufacturing companies have moved all or part of their operations to the Philippines, and it is estimated that up to 200 firms have offices in Singapore, and 200 in Indonesia. Fifty companies (at least) are actually operating in Indonesia and many more in Singapore. A chartered accountant in Brisbane, who has worked for companies moving abroad, especially those in the electrical engineering field, estimates that about 20% of the work in this field has moved out of Australia. He also estimates that between 5,000 and 10,000 jobs have been lost here as a result.
There are many examples of such companies. Electrical Equipment of Australia, for example, moved one of its subsidiaries to Singapore. The general manager commented that the move means “a loss to Australia of about $1 million in capital and hundreds of jobs”. He added with sickening hypocrisy: “It wasn’t easy – some of these people I have known for years. But, frankly, if we are to survive, we will have to go further offshore.”
Next door is Kempthore (lighting) which has gone into (junior) partnership with the Japanese multi-national, Sony; and the U.S. General Electric Co., which has just closed an Australian plant down and moved there (presumably sacking however many workers were there).
A number of companies have moved to the Philippines. The attractions for capitalism include special tax concessions and other forms of government assistance – and workers whose wages are from $1 to $2 per day. So shocking are living standards and the wage rates paid in the Philippines that the government actually woos foreign businessmen with advertisements reading: “In our country labour is cheapest – wages for a maid will not exceed $15 a month.” The Managing Director of Bradmill, which set up a subsidiary there to export clothes back to Australia, said that “There was no way we could export from Australia any more . . . we expect to make a profit . . . labour costs are much lower.” Another clothing company, Amco, is exploiting about 300 Philippine workers in a “duty free zone”. The company’s fabric director said that labour in the Philippines is “very willing to work, cheaper, and they don’t strike.” (Strikes, of course, are illegal under Marcos’s fascist dictatorship. Amco is more profitable as a result of this move. And in 1973, the Gaty Clothing Company moved to Manila, sacking 151 workers in Australia.
These figures are overshadowed by the efforts of the English multi-national Dunlop’s “restructuring”. Its workforce in Australia has dropped from 26,295 in December 1973 to 20,655 in June 1976, and more jobs will go soon. Dunlop constantly threatens workers in Australia that unless they produce more goods with fewer hands and lower piece-rate bonuses, it will close down and move to Asia. Dunlop has in fact opened a rubber glove factory in Malaysia and has moved its tennis ball factory to Manila. It has closed down several factories operated by its clothing subsidiary, Holeproof, and is beginning to import garments from factories it has recently opened in Singapore. Its footwear subsidiary, Grosby Shoes, has also moved to the Philippines. (In 1969, Dunlop manufactured all its footwear in Australia; today, 50% is imported). Dunlop’s Managing Director complained that the removal of “export incentives” (government handouts) were the “last straw” that moved the company to open the Malaysian glove factory. He said that he expected a lot more manufacturing industry to move to South East Asia “because the government is clearly trying to restructure high cost industry. I feel Australia will be better off with its resources put into low cost industries” (like the mining rip-off). “We should be able to go forward together towards these objectives – except that the Industries Assistance Commission (I.A.C.), (renamed by a cartoonist as the Overseas I.A.C.) feels that we should all be hit with a mallet” (i.e. makes it too obvious). “Dunlop still cannot feel quite able to send its total plant overseas. . .” Very magnanimous, Mr. Jarman!
When the bandit Lee Kuan Yew, dictator of Singapore, came to Australia it was pointed out that one of his objectives in coming was to encourage imperialist and comprador capitalists to invest in Singapore – often moving their operations from Australia. He shamelessly offered low wage rates, totally tamecat and subservient trade unions, the illegality of strikes and all the weaponry of fascist oppression as inducements to foreign investors. His stand is against the interests of both Australian and Singapore workers. On the one hand, unemployment is created in Australia as firms move out. On the other hand, Singapore workers are cruelly exploited and forced to live in poverty.
The general level of wages is determined by the socially accepted standard of living in a particular country. Where the standard is low, wages are low. In the countries of South East Asia the people are kept in poverty by governments which suppress attempts by workers to struggle for a greater share of the great wealth they produce for the multi-nationals. It is because wages are lower, and the rate of profit thus higher, that companies are moving from Australia to South East Asia. Capitalism is admitting that the standard of living of the people in Australia is too high for it to operate profitably – in Australia, mind you, where 20% of the population is on or below the poverty line! What a cruel system!
Underlying this trend is the place Australia occupies in the contention between U.S. imperialism and Soviet social imperialism. It is increasingly clear that the U.S. wants to turn us into nothing more than a quarry for cheap and abundant raw materials (particularly strategic minerals) and a war-base for defence against the Soviet Union. Imperialism has ceased to “develop” Australia and is throwing Australian workers aside. This is what lies behind the Fraser-Hawke assault on wages and living standards. They want to do the same thing as Lee Kuan Yew – reduce wages to the point where Australia becomes “attractive” to foreign investors. The recent devaluation is also part of this process. It cheapens Australian products – particularly in the export-oriented mining sector – and reduces living standards by raising the price of imported goods. It is all part of a multi-national-dictated effort to turn Australia into a low-wage supplier of raw materials for U.S. imperialism’s contention with Soviet social-imperialism.
The Metal Trades Industry Association expressed the dilemma facing capitalism in Australia. It voiced concern over “transfer and development of production facilities overseas. Goods produced by Australian companies overseas, with low unit cost labour are then imported into Australia.
While no official statistics as yet are available which quantify the extent of this development, MTIA believes that during the next 12 to 18 months many metal trades companies will be faced with the dilemma of either maintaining low return productive facilities in Australia with the hope that the situation for manufacturers might improve, or establishing plants in low unit cost overseas countries.
This second alternative will create the sort of structural change that will ensure continuation of an undesirably high level of unemployment. (Australian Financial Review, 23/11/76)
So this is the choice we face. There is no way to preserve security of employment (let alone full employment) or decent living standards for the people under capitalism. The only way out is national independence and socialism. We must strengthen our unity with the people of South East Asia and fight to defeat our common enemies – U.S. imperialism and Soviet social-imperialism.