Archive for October, 2012

Go long on nonsense! Higher learning from the office tower

October 28, 2012

In a lecture given earlier this year in Sydney, Philip Mirowski described the use by university administrators of citation indices like Thomson Reuters’s Web of Knowledge and Elsevier’s Scopus.

These have, he said, become ‘a sharp-edged audit device wielded by bureaucracies uninterested in the shape of actual knowledge and its elusive character’:

Bibliometrics gain power and salience by allying itself to the commercialization of research. The so-called rationalization of the university through research commodification requires more and more metrics to feed the bureaucracy, and provide short-term indicators of performance, since science has itself previously resisted quantification and has in the past proven recalcitrant to Taylorist techniques of micromanagement.

The providers of indices of scholarly ‘output’ (i.e. publication counts), claiming to measure the quantitative output of science, have deliberately ‘misrepresented the growth rate of science as part of [their] business plan.’

University administrators, serving their own purposes, have joined in with this deception. All parties are content to ‘play fast and loose with the meaning of knowledge… where intellectual debility is trumpeted as health’.

Note that, once it’s entered as intellectual property in the books of a firm, university or research institute, ‘knowledge’ acquires many of the characteristics of any ordinary financial asset.

It can, for example, be used as collateral for borrowing. An owner of IP (e.g. the university ‘technology transfer’ office or patent-holding company) can use it to raise funds either through bank lending or by issuing debt securities (e.g. so-called Bowie bonds).

Credit is backed by title to the asset or by a claim to its associated future revenue stream (e.g. the lump-sum fees or flow of royalties received as part of licensing agreements regarding copyright, trademark, patent, etc.).

In June 2000 a securitization deal involving an HIV drug (the reverse-transcriptase inhibitor Zerit) licensed to pharmaceutical firm Bristol-Myers Squibb allowed Yale University to raise $115 million in debt financing. The issue was underwritten by Royalty Pharma and Yale reportedly used part of the proceeds to fund on-campus capital improvements, including a $180 million new medical building. (Zerit later turned out to generate less revenue for Bristol-Myers, and thus lower royalty payments for the patent holder, than had been estimated. Sales projections, which were the basis for Yale’s upfront payment, were off by $400 million.)

In 2007 a similar ‘IP monetization’ deal allowed Northwestern University to raise $700 million.

Like with other secured borrowing (e.g. real estate), both the borrower and the lender have a vested interest in appreciation of the underlying asset’s price.

For the borrower (the IP owner) inflation means that debt can be written off against prospective capital gains. And, for the creditor, asset inflation improves the quality (value and liquidity) of loan collateral.

All parties therefore seek to preserve, and if possible to increase, the paper value of proprietary ‘knowledge’ (i.e. valuation of the IP based on the present value of the projected royalty stream).

As with other financial assets (e.g. equities, real estate), price inflation of ‘knowledge’ follows when there is an inflow of funds to the market without a corresponding outflow. The more the price of proprietary ‘knowledge’ rises, the more credit flows into the market seeking speculative gains, leading to a generalized appreciation of prices, and so on.

Thus the efforts, described above by Mirowski, to deliberately misrepresent the growth rate of knowledge and the quantity of declared ‘inventions’. This is a confidence trick.

Over the past three decades, many large pharmaceutical and biotech corporations have reduced their levels of in-house research.

Instead they have engaged contract research organizations, such as Melbourne University’s Bio21 Institute, housed at public universities and hospitals.

These outsourced R&D projects are promoted as ‘business incubators’ of startup firms. They duly receive generous funding from state governments, which together with local business groups hype the prospect of a local Silicon Valley, Boston or North Carolina ‘research cluster’ or precinct.

Yet, as Mirowski observes, ‘the stark truth is that most biotechs never produce a drug or other final product; they are just pursuing commercial science, which almost never makes a profit.’


[Once] you take the full costs of TTOs [technology transfer offices] into account, very few universities make any money whatsoever, much less serious revenue, from management of their IP assets… It is common knowledge that few university TTOs manage to cover their current bureaucratic expenses with their license revenues; beyond that, they are distinctly loath to admit they have been suing other universities or even their own students over some crass IP disputes, and rarely report either their court awards or their spiraling attorney fees as part of the commercialization calculus. This is indeed one major factor behind the inexorable proportionate rise of administrative employees to the detriment of faculty employment in the modern American university. Yet few are willing to enter that administrative bloat on the liabilities side of the commodification ledger.

Mirowski therefore says that ‘a wide array of phenomena lumped together under the rubric of the “commercialization of science”, the “commodification of research”, and the “marketplace of ideas” are both figuratively and literally Ponzi schemes.’

Yet strictly speaking a Ponzi financing structure doesn’t exist so long as borrowing can be hedged by rising asset values.

Only when the IP (the ‘knowledge’ that has served as collateral for borrowing) has been shown (as with Zerit) to generate less cash flow than advertised, and its price falls, must debts then be serviced by drawing in credulous suckers. Until then, prices will continue to appreciate so long as market liquidity is maintained by funds pouring in.

This means that, every phase of the cycle, the university has need of the boosterism of ‘promoters and spinmeisters’.

When it comes to biopharmaceutical research, publications in academic journals regularly serve as ‘infomercials’, promoting the marketization or commercial application of the drug, clinical treatment, product or discovery. It is widely acknowledged that many such articles are ‘ghost authored’ by a corporate client and attributed to ‘honorary’ academic authors, usually including a head of department or senior professors along with more junior scholars.

Presented with a draft manuscript prepared for them by a drug company, and with career advancement depending on the number of published journal papers listed on their CV, who among academic researchers is any position to demur?

In the natural sciences, the ‘technology transfer’ business model of higher education is based on exaggerated bluster about the commercial value of ‘discoveries’ and ‘inventions’ that result from proprietary research.

This, which Mirowski calls ‘epistemic Ponzi’, is a more lucrative version of a practice that is common across the humanities and social sciences.

Throughout these academic disciplines, from economics to sociology and ‘continental philosophy’, can be found grandiosely inflated claims to novelty and generality of ‘knowledge, used in a kind of intellectual arbitrage or carry trade.

Scholarly conclusions won cheaply in one field may be sold dearly to audiences at other institutional ‘price points’, i.e. in other academic disciplines, or in journalism and the media world:

Intellectual arbitrage has proven, and surely will remain, a relatively easy route to the academic coin of the realm – namely distinguished publications and large numbers of citations.

Intellectual fashionability  recognition by journalists as someone ‘interesting’, and acknowledgement by colleagues and admirers as a rising authority, a guru and seer with his own unique brush stroke, a visionary with a subversive or challenging new ‘theory’ and an idiosyncratic lexicon distinct from those of his peers, a future grandee  can be leveraged to gain external rewards from a wider audience.

Such spillover into the public domain usually involves niche success in a corner of the publishing world (e.g. among salon leftists). But it may extend to lecture tours or TV appearances, and even to massively successful mainstream products like Freakonomics. In some academic fields (economics, management, ‘public policy’) professional advancement can bring well-paid consulting gigs or a position in the state bureaucracy.

The term ‘intellectual arbitrage’, originally used dismissively as above, later acquired a positive meaning after it was picked up for use in organization and management theory. There it is used to laud a type of ‘engaged scholarship’ (note the Sartrean echoes) or ‘knowledge transfer’ across institutional boundaries.

As the vacuous verbiage attests, the result is a serious loss of intellectual probity: ambitions become unmoored from any methodological commitment towards reasoning from evidence, high inferential standards or deductive rigour (c.f. Hardt and Negri’s Empire. This bestselling book was described in New Left Review as ‘the Lexus and the Olive Tree of the Far Left’  though written, of course, ‘from an incomparably higher cultural level’).

