Andy Blunden April 2004

Mark Latham, Mass Capitalism and the Stakeholder Society

From the Suburbs. Building a nation from our neighbourhoods, by Mark Latham. Pluto Press 2003.

Mark Latham’s book is written somewhat in the same style as he is conducting himself as ALP leader: releasing brand new policies almost every day, many of them hair-brained and most of them populist, but at such a rate that the Howard Government is at its wit’s end trying to respond to him and keep up. In contrast to the “small target” strategy of Kim Beasley, Mark Latham is like herd of antelopes that runs off in a thousand different directions, leaving the attacking lion bewildered and surrounded by dust.

From the Suburbs is an improvisation on the theme of the Third Way, which he calls “new social-democracy,” which is really quite bold in its scope. He embraces the “social capital” agenda wholeheartedly with a promise to de-fund the welfare state and hand over responsibility for running programs to charities, “social entrepreneurs” and corporations doing community work for tax concessions.

His critique of the welfare state (much of it valid) and his communitarian agenda (much of it welcome) is however inextricably intertwined with an economic liberalism which borders on the bizarre. Latham describes the current period of development in Australia as one of “mass capitalism” and his solution as the “stakeholder society.”

“Mass Capitalism”

According to Latham, the rise of Mass Capitalism can be seen in the following trends:

He goes on to quote approvingly the US Senator, Russell Long, ‘the only trouble with capitalism is that there are not enough capitalists’.

“Up to 60% of the population,” he says, “is participating in the benefits of mass capitalism ... The purpose of welfare policy should be to increase the number of stakeholders. Sixty percent is not enough. We need to aim at universal participation, giving all Australians access to a range of assets: financial capital, human capital and social capital.” [p. 48]

“More than ever, workers are owners,” he says, “with access to the key resources of a modern economy; assets and information. Through their positions on the boards of superannuation funds, for instance, Australia’s trade union trustees have say in the management of $216b in fund assets. ... workplace democracy is more likely to be achieved through the power of ownership than through industrial relations law.” [p. 73]

So Mark Latham embraces the absurd, counter-intuitive thesis that capitalism can be reformed by turning everyone into a capitalist. That 400 years of capitalism belies this hope does not deter him, because the evidence is to the contrary — already the majority of us are “capitalists.”

Everything that he says about “social capital,” stronger communities, “asset-based welfare,” “Nest-Egg Accounts” and so on, has to be interpreted in this light: Latham actually proposes that poverty and inequality can be overcome by making everyone into a capitalist, and that employees can gain control over their employers by owning shares in the company.

This perspective has of course enormous populist appeal for the aspirational voters Latham hopes to entice. Maybe not everyone can become a capitalist, but I can. “Ownership is the elixir of life” he says; rights on the other hand are divisive and fragment society. Latham wants a political debate not around rights but around values. But it is extremely difficult to reconcile the claim to prioritise “connectedness” and “community” with the aim of directing every policy towards the promotion of private ownership.

Mixed in with the aspirational rhetoric is the Third Way critique of the welfare bureaucracy and the politics of redistribution which actually needs to be taken seriously.

For example, he points out that the welfare state delivers benefits not to communities but to individuals, and in doing so exacerbates individualism and weakens social bonds. By replacing social bonds between people with relations between individuals and the state, the normal networks of mutual aid are undermined. This theory is not of course Mark Latham’s invention, but it has a lot of validity and should be taken seriously.

The problem is that by linking this critique with his mad-cap, utopian, laissez faire economic liberalism Latham is going to give it a bad name. It is important that in reacting to his agenda the debate is not allowed to become polarised. His method of presentation invites his opponents to reject his agenda holus bolus. And this is not difficult because his style of writing is to string one unsubstantiated assertion after another, quoting from a multiplicity of authorities that would never agree with one another, as if what he was saying was established scientific truth.

He attempts to cast himself in the role of an innovator and his opponents as defenders of the old. The debate is far more likely to be fruitful however if it takes place on the arena of what ought to replace the old system, rather than whether his critique of the welfare state and so on is valid or not.

Just one example. Latham is full of praise for “social entrepreneurs.” These are people who work in communities with the aim of helping people start up small businesses, very often “import substitution” businesses, which replace use of government agencies with services provided from within a community, thus redirecting demands on government bureaucracies into paying work for locals. Latham wants to demolish the welfare state and redirect its funds to supporting “social entrepreneurs” with start-up capital, to “save the public sector vast amounts of money.”

