Finance Minister Mathias Cormann evoked memories of the Cold War when he gave a speech to the Sydney Institute on the evening of August 23, on the subject of "Policies for Opportunity vs Politics of Envy".
Referring to the Berlin Wall, Senator Cormann argued that Labor was reverting to the socialism of an earlier era.
Senator Cormann foreshadowed the content of that speech when interviewed on the ABC's RN a few hours beforehand.
"Clearly, Bill Shorten has made a judgement that enough people across Australia have forgotten about the historical failure of socialism," he said.
When pressed about his reference to socialism, Senator Cormann responded: "I would characterise Labor's policies as socialist, absolutely."
Labor politicians responded strongly. Opposition finance spokesman Jim Chalmers called the comments "the latest in a long line of pretty bizarre conspiracy theories" and "unhinged hyperbole".
Senator Penny Wong "So I guess Malcolm's decided a risible "socialism" scare campaign is the best he's got at the moment."
Backbench Labor senator Sam Dastyari told the Senate that "the idea that somehow there is some kind of socialist plot being led by the Labor Party...just shows how desperate, how unhinged and how lacking a basis in reality this Government has become".
But, putting aside Labor's protestations, does Senator Cormann have a point?
Can Labor's policies be described as "socialist"? RMIT ABC Fact Check finds out.
Senator Cormann's claim is sensationalist.
There is no settled definition of "socialism" or "socialist policies".
Socialism is a collection of ideas that have been subject to vigorous debate since the 19th century.
One form of socialism is centred around public (i.e. government) ownership of "the means of production, distribution and exchange".
The Australian Labor Party's national platform has long included an objective of "democratic socialism" along these lines "to the extent necessary", but it is not reflected in the party's current policies.
Labor is not proposing nationalisation of Australian industries.
A broader definition of socialism includes policies that use the taxation system to redistribute income and espouse government intervention in the market economy.
On that basis, some of Labor's policies are, strictly speaking, "socialist".
The current British Labour Party leadership and US Senator Bernie Sanders argue for similar policies, and openly describe them as socialist.
But Senator Cormann goes too far when he talks of the Berlin Wall and the "system of government" that existed in Eastern Europe between 1945 and 1989.
That failed totalitarian and oppressive system bears no resemblance to the policies of Australia's Labor Party.
What is socialism?
Judging by the response to Senator Cormann's speech, the term "socialism" in Australia evokes images of the Soviet Union, North Korea, Cuba and other repressive communist states.
In his speech, Senator Cormann himself referred to socialist/communist East Germany:
"The Berlin Wall came down 28 years ago, which means roughly 18 per cent of Australians enrolled to vote were born after the fall of the Berlin Wall and the failure of a system of government that destroyed the economies of Eastern Europe," he said.
But what does socialism really mean?
The late George Lichtheim, a German intellectual who specialised in the history and theory of socialism, defined socialism as:
"An economic organisation of society in which the material means of production are owned by the whole community and operated by organisations that are representative of, and responsible to, the community according to a general economic plan, all members of the community being entitled to benefit from the results of such socialised plan's production on the basis of equal rights."
Political scientist Stephen Ingle has suggested that the "gist of socialism" is that "it constitutes an attempt to create a society in which rewards and efforts are shared equally through public control of the major agencies that shape people's lives".
Experts consulted by Fact Check suggest that there is no one correct definition of socialism.
Associate Professor Paul Strangio, a political historian at Monash University, tells Fact Check:
"Socialism has historically encompassed a broad family of ideas, practices and movements.
The typical understanding of socialism in left-of-centre political parties in Western democratic countries involved significant government intervention in the economy: public ownership of the means of production, distribution and exchange.
To put it another way, nationalisation of key elements of the economy."
John Carroll, Emeritus Professor of Sociology at La Trobe University, tells Fact Check that "fundamental to socialism is the belief that the state is the best organiser of society".
Classical liberal philosopher Friedrich Hayek described a change in the meaning of socialism between the first edition of his book The Road to Serfdom in the 1940s and a new edition in 1976, writing in the preface to the 1976 edition:
"At the time I wrote [the first edition], socialism meant unambiguously the nationalisation of the means of production and the central economic planning which made this possible and necessary…
Socialism has come to mean chiefly the extensive redistribution of income through taxation and the institutions of the welfare state."
What is democratic socialism?
Both the Australian Labor Party and the Labour Party in the United Kingdom have, from time to time, advocated for "democratic socialism".
Still present in Australian Labor's platform is the following commitment:
"The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields."
And the party's "Principles of Action" are:
"The Australian Labor Party believes that the task of building democratic socialism is a co-operative process that requires:
(a) constitutional action through the federal and state parliaments, municipal and other statutory authorities,
(b) union action, and
(c) ongoing action by organised community groups."
In 2016, Labor launched a review into its socialist objective for the first time since 1981, with "a view to replacing the existing language with the most appropriate and modern set of principles and objectives for the Australian Labor Party".
