2001: Annus Horribilis

Frank Stilwell

The Queen of England once used the phrase "annus horribilis" to describe a year in which her family had been beset by a series of traumatic events. "Queen's Bum Year" headlined Rupert Murdoch's newspaper "The Sun".

The phrase (either in the Latin or the tabloid vernacular) seems thoroughly appropriate again at the end of the current year. This is a year in which we've all had to face the consequences of a series of traumatic events. By any standards it has been an awful start to the millennium.

That makes it all the more necessary to ask what can be done in the year ahead to deal with the after-shocks - political, social, economic and environmental - and to lay the foundations for a better future. For the labour movement, both worldwide and in Australia, the challenges are particularly significant.

Retreat from Kyoto

The 'sleeper' issue is environmental policy. However, the global environmental challenge is absolutely fundamental. Over the last decade the evidence about the threat posed by global warming has become increasingly clear. So to has the recognition of the need for collective action on a global scale to develop and implement policies to reduce per capita energy-use, and the use of fossil-fuels in particular. Hence the importance of the Kyoto 'summit' of 1997 to engineer the political conditions for that response.

The Australian government's stance at Kyoto put the interests of the coal and oil lobby ahead of any ecological responsibility. In the three years since then, more back-sliding is evident, as Clive Hamilton ably documents in his new book Running From the Storm: The Development of Climate Change Policy in Australia (UNSW Press, Sydney, 2001). This year has seen the government unresponsive to pressures to adopt a more principled position.

More globally significant than the Australian stance, of course, is that of the US government. After all, the USA is responsible, in broad terms, for about a quarter of global resource depletion. That is why President Bush's announcement in March of this year, that he considered the Kyoto agreement "fatally flawed" and that he would not ratify it, was such a major set-back. Bush's decision, as the Japanese Prime Minister said, was "truly deplorable".

The struggle for more sound environmental and energy policies will continue nevertheless - locally, nationally and globally. Indeed, as the ecological crisis deepens, this will surely become an ever more important issue. It is an issue on which the labour movement needs to position itself with the progressives, rather than align with those resisting change.

Jobs will be lost in any restructuring towards ecological sustainability (and the Kyoto targets would be only a minor first step), but other jobs will open up in industries with more ecologically sustainable characteristics. Indeed, Australia could be a significant world leader in the development, production and export of appropriate technologies, drawing on our established expertise in areas like solar energy. etting this issue the political attention it warrants must be a high priority for the future, notwithstanding the recent setbacks.

War and Terrorism

Understandably, the events of September 11 in the USA and the subsequent war on Afghanistan have overshadowed all other concerns this year. It has become a cliché to say that after September 11 the world would never be the same again. Terrorist attacks and suicide bombing are not novel, of course; it is just that the sheer scale of the carnage on September 11 was so horrendous - and, of course, the USA was the target.

The most significant political consequence of September 11, to my mind, is the emergence of the so-called 'Bush doctrine'. This is what now makes the world a very different place. It is the policy of wreaking vengeance, not just against suspected terrorists but also against states suspected of harbouring them. That, in the absence of conclusive evidence against individual suspects, and in the absence of due process for investigation and enforcement through the United Nations and international courts, is the basis on which the US government claims legitimacy for its warlike response to September 11.

The 'Bush doctrine' has contributed to a new world disorder. The recent escalation of state-backed violence in Israel/Palestine is its most striking manifestation.

Herein lies a terrible irony. To see its significance consider the following chain of events and interpretations. 1. Because of the American government's support for Israel and the corresponding denial of Palestinian rights, the Israel/Palestine situation lies at the root of the antagonism to the USA among Muslim fundamentalists. 2. Such resentment takes its most grotesque form in the terrible attacks launched against the World Trade Centre and the Pentagon in September. 3. Feeling the need to make a quick, decisive response, and lacking the ability to directly penalise the perpetrators, the US President develops 'the Bush Doctrine' to justify declaring war. 4. Leaders of Allied nations as Britain and Australia immediately embrace 'the Bush doctrine'. 5. The Israeli leadership, generally predisposed towards the principle 'an eye for an eye, a tooth for a tooth', embraces it particularly enthusiastically. 6. So we get the demonisation of Yassser Arafat, the Palestinian Authority more generally, and the escalation of violence on both sides in the Israel/Palestine conflict. In effect, this is a process of circular and cumulative causation in which the root problem is accentuated by the posited 'solution'.

The challenge for us all in the year ahead is to find ways to redirect these profound conflicts out of the hands of self-appointed global policemen into the properly constituted international institutions, emphasising the pursuit of justice rather than vengeance, and seeking a resolution through negotiation rather than ever-escalating violence. Otherwise there will not be a world worth living in. The labour movement, in conjunction with all concerned citizens, needs to consider how it can best contribute to those processes. The Australian labour movement has been a consistently strong supporter of peace movements in the past, so there is a proud history on which to build.

Economic Recession

On the economic plane, one of the most obvious consequences of September 11 is to accentuate the slide into recession. Indeed, the slide looks like becoming an irreversibly slippery slope over the year ahead. Economic conditions always rest on social, political and legal foundations. In this case the foundations have been badly shaken, leading to investor and consumer confidence taking a nose-dive. In an economically interdependent world economy, it is very difficult for any one country to insulate itself from the consequences. That is one of the downsides of 'globalisation'.

