Bob Gould, 2004

Free trade and Marxism

Source: Ozleft, Marxmail, February 4, 2004
Proofreading, editing, mark-up: Steve Painter

It’s nice to know that Phil Ferguson withdraws the accusation of racism against Michele O’Neill and myself, as a result of Tom O’Lincoln gently chiding him for being a bit over the top. It’s a bit ironic, considering that Ferguson associated my opposition to further reductions in tariffs in the clothing and textile industry with my rejection of, as he puts it (more or less correctly), some parts of Lenin’s theory of imperialism.

His mate, Tom O’Lincoln, who shares his general views on tariffs, also to my understanding rejects more or less the same aspects of Lenin’s theory of imperialism that I do (I’m open to being corrected by Tom if that’s not the case).

One’s views on the detail of Lenin ‘s theory don’t necessarily have a one-to-one relationship to one’s views on free trade and protectionism.

On the specific question, I’d ask this question of Ferguson: are Marxists obliged to be free traders? Does Ferguson favour, in all circumstances, the abolition of all tariffs? That seems to be his position.

I have a different view, which I don’t pretend is necessarily the same as that of Michele O’Neill, although I agree with her specific motion on tariffs in the clothing and textile industry.

As a Marxist, I am neither a free trader nor a protectionist. Over a long life (Phil Ferguson seems to consider relative longevity some kind of political crime), I’ve consistently opposed, from a Marxist point of view, the Stalinists and right-wing Social Democrats who have called for increased tariffs as some kind of radical or socialist program.

Campaigning for increased tariffs is always a nationalist diversion from the socialist struggle.

Existing tariffs are a somewhat different question. Tariffs in most countries are a product of contradictory forces and pressures in politics and society. The push for the abolition of existing tariffs today is almost entirely driven by finance capital and the ruling class, which advance a fantasy of free trade so as to impose the hegemony of finance capital and corporations on the world.

There is broad popular resistance in all countries, including Third World countries, to this kind of free trade. While not idealising this too much, socialists ought to resist bourgeois pressure for what the ruling class calls free trade.

Concretely, the existence of some tariffs in particular industries directly underpins the standard of living and wage levels of workers in those industries. This is particularly the case in Australia, in some light industries, particularly textile and clothing.

It’s worth noting that the overwhelming majority of workers in the TCF industry, like blue-collar workers in many sectors of industry in Australia, are now drawn from the ranks of non-English-speaking-background migrants. Many of them come from Third World countries where trade unions are battered and oppressed, and low wages tend to prevail.

It’s reasonably clear that the prospect of getting better paid work is one of the factors that has brought these migrants to Australia in the first place. The sectional interest of these workers in protecting their wage levels has to be addressed as part of a Marxist approach to this question.

In this area, as in all others, there is no substitute for empirical inquiry, information and concreteness. Tom Bramble’s excellent article on tariffs and the fair trade debates, in the Journal of Australian Political Economy, clearly indicates that in every industry, with the exception of the TCF industry, there is no significant connection between tariff reductions and job losses.

Much more significant is the development of the forces of production, and consequent technological unemployment, together with a ruling class offensive around productivity and job losses.

The TCF industry, however, shows a correlation between tariff reduction and job losses which, in this otherwise excellent article demolishing the protectionist arguments that Bramble fails to account for.

The bourgeoisie, in justifying tariff reductions, without acknowedgment echo Marx’s position on the corn laws in 19th century Britain. Marx points out that one aspect of the corn law tariff was that it inflated the cost of wheat and therefore bread sold to working class buyers eroded their wages and standard of living.

It is true that, to some extent, the effect of tariffs is to increase the cost of goods to consumers, as the free marketeers claim.

However, these things go in anything but a straight line. Prices of consumer goods are not simply dictated, in modern capitalist economies, by the raw cost of production.

Imperialism and monopolisation distort the prices, and the prices are actually dictated by a more nebulous, but nevertheless quite real, phenomenon: what the market will bear. Many of the goods imported with a very low wage component end up being sold to consumers at 20 or 30 or 50 times their initial cost of production, and very close to the price of the commodity produced under conditions of limited tariff protection.

There is a significant superprofit between the prices of the local producers and the prices of the imported product, even after the tariff markup. There is little evidence that the removal of the tariff would do anything except increase that superprofit, at least in the forseeable future. Genuine free trade is impossible under conditions of imperialism.

The TCF union, at least in Victoria under Michele O’Neill’s leadership, tends to associate a number of things. It fights hard to organise outworkers and improve their wages, it fights hard for wage increases for its members, and it exerts a considerable amount of pressure on employers to try to force them to introduce better machinery and better training.

The TCF union is also pretty active in support of refugees and in support of trade union rights and struggles in Third World countries.

The two or three waves of tariff reduction in the TCF industry have largely been imposed by right-wing Labor governments, which were also conspicuous in their lack of concern for trade union rights and basic democratic rights in Third World countries, an example of which is the outrageous acquiescence to the practices of the Suharto regime in Indonesia and the acquiescence in the lack of real trade union rights, particularly in China, the main country to which TCF production is being transferred.

Taking all the above into account, it seems to me to quite principled from a socialist point of view to oppose further tariff reductions in the TCF industry if it is associated with, as it is by the leadership of the TCFUA in Victoria, campaigning for union rights and better wages and conditions in Third World countries as well.

There is no doubt that a socialist government in Australia would ultimately abolish all tariffs, but this abolition would take place in combination with a dramatic reduction in the working day, the retraining of displaced workers, and the wholesale transfer of work into useful areas.

To some degree an international division of labour would be of substantial economic benefit to a socialist government in Australia and would make all tariffs redundant.

