Monday, July 13, 2026

Working class stratification, education and politics in Australia

Greens unionists

In the past two decades, new mass left-wing formations have arisen in varied parts of the world that have challenged bourgeois politics’ status quo. Notwithstanding their considerable differences, examples of this include Syriza in Greece, Podemos in Spain, the upsurges around Bernie Sanders’ presidential bids and Jeremy Corbyn’s 2015-19 leadership, and left turns by some Green parties, including the Australian Greens and now the England and Wales Greens.

Some of these formations, not least Syriza in its dramatic collapse into neoliberalism, have been coopted into mainstream politics. Nonetheless, in general they have posed complex questions for Marxists. They radically challenge official social democracy while clearly not representing the mass revolutionary politics we want to build.

One arguably undertheorised aspect of these formations is their attraction to young people. Younger people today have higher levels of education than any previous generation. They also have poor prospects for employment and life generally. Their condition is sometimes summarised using the concept of a “precariat”.

This article examines the social and political bases of such formations, using the example of the Australian Greens. It explores the political effects of the changing nature of education under late capitalism.

First, we present a theoretical framework. This is based on an adapted theory of a labour aristocracy, which explains how the working class is stratified and the political effects such stratification has. Our framework also considers the nature of education as a key way that capitalists improve workers’ labour power. We then present data showing the increasing importance of post-school education in Australia. Finally, we analyse survey data from the 2025 Australian Election Study to show relationships between class, education, ideological positions and voting.

Working class stratification, the labour aristocracy and politics

According to historical materialism, class emerges from a dynamic field of relationships within a system of social production. Under capitalism that consists of a working class constrained to sell its labour power, a ruling class owning and controlling the means of production, and a variegated middle class, with intermediate levels of ownership and control in the socio-economic field (Fieldes, 2005, Kuhn, 2005, 2006). Moreover, classes are formed through the historical and political agency of their members (Thompson, 1963).

Workers’ class agency, however, has proved to be problematic. Workers’ organisations, such as national industrial federations and parties, formed readily after the emergence of a working class in what are now the advanced capitalist countries (Kelly, 1988: 72-73). But these have not proceeded to dig the grave of capitalism.

Divisions within the working class might be an explanation for the persistence of non-revolutionary forms of working-class action. Many Marxists seem to have been wary in their considerations of the effects of social stratification among workers, in part because other analyses of occupational, educational, income, and/or status differences are often explicitly opposed to Marxist class analysis (Sørensen, 2005, Breen, 2005).

In this paper we argue that stratification within the working class is important, but we do not exaggerate this point. We understand the political effects of the relations among the strata of the class are just that, not a signifier of class differences. The latter is a misconstruction that has become especially prominent since the emergence of a strata of highly educated, non-managerial workers. Those workers, and the parties mainly supported by them, have been categorised by some commentators as “middle class”. Meanwhile parties mainly supported by other workers are considered some sort of “workers’ party”, whether the latter parties attempt a revolutionary politics or set out to manage capitalism even in its moments of crisis (Hillier 2010).

Our analytical framework is a theory of the labour aristocracy, as this originated in the writings of Karl Marx and, especially, Friedrich Engels, Karl Kautsky (when he was a revolutionary), Vladimir Lenin, and the early Comintern leaders, such as Antonio Gramsci (1924: 199-200). As Lenin explained the theory, it associates:

  1. the super-profits of monopolising capitals;
  2. a “bribe”: concessions to sections of workers that, having been made where necessary due to the course of the class struggle, can be sustained by monopolising capitals from their super-profits;
  3. a gradation among workers in their conditions of class struggle, as constituted by those concessions;
  4. the specific complex of interests of the “upper stratum” of workers, or “labour aristocracy”, which arises from the material basis of their relatively privileged conditions of class struggle;
  5. tendencies among the labour aristocrats, who are already experienced in and organised for the class struggle, towards both political class consciousness and opportunism, a specific class-collaborationist reformism, these being political outlooks that express the variety of interests in the labour aristocracy;
  6. the opportunism of a part of the labour aristocracy “naturally” asserts itself in the workers’ movement and the politics of workers generally because of the labour aristocracy’s more formed organisation and thinking, so that, in interaction with the influences of bourgeois ideology and the labour bureaucracy, a “bourgeois labour party” is inevitably created as a political organisation or trend; and
  7. the development of a socialist labour movement can only begin in struggle against the opportunist trend (see, for example: Lenin, 1916: 115-20).