Once again, what is involved is a straightforward confidence trick, in which the level of scholarly ‘output’ is deliberately overstated, its worth is exaggerated, or its intellectual penury is obscured by clever marketing.

All this must be understood as a response to incentives rather than as the personal failure of individual academics.

It’s therefore possible, as Mirowski does elsewhere, to link the commercialization of universities to a broader but related phenomenon, ‘the intentional production and promotion of ignorance’:

Whether it be in the context of global warming, oil depletion, ‘fracking’ for natural gas, denial of Darwinism, disparagement of vaccination, or derangement of the conceptual content of Keynesianism, one unprecedented outcome of the Great Recession has been the redoubled efforts to pump massive amounts of noise into the mass media in order to discombobulate an already angry and restive populace. The techniques range from alignment of artificial echo chambers and special Potemkin research units, to co-opting the names of the famous for semi-submerged political agendas; from setting up astroturfed organizations, to misrepresenting the shape and character of orthodox discourse within various academic disciplines.

Agnotology takes many forms. One of the major techniques of agnotology is to simultaneously fund both ‘legitimate’ and illegitimate research out of the same pot, in order to expand the palette of explanations as a preliminary to downplaying the particular subset of causes which are damning for your client.

Like the Great Recession itself, the ‘production of ignorance’, that boom industry of today, is generated by systemic causes. Its origin and mainspring is deeper and more obstinate than the ready culprits with obvious moral failings (e.g. the Koch brothers) who serve as handy scapegoats subject to easy denunciation.

The demise of the millennium-old scholarly project (the university as community of scholars, with its own internal standards of quality control, peer review, discipline and legitimacy, free to some extent from ecclesiastic or commercial judgement) is a product of a particular stage in the development of capitalism.

The privatization of education is part of the post-1980 search for profit in low-capital intensity sectors with large workforces, where provision was formerly undertaken by the state. (In the United States, the Bayh-Dole Act and the Supreme Court’s Diamond v. Chakrabarty decision both arrived in 1980.)

The role of higher education (of instruction and the awarding of degrees, as distinct from research) is no longer to produce a labour force with the widespread technical and general knowledge necessary for growth in real capital assets (as distinct from monetary profit).

With the state’s gradual withdrawal from education provision, and the increasingly unproductive and parasitic nature of the advanced economies, the purpose of universities has become:

  1. Rationing entry to the professional middle classes, upper salariat, and corporate and state leadership. Degrees in law, finance, management etc., are today’s patents of nobility. Marked with the necessary seal from a prestigious university, they entitle the bearer to high earnings that include a share of the surplus product;
  2. Extracting revenue from maintenance of the great mass of the population at subsistence levels of learning.

In 1998, in an article on ‘digital diploma mills’, David F. Noble described the ‘new age of higher education’ pitting on ‘the one side university administrators and their myriad commercial partners, on the other those who constitute the core relation of education: students and teachers’.

Over the previous two decades, he said, the campus had become a ‘significant site of capital accumulation’, in which a ‘systematic conversion of intellectual activity into intellectual capital and, hence, intellectual property’ had taken place:

There have been two general phases of this transformation. The first, which began twenty years ago and is still underway, entailed the commoditization of the research function of the university, transforming scientific and engineering knowledge into commercially viable proprietary products that could be owned and bought and sold in the market. The second, which we are now witnessing, entails the commoditization of the educational function of the university, transforming courses into courseware, the activity of instruction itself into commercially viable proprietary products that can be owned and bought and sold in the market. In the first phase the universities became the site of production and sale of patents and exclusive licenses. In the second, they are becoming the site of production of — as well as the chief market for — copyrighted videos, courseware, CD–ROMs, and Web sites.

The initial step created bloated, high-cost administrative apparatuses. These included offices of ‘technology transfer’, touts who solicited corporate links, patent-holding companies living off royalty payments, legal crafters of patent applications and Materials Transfer Agreements, ethics officers and other managerial overseers who micromanaged research agendas, etc.:

The result of this first phase of university commoditization was a wholesale reallocation of university resources toward its research function at the expense of its educational function.

Class sizes swelled, teaching staffs and instructional resources were reduced, salaries were frozen, and curricular offerings were cut to the bone. At the same time, tuition soared to subsidize the creation and maintenance of the commercial infrastructure (and correspondingly bloated administration) that has never really paid off.

The second phase of the commercialization of academia, the commoditization of instruction, is touted as the solution to the crisis engendered by the first.

Universities, in league with publishing companies like Elsevier, Wiley-Blackwell and Springer, and together with media firms like Pearson, CBS, Disney and Microsoft, thus became vendors of course material and educational software:

With the commoditization of instruction, teachers as labor are drawn into a production process designed for the efficient creation of instructional commodities, and hence become subject to all the pressures that have befallen production workers in other industries undergoing rapid technological transformation from above…

The administration is now in a position to hire less skilled, and hence cheaper, workers to deliver the technologically prepackaged course. It also allows the administration, which claims ownership of this commodity, to peddle the course elsewhere without the original designer’s involvement or even knowledge, much less financial interest. The buyers of this packaged commodity, meanwhile, other academic institutions, are able thereby to contract out, and hence outsource, the work of their own employees and thus reduce their reliance upon their in–house teaching staff.

As Noble showed, due to a change in technical conditions and the labour processes entailed by them, academics are losing their traditionally privileged social position. This, in see-sawing fashion, is destroying the university’s capacity for scholarly research, as the proportion of tenured staff falls and they are replaced by teaching adjuncts, sporadically employed or subject to contingent renewal.

Academics, like other ‘skilled professional’ occupations (certified architects, lawyers, accountants and similar qualified practitioners) earn relatively higher salaries and wages due to their relatively stronger bargaining position in the labour market. (Of course, upper levels of the liberal professions take much of their earnings as capital income, partnership income, or from self-employment in sole proprietorship.) This stronger bargaining position and consequently higher income is due to relative scarcity of specialized skills. The shortage of professionally accredited individuals (sustained by high training costs or restricted guilds) allows the lucky few to earn scarcity rents.

To take Adam Smith’s famous eighteenth-century example of the philosopher and the street porter, in today’s United States a post-secondary philosophy teacher receives a mean annual salary of $69 000, while the all-occupations mean is $44 000, and the annual average for a baggage porter or bellhop is $21 000, with a median hourly wage of under $10.

This skilled layer has, moreover, a degree of autonomy in that sometimes it can control part of its production process, e.g. routines, effort, intensity etc. These working conditions may not be contractually stipulated, nor directly monitored or overseen, nor dictated (as with much unskilled work) by technical conditions of production. Senior incumbents, long attached to their employer and holding security of tenure, are also free from the threat of termination without cause.

University academics have held this relatively privileged social position until now, preserving a degree of scholarly freedom, collegial autonomy and faculty self-direction. As mentioned earlier, their contemporary subordination to the market, involving oversight by a managerial caste, is an epochal event.

The urban efflorescence of eleventh-century Europe, centred on Italy and Flanders, and which birthed the university, was founded on a simple division of labour with the countryside. Agricultural surpluses, extracted as rent from the peasantry, were exchanged by lords for armaments and luxury textiles from the towns. This trade formed the basis for the towns’ mercantile and artisan culture.

From it also emerged Europe’s first non-monastic institutions of higher learning since the fall of the Western Empire.

The university as autonomous community of scholars subsequently survived through peasant revolts, plague and demographic collapse, Reformation, the absolutist state, revolution and intra-European warfare, the solvent of capitalism, transplantation to other continents, and so on.

Today’s sudden transformation of the university, in the space of a few decades, should alert us to the fundamental shifts going on beneath us, of geological significance but occurring on the timescale of a human lifespan.

