By TOM O'LINCOLN

[A version of this article appeared as a chapter in Rick Kuhn and Tom O'Lincoln (eds) Class and Class Conflict in Australia, Longman, Melbourne, 1996. A more recent analysis, by Sam Pietsch, is to appear in Rick Kuhn (ed) Class and Struggle in Australia, Pearson Longman, Melbourne, 2005. I've posted this older version here because it embodies my own particular "take" on just what a ruling class is.]

Who rules Australia? Certainly not the ordinary working people, despite the existence of formally democratic governments. Most intelligent social theory today recognises that power and wealth are unequally distributed. However, even the more critical amongst conventional social theorists are usually satisfied to describe a range of powerful interests and elites. The Marxist approach is distinguished by its insistence that power lies with an identifiable ruling class who individually and collectively control capital and the machinery of state. This chapter aims both to demonstrate the existence of such a ruling class and to provide a portrait of it, describing its membership, their links, and the means by which they rule. The empirical data are for varying time periods and quite a bit could not be readily updated, so we will be left with a broad-brush portrayal of the ruling class in the early nineties.

Various studies have found that inequality of income has remained broadly similar throughout this century. Phil Raskall’s work covering the decade to 1990 has shown that while inequality of incomes did decrease somewhat in the early to mid-1970s to about 1977, the trend has been reversed since then, and ‘the trend in the last few years has been to more rapid increases in inequality’. The Gini coefficient, which measures inequality on a scale of 0 to 1 (0 is equality), was 0.486 in 1981-2 but had risen to 0.524 in 1989-90. In the latter year, the bottom tenth of the population received 0.01% of all income, while the top tenth received 32.64%. These numbers include income received from various forms of welfare; if market-derived incomes only were measured, the inequality would be greater. Moreover, incomes are only part of the story. People enjoying high incomes can accumulate wealth and their heirs can accumulate it further. Consequently, as Ian McLean says, ‘the disparity in wealth among individuals is typically greater than that of income.’ Two different investigations have found that the top 1% of the population owns around 20% of the wealth. This disparity in wealth also appears to be growing. The Business Review Weekly reported in May 1993:

Wealth is not only spent on riotous living but is also invested, which brings us to the first major link between money and power: share ownership. Holding shares does not in itself confer power; for that you need a strategic share holding. Although in quite a few companies the majority of shares is owned by relatively small investors, and in most big ones no single interest has a majority share holding, still a small number of players has effective control because the remainder are too dispersed to exercise any influence on the composition of the board or company policy. A 5% holding is strategic in most sizeable companies.

Consider Table 1.1. Information about public companies is available from the stock exchange, so we can examine who owns and controls what.

Researchers have investigated this a number of times in the past and I did some work in 1993 to bring the analysis up to date. The key information is summarised in Tables 1.1 and 1.2. Table 1.1 shows the top twenty companies as measured by market capitalisation and the slice owned by the top twenty players in each.

Immediately we notice a certain concentration of ownership. In seven of them, one private company held more than 20% of the shares. In addition, there was a sort of club of major players who had a finger in every pie. AMP and National Mutual had significant holdings in all twenty, as did one or another major public-sector superannuation fund. Furthermore, the term ‘nominees’ appeared over and over, commonly associated with banks. Nominees hold shares on behalf of clients, whom they are not required to name. Clearly some big stakeholders lurked behind these anonymous headings. To take just the three largest companies: nominees held over 15% of BHP, nearly 30% of News Corporation and over 24% of the National Australia Bank. Between them these shadowy players accounted for over $10 billion worth of shares! Similar patterns extended throughout most of the top 100 companies.

Analyses over the years have shown a continuing concentration of share ownership. Whereas in the early fifties the top twenty shareholders held 37% of shares in the largest companies, that figure had risen to just over half in the seventies. My own investigation found it had risen further by the early 1990s, to around 63%. This is consistent with an increasing concentration of private wealth. A study of the Business Review Weekly’s ‘Rich List’ found that whereas the richest ten possessed about a quarter of the total wealth of the top hundred in 1983, they possessed nearly half in 1992.