However, as most people will be aware, we’re still a fair distance from international socialism, and to expect even a significant part of this program from the conservative, capitalist governments of today, under conditions of working class retreat, is fundamentally utopian.

What is the alternative? If it is unprincipled, from a socialist point of view, to oppose further tariff reductions in the TCF industry, what is Phil Ferguson’s “Marxist” alternative? Is it, as it seems to be, consistent support for the capitalist free market and free trade, and the abolition of all tariffs? Where’s the Marxism in that?

One of the curiosities of this particular issue is that it is my understanding that the leadership of the DSP, with which Phil Ferguson likes to agree from time to time, has a similar point of view to mine on this question, despite the fact that it supports every comma of Lenin’s theory of imperialism. Does this make the DSP a nationalist party as well?

Michele O’Neil’s motion opposing tariff reductions at the federal Labor Party conference. Tom O’Lincoln’s small mercies

February 5, 2004

We’re asked to be grateful to Tom for gently reproving Phil Ferguson for his extravagant attack on Michele O’Neil as racist, but then Tom goes ahead and himself verbally sets up O’Neil.

Tom creates a cute, and almost classic, amalgam, self-righteously warning about the pressures poor Michele inevitably comes under, being a full-time union official and all. Then he loads her up in the following way:

“On the other hand, typically union calls for protectionism don’t connect to strikes, and for very good reason: they usually want to form some kind of united front with the bosses. I remember very well how the TCF unions held a mass rally about this in the 1990s and invited Victorian Premier Jeff Kennett to address the crowd. Kennett was a notorious union-basher.”

I’ve never met Michele O’Neil and I don’t live in Victoria, but I’m familiar with the broad outlines of her very impressive history of industrial agitation. Isn’t she the same Michele O’Neil who led the rank and file struggle that tipped out the previous, conservative leadership of the Textile and Clothing and Footwear Union, and didn’t that take place after the rally that O’Lincoln mentions?

It’s just a bit cute to make her responsible, by implication — even the indirect implication — that she’s a union official so she was responisble for having Kennett on the platform at a union rally.

Isn’t it a bit a sectarian and mischievous to imply, in the same indirect way, that she may be in some way responsible for the Textile Union being overly nice to textile industry employers?

All that I’ve read and heard suggests that, unlike the leadership she replaced by leading a rank and file rebellion, she fights the employers extremely energetically in the interests of her members.

There’s an element of truth in the general point that O’Lincoln makes in his inimitable self-righteous way about the pressures on all elected union officials, and unelected ones for that matter, but that leads me to treasure the role played by the smallish number of full-time union officials who have a proven record of resisting those pressures, and surely Michele O’Neil is one of those.

One should also listen carefully to the point of view of the minority of union officials who resist these pressures — to which Michele O’Neil belongs.

Tom accuses me of the following:

“But I don’t know what is specific to Michele’s stand, because Bob didn’t actually tell us, and when I clicked on Nick’s link I couldn’t get to his article. Could you please tell us what is different about Michele O’Neil’s position?”

Well, as a matter of fact, Tom, I did tell you, in a rather summary way, I admit. I should have been more detailed to allow for your propensity to sometimes misunderstand or not notice things.

In my first article, ALP federal conferences lurches unevenly leftward, posted on Monday, I said:

“On trade policy, the capable, persuasive and determined Michele O’Neil, Victorian secretary of the Textile, Clothing and Footwear Union (who spoke a number of times at the conference), achieved quite a coup. She avoided too much discussion of it at the left caucus, at which it was said that Kim Carr was opposed to her amendment, but on the floor of the conference she insisted, to Kim Carr’s obvious displeasure, in putting an amendment that tariff reductions in the textile and clothing area be frozen for the indefinite future. Michele O’Neil’s amendment was comfortably carried by the conference, despite opposition from some front-benchers. In the comparative jungle of ALP trade union politics, Michele O’Neil seems to me to be a fairly principled and rather ingenious agitator.”

That little account, while a bit summary, is as I saw the issue unfold on the floor of the conference. If you think I’m lying, you might do a bit of your own research, since you have such strong opinions. Look at the bourgeois press for that day, where it was reported, or you might even approach Michele O’Neil herself and get a copy of her resolution.

The critical issue is that she did not call for any increase in tariffs: just a freeze on existing tariffs, which is defensible from a socialist point of view.

Your mealy-mouthed hand-wringing about her using her valuable conference time to promote tariff protection, which suggests she was talking about new tariffs, is a kind of slander.

You wax eloquent about it only being hot air at an ALP conference, anyway, but this bit of hot air is actually quite important. It’s the first time in recent years that the constant and unrelenting pressure of the economic rationalist parliamentary leadership of the ALP has been seriously checked in such a public arena. From that point of view it’s a good deal more than hot air.

The question posed for you, Tom, is do you agree or disagree with Michele O’Neil’s proposition that tariffs in the TCF industries should be frozen for the foreseeable future?

Another aspect of your post that I find extremely problematic is the whole business about hot air at ALP conferences.

At this conference, even the more conservative wing of the trade union bureaucracy, in fact the whole ramshackle structure of the trade union bureaucracy, with all its weaknesses and contradictions, with which we are familiar, closed ranks to present a bill of demands on the possibly incoming Latham Labor government: that it must reverse all the reactionary industrial legislation of the past seven years.

Those demands on an incoming Labor government are, from a Marxist point of view, considerably more than hot air. To some extent they are driven by the recognition of even the most conservative and bureaucratic union leaders that the interests of the trade union organisations that provide them with a living require the reversal of these reactionary anti-union arrangements.

There was a lot more than just hot air at this ALP federal conference in the year 2004.