Forewarned is forearmed: Economic Reform Roundtable

Written by: on 4 August 2025

 

(Original graphic from www.artpictures.club)

An “inclusive” Australian Labor Party initiated conference, The Economic Reform Roundtable (ERR) will be held between August 19 and 21, targeting taxation and other means of making the Australian economy more dynamic.

“Inclusive” is perhaps something of a misnomer: attendance is by invitation only. Peak union and civil society organisations will be present, but the agenda will be driven by keynote speakers: the Reserve Bank on Day 1, the Productivity Commission on Day 2, and the Department of the Treasury and the Grattan Institute on Day 3.  

So here we have a focus on addressing the economic stagnation and downturn of capitalism in Australia. The Labor government, with their recent electoral victory are now setting out to reinvigorate the economy and ensure a more equitable outcome for Australian workers. At least that is how this initiative is being interpreted by a broad section of the intelligentsia and is increasingly being supported by the established media.

For example, in the Age on the 21st of July, Peter Hartcher, editor of the Sydney Morning Herald produced an article titled: “Advance Australia, richer fairer”. Hartcher, an advocate for confrontation and war with China has never been an opponent of economic rationalism and yet here we have an article extolling the

We are seeing an increasing number of articles that refer to the exploitation of workers and the need to address this through a greater proportion of the overall wealth being produced being distributed through wages.

There is a deliberate change in the messages being conveyed to the Australian people and it represents an attempt to build support for capitalism by presenting it with a more humane and caring face. For capitalism, it is a means of disguising its exploitative nature to enable and reinvigorate that exploitation going forward.

Capitalism's productivity crisis

For the Labor Party and reformists in general, this is a very good example of the role of Social Democrat parties and their followers in times of economic downturn and crises. We have a position where capitalism is experiencing what has been defined as a lack of growth in productivity.

It is important to understand how the issue of productivity is defined within capitalism. Basically it is in terms of the GDP relative to the total wages. In other words it is an issue of the price that can be realised on what is produced over the cost of its production.

To clearly demonstrate that productivity has fallen you would need to compare the actual output of commodities with hours worked over a particular period of time. And in doing this you would also need to be very clear about what components of work are actually contributing to commodity production and surplus value.

If we have a situation of over production, which is the case at the moment, capitalism needs to find a means of increasing production while lowering item costs. Initially the focus is on extracting more from workers without increasing wages. When this can’t be achieved through extending the time worked, or if it is socially difficult then increases in productivity will depend on investment in new technology.

Marx pointed out that in times of economic crisis, three changes are necessary for capitalism to revive; i) lowering of wages (the only source of profit through labour expended by labour power exceeding the labour involved in its production), ii) innovation through the introduction of new technology (AI), and iii) the resultant concentration and centralisation of capital. 

The focus over the last couple of decades has been on stagnant and reduced wages. This will continue but the emphasis is now moving to technological innovation and taxation reform.

Capitalism needs social democratic parties

In periods of economic crisis, the social democratic parties become an important tool within capitalist countries. They are the means of carrying out the changes necessary to facilitate the revival of capitalism without creating excessive social unrest. Keynesian economics after WW2 is a classical example of this. The reformist ideology of social democratic parties is an effective means of deadening the population’s understanding of what is taking place.

It is this way of presenting the issue that disguises the true nature of capitalism and encourages struggle around improving conditions with for example the common slogan “a fair day’s pay for a fair day’s work”. It never addresses the issue that this is an impossibility as it is meaningless. To use the term fair in a relationship based on exploitation is a nonsense and simply enables the continuation of that exploitation.

Given the “cost of living” crisis of capitalism, it becomes necessary to move the focus from wage reduction to economic innovation. This is how the ERR should be understood and explained and provides the real meaning of the term “capital deepening”.  When looking at the second requirement of technological innovation for capitalism to overcome economic crises, the Labor Party is facilitating the introduction of AI and this will result in significant improvements in productivity. All the chatter about the personal impact of AI is a diversion from its real value to capitalism in terms of establishing a new base for the ongoing expansion of capitalism and exploitation of workers.

There are numerous articles related to the concept of capital deepening. An article in the Age newspaper on the 1st of August by Shane Wright, “Big cut in company tax – but it would come with a sting” draws heavily on a proposal by the Productivity Commission. An essential aspect of this proposal is a 20% cut in company tax for companies with revenues less than 1 billion and channelling investment into areas that will increase productivity. Wright quotes deputy chair Alex Robson “..the tax proposals were aimed at encouraging businesses to spend more on investment that would lift overall productivity”.

The fundamental issue here is that the Labor Party is doing what is required of capitalism at this point in time. Tax reform and technological innovation will take place within capitalist relations of production. It has nothing to do with value to individuals and everything to do with trying to rescue capitalism. 

That is not to say it will succeed. However, these strategies have succeeded in the past and they may going forward. 

Older workers will remember the Hawke government’s introduction of the Accord, which lasted in various forms from 1983 to 1996. It was Labor’s response to the inability of the previous Fraser Liberal government to successfully freeze wages. With the support of the ACTU, Hawke implemented a wage freeze in return for a “social wage” – increased expenditure on items like health and education, and wages indexed to the Consumer Price Index. The latter lasted two years. By the 3rd Accord in 1987, the move towards determining wages on productivity had been made. Workers were forced to agree to “multi-skilling”, or one worker doing the job of two or three in a scramble to boost productivity  and hence justify a wage increase. Profits were secured, but wages were not. In 1991, enterprise bargaining, related to productivity, saw unions weakened further as they were forced to negotiate at individual workplaces instead of on one industry-wide Award.  Thus weakened, unions had to face the onslaught of John Howard’s “work choices” after the 1996 election.

The scale of the current crisis is incredible as is apparent through the climate catastrophes and the escalation of wars as the different imperialist powers attempt to mitigate their decline as is the case with America or further their ascendence as is the case with China. Based on these developments there is no guarantee that capitalism can be revived, at least in its current bourgeois democratic form. There is the real possibility of overt dictatorship in the form of fascism.

Hence the need to counter such outcomes through exposing what is taking place. The social democratic proposals, supported by institutions such as the formal role of the unions needs to be understood and countered through appropriate mass work.

 

 

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