In Dr Jim Cairns’ time as Deputy Prime Minister and Treasurer under the Whitlam Government, he observed first-hand the social democratic and labour parties’ tendencies to capitulate to capitalist bureaucratic norms and economic orthodoxy, all confined within electoral limitations of what could be considered ‘popular’. Most significant to us now is Cairns’ observations of how social democratic parties of the 1970s paid far more attention to opinion polls than analysis of our economic system.

CREDIT: WIKIMEDIA COMMONS
Jim Cairns was the most senior Left figure during Whitlam’s leadership of the Labor Party, becoming Deputy Prime Minister and Treasurer in 1974.

Cairns described this tendency as “Whitlamism” since what mattered to them most was the acquisition of political power. If unpopular policy were to arise; for example, a policy that would reduce inequality — radically outside of the perceived limit of power — it would be rejected on the basis that “if we brought that to an election, we wouldn’t be in power.” Ultimately, there was and still is no expansive attempt to address the economic contradictions arising from capitalism, and instead only piecemeal concessions working within won power.

Now, this rhetorical device of “we can’t do X as it would be unpopular” is still repeated today whenever people raise issues within or about the Australian Labor Party. These range from minimal reforms to address income inequality, to the AUKUS agreement, a capital gains tax discount, and so on. This is thought of as “pragmatism”. However, when we actually analyse the core rationale at play, it loops back to Cairns’ thesis: that we often enact the policies of our conservative opponents because they are within the won limits of exercisable power.

Take for example, AUKUS. It is a manifestation of the integral and bipartisan US-Australia alliance, and so supporting and expanding AUKUS is seen as something desirable. In fact, it was one of the very few things that former Coalition leader Peter Dutton commended Prime Minister Albanese for doing.

Now we look at a policy outside the won limits of power: changes to negative gearing and the Capital Gains Tax discount. Reworking these policies is perceived as outside the won limits of power, as Labor lost both the 2016 and 2019 federal election with changes to them as a part of its policy platform. Such changes would have decreased house prices and created a powerful disincentive for property speculation — however, these election losses spooked Labor into
abandoning their pursuit even after attaining government in 2022. Demonstrating Cairns’ thesis perfectly, the ALP is hamstrung by a “mandate” of self-imposed limits such that they cannot meaningfully address the crises brought on by capitalist economic relations.

What Cairns proposes as an alternative to this is to smash the won limits of power entirely. We as a movement, built on class-based struggle against a ruling economic elite, must champion “counter-power”. This will entail building institutions outside of Capital to fight and win the battle for hegemony.

The best example of counter-power can be seen throughout the 1960s-1970s within the Australian trade union movement. Whitlam upon his assumption of leadership was considered a moderate, breaking with the traditional socialism of the ALP. However, the powerful union movement acted as a counterweight to the traditional power of Capital.

CREDIT: ACTU
The 1960s-70s are widely considered to be the pinnacle of trade union power in Australia.

This resulted in wide-ranging social and economic reforms, radically changing Australian society. Free university, large wage increases, Medibank (Medicare’s predecessor), gender equality, land rights, an end to conscription, increases to pensions and so on. These are policies that genuinely, substantially improved the material conditions of the Australian worker.

This only came about as the result of relentless pressure from the trade unions. We can compare the Whitlam era to Albanese’s assumption of the Prime Ministership in 2022. Due to bureaucratisation and an overall decline in union density and overall membership, trade unions can no longer muster the requisite counter-power needed for the state to enact impactful pro-worker reforms.

What we have seen from Anthony Albanese is what Whitlam would have been without union counter-power: Whitlam’s term saw the 1974 ALP National Conference described by observers as a “business orgy”. Without sustained and continued counter-power, social democratic parties regress to the limits set by conservative parties such as wage restraint, austerity and so on.