Thus strategic share ownership in the ‘commanding heights’ of industry is concentrated in relatively few hands and linked to vast private wealth. In addition, there are alliances and networks between the major players, which show that despite the quite intense competition that goes on between capitalists, they also constitute something of a collective. Table 1.2 shows one of these networks quite clearly: strategic stakes in all the major banks were held by nominee companies associated with the banks themselves. This provides the banks with insurance against takeover bids; it also makes something of a mockery out of the rules prohibiting companies from trading in their own shares. Clearly there is an element of collective control amongst the four major banks, which in 1992 accounted for about 40% of all financial institutions’ assets.

There are also human links between capitals, most importantly interlocking directorships. One important study is presented in a 1979 book called Elites in Australia. The authors looked at 66 board chairpersons and managing directors in the largest corporations. ‘When we excluded all subsidiary companies, we found that the 66 corporate leaders held 122 board positions in 79 companies … The boards of all but 19 of these 79 companies were interlocked with at least one of the others through these 66 leaders.’ A second major network of interlocking positions exists among business lobby groups: ‘45 of the 80 corporate, pressure group and stock exchange leaders in our sample held 74 positions as national officers or executive council members in 27 major pressure groups [and] nearly half of the national offices in these groups were held by less than three dozen leaders … In 1975 the 45 business leaders who held top pressure group positions interlocked 15 of the 27 groups a total of 97 times.’ A 1991 study of the 250 top companies arrived at similar conclusions, finding that ‘big linkers’, i.e. directors with several board positions, represented less than 2% of directors but accounted for ‘around 50% of network links’. Had the focus been on a smaller number of very large companies, the linkages might have been even tighter, if the examples presented in Table 1.3 are any indication.

To this picture must be added a few private companies including Davids Holdings and Kerry Packer’s Consolidated Press Holdings, and the Mitre Ten Cooperative with its group turnover of $1850 million. However the revenue of the top 500 private companies in 1993 was only 6.3% of GDP, compared with over 28% contributed by public listed companies.

Within the leadership of business we must distinguish between ownership and management. Those who own capital often rely on others to manage it, and conflicts can arise between the interests of shareholders and managers. Shareholders tend to want to maximise dividends, whereas management may prefer to reinvest a large share of profits or concentrate on building market share. Occasionally the conflict becomes acute, as when the 1980s corporate raiders pledged to increase returns to shareholders by turfing out the in-groups and empire-builders allegedly running major firms. However these ructions seldom represent a serious conflict within the business elite. At the top of key corporations the chairman of the board, who supposedly represents the shareholders, is usually close to the chief executive officer. Indeed, as Table 1.3 shows, he or she is likely to be a former CEO.

The owner/manager division sometimes becomes strained because it reflects the more important division between the large and dispersed community of investors who nominally ‘own’ industry through their shares, and the much smaller number of people who both own and control key blocks of capital.

Despite their large numbers and huge (when added up) share holdings, small and medium sized investors have very little clout. (About 10% of the population own shares directly.) A Shareholders’ Association was formed in 1968 but remained virtually unknown until the start of the 1990s, when a backlash against the excesses of the previous decade pushed membership up considerably. Even then its influence remained negligible, with chairman Brendan Birthistle conceding: ‘The crucial issue is that the institutions have got the votes, and until we get support from institutions we’re only going to be of limited effect.’

Source: AFR Review, August 1993, p21 (abridged)

Those people who enjoy both ownership and control form the social group which presides directly over what Marxist theory identifies as exploitation. This refers not so much to rip-offs or payment below the going rate for a given job as to the systematic extraction of a surplus value, and hence profit, from the production process. Since the Marxist argument identifies labour as the direct or indirect source of all new values, it concludes that this surplus must derive from workers’ labour. The surplus is more widely distributed (e.g. to governments) with income and power inequalities ensuring that various social elites get the greatest benefits.

