The Condition of Labour Today

Ronald E. Johnson

[2012]

I am grateful to speak at this Conference and I would like to thank Faye and Richard Giles, Tony Fitzgerald and the team in NSW for a great effort in bringing it all together. I am very much looking forward to hearing the other speakers this weekend and hopefully learning from those talks and other conversations about how we might better direct our energy towards achieving a free and just society.

On 11 September this year it will be exactly 120 years since Henry George concluded writing his inspirational work, The Condition of Labour- An Open Letter to Pope Leo XIII.

The title of my talk is "The Condition of Labour Today".

My approach here is not to try to improve upon or update the work of Henry George. Rather, I will highlight aspects of contemporary Social and Industrial Relations, with particular reference to Australia, to illustrate my belief that the moral principles and economic ideas outlined by George have a timeless and crucial relevance to humanity's capacity to survive and prosper on Earth.

At the foundation of George's message is the Golden Rule, which he described in the following way: "the teaching of Christ that we should do to others as we would have them do to us, which a true political economy shows is the only way to the full emancipation of the masses."

The Condition of Labour is the first book by Henry George that I ever read and in 1997 when the book found me, arising from a few years work as a professional union activist, I just happened to be feeling disillusioned with the limits of trade unionism as a means of achieving justice for working people and at the same time found that circumstances caused me to seriously consider that perhaps God was indeed real and might be able to help me to get my life back on the right path.

For me, The Condition of Labour was exactly the right book at the right time. The book helped me to restore my faith in God and it gave me hope that we could do something to overcome poverty, injustice and warfare. The Condition of Labour caused me to re-consider my views about socialism, communism, The Welfare State and Protectionism. This book gave me the confidence to eventually abandon my simplistic adherence to the idea that religion was just "the opiate of the masses". For the first time I began to understand the fundamentals of political economy, property rights and the effects of taxation.

To this day, I believe that The Condition of Labour is simply the best book on Industrial Relations that I have seen by a country mile.

In The Condition of Labour, Henry George reveals to his reader simple truths: about how we all need access to land in order to work and to live; about God's law of labour that we must live by the sweat of our brow; about the fact that it is labour or work that confers the right to own wealth; and about how the system of the private ownership of land turns all of that upside down by denying equal rights to the Earth, (as George wrote) attaching "to things created by God the same right of private ownership that justly attaches to things produced by labour", and thereby causing those who live by their labour to be robbed by those who make economic gains through the private ownership of land.

Early on in The Condition of Labour Henry George explains the natural law of rent, that is, the idea that as society advances, this progress is reflected in increasing land values, wherein lies a great fund that belongs to the community and which should be taken by the State for the benefit of all. George also sets the record straight about God's role in human poverty:

"We see that God in His dealings with men has not been a bungler or a niggard; that He has not brought too many men into the world; that he has not neglected abundantly to supply them; that he has not intended that bitter competition of the masses for a mere animal existence, and that monstrous aggregation of wealth which characterise our civilisation; but that these evils, which lead so many to say there is no God, or yet more impiously to say that they are God's ordering, are due to our denial of His moral law. We see that the law of justice, the law of the Golden Rule, is not a mere counsel of perfection, but indeed the law of social life. We see that, if we were only to observe it, there would be work for all, leisure for all, abundance for all; and that civilisation would tend to give to the poorest not only necessaries, but all comforts and reasonable luxuries as well. We see that Christ was not a mere dreamer when He told men that, if they would seek the Kingdom of God and its right doing, they might no more worry about material things than do the lilies of the field about their raiment; but that he was only declaring what political economy, in light of modern discovery, shows to be a sober truth."

The ideas and principles enunciated by Pope Leo in Rerum Novarum and reinforced in subsequent Encyclicals have had a major impact on social and economic conditions and the functions and structures of the State (especially in the Western World) throughout the 20th Century and into this current Century. We have enshrined the idea enunciated in Rerum Novarum of the "inviolability of private property", including unfortunately, private property in land. In his New College Lecture on "Church and State: Christianity and Politics", delivered by Kevin Rudd MP in October 2005, Mr. Rudd drew a stark contrast between the proposed Howard Government WorkChoices legislation and more than a century of Catholic social teaching. He asked, "How does it [WorkChoices] square with Pope Leo XIII's Encyclical of 1891, Rerum Novarum, which states: 'it is a natural human right to form professional associations of workers'?" Mr Rudd continued:

"My point…is that the core documents of Catholic Social teaching in no way seek to marginalise the role of trade unions. Nor do they seek to marginalise the role of the State in bringing about a fair industrial system through instrumentalities such as an independent industrial commission. In fact, the reverse."

