It might almost be taken for granted that national autonomy over such matters is compromised by decisions of foreign-based corporations to invest or disinvest in a nation, to direct investment into one form of activity or one region within a nation, or to demand that social policy changes be made in order to secure the retention of existing investment.

However, it should be clear that summary statements of this sort do not take us very far. We need to analyze the various forms of impact of the global system on different states, the diverse ways in which national autonomy is restricted or shaped, and the ways in which social justice is shaped both by adaptation and resistance to such "external" constraints. For example, a distinction needs to be drawn between economically dependent nations which appear as producers of cheap labor in the world economy, and those which appear primarily as suppliers of raw materials. In the case of the former, world systematic pressures will be upon national regimes to impose repressive strategies in order to keep down wages and related costs of production. In the case of nations that are primarily exporters of raw materials the same restrictions do not necessarily apply, for generally speaking production of raw materials is capital intensive rather than labor intensive. In such cases, the relatively high level of per capita wealth could create a leeway for the state to secure cooperation from labor and other groups through the provision of wage justice, welfare, and related institutional arrangements (Crough and Wheelwright, 1982: 110). In this latter situation, which has in the past applied to Australia, there are clearly major opportunities for dependent states to work toward social justice objectives within their national boundaries.

The first of several key questions about social justice in Australia therefore concerns the historical role of its place in the world capitalist system in forming current arrangements bearing on social justice. A second, more pressing, but also more speculative issue concerns whether such international conditions will continue. If this is not likely to be the case, then it becomes clear that the future of social justice -- to the limited extent to which it has been achieved in this country -- must be placed in jeopardy.1

Foreign Control and Resources in the Colonial Era

For much of its history since the white invasion in 1788, Australia existed as a satellite of the British industrial and finance imperialism. Initially a penal colony which was also of some strategic significance to the British, the character of the region changed rapidly as an effect of massive injections of expropriated productive land taken from the aboriginal Koori people. This expropriated capital gave an enormous competitive advantage in the international market to the emerging colonial bourgeoisie and to British-based investors, and formed the foundation upon which a generally prosperous white society has been built.

The development first of pastoralism and later of the gold rushes in this context created the foundations for a society which had many of the familiar characteristics of a peripheral nation. First, the wealth of the country was founded on resources originating in the hinterland, which were extracted and exported to the core (in this case, British) market. British capital investment and British domination of the markets for the principal Australian exports (wool, grain, and meat) shaped the political economy of the nascent nation, developing it in the normal "imbalanced" colonial form. The economy emerged as one reliant on the export of only a few commodities, and as correspondingly reliant on the core economy for the provision of manufactured goods. The continent therefore took on an "underdeveloped" social geography, with the mass of the populace clustered in coastal commercial cities: the points of entry and exit of capital. Then, as now, the Australian continent became the locus of one of the most urbanized societies in the world.

Second, and as a corollary of this, the spatial arrangements took on the form of internal colonialism, with the white settler population living overwhelmingly on the coastal fringe. The far less numerous Koori population -- decimated by introduced diseases, expropriation of their land, and spasmodic exercises in genocide -- survived mostly in the sparsely populated hinterland, while elsewhere the survivors were rounded up into reserves. Strictly speaking, therefore, largely as a result of the specific patterns of development characteristic of a colonial, resource-based economy, the history of social justice in Australia must be divided into two parts. As articles by Fesl, Bird and O'Malley, Havemann, and Palmer in this issue indicate, while white Australia must be considered to be an advanced capitalist society, the Kooris have existed in a relation of internal colonialism in their own land, largely outside of the umbra of social justice benefits and protections achieved by the white governments and popular movements.

The foundation of social justice in white Australia was based largely on two interacting factors. The first was the development of the economy as a resource-based satellite of British industrialism; the second was that settlement overwhelmingly was by politically sophisticated working-class immigrants from the British Isles. While the complexities of colonial political struggles cannot be reviewed here, the outcome (as with other colonies of British settlement) was that a white working class emerged which was able to secure considerable material, political, and social concessions, often in advance of those left behind in the colonial motherland (see, for example, Macintyre, 1985).

