Australia is in the biggest inflationary episode since the 1970s, and major newspapers are sounding grim warnings about that decade—none of them grimmer than those in the paper that most speaks to and for the bosses, the Australian Financial Review.
The AFR has had recent opinion pieces such as, “Let’s not repeat the perilous mistakes of the 1970s”, “The economy is too hot like the 1970s”, “A wage-price spiral is a ticket to revisiting the 1970s” and even a very lengthy article from November 2021 offering more comprehensive horrors, “Why the 1970s was the decade of living dangerously”.
Leave aside for a moment, as Omar Hassan recently wrote in Red Flag, that what we are currently seeing “is not a wage-price spiral, but a profits-profits spiral, as businesses raise prices on their products to protect or increase their profits”. Sadly, there is no “wage spiral”, as virtually no unions have done anything to win wage rises above inflation.
One of the few to acknowledge this reality, so unlike the 1970s, is the economist Richard Denniss. Writing in the New Daily on 24 June, he pointed out the sudden turnaround on the part of the Reserve Bank Governor Phillip Lowe, who last year suggested real wages needed to rise: “Now he is telling workers that if they don’t accept real wage cuts, then their greed will be responsible for inflation ... even though real wages fell by a record 2.7 per cent over the past year”.
Australian Council of Trade Unions Secretary Sally McManus responded to Lowe’s fearmongering about wage rises in the worst possible way: not by demanding, let alone organising to fight for, wage increases above the level of inflation, but by running up the white flag. “To think somehow that the system is going to deliver across-the-board pay increases of 5 or 7 per cent is boomer fantasy land”, she said. “We do not have centralised bargaining in this country. It would not be possible for that to happen.”
So Australia enters this new round of inflation with massively increased wealth inequality and a declining share of national income going to workers. Soaring prices and falling wages have combined to inflict economic pain on the working class, and there is no fight in our union leaders.
So why the “no return to the ’70s” mantra? A few facts to begin with, which will help explain why the capitalist class so hate the 1970s.
When inflation began to accelerate in 1973, wages grew with it. Inflation peaked in 1973 at 17.5 percent. Average wages grew by about 15 per cent in 1973 and by roughly 28 per cent in 1974 as workers fought to get ahead. The unions won equal pay for women, and militant unions were able to force its implementation at the job level far earlier than the official decision specified. Between 1969 and 1974, average hourly wage rates rose for men by 98 per cent, and for women by 142 per cent.
Today, as wages fall, one-third of national income is going to profits—an all-time high. As a result, the share of national income going to wages has sunk to a low of just under one-half.
By contrast, in the mid-1970s profit share was at a postwar low of 16 percent and the wages share was 63 percent.
Industrial militancy was a big feature of the 1970s. At its high point in 1974, more than 6 million days were taken on strike. Increasing militancy can also be measured in the number of strikes per year. Between 1951 and 1967, the annual average was 188 strikes; between 1968 and 1971, there were more than 1,300 strikes a year, and the trend was upward.
The number of strike days by Australian workers has for the last ten years been fewer than 100,000 a year, even though the workforce is now twice as large as it was in the 1970s.
Union membership had declined in the 1960s but rose as the level of strike activity increased. In the 1970s, roughly half of employees were union members. Union density today is 14 percent.
How were those very desirable outcomes achieved?
Sometimes it is argued that it was just easier to go on strike in this period because there were plenty of jobs. Yet unemployment, which had been below 2 percent for decades, began to rise in the early ’70s, reaching 2.7 percent in 1974 and almost 5 percent in 1975, on an upward trajectory until 1983, when it reached 10 percent. Nonetheless, there was a rising level of industrial action and a series of significant victories for the unions which did not cease when unemployment started to go up.
In 1969, a major semi-spontaneous strike wave had defeated the attempt of the conservative Menzies government and the industrial court to fine unions (and jail a tramways union official, Clarrie O’Shea) for taking industrial action. This significant victory for strike action and the ending of the penal powers fuelled workers’ expectations and their militancy.
Despite Sally McManus’ claim that workers can’t make wage gains without a centralised wage-fixing system, in the 1970s there was growing decentralisation of the way in which Australian wages were determined.
In the late 1960s, national wage increases approved centrally by the Arbitration Commission (today’s Fair Work Commission) still made up half of the average wage increase, but this had fallen to one-fifth by 1974.
Centralised wage fixing was increasingly discredited as many in the trade union movement believed it had locked them into a system of wage restraint. Some unions sought to improve wages and conditions by direct action, and the number of strikes skyrocketed against individual bosses or across whole industries for wage claims far beyond what the Arbitration Commission was prepared to countenance. Despite accelerating inflation, workers achieved substantial real wage growth by these means.