The personal and corporate linkages between major companies and top employers are enhanced by social ties, ranging from marriages through club memberships to ostensibly selfless activity in sporting or charitable organisations; and they are continually renewed and reshaped through networking. One colourful example, though now somewhat tarnished, is the clique of ‘Elders boys’ around John Elliot. The core of the group met through MBA studies at Melbourne University or at the management consultancy firm McKinsey and Co. It included Michael Nugent, chief executive at Goodman Fielder; Peter Scanlon, Chairman of the Victorian TAB; Geoff Lord, who controlled a large privately held business empire; Richard Wieseman, media heavyweight; and until he turned state’s evidence, investment banker Ken Jarrett. The group was reported in 1993 as publishing a private newsletter, XLant, and holding parties twice a year. It also shared football interests: Geoff Lord, former head of Elders Resources, was on the board of Hawthorn Football Club and Peter Scanlon was a former AFL commissioner, while John Elliot’s involvement with Carlton was well known.

The social links sometimes begin at school. A study of the 1988 Who’s Who found that most people cited had privileged educational backgrounds: 39% of the men and 41% of the women had gone to elite protestant or non-denominational private schools. Although efforts have been made in recent decades to apply meritocratic principles to both education and career structures, the ‘old school tie’ is still an important link today, both within and between the various elites. A 1994 study found that even under the Order of Australia, supposedly more egalitarian than the old knighthood system, 60% of those receiving honours were from a small number of private schools. Of course, what school you go to reflects what social class you grew up in. As one important study states: ‘One of the most consistent findings in research on elites is that … elite persons are predominantly recruited from the upper echelons of the stratification system.’ This study found that a third of members of all elites had fathers who were business owners and managers, and a further quarter had fathers in the professions.

From these facts we might be tempted to infer that privilege is simply something people are born to, and that power is simply inherited. In reality, capitalism has never been a closed system in this way. It is common enough for newcomers to join the ruling class, and for failed high flyers to drop out of it. One way to test the relative importance of social background within the business elite was to perform a rough and ready analysis of the ‘Rich 200’ profiled by Business Review Weekly on 21 May 1993, using the capsule biographies to divide them by family background into three crude categories: ‘rich’, ‘middle’ and ‘poor’. Of the 149 which could be readily categorised, seventy appeared to come from ‘rich’ backgrounds, thirty-three from ‘poor’ backgrounds, and forty-nine from backgrounds somewhere in-between. (Those coming from the bottom of the heap included brash entrepreneurs such as Lindsay Fox and cultural figures like Colleen McCulloch.) It is clear that most rich people have come from backgrounds which at least afforded them some advantages, and that nearly half had an immense head start on the vast majority of people. It is equally clear, however, that the ranks of the ruling class are continually renewed by the entry of certain people with the initiative, ruthlessness and luck to claw their way up.

Cut-throat competition also weeds out those who can’t cope, and although undoubtedly living more comfortable lives than workers, the bourgeoisie are not immune to the other destructive pressures of an alienated society. A study following 200 Harvard students through their lives from the 1930s to the late 1980s found ‘that wealth at age twenty does not guarantee success. There is a high rate of failure and poor health among these men: failed marriages, bankruptcy, premature heart attacks, alcoholism, suicide, and other tragedy.’ The pattern is unlikely to be substantially different in Australia and this no doubt helps to explain a certain turnover in the ruling class.

The dimensions of the business elite are easy to measure in some ways, and difficult in others. One line of attack is to set up statistical categories and see who fits into them. This approach is used by the Australian Class Project, whose preliminary findings on the country’s class structure appeared in 1989. Following the methods of Eric Olin Wright, they defined the ‘bourgeoisie’ as sole or major owners of enterprises employing ten or more people. Only 0.4% of the population were in this category. In addition they defined ‘managers’ as non-owners who directly participate in budgetary decisions. A total of 13.6% of the population were in this category. Using these figures we could define the business elite as comprising up to 14% of the work force, but the figures raise as many questions as they answer. Spouses or other relations of the ‘bourgeoisie’ may play a major role in practice, for example, while some of the ‘managers’ may not have anything like enough influence or status to count as part of a business elite.