This Marxist tradition of a theory of the labour aristocracy is fundamentally a guide to political action — that is, the theory is concerned especially with points v–vii. In particular, it directs revolutionaries not to accept reconciliation with the workers’ “mass organisations” that collaborate with capital. Instead, they must recognise the interests of the mass of the working class are most fully represented in the struggle against capitalism. This is, even though most workers will only enter that struggle in revolutionary periods, through means such as mass strikes, which are characterised precisely by the involvement of the previously unorganised.

Criticism of theorisation of labour aristocracy, however, tends to focus on its elements of political economy and sociology, claiming that it exaggerates working class stratification — that is, the criticism is primarily concerned with points i–iv (see Post, 2010; Bramble, 2012). It is beyond the scope of this article to thoroughly review these debates (see Strauss, 2007a, 2005, 2007b, 2004a, 2004b). But we will note that the original proponents of the theory had not usually considered its sociological underpinnings issues for debate.

The contradictory political roles in the latter half of 19th century of the “respectable worker” in Britain and skilled workers towards the German social democratic movement were generally acknowledged: the relatively privileged workers had shown themselves to be the most capable of industrial organisation and political action, but could also be elitist and a brake on radicalism (see Kautsky writing in 1892 on “skilled and unskilled proletarians” in the worker movement, “the part of the proletariat that fights for the common interests of its class”, compared with “worker ‘aristocrats’ sunk in their egoism”, cited in Lih, 2008, p. 76; and 1901).

The labour aristocrat has traditionally been considered to be a skilled manual worker. To them, society had granted a higher social status and they pursued a collective monopoly of their particular type of labour-power to secure more reliable employment and higher wages. More recent decades have altered this picture of working class stratification. In part, change has stemmed from capitalism’s non-recovery from its structural crisis through three or more decades of the ruling class’ neoliberal response, which has changed in type and scope the form of the concessions that constitute the bribe. But here we focus on how stratification within the working class has changed with the changing level of formal education among workers.

We demonstrate below that formal education has increased in importance under late capitalism. This trend has developed alongside the constitution of more formally educated employees as workers. We argue labour aristocracy theory poses these trends as a recasting of long-standing divisions in the working class, in contrast to the view that a “new middle class” has arisen. Thus, we are concerned with a group of workers who we posit are potentially, on the basis of their fundamental working class nature, part of a revolutionary workers movement, but whose current political involvement is more contradictory. These workers are often better organised, but often influenced by opportunism, materially based on being part of the labour aristocratic stratum.

Capitalism, labour power and education

A strand of Marxism has developed an analysis of education as the production of labour-power without discounting the ideological role of education. The latter role, on the other hand, has been disputed within Marxist theorisation of education. One view focuses on the role of education in the reproduction of the social relations of capitalist production through firstly, training members of the ruling class in the ruling ideology and its “practice” and, secondly, through training members of the working class to be subject to that ideology (Althusser, 1972: 89-126, Bowles and Gintis, 1976).

But there is also a cogent critique of that “dominant ideology” view, which argues that workers are subordinated by economic relations and are relatively free of bourgeois ideology (Abercrombie, Hill and Turner, 1984). If an over-emphasis on education as ideology is to be avoided then further development of the conception of education as labour-power production may contribute to an explanation of the reproduction of the conditions of capitalist production, and to an explanation of the role of education and related forms of class stratification in politics.

Marxism treats labour power as the human capacity to labour. Under capitalism, labour-power is a commodity that is sold by a worker to a capitalist in return for a wage related to its value — the socially necessary labour-time for its production.

Analysis of capitalist production in Marxist political economy usually proceeds from the point of view that the qualities of labour-power available to capital are given. That aids in the explanation of the creation of surplus value, including the variables involved. Such a simplification also expresses the distinction between commodity production and the de-commodified reproduction of labour-power within a family system, including the social position of apprentices when they were dependants within their master’s household.

The qualities of labour-power, however, are developed in varied ways within individuals and do matter to the capitalist. Labour-power of a higher quality — in, for example, workers’ capacities to interact with other workers, to use machinery and raw materials effectively, to apply scientific findings, and to exercise initiative within an overall understanding of operations — increases relative surplus value if it reproduces its own value more quickly (Rikowski, 2002: 196).

Distinct forms of education and training, if sometimes undertaken concurrently with mutually reinforcing effects, develop labour-power’s qualities. In on-the-job training, a worker learns while they are employed by a capitalist. In education a worker, as a student, is not employed, but is involved, along with her or his teachers, in the production of labour power. Workers whose qualities of labour-power are developed by education or training are then employed, or continue to be employed, by capitalists because the latter want to get higher profits — that is, to secure for themselves more surplus value relative to the increased value of the capital they might expend on wages (variable capital) and, perhaps, non-salary costs (constant capital).