Mr Rudd and the ALP won the election in 2007 on a wave of union, church and public protest essentially calling for a return to the industrial relations legislated rights and structures that embodied 20th Century Australian Industrial Relations. The Rights at Work that the labour movement fought for included: the restoration of a strong independent industrial tribunal with the capacity to conciliate and arbitrate industrial disputes and to determine a fair minimum wage; The right of workers to freely join a union and participate in union activities, including collective bargaining and legally protected industrial action; Further, the right to a fair safety net of award conditions and the right to protection against unfair dismissal.

There may be some argument about the extent to which the Labor Government's Fair Work Act 2009 has secured these reforms. However, there has been a general shift back towards these legal rights and structures, albeit within a different constitutional framework and a difficult economic environment.

However, the important thing to note in this context is that the legal rights that the labour movement pressed so hard for in the lead up to the 2007 Federal Election and as at least partially reflected in the Fair Work Act 2009, are essentially closely aligned with the ideas of a fair system for workers set out by Pope Leo XIII in Rerum Novarum. As well as supporting the right to private property, including in land in Rerum Novarum, Pope Leo XIII supports the idea of a redistributive Welfare State that collects a "just" rate of taxation, charity, trade unionism (provided they do not go too far), limited State regulation of Industrial Relations through dispute settlement, the establishment of a fair minimum wage ("enough to support the wage earner in reasonable and frugal comfort") and safe and fair working hours and conditions.

From the worker or trade unionist's point of view, the key lesson that arises from a study of The Condition of Labour is that the Rights at Work that we have struggled to hold for over one hundred years, are really 'concession rights', settled by way of a regulatory compromise between the establishment (with some help from the Church) and labour representatives. These concession rights have been socially important and remain so in the absence of the true justice embodied in realising equal rights to land. However, they can never be more than a far inferior substitute for justice.

In The Condition of Labour Henry George wrote:

"…since labour must find its workshop and reservoir in land, the labour question is but another name for the land question…" (P.62).

He added:

"What is wrong with the condition of labour through the Christian world is, that labour is robbed." (P.85). That remains true today:

As Jeff Lawrence, ACTU Secretary pointed out on 30 June this year:

"Over half of full-time workers in Australia earn less than $55,000... In the first eighteen months of the Fair Work Act, profits grew more than twice as fast as the total wages bill in the market sector."

Workers engaged through their unions in the struggle for justice at work find themselves in the middle of a narrow argument about state regulation and the rules for collective bargaining. This is an argument almost completely removed and diverted from the essential, substantive and supremely important debate about the natural rights of workers. One illustration of the narrow parameters, (relative to a proper consideration of natural rights) involved in this debate is the recent criticism of the NSW Liberal Government by the Federal Labor Government for imposing a 2.5% cap on pay increases for NSW State public servants. Yet at the same time, the Federal Labor Government is seeking to impose a 3% pay cap on its own public servants. Here we have an argument about the degree to which real wages should be cut.

The story of Australian industrial relations and the social and economic conditions of the past 120 years demonstrates the limited successes of Conciliation and Arbitration, Trade Unionism and the Welfare State under a system that re-enforces the private ownership of land. Debates about justice at work have been pushed to the margins. Meanwhile, at the epicentre of political economy, land monopoly and the taxation of labour and its products are stealthily wrecking our economy, driving down wages and facilitating by legal means, the theft of working people's rightful wages.

The Condition of Labour today is reasonably good for some sections of the workforce with scarce skills, for example in the mining industry. Strong unions have also aided sections of the labour force. Yet as Henry George pointed out, special skills and trade union organisation can only help some groups of workers on a temporary basis and under a system of the private ownership of land, land price increases will outstrip wages growth. Indeed, in many of the mining areas, spiralling land prices are driving up housing costs and taking a massive cut from the take home pay of men and women working under extremely difficult conditions.

