The Global Economy in Australiaby Dick Bryan and Michael Rafferty
Sydney, Allen & Unwin, 1998, pp. 277
This book is an important addition to the literature relating to what is referred to as globalisation and its effects on Australia. Globalisation has brought many problems, and it is still unclear what its long-term effects will be on Australia.
The authors commence by citing the United Nations Conference on Trade and Development: "The considerably increased mobility of capital that characterises the current process of globalisation has not resulted in higher investment and faster growth, but rather in higher profit shares at the expense of labour." This has occurred largely because capital is of its nature able to move freely from country to country, whereas labour is generally immobile: usually it is impractical for employees to migrate from country to country in the search for work.
The authors comment that in Australia there is a widely held perception that economic life is becoming more pressured and less secure; those in full time work are working longer; those out of work are finding it harder to get back in; long-term unemployment becomes the increasingly likely future of school-leavers, creating a culture of personal depression and social alienation; families that could once manage on one income now require two; the pursuit of efficiency through cost-cutting creates stress and uncertainty, as well as profits.
These perceptions are not general, for some have benefited from changing conditions. The authors point out that, for example, in every capital city there are select suburbs where house after house in street after street has a value upwards of three-quarters of a million dollars. But growing inequality has been a product of the past two decades:
"[T]hese $750,000 houses are the equivalent of twenty-five years' pretax income for a person on average weekly earnings, and a life-time's income for a low-paid worker. So for the majority ... the pursuit of efficiency in economic processes has come at a great cost, in terms of access to work, pressures at work (with direct implications for home life), take-home pay, hospitals and housing."
The authors note that in the pursuit of profitability, global expansion is one form of competitiveness — the search for greater markets, cheaper inputs and new investment opportunities. They continue:
"The essence of the class bias associated with globalisation is straightforward. Capital (finance and industry) is relatively internationally mobile, labour generally not. On an international scale, the owners of capital can compete between localities to get the highest return, and in any particular locality their decision to invest is predicated on an expected rate of return. Nation states assume the mantle of attracting capital in the name of national growth and so assume to meet capital's need for a profitable environment. Labour, on the other hand, is penalised for its relative immobility, its lack of control over investment decisions, and its oversupply. Workers are told by the State that they must work harder, smarter and longer and for less remuneration — otherwise capital will go elsewhere (or there will be no investment)."
As the authors point out, in reality globalisation means that labour must work harder for less income and a lower standard of living. They conclude that "the long-term future for labour looks bleak," and that with the exception perhaps of the fastest-growing nations in the early stages of development and the richest few of the nations, viability comes from one nation's making its labour cheaper for capital than labour in other nations. This involves "a tacit auction between nation states to cut the costs of labour to capital".
The authors discuss at length the implications of globalisation for Australia, and their analysis is illuminating and helpful. However what is lacking is definite advice as to how the problems that they discussed may be resolved to Australia's advantage, or at least so as to minimise the adverse consequences and distress in many quarters caused by the removal of international barriers.
This criticism does not negate the value of the authors' exposition. It contains many perceptive insights, and would be a very useful acquisition for those who are concerned by Australia's economic future. It may be thought that the time has come when a critical assessment of globalisation should be made, for the purpose of determining how Australia can, without causing adverse economic repercussions, re-introduce some barriers in order to protect Australian employment and social conditions. So for example it may be that the introduction of low levels of tariffs should be considered, not for the purpose of curtailing foreign trade generally, but to provide an off-setting advantage to Australian industry against both extraordinarily low wage levels (as in China, for example) and massive economies of scale (as in the United States and Japan, for example). A current prejudice, based primarily in the United States, is to dismiss policies of this nature with undue summariness.
National Observer No. 40 - Autumn 1999