A tendency seems to exist for the significance of formal education to increase relative to on-the-job training in improving the quality of labour-power. This would follow, first, from capitalism’s increasingly socialised production, which favours abstracted systems-level thinking over what might be learnt experientially, although the role of the latter in producing goods and services for use is not eliminated. A second reason for this development, particularly in the context of intense competition, is that capitalists want to benefit from the more developed qualities of a worker’s labour-power, but not to bear the growing costs of that worker’s learning. With education, each employer might be able to have other employers, through the state, or workers as students and graduates, at least initially meet some or all of the cost of extra years of labour-power improvement.

That is, the dynamic behind the post-World War II expansion of education is that capital and capitalist states have sought to arrest declining profit rates by increasing the quality of labour power. This process led to a broadening and deepening of the engagement in education among workers. In the post-war boom decades, secondary education for the working class expanded dramatically, in addition to the more generally acknowledged growth of post-school education.

In recent decades this tendency has continued, intensifying into a qualitative change. In Australia, governments, starting with the Australian Labor Party under Bob Hawke and Paul Keating, have striven to universalise upper secondary school study and increase participation in post-school education. The impact of the latter development in the changing composition of the labour force in terms of the increased numbers of post-school qualifications, is evident from the Survey of Education and Training, which unfortunately only ran from 2001–09 (see Figure 1).

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Figure 1: Those in workforce with one, two or three or more qualifications in 2001, 2005 and 2009, per cent. (Source: Australian Bureau of Statistics, 2001, 2005, 2009)
Figure 1: Those in workforce with one, two or three or more qualifications in 2001, 2005 and 2009, per cent. (Source: Australian Bureau of Statistics, 2001, 2005, 2009)

The proportion of those with at least one qualification has risen from 51% in 2001 to 57% in 2009; in the same period, the proportion of those in the workforce with three or more qualifications has increased from 6% to 9%. There is a clear trend towards a more highly qualified workforce including the holding of multiple qualifications.

The breakdown of the type of qualifications held by members of the workforce, according to their highest qualification (as shown by Census data in Figure 2) reinforces this picture. People are holding higher qualifications than before in professional, trades and other occupations.

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Figure 2: Employed persons by highest qualification, 2006-2021, per cent. Source: ABS (2006, 2011, 2026, 2021)
Figure 2: Employed persons by highest qualification, 2006-2021, per cent. Source: ABS (2006, 2011, 2026, 2021)

Diplomas as a highest qualification are stagnant, while bachelor and postgraduate degrees and certificates are increasing, because as Tom Karmel (2010) shows, the bachelor degree is tending to supplant the diploma as the entry level qualification in many occupations (for example, in teaching and nursing from the 1980s). Additionally, occupations such as childcare increasingly need formal qualifications, initially in certificates, rather than informal or on-the-job training.

These developments — accompanied by workers needing the capacities and skills developed through formal education to get many more jobs than before, and a growing proletarianisation of these jobs through workers’ employment (rather than self-employment as professionals) and their increasing real subordination within capitalist or state employment because they are now less likely than were many white collar workers in the past to be petty authorities and managers in the factory, in the classroom and so on — have had effects on the working class and its stratification.

First, where the general level of workers’ education has risen to match that of occupations that were previously held by more educated workers, many workers in those occupations have lost much of the strategic strength in the class struggle that they had and have sunk into the mass of the working class: this has been the fate of most clerical work, for example (Braverman, 1974: ch. 15).

Second, the strategic position of the now more educated workers was in the first instance strengthened. However, since the onset of capitalism’s structural crisis and a long wave of relative stagnation, their educational advantage has become less certain to result in a better-off position of these workers. This is because the effects of that advantage had to be refracted through the processes of gaining and sustaining concessions in the class struggle, yet capital had begun to impose neoliberalism.