By 1973, commentators in the Journal of Industrial Relations were noting with alarm the decentralisation of Australian wage setting, especially “the number of major stoppages designed to reverse decisions of the Arbitration Commission”. If this were not stopped, “it would mean that the Arbitration Commission had become merely one factor in the process of settling industrial disputes. The final arbiter would be industrial strength”.
This increase in rank-and-file, on-the-job activity began to shift the balance of power within the trade union movement. Eminent QC A.E. Woodward was a regular contributor to the Journal of Industrial Relations’ annual review. He wrote in 1970:
“One of the biggest dangers in union affairs today is the spread of so-called ‘participatory democracy’ which means, in effect, rule by mass meetings. It is of course true that I have never attended a union meeting, but I have often been to other mass meetings. Coherent argument is impossible, the demagogue is in his element, and the organized, vociferous minority can often carry the day and commit responsible leaders to irresponsible policies or courses of conduct.”
Other changes were also taking place within the unions. Growth in union density to over 50 percent included an increasing proportion of women and white-collar workers. The key factor in this growth was the demonstrated strength and strike combativity of the trade unions.
The “strike disease” was catching. Previously passive groups of workers began to strike. Blue-collar unions with no particular record of militancy became more active. White-collar unions also began to strike—in 1968 bank officers and NSW teachers took their first strike action and grew because of it.
The 1974 Journal of Industrial Relations annual review explained the changing industrial attitude of white-collar workers by reference to changes going on in some other sections of the community: “[Protesters] appear to have decided that ‘gentlemanly attitudes and forms of protest’ are not effective means of achieving aims ... The behaviour of many non-manual unions is characterised by strike action combined with some combination of the following attitudes: rejection of community sympathy as irrelevant ... and rejection of public interest as either irrelevant ... or asserting the latter is consistent with their case.”
Successful industrial militancy had other, less tangible, benefits. Workers gained confidence to take further action over more ambitious demands, and to broaden the scope of action to wider social and political questions.
The industrial situation in the early 1970s was influenced by the more general radical mood of the time. Wage militancy paralleled a great upsurge of political activity in society, particularly among young people. Unions became part of mass movements against conscription and Australian involvement in the Vietnam War, for Aboriginal rights, against a touring apartheid South African rugby team, for women’s and gay rights and against destruction of the environment.
There was a reinforcing effect between the militant student protests and the defiant mood amongst important groups of workers. Brisbane boilermaker Jim Craig made the connection in this way:
“The sooner the trade union movement takes a leaf from the students and youth in their actions for civil liberties and anti-draft actions the better—if it’s a bad law, defy it, and the sooner we start publicly burning Court Orders, as the kids burn their draft cards, the better.”
A sense of expanded possibilities was widespread, a sentiment that could permeate all areas of life. Jan Harper, a married mother of three doing a postgraduate degree in 1970, shared her recollection of the feeling of immense hope:
“I was absolutely confident that we’d be completely different—that the nuclear family would be finished, that nine-to-five work would be really changed, the structure, the divisions between work and family, all those things would be changed, and I think that feeling of optimism, that the times would change ... was quite common.”
Writing in 1971, civil liberties activist Ken Buckley argued: “A very important feature of our times, the 1960s and ’70s, is the growing effort to throw off restraints imposed from above, the defiance of authoritarian bureaucracies. This is most evident amongst young people, but it is not confined to them. In the trade union sphere it has contributed to the defiance of arbitration penal clauses in O’Shea’s case, and the revelation that a democratic government dare not enforce such penalties in the face of a united union opposition”.
The green bans (which placed industrial bans on development to preserve the natural or built environment) were the best known of the ways in which the Builders Labourers Federation (BLF) acted on the idea that social issues were “union business”, but they were not the only focus of the union’s actions. Within a single week in 1973, the BLF had banned construction work at Macquarie University in protest at a gay student being expelled from a residential college and done the same thing at Sydney University when the Professorial Board had vetoed a women’s studies course. During 1972-73, the BLF also resisted a property developer in the Sydney suburb of Redfern on behalf of the Aboriginal community that lived there.
In sum, the 1970s were marked by increasing militancy on a range of fronts. Industrially, more workers from more diverse union backgrounds than ever before took strike action. As that action proved successful in improving wages and conditions, many workers began to draw conclusions from their success. They placed greater reliance on their own strength, rather than relying on what the Arbitration Commission could give them. They placed correspondingly less reliance on their full-time officials. Insofar as this happened, unions became more democratic.
This expansion of participatory democracy reflected a sense of expanded possibilities in the workplace and in society more generally. The highly politicised climate around the Vietnam War, and radical student activism around a plethora of issues including censorship, apartheid, capital punishment and Aboriginal rights, interacted with and reinforced the working-class confidence that had been born in the workplace.
No wonder the bosses’ mouthpieces don’t want a return of the 1970s.
The things about the 1970s that give the bosses and their proponents at the AFR nightmares are things that should give the rest of us hope. For Australian workers, the 1970s have much to celebrate and learn from.