To their credit, the official monetary authorities have responded - in the United States, Australia and elsewhere - by lowering interest rates. This reduces the cost of capital and is therefore conducive to keeping investment and consumer expenditure levels up. As such, a looser monetary policy can be an effective 'shock-absorber'. However, lowering the cost of capital does not boost investment substantially where business investors are pessimistic about the growth in demand for their products.

Such pessimism had already set in before the events of September 11. Indeed, a recession had been in the making for nearly a year. Corporate collapses had become commonplace - HIH, One Tel and others. Productive investment is down, although speculative activities continue to proliferate. Unemployment rates are rising, despite official attempts to camouflage this through adjustments to the basis on which unemployment is calculated.

Evidently the 'economic bubble' which had seemed to be so impressive in the 1990's has now well and truly burst. Its first portent was the financial crisis of the south East Asian countries 1998-9. The prolonged stagnation of the Japanese economy and the on-going chaos in Russia have further add to the economic crisis on a global scale. The decline of stock values, particularly for the so-called 'new economy' sector, sheeted the reversal of economic fortunes back into the US heartland. The economy there is now in deepening recession.

September 11 cannot be blamed for triggering the economic downturn. It was already setting in. As political economists have always emphasised, periodic recessions are endemic to capitalism.

How deep will be the recession we face in Australia during 2002 is difficult to predict, but I would think a return to the 10 per cent unemployment levels experienced in the previous recessions of 1982 and 1991 quite a possible scenario. It is, of course, a socially unacceptable scenario. So the task for the labour movement is to come up with an alternative economic strategy which points to a better way forward. I tried to suggest some appropriate fiscal, industrial and regional policies in my recent book, Changing Track: Towards a New Political Economic Strategy for Australia (Pluto Press, Sydney, 2000), but there are many other possibilities too. It is not enough to defend jobs, wages and working conditions: a more long-term strategic response to the failures of capitalism is warranted. Here too is a big challenge for the labour movement.

Australian Politics

The difficulty of making any such political economic alternative operational, at the policy level, is obvious enough. Following the November general election results, we have another three years of a Liberal-National Party government led by Howard (or Costello). This is a government which has no sympathies with the labour movement and no idea about how to lay sound economic foundations for a good society. What it does know about is exploiting racism and xenophobia for electoral advantage. It also knows quite a lot about confronting the trade union movement: making Tony Abbott the Employment minister is a clear signal that there will be more of that to come in the year ahead.

These developments mean that the labour movement, in both its political and industrial wings, has been put on the defensive. Its main political institution, the ALP, was defeated at the polls after pursuing a 'soft' campaign. Its campaign was presumably intended not to scare off any voters but in practice it evidently did not enthuse many of them either. In opposition for a further three years, Labor needs some radical re-thinking of its position, not just its electoral posture, but its political philosophy and the basic principles for which it stands.

The growing support for the Greens, led by Bob Brown, is indicative that a principled position is not necessarily an electoral handicap. The Progressive Labor Party did reasonably well too, especially in Newcastle where it got about 5 per cent of the vote. A lot of people are looking for alternatives to an uninspiring ALP.


Coping with these multiple challenges is a tall order. It requires each of us to recognise our multiple roles - as citizens, as workers, as consumers and as custodians of the environment, for example. It requires us to consider what forms of collective organisation and action are conducive to the most progressive outcomes.

Karl Marx said that people make history but not in circumstances of their own choosing. Certainly no one in the labour movement would have chosen the current circumstances. But threats usually come hand-in-hand with opportunities.

The immediate political economic challenge for the labour movement is to work out how best to cope with the deepening recession and the further assaults forthcoming from the Liberals, while continuing to work to reverse the long-term decline in its coverage of the employed workforce. The relationship of the unions to the ALP has to be under scrutiny too. The partnership is evidently not working well - and for good reason, in circumstances where the ALP seems to have policies not fundamentally different from the Liberals in some fields.

The move to change the '60: 40' rule is indicative of the momentum for 'reform' coming from within the ALP. But this misses the main issue. In practice, the ALP depends crucially on its members who are active in both their unions and in the party. The debate over the 60:40 rule is only about the numbers and internal procedures for voting at party conferences. What is more fundamentally at issue are the principles and policies which bind - or should bind - the common interests of the labour movement.

The catastrophic events of the year 2001 highlight some of these principles and policy issues which need to be out in the open for discussion in the year ahead. Antonio Gramsci's famous call for "pessimism of the intellect but optimism of the will" seems ever more appropriate.

If 2001 was an annus horribilis our theme for 2002 should be nil carborundum bastardus (don't let the bastards grind you down).

Frank Stilwell is Professor of Political Economy at the University of Sydney and a member of the Evatt Foundation's Executive Committee.

Suggested citation
Stilwell, Frank, '2001: Annus Horribilis', Evatt Journal, Vol 2, No. 1, February 2002.<http://evatt.org.au/news/2001-annus-horribilis.html>