Pusey found not only that the Federal Government’s Senior Executive Service in the mid-1980s was an elite in status and income terms, but also that its members typically came from relatively privileged backgrounds. SES officers were more likely than the general population to have fathers with a managerial or professional background or to come from middle class families; and to have attended exclusive private schools. We may surmise that such backgrounds predisposed them to views on economic issues similar to those of business. Certainly the promotion process did so, because it gave an edge to people with a ‘business oriented’ educational background (presumably economics or business administration). Pusey also found that the most powerful departments (Prime Minister and Cabinet, Finance and Treasury) had more SES officers drawn from exclusive schools and holding conservative views on policy issues. The top bureaucrats also networked amongst themselves: for example key department heads Mike Keating, Neville Stevens and Derek Volker regularly played tennis.

The elements of common social and educational background make it easier for big business to get on with other elites such as the federal bureaucracy. A second major way in which the bureaucracy has been aligned with the private sector in recent years is the conceptual blurring of distinctions between public and private sector management methods. Emergence of a common view of constitutes management leads, in turn, to the widely held view among senior public servants that ‘strength and efficiency of a government are more important than its particular programs’. The Financial Review informs us that top bureaucrats today ‘increasingly look and work like CEOs from large private sector corporations’.

These influences are far more important than any actual flow of business leaders into the public service. In fact Pusey found there were few outside appointments to the SES, and very few from industry. Transfer of personnel from the bureaucracy into private enterprise is quite important however. In the early 1990s the chief economists employed by both the Master Builders and the rival Housing Industry Association were former public servants. The four partners of Access Economics were all ex-Treasury, as were the chief economists of Citibank, Merrill Lynch, BT Australia and the NAB. Or to take two examples from the State level, Sir Leo Hielscher, Queensland Under-Treasurer under Joh Bjelke-Petersen, reappeared more recently as a director of Crusader Oil and Australian Provincial Newspapers, as well as chairman of Southern Cross Airlines and Gladstone Special Steel Corporation. Sir Sydney Schubert, head of Petersen’s Premier’s Department, later became chief executive of Daikyo Australia and Chancellor of Bond University. Since they know the ropes, these former public servants are ideally equipped to lobby ministers and bureaucrats.

Privatisation has added another dimension to the overlap between public and private sectors, not only because a range of government administrative positions are moving across into the market place along with their agencies, but also because private sector players are finding ways to cash in on the process. ‘While the greatest proponents of these sales are immediate beneficiaries — like merchant bankers, lawyers, accountants, brokers and bankers — the same people often are influential in deciding how and what will be sold … Virtually all of the leading law firms appear to have developed expertise in privatisation …’

Industry’s influence on political parties and governments complements its influence on the bureaucracy. Consider the conservative parties. Few big capitalists enter parliament, especially at the federal level, but there is no shortage of smaller business types or corporate lawyers amongst the MPs. In addition, business is well represented on key committees (especially finance committees) and among key office holders within the apparatus of the Liberal and National parties. Thus in 1993 Ashley Goldsworthy was not only the Executive Director of the Australian Computer Society, Chair of business studies at Bond University, former CEO at both Jennings and Suncorp, a Director of Jupiters, former Director of the Bureau of Statistics and Director of the Australian Ballet Foundation — but also President of the Liberal Party.

Business leaders also network directly with senior politicians of both parties. Although Sir Peter Abeles claims he doesn’t ‘think anyone has power outside government’, he does ‘admit to having, and using, the home numbers of the Prime Minister and the Treasurer’. Kerry Packer’s underling at Consolidated Press, Trevor Kennedy, says his boss has ‘an on-going input and an ongoing relationship with politicians of all parties … There aren’t many people in Australia who, when the secretary comes through and says Kerry Packer is on the other end of the line, don’t take the call.’

There are other elite networks amongst such groups as diplomats, judges or top military brass, and as one would expect, they are associated with certain types of family and educational background. The study of Who’s Who found, for example, that one exclusive Catholic school, Xavier College, had produced more judges than the entire State school system of Victoria.