Material to these achievements are many processes which may be traced directly to the place of Australia in the world capitalist economy. For example, chronic labor shortages induced partly by geographical distance from the imperial, core countries gave considerable political and economic leverage to the small urban working classes. Also, the early development of a directive state -- as a result of its necessary role in providing virtually all the material and social infrastructures in the colonial environment -- meant that organized labor mobilized in relation to state politics and became a political force in its own right at an historically early point.

Perhaps the principal effect of these features of the colonial political economy was the formation of a robust laborist politics, which has shaped the form and distribution of social justice in this country ever since. (For an interpretation of this relation, see Beilharz in this issue.)

Advances emerging out of this milieu were indeed striking in a colonial region. By the end of the 19th century, Australia had a gross domestic product (GDP) per capita almost 50% higher than that of the USA and three times as high as that of Scandinavian countries, and the indications are that there was a relatively wide distribution of wealth for the times. Male suffrage was granted in the early 1850s, female suffrage was granted well ahead of most other advanced nations, the first Labor government in the world was formed (in Queensland) in 1899, the first federal Labor administration took office in 1904 (three years after Federation), and Australia also had the world's first Labor majority national government in 1910 (Castles, 1987).

Thus high levels of foreign domination of an economy do not as such imply that social justice will be taken out of the hands of locals, nor does the implication follow that economic dependency correlates in any simple way with retarded developments in social justice. Rather, we must look more closely at the specific nature of the relationship that emerges out of the interaction between foreign domination and internal developments. This remains true when we turn to the postcolonial era in Australia.

From Federation to the Fifties

In 1901 Australia became an independent nation in the British Commonwealth, yet for the first half of the 20th century, it remained an economic, if no longer a political colony of the British. Some local manufacturing development did occur from the 1930s onward, but was developed largely as an import-substitution measure. Although they provided much employment for the urban working classes, manufacturing industries absorbed less than one-quarter of the total work force, and have continued to account for small proportions -- between 15% and 20% -- of the gross national product (GNP). In this period pastoral and agricultural exports remained the focus of local and foreign investment, and the principal source of national income. The Australian economy thus remained highly vulnerable to exogenously generated shocks, especially through fluctuations in demand for raw materials.

Yet this vulnerability did not generate the forms of political and economic instability commonly associated with dependent nations, and which in such cases have had such devastating effects upon the maintenance or development of social justice provisions (Ibid., 1987). Indeed, in this period, notwithstanding the cruel impact of the great depression of the 1930s, Australia maintained levels of employment and real wages at least comparable with those of most other advanced capitalist states.

This stability largely resulted from class compromises aimed at "domestic stabilization," negotiated between labor and capital in the face of shared threats posed by the very vulnerability of the national economy (Ibid., 1987: 114-115). Domestic stabilization took three principal forms -- tariff protection, control of immigration, and industrial arbitration and conciliation (Ibid., 1987; Macintyre, 1985). Each of these was geared to cushioning the impact of external crises on the employment conditions of the (organized) working class. Tariffs were used to protect industry and thus to create a "conservative welfare state function" in which declines in real wages were minimized. Industrial arbitration was developed essentially as a mode of guaranteeing real wages, and immigration policies were to be implemented as a means of controlling the labor supply without creating labor surpluses or shortfalls (Castles, 1987: 114-115).

As a solution to the central problems created for social justice in the class politics of white Australia, this broad strategy of state-centered compromises emerged largely as a defensive ploy acceptable to organized labor because of the relatively high level of prosperity which it had secured in the previous century, and which it sought to maintain. The strategy in its turn provided what became the key characteristic of Australian social justice: a focus on employment and wage maintenance involving state participation, backed up by a safety net of social security provisions. This is in marked contrast to the modes of generalized welfare provision more characteristic of social democratic politics (Macintyre, 1985: 50-85).2

Clearly, this form of class compromise, a "purchasing of social peace," was reliant on the material foundations of the export of natural resources. But its price was restricted industrial development behind high tariff walls. Until well into the second half of this century, these arrangements secured generally high and evenly distributed material living conditions for the bulk of the Australian working class.3 However, changes that can be traced to a postwar reorganization of the global economy are now beginning to threaten these conditions. The long-term bill for dependency in global capitalism is now falling due.