If Marxists consider the development of white-collar labour, and, specifically, the political involvements of more educated workers, as “middle class”, “new class” or “post-materialist” phenomena, that underestimates the extent of both the restructuring of the working class and the social variation within the class. Raewyn Connell and Terry Irving show an understanding of both the unity of and the specific, historically deeply-rooted, divisions within the contemporary working class when they discussed the growth of white-collar unionism from the 1950s:

In some ways, what was happening here was a revision to a very old pattern, the use of industrial action by privileged groups in the workforce to maintain their distance and extend their privileges over other employees. The “labour aristocracy” of the nineteenth century was reincarnated on a basis, not of traditional manual skill, but of professional knowledge certified by specialised higher education. (1992: 203)

Yet Connell and Irving’s analysis errs in seeing the industrial action of relatively privileged workers as one-sidedly negative. On the one hand, the better-off workers continue to often be the best organised, and to dominate the class’ political life. On the other, the elements of capitalism’s inability to respond to its contradictions are multiplying: workers should oppose this through their industrial and political power.

As well, extended post-school education increases training in critical and systemic thinking. So, the advance of further education had contradictory effects for capitalism. Extended education is intended to make labour-power more productive and profitable for capital, but it also enables some developments of workers’ political consciousness in directions that can extend into radical, objectively anti-capitalist thinking and action. Bruce Tranter (1996), for example, argued that higher education is associated with higher ecological consciousness. This is explored in the following section with an analysis of the changing relationships between class, political identification, political consciousness and education.

Workers and the Greens

Therefore, we argue the multiple crises of capitalism and the expansion of post-secondary education in the working class is the basis for new and particular expressions of workers’ politics in parties that these workers understand to be of the left. Furthermore, the political context for new workers’ parties is the old social-democratic parties’ support for attempts to resolve capitalism’s crises through neoliberalism, workers’ rejection of that and attempts to find alternatives, and thus, many workers’ experience of political change and uncertainty for large numbers of workers.

In recent decades, some new workers’ parties have been formed, or dramatically developed, with a more avowed class orientation. This is most clear, perhaps, in the case of the Belgian Workers Party, although the formation of others partly in opposition to Greens parties that have supported neoliberalism (such as Die Linke in Germany, which has now also rejected a leader’s proposal for a populist nationalism) could also be considered in this framework.

But the new parties we are considering here instead combine social movement politics and class politics, with the latter “traditional” but not in contrast to “post-materialism”, because these new parties are anti-neoliberal, but not anti-capitalist. The Australian Greens, with which we are, in the first instance, concerned, is an example: it has depended for its success on a pursuit of “social justice” and thus opposed neoliberalism (Hawker, 2009: 12, 16, Hoffman and Costar, 2010: 702, Hutton and Connors, 2004: 36, Lohrey, 2002: 64, 66-68, Manning and Rootes, 2005: 403-08, Miragliotti, 2006, Vromen and Turnbull, 2006, Williams, 2006: 325-30, 337).

Three propositions will be explored here with regard to the Australian Greens:

  • This party is primarily supported by workers. In that sense, we do not consider the party “middle class”, unlike a range of authors (see, for example: Allsop, 2011; Bramble and Kuhn, 2011: 189; Hillier, 2010).
  • This party’s support from workers has historically been rooted in the more formally educated part of the working class, although a broadening of support may be evident more recently.
  • This party’s worker support is from the left (Tietze, 2010). In 2009, David Charnock showed the associations among voters between supposed “post-materialist” values and traditional leftist concerns, the strongly leftist self-identification of Greens candidates and the strong perception of the Greens as leftist by voters.

In this paper we seek to extend and broaden Charnick’s contribution with more analysis of the interaction of political attitudes and social structures that drives support for the Greens, and by more explicitly showing the connections between the Australian Greens and social democracy, which were also discussed by former party leader Adam Bandt before 2025, when he lost his parliamentary seat and could not continue in the leadership role.

Data and method

To explore how voting patterns, particularly in relation to the Greens, were structured by class, education and political attitudes, we mainly used data from the Australian Electoral Study/Survey series (AES), up to and including the most recent 2025 survey (McAllister et al., 2025). This random sample survey series collects data after each federal election across a broad range of items covering demographics, voting and political participation behaviour, and political attitudes.

We relate class, education, attitudinal factors and voting behaviour in 2025 using the following methods.