These various elites are, in turn, linked to one another. The most recent academic study attempting to put the whole picture together was that published in Elites in Australia, which demonstrated the existence of an ‘elite network’ of 738 persons. Within this network the authors defined a ‘central circle’ of 418, and within that they further identified a core group of ‘seventy most central national leaders’.

The central circle was sufficiently large ‘as to make its existence invisible to its members’ yet analysis revealed that ‘any circle member could, on average, reach all other members through less than three intermediaries, while non-members needed to go through almost four.’ Close to two-thirds of the central circle consisted of business, political and public service leaders. This along with other, more localised patterns of integration was enough to ‘provide the cohesion necessary to the effective transmission of ideas and influence and for the solution of everyday conflicts and problems.’ The core group of seventy leaders within the central circle consisted of twenty-three politicians, twenty-two business leaders plus four media owners and editors, eleven top public servants, four academics (all economists) and three trade union leaders (all officers of peak bodies like the ACTU). It is almost tautological to say that the members of these elite networks exercise considerable power in their own domains. The researchers noted that ‘circle members more frequently held the most senior positions in the largest or otherwise most influential organisations in the country.’ This is quite clear if we look at the business world today. No one will doubt that Kerry Packer can do pretty much what he likes within the companies he largely or entirely owns, or that the BHP board sets the company’s strategic direction. National Mutual chief Gill Hoskins told a journalist that he could make a unilateral decision to invest $60 million ‘in ten minutes if I really wanted to do so’.

Such decisions affect the lives of large numbers of people, who are usually never consulted. Jobs can be lost and thousands of small shareholders suffer when companies change direction or make disastrous investments. Neighbourhoods can change their character through property development, health can be damaged and lives lost through decisions to adopt environmentally destructive technologies.

That the top bosses are also constrained by law, regulation, custom, limited resources and sometimes by popular resistance from below does not change the argument: rulers have always faced such constraints. And legal formalities must be set against the fact that the bosses have expensive lawyers, mates in the police force and social connections to judges, so that an Australian Business Monthly columnist was only half joking when he remarked that ‘an Australian company director has a better chance of being hit by a meteorite in Collins Street than of being sent to jail for a corporate offence’.

The argument becomes more complex, however, when we extend it to the ability of individuals and groups to exercise power outside their own fiefdoms. Obviously they are influential in various ways. With a combined circulation of over 600,000 for their main daily papers alone, it is obvious that Fairfax senior management and/or owner Conrad Black are in a position to influence political decisions, make or break careers and shape public opinion. But they too are influenced, since their main advertising clients can apply pressure to them in turn. And if some politicians are more than a little scared of Kerry Packer, senior ministers and bureaucrats can also discipline companies. What these facts demonstrate is not some simple pattern of monolithic control, but rather a hurly-burly of conflict, wheeling and dealing which (short of a fascist dictatorship) no single player can dominate. As already noted, an inner elite of around 400 people is already large enough to be invisible to its members, so how do they rule as a group?

Considerations such as these have persuaded some observers that the Marxist concept of ruling class is irrelevant to contemporary Australia. The authors of Elites in Australia remind us their core group of seventy leaders was so small that ‘it requires a belief in conspiracy beyond what is reasonable to conclude that this small group dominated the whole society’, even if there had not been continual conflicts among them. Capitalists themselves often argue along similar lines, with Sir Peter Abeles, for example, contending that ‘power is an illusion, a myth’ while Westpac chairman Sir Eric Neal claims to have only ‘influence rather than power’. Neal heads what two Bulletin writers call ‘a list of key executives [with] the same trait of appearing very modest about their influence and power’ — in other words, the modesty is partly a pose. Yet Sir Arvi Parbo also makes an important point when he says:

Parbo’s ability to be heard already places him on a plane far removed from ordinary workers. Even so, if ruling capitalist society required the Parbos of this world to routinely make and implement collective decisions on their own behalf, then we could agree that no ruling class existed. This is true both for ideological and for practical reasons. The differing interests between, for example, rural and urban industry or exporters and importers, translate into a range of political philosophies. Capitalists do not all agree on much except the need to retain capitalism. And even if they did, they’d have trouble acting in a concerted manner most of the time: one cannot seriously imagine the core seventy players, let alone the wider elite, meeting weekly to plan the economy or direct the ship of state.