A Client State on the Pacific Rim

During the 1950s and 1960s, Australian governments attempted to address the problem of dependency by attracting investment in the domestic industry sector. Given low levels of available domestic capital, this first wave of postwar investment passed control over crucial areas of Australian industry to transnational capital. Between 1950 and 1960, foreign ownership and control of the economy increasing by nearly 50% (Crough and Wheelwright, 1982: 3). With this overseas-funded manufacturing expansion came a sharp increase in the demand for labor, far greater than could be met from the traditional sources in the British Isles. Australia became a major importer of human capital, bringing in up to 200,000 immigrants yearly, mainly from Britain and the Mediterranean countries. These people, intended to swell domestic markets and become the factory fodder of expanding industry, were to change much of the face of social justice, to a considerable extent by increasing the array of demands and stresses associated with cultural dislocation, relative deprivation, and racism -- matters dealt with by Jakubowicz in this issue.

Yet the manufacturing boom was comparatively short lived. During the 1960s, discoveries of huge mineral deposits attracted larger amounts of foreign capital. Between 1963 and 1974-1975, foreign ownership in the mineral industry as a whole rose from 27.3% to 57.8%, the most marked increase being that of U.S. capital, which rose from 9.2% to 28.7%. In rapidly expanding areas this growth was even more marked -- in fuel minerals, for example, the rise in foreign control was from 15.5% to 73% (Crough et al., 1981: 187-188).

In this short period, control of what rapidly became the key export industries of Australia passed into foreign hands. But the rise in ownership and control was itself only one aspect of a broader shift of even more major consequence. Development of the "Pacific Rim Strategy," which generated a new subsystem in the world economy, implied a changing role for Australia. The development of opportunities for access to cheap labor in Pacific Rim Asian nations, coupled with the discovery and development of mineral resources in Australia, located this country as a key supplier of raw materials to Pacific Rim manufacturing centers, and as a market for their products. Foreign investment which had driven the 1960s expansion of Australian manufacturing slowed dramatically. The process of deindustrialization was thus set in train, import-replacing industries declined, and increased pressure on the balance of payments resulted from the increased inflow of manufactured goods. The stage is now set for a major crisis in the foundations of the traditional forms of social justice in Australia.

Social Justice in the Nineties

Australia remains a supplier of raw materials (especially minerals, but also wheat and wool), which account for 80% of export earnings. At the moment, the commodity market is comparatively strong since 1986 prices of major export commodities have risen more then 70% in U.S. dollar terms. Based on historical precedents, things should be going well for Australians. But they are not. Over the past five years, inflation has been running at between two and three times the Organization for Economic Cooperation and Development (OECD) average, levels of personal indebtedness are at record levels, as are bank interest rates. Unemployment has run at an historically high rate of between 6.5% and 8.5% and long-term unemployment is at an unprecedented level. Three million out of the population of 16.5 million live below the poverty line, and an estimated 750,000 children live in very poor families (Emy and Hughes, 1988: 33).

The primary reasons for this decline are to be found in the structure and effects of the Pacific Rim strategy and the transnational investment patterns which are associated with this. The expansion of the minerals sector through substantial foreign investment has now produced rapidly increasing levels of capital outflow as an effect of the consequent servicing of foreign debts, repatriation of capital and of profits.

Such problems of foreign indebtedness consequent upon foreign investment are exacerbated by the fate of domestic manufacturing. Overseas investment continues to be directed toward the profitable extractive industries, while such investment as is attracted to the manufacturing sector goes largely into takeovers of existing concerns rather than into the development of new industrial initiatives.

