How ordinary people paid for the boom

Review: The Land of Plenty
By Mark Davis
Melbourne University Publishing, $36.95

NOW THAT the Australian economy is slowing, ordinary Australians will be expected to take a hit in their living standards.

But ordinary working class people have been forced to sacrifice all through the 16 years of continual economic boom since the last recession in 1992. Mark Davis’ new book The Land of Plenty attempts to trace what went wrong – and why governments have failed to deliver prosperity for the majority of the population.

His book is a polemic against the neo-liberal policies of both the Hawke-Keating and Howard governments, which saw wages and living standards held down to allow an expansion in corporate profits.

Among the strengths of the book is his examination of how living standards were squeezed even at the height of the boom. He points to an increase in average grocery costs by 28 per cent between 2005 and 2007, while average wages increased only 13.8 per cent in the same period.

An awareness of the reality of the class divide in Australian society runs through the book. He attacks the myth that people have ‘never had it so good’ as a product of the “mindset and set of guiding myths to which lip service must be paid to… sit at the right Canberra tables, [and] to be given column space on certain editorial pages”.

Davis sees the problem as the conservative economic consensus and the faith governments have put in the free market, while dramatically reducing government intervention in the economy.

He recognises that Kevin Rudd, a self-proclaimed economic conservative, has shown no signs he is about to break with “the fundamental economic approach taken by the previous three governments”.


But his book is not simply an attack on neo-liberal policies. He seeks to understand how the new conservative consensus emerged in the 1980s with the rise of the new right in the US and UK – and how it has survived in the face of growing popular opposition.

Davis sees race politics as central to the rise of the “new right” in the US.

But he also correctly identifies how racism has been used in Australia “to capture the votes of those who feel most left out [by economic reform] by providing scapegoats”.

He points to the popularity of both Pauline Hanson’s racist diatribes against Asians and her attacks on globalisation and ‘economic reform’, to show how she tapped into the bitterness many people were feeling about economic rationalism and declining living standards.

He notes that Howard learned from this and used racism against refugees to appeal to Hanson supporters and rebuild his electoral support.

Although his arguments on race are buttressed by strange claims that there is a real “crisis of whiteness” and concepts of citizenship and the nation, he identifies that the appeal of racist ideas is a product of the ravages of the free market on peoples lives and their search for answers as to why this is happening.



Yet when it comes to solutions the book is weak. Davis clearly wants a new Keynesian model of increased government intervention in the economy. He argues for increased government planning within the economy where the market fails – for instance in infrastructure and housing.

He rejects WorkChoices as an outdated approach, but argues there can be “social partnership” between unions and employers.

He cites as his model the early Hawke government – with its Accord with the unions and “consultative style”.

Yet it was precisely the Accord that aimed to hold down wage increases for workers in order to restore corporate profitability, after the shock of the end of the post-war boom and recessions in 1974 and 1982.

Already in 1986, just three years after the government’s election Paul Keating was boasting that the profit share of the economy has been restored and the wages share has declined considerably.

Although he wants an end to free market zealotry, Davis believes that a lot of what the new right proposed in terms of economic reform was necessary, and that wage claims of the 1970s were unsustainable.

This means accepting cuts to wages and living standards in the face of economic crisis.

Davis’ approach shows the dangers in his argument that the left has to accept the functioning of the market, and that governments should only try to moderate it.

Rejecting the logic of the market entirely is going to be necessary to defend workers’ living standards.

By James Supple


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