Since these developments originated off-campus, no adequate response to them has been forthcoming, nor can any be expected, from within academia itself.

Especially in its higher echelons, the professional setting is designed, ever more deliberately, to reward conformity and herding. Before the superintendence of the bureaucracy has even been applied, a self-selection filter reliably deters many socially critical and intellectually honest recruits from choosing an academic career, let alone pursuing the professional heights.

Worse still, over the past thirty years, the nominally ‘left wing’ or ‘radical’ remnants of the intelligentsia have succumbed en masse to demoralization, political despair and various associated forms of theoretical obscurantism and inanity (this includes Mirowski himself). Principles have been renounced and critical antennae impaired or crippled.

The more conscious apostates have met with candid enthusiasm the new regime of hucksterism, which blurs the line between scholarship and advertising.

For the fortunate and ambitious, the latter development promises new sources of earnings, commercial opportunities and perks. These range from the modest to the exorbitant, e.g. research papers to be presented alongside exciting new products during all-expenses-paid academic conferences in tourist destinations.

But straightforward corruption in pursuit of money, professional status, etc. seems less prevalent than an instinct for self-preservation, of bowing to exigency in the name of dissonance reduction, with the impotent yet consoling feeling that this is all really someone else’s problem.

Raising the foregoing matters too persistently in such circles provokes the accusation of ‘Cassandraism’, of conservatism or exaggerated negativity, even an unwillingness to recognize that it has always been necessary for academics to ‘pay the piper’. (Several of these retorts, as mentioned previously, are standard Whiggish lines, used habitually by those committed to a Panglossian accommodation with present conditions.)

Yet a sturdier defence of the university against the meddling of bureaucrats and the intrusion of commerce has been heard before, in other historical circumstances.

For the contemporary transformation of the university, sui generis as it is, nonetheless does present a point of similarity (yet another) with the late-nineteenth/early-twentieth century.

Back then, in-house corporate research labs (General Electric, DuPont, etc.) were set up in the US to emulate the practice of German competitors (BASF, Bayer) and their private research institutes, which were linked to state-funded technical schools (the ‘Prussian model’ developed following Humboldt’s reforms).

Both countries were rising industrial powers with imperial ambitions. R&D provided the basis for military technology: Germany’s lead in the chemical industry laid the foundation for the ‘chemists’ war’ in 1914, the Farben monopoly and the Nazi machinery of death.

Meanwhile, in the US, the example of private and government R&D led increasingly to universities operating according to business principles.

In 1918 the economist Thorstein Veblen, ‘at the risk of a certain appearance of dispraise’, took aim at the ‘bureaucratic officialism and accountancy’ taking over US universities, especially ‘those chiefs of clerical bureau called “deans,” together with the many committees-for-the-sifting-of-sawdust into which the faculty of a well-administered university is organized.’

Veblen’s book, The Higher Learning in America: A Memorandum on the Conduct of Universities by Business Men, is typically forthright and perceptive, and deserves to be quoted at length:

The salesmanlike abilities and the men of affairs that so are drawn into the academic personnel are, presumably, somewhat under grade in their kind; since the pecuniary inducement offered by the schools is rather low as compared with the remuneration for office work of a similar character in the common run of business occupations, and since businesslike employees of this kind may fairly be presumed to go unreservedly to the highest bidder. Yet these more unscholarly members of the staff will necessarily be assigned the more responsible and discretionary positions in the academic organization; since under such a scheme of standardization, accountancy and control, the school becomes primarily a bureaucratic organization, and the first and unremitting duties of the staff are those of official management and accountancy. The further qualifications requisite in the members of the academic staff will be such as make for vendibility, – volubility, tactful effrontery, conspicuous conformity to the popular taste in all matters of opinion, usage and conventions.

Veblen goes on his familiar tart style. He explains why expenditure of resources on advertising is a zero-sum game, an aggregate wash for the university sector that ‘has no substantial value to the corporation of learning; nor, indeed, to any one but the university executive by whose management it is achieved.’ He describes the cowardice and cynicism of academic careerists. And he notes, in amusing fashion, how the superficial trappings and old emblems of the scholarly enterprise are retained in the interests of business.

Finally, Veblen states his advice for ‘rehabilitation for the higher learning in the universities’:

All that is required is the abolition of the academic executive and of the governing board. Anything short of this heroic remedy is bound to fail, because the evils sought to be remedied are inherent in these organs, and intrinsic to their functioning.


It should be plain, on reflection, to any one familiar with academic matters that neither of these official bodies serves any useful purpose in the university, in so far as bears in any way on the pursuit of knowledge. They may conceivably both be useful for some other purpose, foreign or alien to the quest of learning; but within the lines of the university’s legitimate interest both are wholly detrimental, and very wastefully so. They are needless, except to take care of needs and emergencies to which their own presence gratuitously gives rise. In so far as these needs and difficulties that require executive surveillance are not simply and flagrantly factitious, – as, e.g., the onerous duties of publicity – they are altogether such needs as arise out of an excessive size and a gratuitously complex administrative organization; both of which characteristics of the American university are created by the governing boards and their executive officers, for no better purpose than a vainglorious self-complacency, and with no better justification than an uncritical prepossession to the effect that large size, complex organization, and authoritative control necessarily make for efficiency; whereas, in point of fact, in the affairs of learning these things unavoidably make for defeat.


The duties of the executive – aside from the calls of publicity and self-aggrandizement – are in the main administrative duties that have to do with the interstitial adjustments of the composite establishment. These resolve themselves into a co-ordinated standardization of the several constituent schools and divisions, on a mechanically specified routine and scale, which commonly does violence to the efficient working of all these diverse and incommensurable elements; with no gain at any point, excepting a gain in the facility of control control for control’s sake, at the best. Much of the official apparatus and routine office-work is taken up with this futile control. Beyond this, and requisite to the due working of this control and standardization, there is the control of the personnel and the checking-up of their task work; together with the disciplining of such as do not sufficiently conform to the resulting schedule of uniformity and mediocrity.

These duties are, all and several, created by the imposition of a central control, and in the absence of such control the need of them would not arise. They are essentially extraneous to the work on which each and several of the constituent schools are engaged, and their only substantial effect on that work is to force it into certain extraneous formalities of routine and accountancy, such as to divert and retard the work in hand. So also the control exercised more at large by the governing board; except in so far as it is the mere mischief-making interference of ignorant outsiders, it is likewise directed to the keeping of a balance between units that need no balancing as against one another; except for the need which so is gratuitously induced by drawing these units into an incongruous coalition under the control of such a board; whose duties of office in this way arise wholly out of the creation of their office.


Apart from such loss of “prestige value” in the eyes of those whose pride centres on magnitude, the move in question would involve no substantial loss. The chief direct and tangible effect would be a considerable saving in “overhead charges,” in that the greater part of the present volume of administrative work would fall away. The greater part – say, three-fourths – of the present officers of administration, with their clerical staff, would be lost; under the present system these are chiefly occupied with the correlation and control of matters that need correlation and control only with a view to centralized management.


All that is here intended to be said is nothing more than the obiter dictum that, as seen from the point of view of the higher learning, the academic executive and all his works are anathema, and should be discontinued by the simple expedient of wiping him off the slate; and that the governing board, in so far as it presumes to exercise any other than vacantly perfunctory duties, has the same value and should with advantage be lost in the same shuffle.


At the crossroads

October 16, 2012

Thomas Pynchon’s 2006 novel Against the Day is set in a typically fantastic version of the period 1890-1915.

In his pre-release synopsis, Pynchon joked: ‘With a worldwide disaster looming just a few years ahead, it is a time of unrestrained corporate greed, false religiosity, moronic fecklessness, and evil intent in high places. No reference to the present day is intended or should be inferred.’

