Latham’s suburban vision: new collectivism or old fashioned individualism?

Ben Spies-Butcher, University of Sydney

Mark Latham From the Suburbs: Building a Nation from our Neighbourhoods, Sydney, Pluto Press, 2003 (180 pp). ISBN 1-86403-189-1 (paperback) RRP $24.95.

Mark Latham is a rarity in modern politics—someone who frequently writes and proposes new ideas. The media’s recent reaction to his comments on negative gearing and the abolition of the private health insurance rebate signal that such activities are not encouraged in this country. His latest contribution, From the Suburbs, is engaging like his previous work. But it is also frustrating and disappointing. There is little new material. The chapters have relatively little in common. There is little explicitly about the subject matter promised by the title—the different perspective of those living in the suburbs. And mixed in amongst this is an interesting proposal for a form of childhood superannuation.

Only in the opening chapter does Latham explicitly focus on the suburbs. He sets out what he believes to be a new divide in Australian politics between ‘insiders’ who live in the inner city and ‘outsiders’ who live in the suburbs. The distinction stems largely from the Howard-inspired debate about ‘elites’. Latham claims that Whitlam’s opening up of higher education has created a new progressive elite that has engaged in a culture war with the established conservative elite. The war has focused on identity, particularly the (now four?) R’s—Rights, Reconciliation, Republic, and Refugees. The conservatives are winning, particularly on issues of race.

Latham argues that to regain ground, Labor needs to refocus attention away from the symbolic and toward the material (health and education), and to change tack in the culture war toward emphasising the need for responsibility. This argument accords with Latham’s previous work laying out an agenda for the Third Way. His central theme is that politics needs to go small, away from symbolism and grand visions toward practical realities, away from big government and big bureaucracies toward local communities—and away from plans for restructuring capitalism toward a focus on social relationships.

This new agenda of localism is one half of Latham’s Third Way project, the other half is a commitment to the free market. Again this is a familiar theme for the Third Way. Latham goes to some length to state his pro-market credentials, claiming that globalisation has ‘freed the labour force from the heavy machines and degrading work of industrial capitalism’ (p. 43). Indeed the only fault he finds with economic reform is that ‘it can only be done once’ (p. 61). Latham calls on the Labor Party to embrace this new reality, and recognise that:

  • market forces work better than planned economies;

  • free trade works better than tariffs and industry welfare;

  • competition policy works better than monopolies, either public or private; (and)

  • governments need to be fiscally responsible, delivering surplus budgets and low interest rates.

(Latham 2003, p. 57).

This approach cuts off the traditional social democratic response to disadvantage—reform of capitalism. In its place, Latham proffers two new solutions: expanding asset ownership so that everyone can be a capitalist, and generating ‘social’ solutions to unemployment and poverty. The former is the basis for plans to expand the principle of superannuation across the life cycle. The later is Latham’s ‘responsibility’ agenda, where capitalism extends into the neighbourhood—the world of social capital and social entrepreneurs. As Latham’s citations suggest, this response is more at home in the American Democratic Party tradition, than the tradition of social democracy.

Asset ownership, Latham insists, is not just about economics; it’s an act of inclusion.

The two solutions are linked, and both are part of Latham’s focus on social responsibility. Asset ownership, he insists, is not just about economics; it’s also an act of inclusion. And by teaching (poor) people to save and invest, the government is teaching people responsibility; giving them a hand up, not a hand out. This is the new collectivism, where people own a stake in the economy and where people act as communities to solve their own problems.

At least that is the Third Way spin. On closer inspection it is remarkably difficult to understand how any of this is about collectivism. After all, Latham is suggesting that we give individuals assets so that they can participate more effectively in the capitalist economy. The main actors in rejuvenating communities are social entrepreneurs, charismatic individuals who innovate, mobilise (social) resources and build (social) capital.

The overriding justification for the Third Way is its ability to move away from top-down policy making to what Latham terms ‘inside out’ processes. Localism is the key feature of this new paradigm. And in dismissing traditional Left-wing solutions, Latham draws a line between the social democratic tradition of big government, big bureaucracies, and big unions and the Third Way approach that focuses on communities and neighbourhoods. Overlaying this shift from big to small is a shift from economic to social, a dimension Latham claims the Left has also ignored in pursuing (economic) socialisation and redistribution. Because of this, Latham claims, we need to move away from Left vs. Right, away from the question of ownership, to focus on the micro, social relationships and responsibility.

But it is a false and unconvincing dichotomy. The move to localism is not new. Many movements have focused on small-scale solutions. They include housing co-operatives, women’s shelters, Indigenous self-determination movements, resident action groups, Green bans, communes, permaculture farms, community health centres, migrant resource centres and credit unions. Most have been associated with Left-wing politics. Many have expressed the same unease about bureaucracy and state power as Latham. But they came to very different conclusions.

What makes these grass roots movements different from Latham’s Third Way politics, is that they continue to express a broader critique of capitalism and market economics. Questions of ownership, control, and power remain central to their understanding of how politics works. Latham offers no rebuttal to these other Left-wing traditions. Instead, he leaves us with a relatively unsatisfying critique of a straw man, a caricature of a brand of highly centralised statist social democracy.

