Or, Latho’s Farewell to the Working Class
Robert Reich, Harvard Economist and Clinton’s Labor Secretary, made something of a splash in policy terms with his coinage of the term “symbolic analysts” in his 1992 book The Work of Nations. Reich argued that comparative advantage in the new economy would be driven by innovation flowing from the skills of employees. Of particular importance to value-adding were the ‘new class’ of symbolic analysts who
solve, identify, and broker problems by manipulating symbols. They simplify reality into abstract images that can be rearranged, juggled, experimented with, communicated to other specialists, and then, eventually, transformed back into reality. The manipulations are done with analytic tools, sharpened by experience. The tools may be mathematical algorithms, legal arguments, financial gimmicks, scientific principles, psychological insights about how to persuade or amuse, systems of induction or deduction, or any other set of techniques for doing conceptual puzzles.
Reich’s work made quite an impact on Clinton-era policy, and also on Third Way thinking. It seems Australia has belatedly caught up. So in tune with the contemporary world of work are our politicians, that we should not be surprised that the Howardians have managed finally to unearth a ‘secret’:
Earlier this year, Liberal frontbencher Joe Hockey visited John Howard at Kirribilli to let him on a secret. Hockey told Howard of an evolving dynamic in the Australian workplace. While many stereotypically see small business as a retail outlet in a Westfield mall, Hockey’s department had been working away on the growth of stay-at-home businesses.
Latho’s known about this ‘secret’ for quite some time, at least since 1998’s tome Civilising Global Capital. Having apparently forgotten about the symbolic analysts during the “ease the squeeze” election campaign (when Howard threw a few bones in the form of tax concessions and talk of an “entrepreneurial culture”), he too has belatedly rediscovered the “new middle class … with its army of contractors, franchisees and entrepreneurs”.
It’s not surprising either that this shift in the labour market, and the increasing individualisation of society that is part cause and part effect, are news to politicians. From Higgins J in the Harvester Judgement to Frank Castles’ “Wage-Earners’ Welfare State”, it’s been clear that policy in Australia is based on a normative model of a family with a full time worker as main breadwinner. Politicians, many policy makers and journalists still seem frozen in an imagined world of happy middle class families with hubby doing a 9 to 5 day while the societal sands shift beneath their (elitist?) feet…
This debate is being framed in terms of IR policy, Labor’s economic credibility and the politics of the Labor-Union connection.
Is Latho on to something now, or is his leadership so troubled that Unions will easily put the kybosh on this attempt to rethink policy and electoral appeal? Is Latham’s leadership so weak that this debate will play itself out (as did the mooted appointment of Julia Gillard as Shadow Treasurer) as a proxy fight over his continuing leadership?
Steve Lewis’ column in The Australian says that Joe Hockey’s department identified 800,000 “home-based enterprises”. Lewis goes on to cite the fact that 4.1 million Australians have ABNs.
But what are the true dimensions of this “new middle class”? A first point is that the ABN figures would capture many people who do not make the majority of their income from or spend their majority of the working time on consultancy, journalism, or selling stuff on ebay or at markets, for that matter.
A second important point was made by Tony Healy in a comment at John Quiggin’s place:
Many so-called sub-contractors and “self-employed” are actually casual workers or, in labour market terminology, dependent contractors. These are issues that fall into concern about casualisation and abuse of market power by labour hire firms. The issue is further muddied by the fact that contractor has opposing meanings. In housing, it means a small employer. In IT and business services, it usually means an individual and usually means a dependent contractor or casual worker.
The ABS Forms of Employment series distinguishes between “Owner Managers of Incorporated Enterprises” and “Owner Managers of Unincorporated Enterprises”. The latter category is likely to be the group that we are talking about – incorporated enterprises are likely to be larger scale.
The most recent ABS data (from September 2002) from the Forms of Employment series suggests:
Owner managers of unincorporated enterprises represented 12% of all employed persons. Of the 1,129,400 persons in this group, 21% were in Construction, and 16% were in Agriculture, forestry and fishing. Nearly one-quarter (24%) of this group were Tradespersons and related workers, while 17% were Managers and administrators.
Readers can draw their own conclusions, but this strongly suggests that Tony Healy is dead right. Most people described as “contractors” are not the “new middle class” of symbolic analysts and consultants, but rather the newly outsourced working class of dependent contractors.
Hence the IR connection. Howard’s policy settings seek to maintain the ‘freedom of contract’ of employers by combatting union attempts to bring such contractors within the reach of the IR system, and opposing state legislative moves (in NSW and Queensland) to allow the Commission to prevent outsourcing and contracting out where the remuneration is less than that of award employees.
Mark Latham, in my view, is right to argue that:
“If contractors and franchise-holders are being mistreated by large corporations, we should be just as passionate and determined to defend their interests as when workers and their rights are abused by employers,” he said. “Just as Labor is determined to protect the statutory entitlements of employees, we should defend the rights and entitlements of a new class of economic independents.”