This Gilded Age is also (like our own) an era of intense Great Power rivalry. Each character seems to have his or her own Lewisian counterpart, a spectral double working for the enemy.

This is the case, for example, with the novel’s two geographers, British and German, modelled on the real-world figures H.J. Mackinder and Karl Haushofer:

[A] pair of rival University professors, Renfrew at Cambridge and Werfner at Göttingen, not only eminent in their academic settings but also would-be powers in the greater world.

Years before, in the wake of the Berlin Conference of 1878, their shared interest in the Eastern Question had evolved from simple bickering-at-a-distance by way of professional journals to true mutual loathing, implacable and obsessive, with a swiftness that surprised them both. Soon enough each had come to find himself regarded as a leading specialist, consulted by the Foreign Office and Intelligence Services of his respective country, not to mention others who preferred to remain unnamed. With the years their rivalry had continued to grow well beyond the Balkans, beyond the ever-shifting borders of the Ottoman Empire, to the single vast Eurasian landmass and that ongoing global engagement, with all its English, Russian, Turkish, German, Austrian, Chinese, Japanese – not to mention indigenous – components, styled by Mr. Kipling, in a simpler day, “The Great Game.”

[…Over] their cloistering walls and into the map of the megacosm, the two professors continued to launch their cadres of spellbound familiars and enslaved disciples. Some of these found employment with the Foreign Services, others in international trade or as irregular adventurers assigned temporarily to their nations’ armies and navies – all sworn to loyalties in whose service they were to pass through the greater world like spirit presences, unsensed by all but the adept.

Later one of the protagonists visits Renfrew at Cambridge, allowing the professor to rehearse his/Mackinder’s Heartland Theory. This strategic outlook was distilled by the actual Mackinder into the dictum ‘who rules the World-Island commands the World’.

In Pynchon’s fictional version:

[Renfrew] motioned Lew to a smaller room, where a globe of the Earth hung gleaming, at slightly below eye-level, from a slender steel chain anchored overhead, surrounded by an ether of tobacco smoke, house-dust, ancient paper and book bindings, human breath…. Renfrew took up the orb in both hands like a brandy snifter, and rotated it with deliberation, as if weighing the argument he wished to make. Outside the windows, the luminous rain swept the grounds. “Here then – keeping the North Pole in the middle, imagining for purposes of demonstration the area roundabout to be solid, some unknown element one can not only walk on but even run heavy machinery across – Arctic ice, frozen tundra – you can see that it all makes one great mass, doesn’t it? Eurasia, Africa, America. With Inner Asia at its heart. Control Inner Asia, thefore, and you control the planet.”

“How about that other, well, actually, hemisphere?”

“Oh, this?” He flipped the globe over and gave it a contemptuous tap. “South America? Hardly more than an appendage of North America, is it? Or of the Bank of England, if you like. Australia? Kangaroos, one or two cricketers of some discernible talent, what else?” His small features quivering in the dark afternoon light.

“Werfner, damn him, keen-witted but unheimlich, is obsessed with railway lines, history emerges from geography of course, but for him the primary geography of the planet is the rails, obeying their own necessity, interconnections, places chosen and bypassed, centers and radiations therefrom, grades possible and impossible, how linked by canals, crossed by tunnels and bridges either in place or someday to be, capital made material – and flows of power as well, expressed, for example, in massive troop movements, now and in the futurity…”

The Chums of Chance, meanwhile, are a group of young balloonists. They are employed or contracted by a shady organization that accepts missions from various governments and private detective agencies.

The Chums are commanded to set out for Bukhara, on the Silk Road. Ostensibly in search of Shambhala, the balloonists learn that their true mission has to do with Great-Power rivalry between Britain, Russia, Japan, China and Germany.

The historical reference here is to covert expeditions, across central Asia and into northwest China, made by imperial envoys such as the Tsar’s military-intelligence offiicer Mannerheim (who set off in 1906).

Soon the Chums are visited by a mysterious figure from the future:

“We are here among you as seekers of refuge from our present – your future – a time of worldwide famine, exhausted fuel supplies, terminal poverty – the end of the capitalistic experiment. Once we came to understand the simple thermodynamic truth that Earth’s resources are limited, in fact soon to run out, the whole capitalist illusion fell to pieces. Those of us who spoke this truth aloud were denounced as heretics, as enemies of the prevailing economic faith. Like religious Dissenters of an earlier day, we were forced to migrate… We might ask you to accept a commission from us now and then – though, regrettably, with no more detailed explanation than you currently receive from your own Hierarchy.”


“So this is supposed to be like Squanto and the Pilgrims,” Chick reported to the plenary session called hurriedly next morning. “We help them through their first winter, sort of thing.”

“And suppose it isn’t like that,” said Randolph. “Suppose they’re not pilgrims but raiders, and there’s some particular resource here, that they’ve run out of and want to seize from us, and take back with them?”

Confused but unwilling to turn back, the Chums see prophetic visions of the terrible events due to take place, soon, in the grasslands, deserts and tundra of central Eurasia:

“Whatever is to happen,” [the visionary] reported upon his return, “will begin out here, with an engagement of cavalry on a scale no one living has ever seen, and perhaps no one dead either, an inundation of horse, spanning these horizons, their flanks struck an unearthly green, stormlit, relentless, undwindling, arisen boiling from the very substance of desert and steppe. And all that incarnation and slaughter will transpire in silence, all across this great planetary killing-floor, absorbing wind, stell, hooves upon and against earth, massed clamor of horses, cries of men. Millions of souls will arrive and depart. Perhaps news of it will take years to reach anyone who might understand what it meant…”

…”Who are they?”

“German or Austrian, would be likely, though one mustn’t rule out the Standard Oil… Make your way to the surface, get back to England at all cost. They must be told in Whitehall that the balloon is up… Go! find someone in the F.O. intelligence section. It is our only hope!”


Meanwhile, for days, weeks in some places, the battles of the Taklamakan War were raging. The earth trembled. Now and then a subdesertine craft would suddenly break the surface with no warning, damaged mortally, its crew dead or dying… petroleum deposits far underground were attacked, lakes of the stuff would appear overnight and great pillars of fire would ascend to the sky. From Kashgar to Urumchi, the bazaars were full of weapons, breathing units, ship fittings, hardware nobody could identify… which all the Powers had deployed. These now fell into the hands of goat-herders, falconers, shamans, to be taken out into the emptiness, disassembled, studied, converted to uses religious and practical, and eventually to change the history of the World-Island beyond even the unsound projections of those Powers who imagined themselves somehow, at this late date, still competing for it.

Here  with the description of an apocalyptic military engagement in Central Asian Turkestan, as the contending imperial powers nurture and suppress various local ethnic separatists  the book’s reference to contemporary realities is obvious.

China’s northwestern frontier (bordering Afghanistan, Pakistan, Kyrgyzstan, Kazakhstan and Tajikistan) is a gateway for locally-owned firms (and a bridgehead for Beijing’s armed forces) to the energy resources of the Caspian basin and southwest Asia.

On the far side of the Central Asian republics, along China’s western flank, sit deepwater oil and gas fields off Azerbaijan and Turkmenistan, and the giant Tengiz, Karachaganak and Kashagan fields in Kazakhstan.

Slightly to the south is the greatest prize of all: the vast bounty of the Persian Gulf, along with access to Indian Ocean ports like Karachi.

From the 1990s an increasingly dense supply network of railways, roads and pipelines has been laced across the central Eurasian steppe. As ever, commercial trade routes do double duty as military lines of communication. They are available, if needed, to provide logistic support linking combat units with bases of supply.

Xinjiang itself contains uranium and coal reserves, and its Tarim Basin apparently has non-trivial hydrocarbon deposits.