For the far-flung legions of capital to retain control of society, however ¾ to ensure that their position is secure and that the process of capital accumulation isn’t threatened ¾ does not require a conspiracy. Most of the time they can fight among themselves and leave wider political and social issues to the Paul Keatings or the Jeff Kennetts, because most of the time the system is not challenged. Generally the weight of tradition, dominant ideas, conservatising and cooptive institutions, and the pressures of the market economy itself combine to prevent the emergence of a working class movement capable of seizing industry or state power.

The ideas of the system, ranging from popular ‘common sense’ through sophisticated academic theories are continually reinforced by schools and universities, politicians, the media, and official trade union structures. Meanwhile most workers, their waking hours consumed with the practicalities of survival, hardly have the leisure to develop a critical analysis of society. When events provoke them to anger, divisive ideologies such as sexism, racism or homophobia are at hand to divert attention from the capitalist system itself onto various scapegoats. These and other related social and cultural mechanisms help maintain a political and ideological hegemony which is the system’s main guarantee of survival. It would take the emergence of a coherent mass revolutionary workers’ movement to challenge this hegemony systematically.

Therefore most of the time the ruling class can be, to give a non-sexist rendering of one of Karl Marx’s better phrases, ‘a band of hostile siblings’. It is sufficient that this class has the ability to draw its forces together when its power is threatened, either by external foes (as in war) or domestic enemies at high points of working class struggle. At such times the media are capable of arguing a very consistent set of politics, partly through orchestration but mainly because they resort to a ready-made ideology with deep roots in society. Employer groups can mobilise to lobby politicians, who put their heads together with senior public servants; they may even alert the army while the police occupy key locations. Each real or perceived threat to the power of capital in Australian history has provoked the bourgeoisie to begin gathering its forces systematically in this way, the most recent example being the 1975 Constitutional Crisis.

Pastoral and agricultural capital has the longest history, dating to the earliest colonial times when the officer caste used its control of the embryonic Australian state to exploit convict labour on newly cleared land. These early landowners were soon joined by rich immigrants and upstart squatters to form a powerful section of the bourgeoisie. Until late in the 19th century, these rural interests had especially close ties to finance capital, but in this century the financiers have widened their scope to take a major interest in manufacturing as well. Politically, rural capital has an uneasy alliance with mining capital, whose importance has grown dramatically since the 1960s. If Australia had ridden on the sheep’s back in earlier times, it rode the ore train during the latter stages of the postwar boom.

Manufacturing capital is a key industry group on today’s urban scene. Although manufacturing existed in the 19th century to meet the needs of local consumption, it was less important in the urban economy than such sectors as the retail trade, construction, and transport. Its rise began in the early 20th century, when governments set about fostering it. BHP’s decision to build a steel mill at Newcastle followed promises of government assistance, and the first avowedly protectionist tariff was established in 1920. World War II gave manufacturing another boost and at its postwar height it accounted for around 30% of GDP.

Historically, manufacturing industry has relied on high tariff walls to shield it from international competition, and this has constituted the most important source of friction between it and the rural and mining sectors. Mining and most of the larger rural interests do not benefit from tariffs; for them tariffs simply increase the cost of inputs. With the greater integration of the world economy in recent years and a long term secular decline in the prices of rural and mineral exports, federal government policy has turned sharply away from tariffs and the economy has been opened to international competition. This is forcing a dramatic restructuring, with manufacturers orienting more to export markets. In addition, following international trends, manufacturing’s share of the economy has begun to decline, and that of services has begun to increase.