  1. First, we restructured collected data on labour force participation to categorise respondents into class groups in several of the election surveys, including 2025. We put respondents who stated what their employment relationship is or had been into one of three categories: “capitalists” (self-employed and employers); “employed upper managers”; and “workers” (non-upper managerial employees). This means we included not only those who were currently working but also the unemployed and retired, before identifying those who were or had been employers or self-employed and also those who described themselves as an upper manager.1
  2. We then descriptively show how lower house voting in 2025 varied by class, and also by union membership as an indicator of class consciousness, and by highest post-school education levels. These results are compared to relevant findings from some earlier AES and other political attitude surveys (Bean et al., 2004, Jones et al., 1996, McAllister and Mughan, 1987, Aitkin, 1979).2
  3. We then constructed five attitudinal scales by several methods, depending on the number of survey items measuring aspects of key attitudes. We present average values of these attitudes by lower house vote, class and education level. The attitude scores are:
    1. A “union power” attitude score, derived from responses to the item, “Do you strongly agree, agree, disagree or strongly disagree with the following statement? The trade unions in this country have too much power.”
    2. A “women’s rights” score, derived from the item, “Do you think the following change that has been happening in Australia over the years has gone too far, not gone far enough, or is it about right? Equal opportunities for women.”
    3. A “Pro-Palestine” score, derived from the item, “Which side in the Israeli-Palestinian conflict, if any, do you sympathise with more?”
    4. An “Aboriginal rights” score, derived from the numeric mean of responses to the two items, “Do you think the following change that has been happening in Australia over the years has gone too far, not gone far enough, or is it about right? Aboriginal land rights”, and “Do you think the following change that has been happening in Australia over the years has gone too far, not gone far enough, or is it about right? Government help for Indigenous Australians.”
    5. An “immigration” score, derived from six items relating to immigration using factor analysis, the method that most validly estimates scores from more than two survey items.3

      To account for differing measures among variables, these scores are standardised, that is converted to a scale with a mean of 0 and a standard deviation of 1 (which means about two-thirds of scores are between -1 and 1)

  4. Finally, we test models of voting behaviour using regression analysis. There is some complexity in the results due to the categorical nature of class, education and voting data. To include this type of variable in statistical models, the effects of inputs (class and education) and the effects on outcomes (vote) need to be in the form of comparisons between each category and a reference category. Reference categories can be chosen to be the category of most interest: for example, we look at the effect of being a worker as compared to being a business owner, and the effects on voting Greens as compared to voting Labor.4

Results

In results reported in the following charts, we show relevant proportions of categories and mean scores by party group, with “confidence intervals”. Confidence intervals are an indication of how reliable a result from a sample survey is. By giving the range, we are 95% confident that the value lies in the population from which the survey is sampled — in this case the population of Australian voters. If confidence intervals for two results do not overlap, we can say that there is a statistically significant difference in these results at a 95% level — that is, we can be 95% confident that the difference found in the sample derives from an actual difference in the whole population — but also where there is some overlap there is still the possibility of a significant difference, which can then be calculated (Cumming 2009).

First we examine the class composition of the party voter groups in the 2025 AES. As we can see from Figure 3, the vote for each party group varied somewhat by class. The proportion of the Liberal’s (73%) and National’s (77%) vote that came from workers was significantly smaller than the proportion of the ALP’s (86%) or Greens’ (83%) vote; and the proportion of capitalists among the Liberal (17%) and National (15%) was much higher than among the ALP or Greens (both 8%). None of the differences between the proportions of the ALP’s and Greens’ vote from different classes were significant. This repeats, though less emphatically, the 2007 pattern of the proportion of these parties’ votes from workers we have previously examined (Fredman, 2013) and the 2010 pattern (Fredman and Strauss 2012).

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Figure 3: Class composition of each main group of 2025 lower house voters, per cent with 95% confidence intervals
Figure 3: Class composition of each main group of 2025 lower house voters, per cent with 95% confidence intervals

Evidence of the working-class nature of the bulk of the ALP and Greens’ electoral support is reinforced by consideration of the proportion of all party groups of unionists, taking union membership to signify an element of working-class consciousness. Again, as can be seen from Figure 4, there is no significant difference in this proportion between the ALP (23%) and the Greens (19%), with the figures for both parties being significantly different to that for the Liberals (11%) but not the very unreliable figures from Nationals (25%) and One Nation (15%) voters.

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Figure 4: Union membership by party vote by workers, per cent with 95% confidence intervals
Figure 4: Union membership by party vote by workers, per cent with 95% confidence intervals

Our previous work showed that Greens voters could be demographically distinguished from Labor voters, most notably by their typical level of education: at the 2007 election, 50% of Greens voters had a bachelor degree or higher compared with 28% of Labor voters (Fredman 2013). However, in 2025 (see Figure 5), the proportion for both parties’ voters is 33%, in turn significantly higher than for other parties apart from the unreliable figure of 29% for One Nation voters. Meanwhile, more Greens voters than Labor voters have no higher education qualification, and there is a significantly larger proportion of Labor voters with a certificate or diploma as their highest qualification (46%) than Greens voters (35%).