Latham suggests a form of childhood superannuation, where the government opens accounts on behalf of newborns.

This false dichotomy of big Left vs small Third Way allows Latham to completely avoid questions of ownership, power, and the role of economic liberalisation in creating the very disadvantage he seeks to remedy. It is all the more frustrating because Latham appears to credit economic liberalisation with delivering the goods in the two areas where disadvantage is most pronounced—employment and the distribution of wealth.

On the first score he extols the market for creating knowledge economy jobs, while spending much of the book examining the social problems generated by long-term unemployment. Latham comes close to acknowledging the contradiction:

When I grew up in the Green Valley housing estate in the 1960s, for instance, most of the dads were in work. This gave us kids effective role models and mentoring. The emergence of long-term and inter-generational unemployment in the 1980s, however, has had a crippling social impact (p. 86).

One might imagine that this argument suggests that the solution to disadvantage lies in job creation. Or that at least Latham would match the dates and realise that this sudden ‘emergence’ of unemployment directly coincided with economic liberalisation. But no. Instead, Latham suggests that ‘It is not possible to get people back into work without first fixing the social dimension’ (p. 86). The responsibility, as Latham likes to term it, for fixing the social problems born of unemployment lies with poor communities.

Even ‘community’ is a relatively individualistic concept as Latham uses it. The main actors in his community are ‘social entrepreneurs’. Like their better-known economic entrepreneur cousins, Latham’s social entrepreneurs use start-up capital and initiative, rather than living on welfare or handouts. Yet he also claims that the main resources social entrepreneurs use are ‘disused public assets’ (p. 93), never acknowledging that these resources are accessible precisely because they are ‘public’. If they were not, the level of start-up capital required would be far higher.

The same theme emerges in Latham’s discussion of ‘asset democracy’, the other great success of market reform. Latham points to the rapid expansion in the ranks of asset owners (outside home ownership), largely through superannuation. He claims that super has ensured that the distribution of wealth in Australia has remained stable, contrary to the experience in other countries, but does not go one step further to ask what is driving this underlying international trend towards concentration.

Latham says little about the rise of large corporations and what he does say is tame.

However, given the assumption that Labor must embrace market reforms, Latham does seem to be striving for ways to minimise the resulting inequalities. He suggests a form of childhood superannuation, where the government opens accounts on behalf of newborns. Both parents and government would contribute to the funds that Latham expects to be around $10,000 on maturity when the child turns eighteen. This scheme, Latham claims, gives everyone access to capital, and teaches everyone how to save and invest.

But there is a catch. Like superannuation, this would not be normal asset. Under Latham’s scheme, the fund can only be used in certain prescribed ways. He wants people to invest, not just to go on a round-the-world trip. He suggests that the money could be used for ‘home ownership, HECS payments, rollover investments, training and employment’ (p. 77). But once he makes this clear, it becomes apparent that this nest egg will not be an asset for most young people; rather, it will be a way of paying off debt, in particular home mortgage and HECS debts.

It is odd indeed that a Labor Government would propose giving everyone money to buy the education they once provided for free. In fact it almost sounds like a voucher system. And the proposed size of the fund is considerably less than the first homeowners grant was at its height ($14,000). While the latter scheme initially appeared to increase affordability, in the longer term its main effect has simply been to drive up prices. Neither scheme is as efficient as solving problems of disadvantage through public provision. We are left with a Labor agenda that diverts resources from public housing and education into the direct payment of money to individuals so that they can ‘invest’ in exactly these goods through a relatively deregulated market. But for Latham, these are not ‘assets’ unless they are privately owned. In the same way that superannuation replaces the pension, so this new asset would replace free education and affordable housing.

A final example probably makes the point best of all. In discussing the distribution of wealth Latham addresses the longstanding Labor goal of worker control of production. He argues that there are two ways to achieve this goal: making it easier for employers to give workers shares through remuneration packages; and enabling worker trust funds to purchase shares. Latham supports both ideas, although he suggests that trusts allow for a higher degree of ownership because they are not limited by workers’ remuneration. But he does not recognise that the first policy involves individual share ownership by individual workers, while the second involves collective share ownership by a trust.

What is also missing from this story is any serious discussion of business. Latham decries big government, bureaucracy, and unions, but says relatively little about the rise of large corporations and the tendency to monopoly. What he does say is very tame. Latham’s solutions involve encouraging businesses to be socially responsible (although he doesn’t mention regulation), encouraging them to donate to social venture capital funds (offsetting the need for government funding of community development), and beefing up competition policy. Only the final measure is likely to have any real effect, although the Australian Competition and Consumer Commission’s efforts to date, while increasingly aggressive, have not prevented further concentration of market share.

This is the great disappointment of Latham’s work in general. He has an obsession with the market that obscures a clear understanding of collectivism. Latham does not rebut the traditional collectivist argument over ownership and control; he does not even acknowledge it. Instead, he reduces collectivism to nationalisation, in a single, centralised and bureaucratic model. And he doesn’t even convincingly reject this. His style is open and accessible. The final chapters—quite irrelevant to the rest of the book—abusing the Coalition are somewhat amusing. But the vision is a let down.

Ben Spies-Butcher is currently researching a PhD on social capital and Australian public policy in the Political Economy discipline at The University of Sydney.