Since the 1960s Lop Nur in Xinjiang has been the site of a nuclear weapons test range, missile storage facility, production complex and an air base with launch facility.

As discussed on this blog many times before, one key plank of US grand strategy, over the past few decades, has been to establish client governments and military protectorates in parts of the world where large deposits of energy and raw materials are found.

Washington has pursued this agenda through various violent means: ‘preventive’ regime change, humanitarian intervention and so forth.

The US state leadership no longer enjoys the clear-cut strategic primacy granted to it, as in decades past, by the competitive ascendancy of US-owned firms; nor is it able to prevent rivals with strong balance-of-payments positions from gradually gaining international influence through outward flows of investment and cheap loans. Therefore it has been forced to rely on the one dimension in which its supremacy remains unchallenged: military power, in which the international gradient is steep.

But, as well as planting garrisons near the world’s largest oilfields themselves (in southwest Asia, the Caucasus and Caspian basin in Central Asia), Washington has also sought to achieve military control over the energy supply corridors and transit routes that link them to China, Russia, Europe, Japan and India.

This ability to interrupt the flow of oil and gas, and thus to cut off the supply of fuel available to competitive rivals for use in industrial activity and for military purposes, is of the utmost strategic worth.

As Churchill, Hitler and Stalin insisted to their generals (who listened with varying degrees of buy-in and obtuseness) sequestering and controlling energy supplies is decisive during war. The ability to disrupt supplies is also useful during peacetime as a means of gaining leverage during commercial and diplomatic negotiations. (Among other things, it now sustains demand for US Treasury securities and thus underpins the liquidity of the world’s deepest financial markets.)

Since 1945, Washington’s naval pre-eminence has granted it control of the world’s sealanes and made the US state the ultimate guarantor of global maritime trade (and sea lines of communication). If necessary, these shipping channels may be closed and the maritime commerce (including energy supplies) of rivals interdicted.

But the ability to deny its rivals’ land-based transit (and military logistics) has been another matter, one inherently more difficult. Advancing its position there, at the centre of the Eurasian landmass, has been the chief goal of US militarism since the end of the Cold War.

Thus the oft-stated focus from US policy strategists on bringing Poland and Ukraine into NATO. During the 1990s, Zbigniew Brzezinski, RAND’s Stephen Larrabee and Sherman Garnett from the Carnegie Endowment stressed that Ukraine was the ‘keystone in the arch’ of Washington’s Drang nach Osten.

NATO’s eastward expansion would not only create a cordon sanitaire between Germany and Russia, and allow US missiles to be placed up against Russia’s western border. It would also secure Washington’s military-strategic position in the Black Sea (Moscow retains a naval base in Sevastopol). And with this the US ruling elite would completely dominate the Caucasus and energy-rich Caspian basin.

Meanwhile, from the south, Washington has sought strategic control over the Transcaucasus transport corridor for oil and gas products  (which the EU-funded TRACECA styles as ‘the Silk Road of the 21st century’). In a bid to destroy Moscow’s influence over this southern export route, the US State Department has struck security ‘partnerships’ and helped to foment a sequence of ‘revolutions’ in the GUAM countries (Georgia, Ukraine, Azerbaijan and Moldova). The Kremlin has attempted to stall Washington’s advance by encouraging separatism in Moldova (Transnistria), Georgia (Abkhazia and South Ossetia) and Azerbaijan (Karabakh).

Most obviously, the invasion and decade-long military occupation of Afghanistan has created a Central Asian buffer that separates the Persian Gulf from the US’s competitive rivals.

And, over the past decade, Turkey’s status as Washington’s energy broker between the Caspian and Europe has been elevated. This has assumed particular importance lately during Syria’s slow-motion regime change.

The overall result fulfils what Brzezinski in The Grand Chessboard (1997) presented as the basic desiderata of Washington’s Eurasian geostrategy:

To put it in a terminology that hearkens back to the more brutal age of ancient empires, the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together.

This means (1) preventing the European ‘vassal’ states from developing any autonomous capacity, outside the NATO security umbrella, for projecting military-strategic power (and similarly for Japan); and (2) obstructing those potential peer competitors that are not integrated into Washington’s set of hub-and-spokes military ‘partnerships’, namely Russia and China, from striking alliances with each other and with energy producers and regional powers such as Iran.

(An identical outlook, from a different wing of Washington’s policymaking elite, was laid out in the Pentagon’s 1992 Defense Planning Guidance. This document decreed that post-Cold War ‘strategy must now refocus on precluding the emergence of any potential future global competitor’ and ‘preventing the domination of key regions by a hostile power.)

To help resist this agenda, Moscow and Beijing have formed the Shanghai Cooperation Organization with Central Asian republics. The two imperial powers have managed to build a few bilateral and regional instances of diplomatic, commercial and military cooperation. But within the ‘strategic partnership’ the conflicting interests of the parties are insurmountable. And even the slightest move towards a regional military-political bloc is enough to induce hysteria in US security-policy circles. In 2010 an alarmist article written by Robert Kaplan for the CFR magazine Foreign Affairs featured the following map. It purported to display the geographic scope of Beijing’s strategic influence.

The tendencies described above  and above all the belligerence of the US state elite  presage another terrible global conflagration between imperial rivals.

I therefore want to conclude this post by returning to the period written about in Pynchon’s long novel.

I wrote an earlier post here regarding the lead-up to the First World War. It described the decades of self-delusion and obliviousness before general war arrived abruptly, like ‘a clap of thunder in the summer sky’. Yet the plot of Against the Day, over the course of 1000 pages, reveals the slow accretion of countless minatory signs, clear evidence pointing to the coming catastrophe. It is not merely in fiction or in retrospect that these clues appear: contemporary observers, properly equipped, were indeed alert to a looming showdown between the contending powers.

What then accounted for the mass confusion and unpreparedness that was revealed when war eventually arrived?

Next month marks the 100th anniversary of the Second International’s Basel Congress. This extraordinary congress was called following the outbreak of hostilities on the Balkan peninsula. The manifesto agreed upon by social-democratic delegates in Basel declared the ‘complete unanimity of the Socialist parties and of the trade unions of all countries in the war against war’:

[Each] section of the international has mobilized the public opinion of its nation against all bellicose desires. Thus there resulted the grandiose cooperation of the workers of all countries which has already contributed a great deal toward saving the threatened peace of the world. The fear of the ruling class of a proletarian revolution as a result of a world war has proved to be an essential guarantee of peace…

The Congress records that the entire Socialist International is unanimous upon these principles of foreign policy. It calls upon the workers of all countries to oppose the power of the international solidarity of the proletariat to capitalist imperialism… Let the governments remember that with the present condition of Europe and the mood of the working class, they cannot unleash a war without danger to themselves… It would be insanity for the governments not to realize that the very idea of the monstrosity of a world war would inevitably call forth the indignation and the revolt of the working class…

The Congress therefore appeals to you, proletarians and Socialists of all countries, to make your voices heard in this decisive hour! Proclaim your will in every form and in all places; raise your protest in the parliaments with all your force; unite in great mass demonstrations; use every means that the organization and the strength of the proletariat place at your disposal! See to it that the governments are constantly kept aware of the vigilance and passionate will for peace on the part of the proletariat!

Mainstream historians have compared this resolution from November 1912 to the social democrats’ spectacular embrace of the national cause in August 1914. In these scholarly examinations, the later treachery is presented as an abrupt reversal of the earlier position. But these events, and the history of subsequent antiwar and ‘pacifist’ movements, hold another great lesson for today:

It is not possible to prevent war by ‘mobilizing the public opinion’ of a nation against the ‘bellicose desires’ of its leaders. Neither the strengthening of trade unions, nor the placement of social-democratic representatives in parliament, nor ‘great mass demonstrations’, not the raising of protests nor loud proclamations of the common people’s desire for peace are adequate. None of these contributes a ‘great deal toward saving the threatened peace of the world’, nor provides an ‘essential guarantee of peace.’ The ruling classes’ fear of ‘the indignation and the revolt of the working class’ will not stay the hand of capitalist imperialism  only the latter’s complete annulment will do.