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Figure 5: Party voters in each highest educational qualification group, per cent with 95% confidence intervals
Figure 5: Party voters in each highest educational qualification group, per cent with 95% confidence intervals

The changing voting pattern of more highly educated workers suggests that the past election saw them swing back towards voting for Labor after a period of consolidation of Greens votes from these workers. Figure 6 examines this pattern, in this case only showing working class voters. It shows that during the 1980s, the ALP first lost the support of many highly educated workers, initially to the fragmented progressive alternatives of the 1980s, with the Greens beginning to win them after the party’s formation in 1990 before thoroughly bringing them together in the 2000s. The ALP’s vote among workers with a bachelor degree fell between 1977–87, even though the party’s electoral fortunes overall had improved, from a second harsh defeat following Gough Whitlam’s dismissal to a third election victory under Hawke. By 1996 many highly educated workers who would have supported the ALP in the past were no longer doing so, and up until 2022 the Greens won the support of a generally increasing proportion of them. This advance was reversed in 2025, perhaps due to the threat of a hard right Coalition.

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Figure 6: House of representative votes by workers with and without a bachelor degree, per cent, selected elections 1977-2025
Figure 6: House of representative votes by workers with and without a bachelor degree, per cent, selected elections 1977-2025

Those who vote for the Greens, however, continue to be distinguished from those who vote for Labor by some of their political attitudes, as discussed in the data and methods section.

Figure 7 shows the means of the score by party group for each of the attitudinal scales. Labor supporters are on average more pro-union, more pro-women’s rights, more pro-immigration and more pro-Palestine than Liberal, National or One Nation supporters. Greens supporters are on average more pro-union, more pro-women’s rights, more pro-immigration and more pro-Palestine than ALP supporters.

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Figure 7: Mean scores by party group of the five attitudinal scales, with 95% confidence intervals
Figure 7: Mean scores by party group of the five attitudinal scales, with 95% confidence intervals

We have then a number of factors clearly related to party vote. However, it should be noted that these variables are themselves related to some extent, as can be seen from Figures 8 and 9. From Figure 8 we can see that attitudes vary with class: in particular, workers are on average more pro-union than the other classes. From Figure 9 we can see that attitude scale scores vary with highest qualification: in particular, those with a bachelor degree or higher are on average more pro-immigration than those with other levels of highest educational attainment.

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Figure 8: Attitude scales by class
Figure 8: Attitude scales by class
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Figure 9: Mean of attitude scales by highest post-school qualification, with lower and upper 95% confidence interval ranges
Figure 9: Mean of attitude scales by highest post-school qualification, with lower and upper 95% confidence interval ranges

A model of voting

The discussion above outlining our descriptive statistical results suggests that Greens electoral support, compared with the Coalition and One Nation, varies with class, education and attitudinal scales. But compared with the ALP, it varies with some attitudinal scales. Meanwhile attitudes also vary somewhat with class and education.

To further investigate the interrelationship between different explanatory factors, and their relative weight in explaining voting behaviour, we have tested a statistical model. Logistic regression is a technique for modelling the probability of one event occurring with respect to another, and gives the relative weight of explanatory factors associated with such an occurrence. “Multinomial” logistic regression can model a dependent categorical variable with several categories (such as a voting choice between several parties) as a series of binary logistic regressions with the possibilities being one category compared to another. That is, in the results shown in Table 5, the column marked “Greens vs Labor” gives the probability of voting for the Greens in the lower house versus the probability of voting for a Labor candidate in the lower house.

The results are expressed in terms of “odds ratios”. Each odds ratio result indicates the extent by which the odds of voting for one party group with respect to another (for example, voting for the Greens rather than Labor) are increased if the independent variable is increased by one unit, in the case of numerical independent variables (such as our attitude scales), or is “true”, in the case of dichotomous variables, controlling for other independent variables in the model. Independent variables which are categorical variables with several categories (in this case highest educational level and class position) are treated in the regression procedure as a series of dichotomous variables.

To illustrate, consider the first column of Table 5, which models the probability of voting for the Greens rather than Labor. The result indicated in the last row, marked “Aboriginal rights score”, for this column, is 1.68 (with a double asterisk indicating that we can be 99% certain this is a statistically significant result). This means that, in this model, the odds of voting for the Greens versus voting for the Labor increased by 1.68 times for every additional unit of the Aboriginal rights score, controlling for other independent variables (comparing cases within the same categories of categorical variables, and keeping numerical variables at their average level).