Nationalisation was tried by Labor in the distant past.
In 1947, Labor prime minister Ben Chifley announced a plan to nationalise Australia's privately-owned banks.
The banks successfully challenged the plan in the High Court, and Labor ended up losing the 1949 federal election to the Liberal Party led by Robert Menzies.
Labor did not get back into government until 1972, by which time it had effectively abandoned the idea of nationalisation.
Associate Professor Strangio tells Fact Check that:
"Starting under the leadership of Gough Whitlam in the 1960s, Labor moved away from a residual commitment to public ownership. It became more accurate to describe Labor as a social democratic rather democratic socialist party.
By the Hawke/Keating era in the 1980s, that distancing became even more pronounced as the Labor government embraced market liberalisation policies."
And in 2006, newly installed Opposition Leader Kevin Rudd made a point of telling The Age newspaper:
"Any political party has to be absolutely confident in the objectives for which they stand.
I am not a socialist.
I have never been a socialist and I never will be a socialist."
Fact Check asked Labor's Senator Kim Carr, a member of the so-called "socialist left" faction, what the democratic socialist objective meant in practice today.
Senator Carr says:
"Labor's socialisation objective is not about the straw man of extensive public ownership and a centrally planned economy.
But it is about public entrepreneurialism, and public investment in the forms of human endeavour that are necessary to build and sustain a democratic, just and technologically advanced society.
Socialisation is about defending a just minimum wage and fair working conditions.
It is about the creation and defence of Medicare, the enhancement of a great public education system, and the construction of national infrastructure like the Snowy Mountains Scheme and the National Broadband Network.
It is about creating productive capacity for the nation and distributing the wealth that flows from it fairly."
Clause IV of the British Labour party's rule book also elaborates on the meaning of democratic socialism:
"The Labour Party is a democratic socialist party.
It believes that by the strength of our common endeavour we achieve more than we achieve alone, so as to create for each of us the means to realise our true potential and for all of us a community in which power, wealth and opportunity are in the hands of the many not the few; where the rights we enjoy reflect the duties we owe and where we live together freely, in a spirit of solidarity, tolerance and respect."
Until the reforming UK Labour leader Tony Blair changed it in 1995, the clause had expressly pushed for nationalisation of "the means of production, distribution and exchange" .
The current British Labour Party Leader Jeremy Corbyn describes the policies he espouses — including tax increases for higher income earners and corporations and re-nationalisation of railways — as "socialism for the 21st century".
Before the recent UK election, Corbyn's Shadow Chancellor John McDonnell predicted he would be the "the first socialist Labour Chancellor", implementing policies such as tax increases for those earning over £80,000 ($A132,000) to pay for education, health and caring services.
2016 US presidential candidate Bernie Sanders has also described himself as a socialist even though he does not argue for nationalisation of industry.
He advocates for higher taxes and better social services.
Political scientist David Azerrad of the US-based Heritage Foundation told Politifact in 2015:
"In what sense is (Sanders) a socialist? Basically he's for more entitlements for the middle class. …That's not the classical 19th century Marxist understanding or even the 20th century one.
But maybe this is what socialism means today."
What does Senator Cormann mean by "socialist"?
Fact Check asked Senator Cormann's office what he meant by "socialist" and what he understood to be "socialist policies", however no clarification was provided.
But based on his speech, Senator Cormann is in effect conflating the two extremes of "socialism".
The first is the example of the former communist states of Eastern Europe, including East Germany (the builders of the Berlin Wall).
Communist East Germany, which lasted between 1949 and 1990, proclaimed itself a Marxist-Leninist socialist state where people lived under "actually existing socialism".
Nearly all aspects of the economy and society were controlled by the government (for instance, by 1989, around 95 per cent of the industrial workforce were employed by state-owned factories or collective farms).
It also had strong totalitarian characteristics — with its people lacking basic freedoms (including those of speech, assembly, and the right to vote).
But at the same time, Senator Cormann refers to the more benign democratic socialism:
"In his pursuit of his personal ambition [Mr Shorten] has even been prepared to trash the legacy of Hawke and Keating, taking Labor back to its failed socialist roots."
What are "Labor's policies"?
In both his interview and subsequent speech, Senator Cormann referred to a number of Labor policies and positions including:
- "[A]ll of Bill Shorten's rhetoric in recent weeks targeting millionaires, targeting the supposedly undeserved rich."
- Labor's intention to "permanently increase the top marginal tax rates to just under 50 per cent", described as "absolutely socialism".
- Labor's desire to tax "workers, savers, homeowners, small business owners more".
- "An attack on self-funded retirees with its planned ban on limited recourse borrowing arrangements."
- "A reversal of our Enterprise Tax Plan" (i.e. business tax cuts).
- An increase to the budget deficit through "higher spending".