Though it may be ‘insanity not to realize’ that ‘they cannot unleash a war without danger to themselves’, the governing elite of the various rival states cannot be swayed by pleas for them to see reason, any more than than they can be persuaded by appeals to their better nature.

By allowing the working population of Europe to hope for ‘the possibility of normal progress’, the social-democratic parties and the trade unions misled their class constituency, and gave advance warning of their eventual opportunism.

In 1911 Rosa Luxemburg sought to dispel the mirage of what she called ‘peace utopias’:

[The] friends of peace in bourgeois circles believe that world peace and disarmament can be realised within the frame-work of the present social order, whereas we, who base ourselves on the materialistic conception of history and on scientific socialism, are convinced that militarism can only be abolished from the world with the destruction of the capitalist class state.


To explain this to the masses, ruthlessly to scatter all illusions with regard to attempts made at peace on the part of the bourgeoisie and to declare the proletarian revolution as the first and only step toward world peace – that is the task of the Social Democrats with regard to all disarmament trickeries, whether they are invented in Petersburg, London or Berlin.

In other words, the consolations of parliamentary reformism, activism and ‘protest politics’ (as described in the previous post) are dangerous illusions. They themselves threaten ‘the annihilation of the flowers of all peoples’.

Keeping a lid on it: maintaining political stability under austerity conditions in Australia

October 7, 2012

As described in the previous post, Australian’s business press has recently featured several prominent communiqués from the economist and Labor government advisor Ross Garnaut, declaring that the coming decade must bring a decline in popular living standards.

Lower wages and salaries and ‘public fiscal restraint’, insists Garnaut, will be maintained over a ‘long period’.

Local ruling layers  for whom the economist’s media bulletins serve as a spine stiffener  should therefore ‘brace’ for ‘difficult times.’

Luckily for its purposes, Australia’s governing elite has had five years, since mid-2007, to prepare for ‘fiscal consolidation’.

Meanwhile it has had the luxury of observing, elsewhere, the public response to the austerity programs that have lowered popular living standards across the north-Atlantic countries.

Australian state leaders have had plenty of time, therefore, to plan and enact measures to increase the resilience of existing institutions.

They have known for some time, and Garnaut merely reminds them, that in coming years the entire social order will be placed under strain. Political stability will be threatened amid growing inequality and mass despondency induced by the denial of life chances.

In May 2010, the historian Simon Schama warned in the Financial Times that ‘in Europe and America there is a distinct possibility of a long hot summer of social umbrage. Historians will tell you there is often a time-lag between the onset of economic disaster and the accumulation of social fury.’ A ‘dangerously alienated public’ was being forced to ‘take stock of the brutal interruption of their rising expectations’. A ‘raw sense of victimisation’ hung in the air like sulphur: ‘we face a tinderbox moment’, Schama told the readers of the FT.

Citing 1789 as an example of where events could lead, he advised ‘our own plutocrats’ to ‘channel mass unhappiness’ into safe directions, before ‘fearful disorientation’ turned into the ‘organised mobilisation of outrage’.

I’ll come eventually to some of the safe channels, useful diversions and political blind-alleys into which the Australian state leadership and propertied classes will seek to shepherd people over the coming years, in order to ‘contain calamity’.

But, firstly, strategic planning has also proceeded along other fronts.

Over the past three decades, Australia’s domestic state has been reconfigured into a tool that can more readily impose unpopular measures (as unelected ‘technocratic’ administrations have recently done, on behalf of creditors, in Italy and Greece).

While many other federal and state government organs have atrophied, Treasury and Finance departments, along with the central bank and associated agencies (APRA, ASIC and the Productivity Commission), have been enlarged and empowered. Initiation and veto powers over government policy rests entirely with these finance-linked bodies, plus with the departments overseen by the prime minister and attorney general.

More generally the executive branch of the state (especially senior Cabinet and the administrative apex of the public bureaucracy) has been strengthened. Old restrictions on its power, held by the other (legislative and judicial) governmental arms, have been removed.

In particular, the counter-terrorism measures of the past decade have allowed a hypertrophic growth in the personnel, resources and repressive powers available to the security, intelligence and police agencies. (Or, as the government’s 2011 review of the Australian intelligence community put it, an ‘important adjustment’ has been made to the ‘balance we have struck as a nation between individual rights and the security of our community.’)

Legal instruments like ‘control orders’ and ‘preventive detention’ have been created, while other entities have been given the power to compel evidence from witnesses.

On several matters of great importance, a few cabinet ministers and high-level civil servants, located mostly in the four or five federal departments and agencies listed above, have acquired freedom from substantive or procedural restrictions on their exercise of authority.

A very small number of individuals has been granted personal control, free of former limits or serious oversight, over matters like the domestic call-out of the armed forces, the detention of individuals and the proscription of entire organizations.

Last year Australian Federal Police Commissioner Tony Negus confided to ABC radio that AFP officers were liaising with London police, to examine the latter’s response to urban riots that had taken place there.

The AFP was preparing for the possibility of local outbreaks:

There are a range of different communities who are feeling um, somewhat left out  and this is a very broad question for government in many ways, and the social issues attached to this, education issues and welfare and a range of other things…

I wouldn’t want to profile particular groups but there are young people in this country who are feeling disassociated with what’s happening in a broader sense. And I think that we saw some of that with the Cronulla riots many years ago where people have come together, and we’ve seen just recently in London with the riots over there.

I think we’ve all got to be very careful and examine very carefully as a society what that means for Australia, and what we can do to prevent such actions happening here. ..

I’ve spoken to the Prime Minister personally about this. It’s something she has a great interest in and we’ll be doing our best to contribute to that whole of Government response to make sure that we’re appropriately ready here in Australia to prevent these things

The hysterically intolerant reaction from ruling circles to an innocuous recent political demonstration in Sydney gives a clue as to how any serious expression of dissent or unrest, should it arise in future, will be met. (Ardent support for repression is guaranteed from liberal quarters. ABC television presenter Leigh Sales preposterously introduced a recent report on the Sydney demonstration: ‘Everybody’s still talking about the violent and unpredictable Muslim uprising that took place in Sydney on the weekend. Police are starting to piece together who was responsible and they’ve found some alarming links to Islamic extremism’).

In September 2011, ASIO Director-General David Irvine told the Safeguarding Australia conference how ‘change in some of the most important drivers of our security posture is going to require us to recalibrate and reprioritize’:

We can all see change and fluidity in world events that matter to our security swirling around us… changes in the fortunes of war in Afghanistan and ongoing unrest in Iraq… groundswells of change in the ‘Arab Spring’… widespread unrest in Syria, Yemen and some Gulf states… the ousting of regimes in Tunisia Libya, Egypt, bringing with it all the uncertainty of the ‘new’… Economic shocks closer to home … unprecedented riots and lawlessness in the UK.

So state power has become increasingly concentrated at its executive pinnacle. This new political setup also corresponds, independently of intention or design, to the existing narrow allocation of wealth and social power, which it exists to protect, and which nowadays accrues to a tiny financial aristocracy.

But too great a compression of political and social power may limit the stability of status-quo institutions.

If Australia is about to have, as Ross Garnaut warns, a decade like the 1930s (replete, so he says, with spending cuts like the Premiers’ Plan!), then preservation of the existing order will demand assistance from sources outside the propertied classes and the state leadership.