Now consider the fourth row in the first column of Table 5, marked “degree and above vs none”, with an odds ratio result of 0.62. This means that those with a degree or above compared to those without a post-school qualification were 0.62 times as likely to vote for Green compared to Labor, or equivalently 38% less likely, controlling for other independent variables. Statistically significant results are indicated with single (95% significance) or double (99% significance) asterisks.

Table 1 shows that from statistically significant results, what most distinguishes Greens voters on average from:

• Labor voters are, in order of relative weight, higher Pro-Palestine and Aboriginal rights scores, and, unexpectedly, a lower likelihood of holding a degree or higher qualification compared to no post-school qualification;

• Liberal voters are, in order of relative weight, higher Pro-Palestine, Aboriginal rights, pro-immigration and union power scores, and a lower likelihood of being a salaried manager compared to a worker;

• Nationals voters are, in order of relative weight, higher Aboriginal rights and Pro-Palestine scores;

• One Nation voters are, in order of relative weight, higher Aboriginal rights and Pro-Palestine scores, and, unexpectedly, a lower likelihood of holding a degree or higher qualification compared to no post-school qualification, and higher women’s rights scores.

In testing the validity of the model a “pseudo-r squared” score of 0.45 was found, which indicates that 45% of the variation in the outcome is explained by the dependent variables, a quite high score for a model in the social sciences.

Table 1: Odds ratio results and their statistical significance from our voting model

FactorGreens vs LaborGreens vs LiberalGreens vs NationalsGreens vs One Nation
(Intercept)0.33**0.61*3.85**7.56**
Certificates and diplomas vs none0.660.790.590.62
Degree and above vs none0.62*0.841.000.38**
Salaried manager vs worker0.590.32*0.631.18
Business owner vs worker0.900.500.501.36
Immigration score1.131.68**1.464.93
Women's rights score1.111.241.391.37*
Union power score0.981.52**1.331.35
Pro-Palestine score1.65**3.49**2.90**2.16**
Aboriginal rights1.68**2.91**3.48**4.37**

Pseudo r2=0.45 * significance at p≤0.05 ** significance at p≤0.01

By way of a conclusion: The Greens, social democracy and the question of a way forward

We have shown that, in the 2025 federal election, Greens voting support among workers demographically widened and there was a return to Labor voting by sections of the highly educated workers. This reversed a key trend from our, and others, earlier findings (Fredman and Strauss 2012, Fredman 2013) on Greens voters’ differences in demographic characteristics, from Labor voters in particular. Previously the Greens had tended to win voting support from much of the highly-educated working class, whereas in 2025, the only educationally differentiated group of voters the Greens particularly won support from was those without higher educational qualifications.

What remains constant is the leftist position of Greens’ voters on average. Developing Charnock’s study, we have shown that voter support for the Greens is most related to leftist positions on economic and, particularly, social questions. Thus, contrary to Geoff Hawker (2009), Greens’ electoral difficulties do not stem from relatively narrow support for protest “against the political system in general”, which he considered to be the party’s stance (11-14). That is not the basis of the Greens’ electoral support. If the numbers of people holding the political attitudes that drive support for the Greens grew, so would that support (in addition to what might be won from people already holding those attitudes who have continued to identify with the ALP).

A key limitation on the Greens lies elsewhere. Tom Bramble and Rick Kuhn (2011) have pointed out the party neither includes class as an organising concept politically nor orients to trade unions, unlike the ALP (184). But, by the same token, the ALP has not deployed those political concepts and orientations to pursue a radical politics. Indeed, in the 1980s, in response to capitalism’s crises, it offered its own version of the neoliberal solution to that crisis (Humphrys, 2019). At a time of “the death of social democracy” and left electoral challenges, Ashley Lavelle has noted that the Greens’ policies have been perceived as more social democratic than those of the ALP (2008: 42, 171).

The Greens, like its sister parties that have arisen across the world since the 1980s, proclaim four “core beliefs”: peace and non-violence, grassroots democracy, social and economic justice, and environmental sustainability (Australian Greens, 2011). These principles suggest both traditional leftist and new social movement antecedents. However, contrary to the predominant commentary on the Greens, which argues that these parties represent either a fundamentally new form of politics or a contemporary expression of the socialist or far left, the Australian Greens can be understood, to a considerable extent, as a contemporary expression of social democracy.