Largely as a result of these shifts, Australia is gaining an economic profile that in some respects does correspond to that of a Third World nation. The following data summarize the situation graphically:

* In 1986, Australia's level of foreign debt was 199% of exports, compared to a figure of about 243% for Mexico or Brazil. By June 1988, the Australian level had risen to 238%.

* In 1986, Australia's interest bill for overseas debts was 14% of exports compared with 19.2% for Latin American states. By 1988, the Australian bill had exceeded 20% of exports. In 1982 it had been only 8%.

* In 1982, Australia's gross foreign debt was $A16 billion; by June 1988 it had reached $A120 billion. This places Australia third on the list of major debtor nations, after Brazil ($A150 billion) and Mexico ($A132 billion).

* In 1980, net foreign debt represented 7% of GDP; by the end of 1988 it represented close to 32% of GDP and some estimates suggest that it could reach 40% by 1990. This compares with Brazil (39%), although it places Australia out of the league of countries such as Mexico (78%) and Argentina (74%).

In short, although Australia has always been a net importer of capital, there have been massive and historically unprecedented increases in the scale of deficits, of the borrowing needed to repay them, and (given significant decline in the value of the Australian dollar since 1985) of the costs of repaying them.

One conclusion to be drawn from what has been presented in this article is that much of the problem confronting Australia is due to high levels of foreign investment and control of the economy, which have both shaped economic development into a dependent status, and which are now -- through capital repatriation, repatriation of profits, and recovery of interest repayments on loans -- siphoning out an enormous volume of capital from the Australian economy. (Repatriation of profits alone increased from below $A1 billion per annum in the 1970s to in excess of $A7 billion in the mid-1980s.)

A rational solution might therefore be to increase controls on foreign investment with a view to achieving greater national autonomy, to renegotiate existing contracts, to increase levels of corporate taxation in order to claw back some of the losses already incurred, and to regulate more closely the outflow of capital in order to ease pressure on national economic resources. Such ideas are not new, and to varying degrees have been adopted as policy by the Australian Council of Trade Unions (ACTU). Attempts to "buy back the farm" from transnational corporations (TNCs) were a prominent feature of the reformist Whitlam Labor Government in the 1970s and contributed greatly to its overthrow in the constitutional crisis of 1975.4

Such policies would in fact address long- and short-term problems confronting social justice in Australia, for the overwhelming threat to that fragile construction must be the removal of its material foundation by forces in the global capitalist economy. So what is being done?

In April 1986, the federal Labor Treasurer announced that the country was on the road to being a "banana republic." It is a theme which has been kept alive by the mass media. The response, predictably, has not been to investigate the penetration of the economy by TNCs, nor to see the net outflow of national capital in terms of the contribution of such forces. Rather, primarily it has been to identify "the nation" as an economic unity that has failed to be sufficiently competitive on the world market. The consequence of such analysis is that "we" must become more competitive, more adaptable, and more efficient. What this means, in effect, is that Australia must become still more closely integrated into the world economy, by tailoring existing economic and social arrangements even more closely to the requirements of transnational corporations, core economies, and the organizations of global finance.

In terms of economic policy this has meant deregulation in a wide array of industries, including the finance sector, coal mining (the principal mineral export), and the media, with others on the agenda to include the wheat industry and airlines. Fiscal deregulation actually has made it easier for overseas speculative capital to move in and out of the country, and has facilitated an exodus of domestic capital to more lucrative foreign bases. (Ironically, Australia now ranks fifth, ahead of France, among sources of overseas investment in the U.S.)

Tariff protection for secondary industries, the traditional mainstay of domestic stabilization and thus of the major structures of social justice in Australian history, is being dissolved as part of a program to restructure industry. The aim here is to make Australian industrial capital move into areas where it can compete internationally, while existing uncompetitive areas will wither away. Basically, the plan involves expanding hi-tech and related service areas, while the traditional areas of secondary industry will be left increasingly to cheap-labor nations.