Creating what members of the policy elite call ‘consensus on the need for reform’ requires the active participation, connivance and unwitting support of various other social fractions.

Treasury Secretary Martin Parkinson has suggested that the policy elite must draw lessons from the 1980s, when ‘a general agreement had formed among academics, policymakers and commentators’ on ‘the need for reform.’ The ‘government of the day then identified, prioritised and built community support for particular initiatives’.

Similarly Garnaut, for his part, mentioned in his recent interview with the Financial Review how under the Hawke-Keating Labor governments a ‘long period’ of ‘public fiscal restraint and incomes [i.e. wage and salary] restraint’ was made ‘politically possible’. This political feasibility derived, he said, from the willing participation of various ‘sectional interests’ in a common project.

Who were these ‘sectional interests’ that provided ‘community support’, and what did the latter consist of?

During the 1980s Garnaut was a senior economic advisor to Hawke. What he and Parkinson now laud about this period, and present as an exemplary model for the present day, involved (as I’ve written several times recently) the fulsome participation of the trade-union leadership, including key Stalinists, in a deliberate elite project (the Prices and Incomes Accord) to reduce the wages, job security and working conditions of Australian employees.

Three decades later, union officials still play the same parasitic foreman or overseer role. They suppress the political activity of employees and help to control the production process on behalf of owners.

Yet their part has waned somewhat following changes during the intervening years: the recomposition of Australian industry and the workforce (especially the reduction in heavy industry and manufacturing, and the rise of casual and intermittent work), the changed place of ‘corporatist’ institutions in negotiations over wages and conditions, the enhanced level of direct monitoring and supervision of workers allowed by new technology, the steep reduction in trade-union membership, and the acquisition by top union officials of social privileges that make plain the incentives governing their backroom efforts ‘on behalf’ of employees.

This removal of the social-democratic safety valve has increased the importance, for the pursuit of elite aims, of various other political diversions, theoretical casuistries and intellectual blind channels. These are presented to the working population by avowedly critical, ‘progressive’, left-wing, ‘radical’ and even ‘socialist’ groups and perspectives.

Some of the latter will, over the coming years, amid an ‘accumulation of social fury’, help to harmlessly usher any popular ‘sense of grievance’ into Schama’s ‘safe channels’, preserving the existing distribution of property rights.

First of all is the familiar, time-honoured presentation of Labor (and its partners among the Australian Greens) as the ‘lesser evil’ to an Abbott-led Coalition. Once in power, it is said, the latter will inflict truly swingeing cuts, courtesy of a ‘budget razor gang’ (for whom state conservative governments have provided a ‘dress rehearsal’). To prevent this, the only prudent course of action available to a ‘progressive’ person is electoral support (holding one’s nose, if one must) for Labor or the Greens.

This cynical position is regularly coupled with the suggestion that austerity measures are imposed only because the ruling elite (or a portion of it) is in the grip of a misguided ideology. Rather than knowing their own interests and ruthlessly pursuing them, state managers and the propertied classes are said, on this argument, not to know what’s good for them. They are indulging, in fact, a bizarre ideological whim or fashion (‘neoliberalism’, etc.) from which they may conceivably be freed.

This conception is, in turn, related to an ‘activist’ brand of politics. An extra-parliamentary protest milieu has existed since the 1970s (when e.g. The Wilderness Society, Australian Conservation Foundation and Nuclear Disarmament Party were born). During this time it has served a useful purpose for the ruling elite, absorbing discontent and trafficking in various political illusions.

In these circles, the ALP and trade-union leaders are considered susceptible to being ‘pushed leftward’ by protest, suasion, cajoling, appeals to their reason or better nature, importuning, threats, urging, petitioning, etc. The ascent of a new ALP government or leader, the occurrence of an election, or the holding of a party or union conference, is inevitably presented by these groups as an ‘opportunity’ for activists to apply ‘pressure’ from below for better and more progressive policies.

Thus, even while the senior state officials of Australia (and the US, France, Italy, UK, Spain, Ireland, Greece, Portugal, etc.) insist in unison that existing living standards cannot be maintained, these activist groups imply that salvation may yet be won under the prevailing order. This licenses ‘left-wing’ political strategies based on that goal. Their upshot is to prevent any kind of ultimate break with the parliamentary system or independence from the political agents of capitalism.

These views thrive amongst well-meaning but politically confused and uneducated people, such as those students who make up the recruiting pool for various campus ‘radical activist’ groups.

But the persistence of these political illusions isn’t explained by the ignorance and gullibility of young people. There are social layers whose entire existence depends on such illusions enduring, and on the resulting perpetuation of existing institutions.

The role of full-time union officials, for example, has already been described. But we must look more widely.

Among these circles also dwell the practitioners of identity politics.

The most blatantly ambitious branch of this species is devoted to the particularist pursuit of careerist benefits for individuals on the basis of gender or ethnic identity. (The spoils may include a larger share of public-service jobs, parliamentary seats, procurement contracts, cheap loans, entry to university courses leading to professional accreditation as lawyers, doctors, etc.)

This lucrative arm of the business calls forth, and cross-subsidizes, its own pressure-group penumbra of lobbyists, journalists, ‘radical’ activists, etc.

The latter encourage or participate in protest politics, as described above. In this they insist on the political exclusivity of the oppressed group in question, which is held to possess its own specific goals  derived from the supposedly unique and shared interests of members  pursuit of which requires independence of ‘movement’ or organization. The fundamental interests of group members (e.g. women, young people, Dalits, ‘yellow people’ or Indigenous people) are held to conflict, in one way or another, with the interests of non-members of the category (e.g. men, old people, non-Indigenous people, etc.). The common interest of all group members, so it is said, is best served by supporting the advancement of suitable group representatives. Once in a position of authority or wealth, the latter will bestow favours that benefit the entire group.

In present Australian conditions, identity politics assumes an especially crucial role.

Of the meagre public goodwill that exists for Julia Gillard’s Labor minority government, a large share is accounted for by appeals to professional feminism. A recent opinion column published in Fairfax newspapers, written by a national coordinator of EMILY’s List, shows the depths of toadying, deceit and self-abasement to which members of this milieu must descend.

This type of article will be familiar to US readers of The Nation. The likes of Katrina vanden Heuvel and Katha Pollitt can always be relied upon to concoct a pressing need for women to support the current Democrat candidate.

Political leaders, in Australia and globally, are announcing themselves ever more brazenly as the servants of banks, creditors and the asset-owning classes. This service will now come, they declare, at the cost of the living standards of employees, their dependants and the broad population.

In pursuit of this project, the propertied classes form as ever a natural constituency. The massed machinery of state repression stands by, ready for use if a ‘dangerously alienated public’ threatens to turn the world upside down. For the moment, various symptoms of political ignorance and disorientation lead restless elements among the propertyless class into traps, diversions and crippling delusions. Meanwhile, in these circumstances, from outside elite layers, practical support for the prevailing order must increasingly depend on the adherence of political constituencies mobilized via flimsy ‘identity-based’ campaigns.

Preparing for austerity in Australia

October 5, 2012

Last Tuesday’s Australian Financial Review carried an interview with economist Ross Garnaut.

In it, Garnaut gave just the latest of many public warnings from a senior Australian bureaucrat or policy advisor to expect ‘faltering incomes and living standards in Australia.’ There would be, he said, ‘restraint in government spending and wages growth for the rest of the decade’.

Two weeks ago, at a Canberra conference organized jointly by the Treasury Department, Reserve Bank and IMF, Garnaut discussed the consequences of slowing private investment, limited employment growth and lower government revenue.

He told his audience to ‘brace’ for a ‘difficult time adapting to a decline in living standards that’s going to be a necessary part of the adjustment’.