So, when Senator Cormann cites Labor's "policies" he refers to its plans for tax rises and higher spending, coupled with tough rhetoric against "millionaires".
Before and after the 2016 election, Labor announced:
- A "10 Year Plan for Australia's Economy" that included limiting the availability of negative gearing, halving of the capital gains tax discount, and a plan to "shut down loopholes which allow big multinational companies to send profits overseas".
- Changes to superannuation tax concessions that Labor says are "unfair and unsustainable" and "skewed towards high income earners".
The introduction of a 30 per cent tax on some distributions from trusts.
A prohibition on "limited recourse" borrowing by superannuation funds.
- A reversal of "tax cuts for millionaires" and "penalty rate cuts for workers".
Labor has also promised a royal commission into purported "misconduct in the banking and financial services industry" and has not ruled out a reversal of the small business tax cuts passed by the Turnbull Government.
Are Labor's policies socialist?
As noted earlier, Labor still claims to be a "democratic socialist" party.
And in recent times Opposition Leader Bill Shorten has suggested he is not averse to government intervention: in a speech on July 21, 2017, Mr Shorten said:
"I do not think it is a sufficient and respectful enough answer to the Australian people, to hide behind some sort of philosophical objection to government intervention.
I did not run for Parliament to shrug my shoulders, and say: "Oh well the invisible hand. That'll help you. The market will decide.
I believe there are things that the Government can do and should do.
I believe there are investments that we have to make, reforms that we have to drive."
But Labor's platform included the socialist objective when it privatised the Commonwealth Bank and Qantas in the 1990s.
It is the party's policy and actions that need to be examined.
Labor's policies clearly do not go to the extremes seen in the communist world.
They also do not fulfil one of the historic tenets of socialism, which was to see the means of production in public (i.e. government) hands, and a give government a key role for government in planning the economy.
Professor Carol Johnson, of the School of Politics and Social Sciences at the University of Adelaide tells Fact Check:
"The Liberal Party has a long history of describing as socialist any Labor policy that involves higher taxes or government intervention.
It is true that Labor's policies today reflect a more left-wing version of social democracy than during the Hawke-Keating era.
But I would call them Keynesian policies rather than socialist ones because Labor argues that reducing inequality also benefits the private sector by giving people more money to spend in the economy."
Associate Professor Strangio says:
"The suggestion that modern Labor is embracing socialism stretches credibility.
Since the global financial crisis, in many countries there has been a renewed impetus for regulation to curb market excesses and policies to address economic inequalities.
Labor has been influenced by this turning away from neo-liberal orthodoxy, but to construe this as a kind of retreat to its socialist past both oversimplifies the party's history and distorts current realities.
It is political hyperbole."
Labor has not adopted an overtly socialist program, but policies that would see taxes raised to fund social services and a renewed interest in government intervention do bear some similarity to those espoused by self-declared socialists Jeremy Corbyn and Bernie Sanders.
And the words accompanying the Labor policies may also matter.
Emeritus Professor Carroll says:
"The main intellectual figure of socialism was Karl Marx who stressed class conflict and the exploitation of workers by capitalist bosses.
Mr Shorten acts like an old-fashioned socialist.
He singles out "the rich" and "millionaires", and attacks the banking industry. This is a mindset we had not seen from Australian Labor in a long time.
However, the comparison with East Germany and the reference to the Berlin Wall are absurd.
As is common with full-fledged socialist states, East Germany had a totalitarian-style government that disregarded human rights. Labor has not proposed anything like that."
Senator Mathias Cormann speech at Sydney Institute, August 23, 2017
ABC RN Drive Transcript, interview with Senator Mathias Cormann, August 23, 2017
- George Lichtheim, A Short History of Socialism, 1971 quoted in "Socialism" entry in the International Encyclopedia of Social and Behavioural Sciences
- Stephen Ingle, "Socialism" in the Encyclopedia of Modern Political Thought, 2013
- F.A. Hayek, The Road to Serfdom, introduction to 1976 edition
- Mary Fulbrook, The People's State: East German Society from Hitler to Honecker, 2005
Michael Gordon and Michelle Grattan, "Rudd rejects socialism", The Age, December 14, 2006
Michael Kruse, "14 things Bernie Sanders has said about socialism", Politico, July 17, 2015
Australian Labor, National Platform
Dr Norman Abjorensen, "How Australia's banks were almost nationalised", June 16, 2017
The Labour Party (UK), Rule Book 2017
Shehab Khan, "Clause IV: What is it, and why is it so divisive?", Independent, August 9, 2015
Jeremy Corbyn, speech to 2016 Labour Party conference, September 28, 2016
"I will be the first socialist Labour Chancellor", Independent, May 7, 2017
Politifact US, "Bernie Sanders - socialist or democratic socialist?", August 26, 2017
Bill Shorten, speech to Melbourne Institute, July 21, 2017
Jenny Macklin, "Prospects for Socialism: Contributing to the Process", Australian Left Review, Spring 1983