Tony Healy is also correct in pointing to the political salience of the confusion about who we are talking about. Latham’s rhetoric of the “new middle class” and Howard’s “entrepreneurial culture” both give the impression that contractors are Reich’s symbolic analysts – highly skilled professionals who find freedom in not being tied down to an employer. Building on Latham’s ideas in Civilising Global Capital about skills development and the value-adding of innovation would be a very sound move, and should also be tightly articulated to broader debates about knowledge, research, innovation and education at all levels. Taxation policy is also likely to be an important instrument here.
It would be a tragedy, though, if those who are contractors in very weak labour market positions were to be forgotten in all this talk of the funky ‘brand’ of new economy ‘portfolio lives’. The terminology of “economic independents” is also unhelpful in obscuring the real issues, though it may help in securing electoral support in an individualised society where people don’t like to think of themselves as dependent. Incorporating the legal concept of ‘unconscionable contract’ into the laws regulating labour hire is a necessity and likely to have a more immediate impact on the lives and economic positions of dependent contractors and their families than action through the IR system. So is marketing this through a discourse of ‘fairness’ rather than ‘protection from exploitation’.
But what of the politics of Latho’s intervention?
Lenore Taylor, writing in the Fin today (link only for subscribers), says:
Just one day after Mark Latham delivered some brutal truths to the ALP, the trade union movement had some brutal truths for him… On Saturday, union leaders at the Victorian Labor Party conference had a blunt message for Latham: moving away from Labor’s traditional trade union support base could threaten his survival.
This is curious, in a way. In an electorate where the “working class base” has shifted towards the Liberals, where the unions’ constituency is shrinking, and where there is no denying that the ideological whistle of freedom has its appeal, Labor needs to embrace all those groups in a much less unified labour market, rather than choose one or the other. The unions’ response to Latham indicates that this debate is much more about re-asserting power relations within the Labor movement than genuinely rethinking the electoral and policy dimensions of a shifting labour market and diversifying forms of work. Latham has never been particularly enamoured of the union connection, and payback is here. As it is too for his leadership style.
Latham is right on this issue, or at least heading in the right direction, but the internal response to his suggestions demonstrates that he is now caught in the zone where any forward move becomes a potential proxy for disguised attacks on his continued leadership. Simon Crean knows all about this. Mark Latham may not lead Labor into the next election, and it may be better for Labor and for Australian society generally if the ability of the Labor Party to respond to important economic and social changes were not to be destroyed by backward looking and inward focussed wrangling. But is there another alternative?
Good post Mark,
I had the most bizarre experience the other week of hearing a Victorian Trade Union Secretary rail against the ‘injustice’ of the imprisonment of union thug Craig Johnston. The bizarre aspect was that I felt like I was transported back in time and I was listening to the aggressive posturing and threatening behavior of 1970s unionism.
When will the unions realise that this macho aggressive thuggery just doesn’t cut it anymore.
It confirms to me my view on the Union/Labor divide that you describe in your post. It is not the ALP that in in most serious need of re-engineering. It is the Union movement.
Union membership has declined dramatically. It is still strong in some sectors, but increasingly they are not the sectors that matter. The willingness of people to accept the individual workplece contract, and reject collective bargaining, simply underscores the decline of union power.
It is very sad to see the ALP attempting to reinvent itself, yet being held back by a Untion movement that would do iself and the ALP a favour if it instead concentrated on its own problems.
I’m in partial agreement, Rex – I’m supportive of unionism but do believe the union movement needs to take a long hard look at itself. In my view, the waste of time that union officials spend in internal ALP politicking is a factor, and as the NSW Labor Council (now Unions NSW) recognised recently, the identification with the ALP is a loser for unions. As I observed a while back, the best research into unionism suggests that debureaucratisation and a vigorous and democratic workplace culture are the keys to union success. This lesson is understood well by people like Greg Combet (whose input I’d also like to see extending into ALP policy outside IR) but needs to be understood at all levels of the union movement. You’re right to observe, in my opinion, that there is very little of the social movement left in a conservative union culture.
As to the ALP, Latham’s most significant contribution may be to bring people to a realisation that the world has changed. Tanner is also very good on this – and it’s a pity his contribution has to be made from the backbench. But it’s sad when attempts at rethinking policy are short-circuited by both internal politicking and the media’s tired tendency to frame things within old lines or lines pushed by the government (ie Costello’s challenge to the ALP to be ‘economically responsible’).
We live in a very different world in many ways, with new forms of inequity as well as opportunity, and the Labor Party should be rethinking policy on this basis.
Link to my previous IR post:
http://troppoarmadillo.ubersportingpundit.com/archives/007277.html
I forgot about the hmtl tags being turned off!
Also, a lot of ABNs are taken out for family trusts and the like…
The militant unions’ main priority seem to be looking after number one, which would be well and good if “number one” was the particular union’s membership as a whole, but it seems as if “number one” really is number one. It’s not hard to see how this “every one for themselves/I’m all right Jack” ethos has led them up to the door of the Liberal Party.
I guess we’ll see where the ALP really stands in relation to all this at the next national conference…
firstly Mark, robert Reich was no economist. My memory has him doing law and something else but it wasn’t economics. I remember this from a book he wrote with Ira Magaziner.