Hundreds of thousands of Australian workers struggle on the economic margins. An increasing number now work on a contract or casual basis. Many rely on working two jobs or upon welfare supplements to survive.

The massive level of mortgage and personal debt that is now carried on the backs of Australian workers was largely fuelled by a trebling of land price during the years of the Howard Government and now has created a growing class of working poor, struggling on the margins and becoming increasingly unable to pay utility bills, service credit cards and to purchase goods and services. Debt, fuelled by rising land prices, is working insidiously at driving down the wages of Australian workers.

Henry George clearly identified the causes of our current industrial and social difficulties when he explained the Law of Wages in The Condition of Labour, as follows:

"Land being necessary to life and labour, its owners will be able, in return for permission to use it, to obtain from mere labourers all that labour can produce save enough to enable such of them to maintain life as are wanted by the land-owners and their dependants."

If we look at the Global view point the condition of labour today is very grim indeed:

• 1.4 billion people live in extreme poverty on less than $US1.25 per day.
• Approximately 600 million children live in extreme poverty.

In Australia:

• Two million people live in poverty or severe hardship. According to Homelessness Australia, more than 100,000 Australians are homeless on any given night.

Housing Affordability and homelessness remain a major problem for Australian workers and society generally. There is some hope in this regard. Despite opposition from the Liberal Party and a lack of support from the big banks, the ACT Labor Government introduced an innovative Land Rent Scheme in 2008 designed to make it easier for new home buyers to enter the housing market. The essence of the scheme is that by paying 4% of the unimproved site value to the Territory Government, the few hundred Land Renters signed up so far needed only borrow around half the usual mortgage amount, that is, just sufficient funds to build a house on their chosen site.

The Association for Good Government ACT Branch would like to see this scheme developed further and will be conducting educational activities aimed at for example, providing income tax breaks for Land Renters.

Henry George wrote in The Condition of Labour:

"For is it not clear that the division of men into the classes rich and poor has invariably its origin in force and fraud; invariably involves violation of the moral law, and is really a division into those who get the profits of robbery and those who are robbed; those who hold in exclusive possession what God made for all, and those who are deprived of His bounty?"

Historical records prove that in 1891 Australian workers and trade unionists in particular, recognised this fundamental point far better than our modern workers and unionists. Australian trade-unionism has lost its way insofar as it has abandoned its demand for natural rights for workers, especially the right to use and enjoy land.

However, there are signs of hope. For example, the ACTU has undertaken some valuable advocacy work in relation to the proposed Minerals Resource Rent Tax. The commissioning of the Henry Review of Australia's Taxation system by the newly elected Labor Government was in itself a massive breath of fresh air in public policy debates. Henry has important things to say about the need to move our revenue collection toward a system heavily based upon Land Value Taxation. Australian unions need to find a way to build support for this aspect of Henry's findings.

I believe that Coalition reactionaries are quietly stuck on the miserable idea of further increasing their beloved GST, which constitutes a continuing and very serious threat to the standard of living of working people. The Liberal Party stands solidly on the side of rent collectors at the expense of labour.

The private collection of land rent is driving an ever-increasing wedge between the haves and the have-nots in Australian society. Different wage rates and industrial agreements have a significant effect in explaining who gets what. But it is the extent to which a person is engaged (either directly or indirectly) in the private appropriation of land rent that really is the over-riding determining factor in his or her socio-economic condition.

Henry George wrote in The Condition of Labour:

"Did not Christ in all his utterances and parables show that the gross difference between rich and poor is opposed to God's law? Would he have condemned the rich so strongly as He did if the class distinction between rich and poor did not involve injustice; was not opposed to God's intent?" (p.76)

Looking beyond social problems and the problem of private property in land causing labour to be robbed, we are now facing potentially catastrophic environmental problems. In the last century in particular, we have seriously damaged our planet by polluting our rivers, oceans and atmosphere. We have cut down too many and planted too few trees. We have witnessed an absolutely alarming level of extinction of animal and plant species and we have caused Global Warming, not just through Carbon emissions but through other greenhouse gases also.

As Henry George noted, the survival of humanity requires us to live in conformity with Natural Law. To damage the Earth with harmful and dangerous pollution denies the Golden Rule by negating the equal right of all people (including future generations) to use and enjoy the Earth.