These remarks, like the others that have preceded them in recent months, have been reported exclusively by the business press. Though the media interventions are made publicly, outside the walls of any closed institution, they are not addressed widely to a mass audience.

Instead, publication of Garnaut’s comments, and of many others from figures like him, is narrowly aimed at:

  1. The governing elite, which is enjoined to exercise the ‘strong leadership’ required to impose such unpopular deflationary measures, while maintaining social stability; and
  2. Those forming the ‘General Staff’ of public opinion (‘responsible’ journalists, ‘sound’ academics, policy intellectuals, business-linked thinktanks and other influential groups), whose task is to prepare the population to ‘adopt the necessary attitudes for real reform and shared sacrifice’.

Tuesday’s Financial Review quoted Garnaut:

“We have to go through a long period of expenditure restraint” that could last “half a dozen years or more”, he said, referring to future government spending.

“The only comparable period would be from 1984 through to the rest of the ’80s.”

Convincing all Australians and sectoral interests of the need to build “a mood for shared sacrifice” was difficult without strong political leadership.

He compared the current challenges to those faced by Australia during the Great Depression, which resulted in the 1931 “Premier’s Plan” that included large cuts in government spending.

“There have been a number of periods of Australian history where we’ve entered circumstances like we are entering now and haven’t dealt with them. Which means we’ve had long periods of bumping along the bottom: you can include the whole of the 1920s and 1970s.”

“We bumped along the bottom, right through the ’70s and early ’80s until 1983 and we came out of it through a long period of restraint; public fiscal restraint and incomes restraint, again around a context of shared sacrifice.

“It was only politically possible because of that sacrifice.”

Throughout 2012, Treasury Secretary Martin Parkinson has repeatedly warned of ‘deep cuts’ to come in public spending.

He has appealed for ‘a sensible discussion on what we expect governments to provide… much of the debate over government provision assumes we can have it all’. He has noted, in this context, the increased ‘community demand for the government provision of what economists call “superior goods”, including aged care, health, disability, education and social welfare.’

Parkinson warned that ‘building pressures across a range of related fronts – health, aged care, disability’, would threaten ‘sustained growth in living standards, and it will also exert substantial pressure on fiscal sustainability.’

The Treasury secretary has therefore urged the beginning of a ‘national conversation’. As well as ‘significant savings’ on the expenditure side, ‘thoughtful decisions’ must be made about the sources of government revenue.

Specifically the tax base will have to shift away from capital income towards other sources like consumption spending.

The Henry tax review had advised that such an adjustment would be needed to ‘underpin growth’:

With continuing globalisation, tax settings will be of increasing importance for decisions about where capital will be invested, especially for small open economies like Australia. Many countries are reducing tax rates on business and capital income relative to labour income and consumption.

Hitherto, according to this Treasury version of reality, profligacy and indulgence have reigned. Now, though, accounts must be settled.

The only remedy for past exorbitance is for one or more unlucky generations to reduce their consumption in order to pay the bill.

Both the substance and rhetorical mode here may be compared to that of George W. Bush in his presidential State of the Union addresses.

In 2006:

We must… confront the larger challenge of mandatory spending, or entitlements… It is a national challenge. The retirement of the baby boom generation will put unprecedented strains on the federal government. By 2030, spending for Social Security, Medicare and Medicaid alone will be almost 60 percent of the entire federal budget. And that will present future Congresses with impossible choices: staggering tax increases, immense deficits or deep cuts in every category of spending.

And 2005:

Social Security was a great moral success of the 20th century, and we must honor its great purposes in this new century. The system, however, on its current path, is headed toward bankruptcy. And so we must join together to strengthen and save Social Security… By the year 2042, the entire system would be exhausted and bankrupt. If steps are not taken to avert that outcome, the only solutions would be drastically higher taxes, massive new borrowing, or sudden and severe cuts in Social Security benefits or other government programs… I know that none of these reforms would be easy. But we have to move ahead with courage and honesty, because our children’s retirement security is more important than partisan politics.

(Of course Australia had, under Hawke and Keating, already taken the path of privatizing retirement provision – a prospect that Bush’s favourite Marty Feldstein called the ‘$10 trillion opportunity.’)

Parkinson’s statements may also be compared to Mitt Romney’s recent remarks, addressed to a private audience but secretly recorded and publicized. Romney pointed dismissively to that large proportion of the US population ‘who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that’s an entitlement. And the government should give it to them.’

Similarly Garnaut, interviewed on ABC television this week, noted that ‘elements in the community [who] are recipients of tax cuts, of government expenditure, have come to expect a continuation of what could be delivered in the short term in the salad days.’

But the salad days, he said, were now over.

Garnaut, Parkinson, Romney (and Barack Obama) thus declare in concert, and in the name of ‘expenditure restraint’, that ordinary people are not entitled to ‘have it all’.

Public provision to citizens of non-market welfare services and social programs must be reduced and, where possible, eliminated entirely. So-called unfunded liabilities in the form of retirement provision and disability insurance must be repudiated. All this, alas, will lead predictably to a durable fall in living standards for most of the population.

Though elected officials are reluctant to express it so candidly, the entire parliamentary spectrum (in Australia, the United States and elsewhere), regardless of political party, has shown its willingness to impose these policies.

The agenda is shared across the world’s developed economies, and is pursued in nonpartisan fashion by the entire state leadership (high-level civil servants and elected politicians) of each country.

This fact owes little to ideological orientation. It follows ultimately from the obligation of state leaders to act on behalf of the propertied classes, whether or not they consciously identify with the latter’s needs.

A ‘conversation’ on these matters, having hitherto been restricted to a semi-exclusive elite audience, is about to be unleashed publicly on an unsuspecting Australian population.

As it has elsewhere, a phoney media campaign will ensue. ‘Serious’ commentators will insist that elected politicians put aside their narrow party interests and personal ambitions, and work together for the good of the nation. (The US ‘debt ceiling’ charade provides the template here.)

The general population, ill-equipped to resist, will be urged to ‘adopt the necessary attitudes for real reform and shared sacrifice.’

And, as I’ll show in the next post, many apparently ‘critical’ individuals and groups, even ‘radical’ ones, will play a useful part in all this. Even as senior state officials declare in unison that existing living standards cannot be maintained, these ‘activist’ circles will imply that salvation may yet be won under the prevailing order. Basing their political strategies on that premise, they will forestall any kind of widespread break with capitalism, the parliamentary state or the status quo.

For the moment, though, what’s the purpose of this broad elite program?

The first aim is to weaken the ‘fallback position’ of employed workers. Reducing (for example) the level of unemployment payments, relative to wages, will raise the relative worth of getting and keeping a job. This will thereby lower the ‘reservation wage’ or minimum salary level that employers find it necessary to offer workers. (Restricting eligibility for disability payments will have the same effect, by expanding the pool of available labour.) And, by increasing the riskiness to employees of shirking or rebellion (raising the ‘threat point’ of job termination), it will motivate more diligent, obedient and intensive work. Productivity and profit income will therefore be higher than otherwise.

Secondly, and more urgently, the aim is to shrink the liabilities entered in the government balance sheet (which had swelled massively from 2007) while preserving the financial assets of the rentier class (banks, financial corporations, mutual and pension funds and wealthy individuals). This means offloading debt (government’s obligations to its creditors) on to the broader population.

The only way for government to start saving, and to become a surplus sector in a country running an external deficit with the rest of the world (like Australia, Britain, southern Europe or the US), is for the thrifty to save less and start borrowing. If the government wishes to save more than it spends, then as a matter of accounting the domestic private-sector financial balance must become negative. Since investment spending by business is currently limited and borrowing has become difficult, this means the household sector must become more heavily indebted. As employees are terminated and lose their income streams, they will cease to make superannuation contributions and will be forced to run down their savings.