The shift in federal government policy has unleashed conflicts, since some sections of capital stand to lose while others gain. Lowering sugar tariffs, for example, threatens the cane growers but benefits food manufacturers who will get cheaper ingredients. As industry turns more to exporting, demands grow for government assistance to exporters, but they are resisted by financiers who demand a smaller public sector. These conflicts are not merely between different companies and industry sectors, but reverberate throughout all major social institutions from trade unions to the machinery of state. Within the public sector, for example, the Victorian Government will tend to align itself with manufacturers, as will the Federal Industry Department and certain ministers. Conversely the Queensland Government will tend to line up with rural and mining interests, while Federal Treasury and the Treasurer will have much common ground with the finance industry.

Conflicts between different class fractions within the domestic bourgeoisie have in recent times seldom posed serious theoretical issues for the left, however, unless they have been somehow connected with the issue of foreign capital. This can happen with tariff protection, which has been a rallying point for some leftists and trade unionists involved in Phil Cleary’s election campaigns for the seat of Wills. In the belief that jobs can be saved by tariffs, the left sometimes argues for them as part of defending domestic industry against ‘unfair’ competition. While the economics are too complex to argue here, the basic problem with this stance is that it distracts attention from the capitalist system, and especially its domestic representatives, as the cause of unemployment. Industries which face no direct foreign competition have also shed labour on a massive scale.

Traditionally, however, the biggest concern for the left has been the issue of foreign ownership and control. Foreign capital has been important in this country’s development, and foreign ownership in the mid-1980s ranged from around 20% in banking and 30% in manufacturing to 45% in mining and minerals processing. The weight of overseas capital in the Australian economy has provoked a succession of left critiques which see this country as the victim of domination by foreign multinational companies, with the local bosses cast in a subservient role. These critiques, which are often very influential, nevertheless ignore some important facts.

Unlike the oppressed colonies portrayed in Lenin’s Imperialism, Australia has not been kept underdeveloped by imperialism. On the contrary, the marginalisation of the Australian continent’s prior inhabitants and their forms of social organisation enabled the European settlers to establish a developed capitalist economy fairly rapidly. Before 1920 rural interests played a very important role in the economy in close alignment with British-dominated bank capital; yet even so high levels of labour productivity were achieved. Over more recent decades, foreign capital has poured into manufacturing and services, creating a modern and diverse industrial base.

Moreover domestic capital has not been cast in a subordinate role. The biggest local companies, such as BHP, CSR or Western Mining have been large enough to compete effectively with the local subsidiaries of the multinationals, while finance, transport and retailing have largely remained under Australian control. Although BHP and Western Mining were once majority-owned in Britain, their capital has been largely transferred to Australia. In 1976 the ANZ Bank became the last of the British owned banks to shift its base to Melbourne.

Even many foreign-owned companies operate as if they were indigenous. Rio Tinto Zinc, for example, allowed its local CEO Rod Carnegie to ‘naturalise’ its subsidiary CRA in the 1970s, with extensive share issues to local investors and the development of a management that sees itself as Australian. It would be quite easy to identify senior executives in other subsidiaries of multinationals who are conspicuously patriotic. When disputes do break out between sections of capital, the division is seldom between foreign and domestic interests. Amongst those interests resisting tariff cuts in recent years, for example, foreign companies such as Ford and Toyota have rubbed shoulders with locally-owned textile and clothing firms.

In the past ten or fifteen years, Australian capital has itself begun to play a greater role on the world stage. In addition to this country’s direct imperialist involvement in Southeast Asia and the Pacific, companies ranging from BHP through Westpac to Fosters have launched operations as far afield as Europe and North America. Thus there can be no logical reason for genuine anti-imperialists to take sides between Australian and foreign capital.

And if our rulers are divided in numerous ways, they also have common interests. One increasingly important reason is the growing socialisation of capital.

We have seen that the concentration of capital has increased steadily over the decades, with the weight of small shareholders decreasing. This is a widely recognised international trend, and one more advanced in this country than in some others including the USA. Yet there are analysts who contend that the concentration is only apparent. Small investors, it is argued, have simply shifted to various forms of pooled investment. Take American pension funds, for example, which now have assets of more than $700 billion. ‘If you treat them as private holdings by another name,’ suggests The Economist, ‘then individuals own roughly three-quarters of all American shares.’ US management guru Peter Drucker takes the argument rather further, contending that these developments constitute a ‘pension fund socialism’ which resolves the conflict between capital and labour ‘by merging the two’.