This regression isn’t the personal fault of leaders within the movement; rather, it’s a logical reaction to a set of circumstances
within the context of the Global Political Economy. The stagflation and oil crises of the 1970s ultimately broke the back of the post-war economic consensus, precipitating a transition away from Keynesianism and towards “economic rationalism”.

CREDIT: HACHETTE
Global events such as the 1973 oil crisis strained post-war economic policy to its absolute limits.

Governments used to broker agreements between two forces; labour and capital, if you can even imagine them competing and mediating. A radical shift in economic policy meant labour would now almost entirely submit itself to the state in a uniquely corporatist form of neoliberal economic relations.

This transition was framed as a project where the Australian working-class sacrificed some of their wages, conditions, rights at work and so on for the “national interest”. It manifested in the 1983 Accord process in which trade unions forfeited their demands for large wage increases, and many rights such as the right to strike; in exchange for policies such as Medicare (previously won under Whitlam without restraining wages). This was alongside other forms of state support offered by Bob Hawke in exchange for union de-radicalisation, which swung the pendulum away from workers and toward Capital.

CREDIT: NATIONAL ARCHIVES OF AUSTRALIA
The Hawke-Keating years saw Labor abandon socialism altogether in favour of neoliberal economic policy.

The Australian Labor Party enacted a policy of, effectively, national austerity from 1983-1996, on a scale even larger than prior conservative governments — representing a decisive break from the largely interventionist tradition of the party. The reason for this break? The need for profit within capitalist economies. Not in the sense that capitalists want to make more money; but because for a capitalist economy to function, profit is a required as an engine of self-expansion, allowing the capitalist to accumulate capital, and to invest, compete, and produce goods and services.

Simply put, without profit to reinvest, there can be no growth to fuel the wage increases and redistributive policies of the state championed by social democrats.

Whitlam needed the profit from the private sector in order to fund his vast array of social and economic interventions such as wage increases and an increase to company tax, which directly impacts the rate of profit. All of this could be funded because Australia and much of the Western world was experiencing an economic boom where average unemployment was 1.3%, GDP growth 5.2% and inflation at 3.3% pre-1974.

By all economic metrics, the numbers presented extremely preferable conditions that enabled Whitlam to enact the above interventions. However, after the end of the 1974 boom, Labor experienced a radical rightward shift toward Capital because the state of economic performance and capitalism was suddenly in crisis. Unemployment at 5.6%, 11.4% inflation and GDP growth at 1.8% from 1974-1983 resulting in a large regression and shift toward business-friendly policies.

These policies were enacted because they were within the won limits of power, as Cairns observed first-hand. Because ultimately, social democracy can only be sustained when macroeconomic conditions domestically and internationally are preferable to enable redistributive measures. And, due to social democrats not winning an adequate scope to exercise power, we witness the regress toward policies to appease the needs of Capital.

CREDIT: THE GUARDIAN
The Albanese Labor government has continued the trend of self-moderating to appease the needs of Capital.

Social democratic governments experience capitalist problems, such as the stagflation seen in Australia in the 1970s. Thus they are forced to give up social democracy in favour of austerity and wage restraint. Because any radical shift to the basis of the economy would be outside the won limits of power.

In short, Jim Cairns has been proven right, and his insights and critiques into the nature of social democracy still ring true within the contemporary politics of the Australian Labor Party: only enacting policies within the won limits of power, because fundamentally they do not want to rock the boat.

“The boat” in question is Australia’s political class; ghoulish functionaries whose priorities radically differ from those of the class they claim to represent. As Cairns explains in The Quiet Revolution, the book which inspired this article, a class of bureaucrats will arise from the union movement and the state to enforce the won limits of power and stifle new ideas.

To break free of this, we must boldly champion ideas that smash the limits of won power, and challenge the entrenched ideas that created this failing power structure.

Expand the won limits of power by organising, spreading pro-worker ideals, joining your union, and getting your peers to do the same. All practical things, when done collectively, can shake the very foundation of our political order.

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This article was originally published in Keep Left #1.