Iron Mark could attract the votes of people who as contractors, small businessmen ets because they all want protection.
most contractors are only contractors becasue they have been outsourced by the companies. They used to be employees and now they lose al their benefits as well as takinga haircut in terms of pay.
small business get taken for a ride by big business. That is their real beef not unfair dismissal.
Their is an opportunity here for Iron Mark if he is smart enough.
You may be right, Homer. There’s some biographical detail on a website he set up when he ran (unsuccessfully) as a Democrat for Governor of Massachussetts in 2002. He does have a law degree, but it doesn’t state what his other degrees are in.
He is currently Professor of Social and Economic Policy at Brandeis University.
http://www.robertreich.org/reich/biography.asp
It would be good to be reich for once in my life!!As long it wasn’t the third one!
The shot about Hockey having belatedly discovered the “secret” would have been better directed at the journalist who used that word. It has been common knowledge for a long time now that this move towards home based type enterprises was mushrooming. The relevance of the newspaper article is that it reports the Liberals’ awareness of it, but the fact that Latham is forced to take up this issue if Labor is to increase its chances Federally.
Latham was given the leadership, in part at least, as an understandable act of desperation. Right now his long term chances may not appear good; but if he IS to survive, he needs to be seen to be doing something. This is one area in which Labor has to act, but it is also a potential minefield. I suspect some will be watching thinking it could blow up in his face, but there pleased to see it being attempted, and grateful it’s not them who are having to do it.
Norman, I strongly suspect Latham will not see out the term. It would seem that this issue indicates that he’s going to have problems which ever way he moves. But it’s hard to see at this stage who would be a viable replacement or who would be able to knock him off. Those who are comparing him to Hewson post 93 might have the time frame right.
the union movement needs to take a long hard look at itself. In my view, the waste of time that union officials spend in internal ALP politicking is a factor
It can be a factor, but is not necessarily. The fastest growing union in WA is the LHMU, and they’re one of the most active within the ALP.
Sorry but you blokes are way off beam.
Iron Mark already knew about this. If you think he could have incorporated this into ALP policy then you are bonkers.
I can tel you from business school FEW peoople wish to work at home. The main reason for this is the social interaction they have at work.
The only reason they do so is that is the final solution. Perhaps like me they find age is a handicap to hard to overcome.
People familiar with trhe AWIRS surveys will think it is deju all over again.
with aplogoies to Yogi Berra.
Homer, is there anything particular in the AWIRS data you’re referring to?
From memory, Robert Reich’s “The Work of Nations” was one of the targets of Paul Krugman’s critique of industrial policy. Popular essays that were collected in “Pop Internationalism”. Excellent economic writing for non-economists.
I think he may have even charged Reich with not understanding comparative advantage, according to James Farrell, Krugman’s test of an economist.
I agree with Homer about the importance of social interaction to work. It is also the reason why shopping will never disappear into cyberspace despite “information economy” boosterism.
Just before Reithy trashed it there was common comment from those in the workforce that there appeared no rhyme nor reason why sackings, redundancies, retrenchhments etal were happening.
It was thought the major reason was to put the fear of god into workers.
Well, Homer, that would make sense in that fear of unemployment always has a strong correlation with decreased levels of unionisation and industrial conflict. Other factors were stock-market short-termism (outsource a lot of workers and your stock goes up) and management theory about network organisations, core business etc.
Mark: Many interesting points here. I suspect most of the people Tony is talking about are in the ‘self-identified casuals’ group. Where they are supplied by labour hire firms, I don’t know whether the ABS considers them employees of those agencies or of the client firms, but they are employees nonethless. But I’m sure you’re right that many of the ‘unincorporated enterprises’ are contract cleaners and so on with few rights.
In a buoyant macroeconomy workers in both these groups feel reasonably secure. But when the next recession arrives, and the dirty tricks Tony warns about become more widespread, perhaps they will get politicised. Labor will need to have some answers ready for them.
Gaby: You beat me to it. I don’t have the book handy, but it may also be Reich that Krugman castigated for fetishising ‘value added’.
James, from memory,shouldn’t it be the converse, i.e., Krugman castigating Reich?
I remember Krugman arguing that focusing on “high value added” industries was wrong in the course of his discussion of industrial policy if by that were meant the industries that Reich thought should be encouraged. It could have been in “Pop” or in “Peddling Prosperity”.
I think he gave the tobacco industry as an example of a high value adding industry, and therefore certainly not the archetypal sexy “new economy” type of industry that needed to be fostered.
it was his stuff particularly with Magaziner was suspect.
he was of the school that Japan was unassailable and the US had to copy then better them.
I think he and Ira partially repented and thus gained the confidence of clinton’s deomcratic lobby group whose name escapes me.
Robert has an interesting point about the LHMU. They have provided not only the current Labor Premier, but most of the recent Parliamentary Labor Leaders in that State, not to mention an amazingly high proportion of politicians right around Australia. Some of them were very capable; but the union mmovement has one more problem than it needs, when people are using it as a stepping stone for their careers. Not to mention the desirability of this for the Labor Party?