We have this sort of ‘socialism’ in Australia too. Not only are the super funds growing steadily but various other forms of pooled investment (such as insurance) are also increasingly important. We noted earlier that of the top twenty companies, each had AMP and National Mutual amongst their top twenty shareholders, and all had one or another public-sector super fund. AMP is the biggest shareholder in four of the top twenty and the second biggest in another six. Victoria’s Traffic Accident Commission showed up in twelve, Colonial Mutual in ten, and the NRMA in seven. Add to this the 21.5% of Fletcher Challenge owned by its employee unit trust and you begin to see the weight of various forms of ‘collectivised’ investment in capital formation. In addition there are various other mutual provident societies. A 1993 news report indicated that super funds had total assets of $146.5 billion dollars, with other managed funds accounting for $75.5 billion. Even these figures understate the situation, since banks (including some publicly-owned ones), building societies and the like also operate with a pool of money drawn from the general public, and there are also some sizeable cooperatives.

As their influence grows, the major institutional investors are becoming more assertive. It was the Australian Investment Managers Group, which collectively controls an estimated $250 billion in funds, that forced Rupert Murdoch to water down his controversial plan for differential voting shares.

It might appear that ownership of the Australian economy is heavily, and perhaps increasingly, collective, and that Marxist critics of a system based on private property are out of date. But for Marx, formal ownership was never the main issue. Rather he emphasised the fact that workers had no control over the accumulation of the wealth they had created, which he saw as ‘socialised’ under the collective control of the ruling class. Marx saw the ‘concentration of the means of production in a few hands’ as associated with its transformation into ‘social production capacities.’ Elsewhere he referred to the ‘common capital’ of the bourgeoisie, or to ‘social capital’. The conflict between capital and labour, in his view, was not resolved but merely reproduced in a new form.

We can see what this means by looking at the country’s most important financial institution, AMP, which in 1992 had $70.2 billion in assets under management and deployed $59.6 billion in policyholders’ funds. Notionally the 5 million-odd policyholders ‘own’ this capital, but in reality they have little control over management decisions, which are sometimes contrary to their interests. Key decisions are made by senior management, which is answerable to the board. In 1992 the board included James Balderstone, Deputy Chairman of Westpac; Ian Burgess, Managing Director of CSR; Bruce Kean, Managing Director of Boral; and John Uhrig, Chairman of Westpac as well as CRA. It is a set of leading capitalists who control the ‘social capital’ of AMP and other institutions.

I have not attempted to estimate the size of the ruling class, since this would depend on drawing arbitrary lines between bigger and smaller businesses, higher and lower levels of bureaucracies and so on. Probably it is 2% or 3% percent of the population at most. What matters is the nature of the power relations, and it is in that context that we can now define the ruling class. It is a network of elites which benefits from the exploitation of the working class and which exercises effective control over economic production, social institutions and political processes. That control is usually exercised in a fragmentary form but it also has its collective aspects, some of them highly developed, and the various elites are capable of uniting in tenacious struggle if it is threatened.

This control is neither absolute nor unchallenged. Competition ensures that no particular interest can ultimately control the accumulation process as a whole. Except where the state intervenes, monopolisation tendencies are never more than partial, for even if one firm gets a stranglehold on some particular Australian market, it may be vulnerable to take-over or to entry by an overseas competitor. Consequently the pressure on the owners and controllers of the system to accumulate capital never abates. Each company must either grow or risk destruction at the hands of its competitors. Owners and managers are forever driven by this implacable logic. Ultimately they are not the masters of capital, but rather a means by which accumulation proceeds; in Marx’s phrase they are the ‘personifications of capital’.

Even so, this chapter has shown how entrenched and powerful they normally are relative to other social classes, so that any strategy for fundamental social change which does not include a realistic plan for combating them must come to grief. The Marxist strategy relies on mobilising that other great force in capitalist society, the working class, whose current state is the subject of the following chapter.

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