George illustrated our utter reliance upon God and his Natural Laws when he wrote:

"Let the mean temperature of the earth rise or fall a few degrees, an amount as nothing compared with differences produced in our laboratories, and mankind would disappear as ice disappears under a tropical sun, would fall as the leaves fall at the touch of frost."(P.41)

One aspect of the Federal Labor Government's recently announced Carbon Tax Package that I believe was particularly progressive was the lifting of the tax free threshold to $18,200, with further upward adjustments to follow.

To put it in some perspective, the Carbon Tax is expected to raise around $10 billion per annum whereas the GST raises around $40 Billion. The GST is effectively a 10% flat tax on wages. So we don't really have a tax-free threshold. I believe the GST is a far more damaging tax that the ALP Carbon Tax package.

Nonetheless, as a Georgist, I oppose the Carbon Tax and believe that we could do far better for our environment and economy by instead making it a priority to collect site rent in lieu of taxation and to eliminate the billions of dollars of Corporate Welfare in the form of government subsidies currently propping up environmentally damaging industries. Other big improvements could be made by broad-based strengthening of anti-pollution regulations, instead of increased taxation.

Greens MP Adam Bandt recently pointed out that an end to "the environmentally damaging largesse of rebates and tax credits given to big fossil fuel users would save the Budget between $9-10 billion a year." He is partly on the right track here but his point really just scratches the surface. For example, the Productivity Commission has identified a separate list of at least $14 Billion of government revenue going to Corporate Welfare each year. I believe a thorough examination of government expenditure would reveal many billions of dollars more.

A system of site rent in lieu of taxation would collect ample revenue, remove privileges and subsidies and ensure free and fair competition for clean industries. Workers receiving the full and proper reward for their labour could then afford to choose to purchase the most environmentally-friendly services.

Writing in The Canberra Times on 14 July this year, Associate Professor Frank Zumbo noted some legitimate concerns with the Carbon Tax as follows:

"The problem here is that, if the effected companies are in highly concentrated markets, the companies can simply pass the higher costs of the carbon tax on to consumers. In the absence of behavioural changes from effected companies, there is a real danger that the carbon tax might not lead to any meaningful reductions in greenhouse gas emissions in key industries.

The problem with ongoing price rises from the carbon tax could even get worse in highly concentrated markets as effected companies could try to raise consumer prices in excess of any carbon-tax related increases.

A lack of real competition in highly concentrated markets creates a tempting environment for the few dominant market players to price-gouge consumers. Here the carbon tax could be used to justify existing or future rip-offs by effected dominant companies intent on driving up retail prices to the detriment of consumers."

From a political point of view, another concern with the Carbon Tax is that the Government does not appear to have the mass of the working class on side with the new tax arrangements, despite the compensation measures.

There is a real danger arising of a return to a Coalition Government. The Coalition has historically demonstrated a determination to govern in the interests of big business, banks, rent collectors, dangerously polluting industries and against the interests of working people. The Coalition is working to re-activate "Howard's battlers", by working in conjunction with powerful segments of the media that successfully pitch their narrow, negative and twisted messages at working people.

Henry George wrote in The Condition of Labour:

"If you will consider how true in any large view is the classification of all men into working-men, beggar-men and thieves, you will see that it was morally impossible that Christ during his stay on earth should have been anything else than a working-man, since He who came to fulfil the law must by deed as well as word obey God's law of labour." P.76

Here is an idea that illuminates the dignity that working people should feel in their daily lives. Henry George also made it clear that not only is the Labour question the same as the land question but that the land question is also a religious question and that justice can be carried by nothing less than the religious conscience. As George noted, while ever we are denied the full reward for our work, we are to that extent enslaved. Chattel slavery was largely destroyed by a religious or moral uprising and the same can occur to industrial slavery.

We saw in 2007 what can be done when Australian churches and unions united to fight for the rights of working people. They formed an alliance that had tremendous support and power. The hope for the future is that churches and the labour movement can revisit the question of Industrial Relations or the Condition of Labour and this time dig deeper beyond advocacy for concession rights to look squarely at Natural Rights in the context of a True Political Economy that shows the absolutely crucial importance of securing the equal right of all to use and enjoy land, as the means to achieve labour freedom.