The second plank of domestic stabilization -- arbitration -- also is being modified, although not dismantled. Among other changes, its role in wage determination has been partially bypassed by state initiatives. In particular, the "Accord" between Labor and the union movement -- a program of voluntary wage restraint balanced against increased nonwage benefits -- has become of central significance. This corporatist innovation has resulted in reductions in real wages and, in addition, has involved the attempt to tie nominal wage increases to increases in productivity. In exchange, reduced taxation for middle- and lower-income earners and other nonwage benefits have been offered, although the former have been delayed, and have been offset by inflationary "bracket creep": federal tax receipts have actually increased at a faster rate than incomes.

Corporate profits have increased steadily since Labor came to power in 1983, while real wages have declined. Despite vaunted taxation reforms, the average rate of tax paid by corporations during the period of Hawke Labor has fallen from 31 cents to 22 cents in the dollar. The result of such shifts is that the share of national income received by labor (59.3%) has fallen back to the level prevailing in 1970, and the gap between rich and poor appears to be widening (Emy and Hughes, 1988: 95). Despite social justice taking a high profile in Labor policies, the government has decreased overall social expenditure during the past three years, notably by targeting benefits more selectively, stepping up welfare policing, and reducing the range of benefits provided. For example, assets tests have been imposed on pensioners, family allowances are now means tested, the long-term unemployed are work tested, welfare fraud has been increasingly highlighted and investigated, the range of medicare benefits has been reduced, and fees have been reintroduced for tertiary education. Moreover, as these examples also suggest, despite government claims about social justice and the elimination of poverty, the common effect of such corporatist strategies will do little to benefit those sectors of the population not in the work force or not covered by the labor unions (Thompson, 1988; Beilharz, 1987; Macintyre, 1986).

In short, a corporatist attempt is being made to restructure the Australian economy in order to render it more attractive to capital in general, and to foreign capital in particular. In the process, the traditional foundations of social justice in the Australian political economy are being abandoned or transmogrified in an attempt to rescue the nation from the consequences of dependency. It appears that, as argued, changes in the world economy -- partly associated with the Pacific Rim strategy and partly brought on by the cumulative consequences of ownership and control by foreign capital -- suggest that Australia can no longer rely on resource exports to fund social justice as we have known it historically. However, attempting to resolve the problem by increasing integration with the networks of global capitalism does not seem a likely solution. What is more likely is an increasing gap between the corporatist rhetoric of an Accord-based construction of social justice and a further falling away of the real relations of social justice.

NOTES

1. I will depart from the normal model of editorializing, i.e., that of introducing individually the various articles which make up this issue. Rather, my intention is to provide an overview of the international context in which Australia is placed -- and, thus, in which are situated the particular struggles for social justice which are the subject matter of the other contributions.

2. It should be clear that I am not concerned in this essay to establish an eternal or ahistorical concept of social justice. Rather, I am attempting to map out the historical contours of the concept as it emerged in Australian history. It is for this reason that I have argued that the concept has no meaningful bearing on much Koori history since the invasion, as Kooris were deemed to be outside the concern of most mainstream politics of social justice until quite recently. Likewise, readers will no doubt have detected that much of the character of the discussion so far has implicitly identified social justice with wage and employment justice. Again, this is due neither to oversight nor theoretical conviction, but rather to the observation that (as this brief essay hopefully is establishing) this has constituted the historical core of social justice politics in this country.

3. As late as 1970, Australia stood out in both these respects. Castles (1987: 118) noted that in that year among capitalist democracies Australia ranked fourth in terms of equality of incomes after taxes and transfers (behind the Netherlands, Sweden, and Norway), and most equal at the level of pretax, post-transfer income.

4. The Labor government of E.G. Whitlam (1972-1975) was ousted from office as the result of the intervention of the Governor General -- the nominal representative of the Queen in Australia. This precipitated a major constitutional crisis both because its constitutionality was -- and still is -- hotly disputed, and because it was regarded by many as a crisis measure precipitated by capital in order to remove a reformist regime. Rumors of CIA involvement in the coup have since been denied by the principal actors involved, but among the Australian Left very strong suspicions still remain.

REFERENCES