“If welfare bureaucracies are failing, they should be de-funded and the resources reallocated to social venture capital. Ultimately, the best form of public sector accountability is competition.” [p. 99]

In backing his star players in this field (such as Brian Murnane), he paints a very negative picture of those who adopt a slightly different approach, engaging people in poor communities in self-help projects, but with a model more closely resembling the public sector rather than small business.

For example, in his report Community Adversity Resilience, Tony Vinson reports on the progress of an intervention in Windale, Newcastle. After initial consultation and benchmarking, a resident-run collective was elected at a public forum to draft and implement an action plan. The program included promoting small businesses but covered the whole range from community festivals to Crime Watch to adult education, involved lots of mutual aid and volunteer work. That is to say, without in any way excluding or minimising the importance of promoting new enterprises in the community, the ethos of the program was towards a community taking control of its own life and becoming a self-governing cooperative. While there is a lot of overlap with the way Brian Murnane proceeded in Claymore, especially in the early stages of “normalising” life in the area and creating some basic trust, it is a different model, a model with much more of a communitarian emphasis than an economic liberal ethos.

Tony Vinson, describes the difficulties faced by these kind of projects in the following terms:

“The capacity to set goals, marshal resources, form strategic alliances and attract and use external support interacts with certain inner strengths or shortcomings. It is not appropriate here to detail the many measures that need to be taken but the broad framework is grounded in research and documented community practice. It includes a modus operandi that is purposefully directed towards meeting community needs while simultaneously strengthening community sentiment and patterns of cooperation and integration, the promotion of collective goals over individual grievances and the exercise of personal power, and the effective management of conflict. It takes time for these qualities to be developed. While governments show an increasing interest in helping to strengthen disadvantaged and non-cohesive communities some authorities have no sooner embarked upon a renewal plan than they are devising an ‘exit plan.’ When disadvantage has become entrenched in a community over many years, even decades, matters cannot be put right in three years. Something nearer to twice that period maybe more realistic and avoid the worst of outcomes, namely, a community left even more dispirited as a result of hopes being raised and left unfulfilled.” [Vinson p. 80-81]

Mark Latham reports the same tendency by government to sabotage community development projects in these terms:

“In the past governments have provided a huge amount of money to community development projects, but with little success. These programs have followed a familiar pattern of failure: the formation of local coordinating committees; the involvement of residents enthusiastic about a new approach; some capital works and physical changes; scepticism and resistance from central government agencies; a gradual loss of effort and enthusiasm at a local level; demands for further government funding; and, ultimately, the collapse of the program.” [p. 96]

He also reports that his own favourite projects have tended to run into difficulties at a certain point as well. These are difficult problems. But the record of business is hardly any better than that of government in assisting poor areas. Windale is after all a depressed area only because of the abandonment of the area by the steel and shipbuilding industries in the first place.

“Self-determination” and “social entrepreneurship” are two different conceptions of how to go about fighting poverty and exclusion. Latham’s only argument against “self-determination” as an approach is that it is always sabotaged by government. For someone running for office as Prime Minister this is not an argument. Where is the evidence that capital accumulation promotes equality and community? There can be none.

But Latham uses a lot of the same rhetoric in his attack on the welfare state as advocates of community development use in their criticism of the welfare state. What a pity it would be if the efforts of people building self-confidence and self-determination in poor neighbourhoods by focussing on community development rather than small business were to be tarred with the same brush in the process of arguing against Latham’s privatisation agenda.

What the Left must not do in this situation is adopt the role of defenders of the welfare state. The welfare state was invented to allow the state to intervene in the growing self-consciousness of the working class, and replace working class mutual aid with subordination to the state. If Latham wants to abolish it then this is a good thing. We have to ensure that what replaces the welfare state is not subordination to capital, but popular self-determination.


According to Latham, political debate in Australia is monopolised by two groups of “insiders:”

“The new establishment is demonised as the chattering classes, chardonnay socialists and latte left. The old establishment is disparaged as the big end of town, greedy capitalists and, more recently, economic rationalists.”

Howard has been able to win elections despite being the ultimate “insider” by provoking arguments with the “new establishment” which has the effect of alienating the “chardonnay socialists” from the mass of “outsiders,” and casting Howard as the ally of the “outsiders.”

Latham’s shoot-from-the-hip political style, deliberatively lacking in polish and complexity, is designed to throw the conservative establishment into a frenzy in which they will do Latham the favour of casting him as an “outsider.” By denouncing everything as bunk, and vaguely alluding to populist notions apparently shared by ordinary people, he is very likely to keep the conservatives off balance long enough to win an election.

The Left should seize the opportunity that a Latham Labor Government will provide to rethink everything from top to bottom.