This understanding is proposed not just because Greens parties have not moved beyond social democracy politically, exemplified in different ways by the archetypal German Greens participation in coalition government and the Australian Greens leadership avowed commitment to replacing the ALP as the reforming party of an Australian capitalism (Brown and Singer, 1996). We have shown, first, that the Greens support is similar sociologically to that of traditional social democracy, or, more precisely, the Greens support comes from what has been a part of the active and dominant element of workers’ support for social democracy.

But a second element has emerged. The Greens are to the left of the ALP, in particular in their voters’ respective attitudes. In the face of the now decades-long neoliberal policy trend of traditional social democracy, many workers who come into struggle around ecological, social or industrial issues are seeking alternative political expressions. But as yet the Greens’ worker supporters do not stand out from those of traditional social democracy in their attitudes to capitalism. We might suggest that the overall reformism of the Greens’ worker supporters wins out in the absence of revolutionary influences: their consciousness of the relations between classes is conflictual, but not antagonistic (Kelly, 1988: 87-88).

Some Greens’ leaders appear to be aware of a need to relate to working people suffering economic stress. At time of writing, the far-right One Nation party is experiencing a surge in support evident in a range of polls, in the 2026 South Australian election, and by winning their first federal lower house seat in the 2026 Farrer by-election. One Nation’s new support seems generally to have been won due to discontent with the political system and the economic stress workers are suffering, rather than representing the expression of racist attitudes to immigration that has been the core of its previous support (Samaras 2026).

In response to workers’ circumstances and this political development, Green Institute director and former Greens parliamentarian Max Chandler-Mather has proposed the party reorient towards “economic populism”: his examples to learn from are the growing Green Party of England and Wales under Zack Polanski and democratic socialist mayor of New York Zohran Mamdani (Chandler-Mather, 2026). Whether such a turn can broaden Greens’ support and more fundamentally move the Greens towards a clearer anti-capitalism remains to be seen.

Revolutionary involvement within or relating to parties such as the Greens, or to sections of them, might help push the consciousness of workers towards anti-capitalism. Success is not guaranteed. The situation represented by the existence of these parties is only that large numbers of workers have abandoned past political certainties and are open to changing their views and activity. From this point of view, the Greens remain a political force under construction, with some of the historical and social determinants that the ALP has had, but without institutional constraints of the kind the ALP experiences.

In this context, what we have suggested here is that an important argument for Marxists to make is that workers in their politics must efface the differences of status among them, which shore up the boundaries of social democracy that surround the workers’ movement. For the development of a working-class led movement for social change, the mobilisation of workers through new parties that have appeared could prove to be valuable, but only if there is a consciousness of the need to unite the different strata of workers.

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  • 1

    We acknowledge that any attempt to represent the Marxist conception of class as a dynamic field of relationships using the static categories of a sample survey inevitably involves some simplifications and abstractions, although we would also point out the AES is relatively rich in demographic detail and assert our method comes closer to Marxist understandings of class than standard sociological categories based on occupation or education. 

  • 2

    To distinguish workers from upper managers in the two earliest surveys, in which no question about management level was asked, those who supervised more than 20 others were categorised this way.

  • 3

    Factor analysis is a statistical procedure whereby a number of items such as questionnaire responses are reduced to a smaller number of factors, within which items correlate relatively highly, and between which items do not correlate very highly. The purpose is to identify underlying structures, in this case of attitudes, that are evident in items that we hypothesize are related before conducting the analysis. The common factors therefore need to make conceptual sense as well as be empirically valid.

  • 4

    Analyses were conducted with the statistical package R, version 4.5.1, with code and more detailed results available on request.

 GERMANY

The Workplace is a Place Where we Have to Fight Against War: Ulrike Eifler



Ana Vračar |




IG Metall's Ulrike Eifler spoke to BreakThrough News about trade union resistance to militarization and strengthening the international anti-war movement.


Ulrike Eifler of the industrial union IG Metall. Photo: Ulrike Eifler/FB

Germany has rapidly assumed a leading role in Europe’s ongoing rearmament drive, channeling billions of euros into modernizing its armed forces, bringing conscription back onto the political agenda, and prompting major industries to pivot toward arms production. 

While Friedrich Merz’s federal government claims that this military buildup will ultimately benefit the population, resistance is growing at the grassroots level. Students and trade unions are increasingly engaging in discussions and actions against war preparations. 

In an interview with BreakThrough News, Ulrike Eifler of the industrial union IG Metall reflects on the current situation and outlines strategies for strengthening the peace narrative within the labor movement in Germany and internationally.

BreakThrough News: The shift toward militarization in Germany is already having a tangible impact on the workforce. How has this transformation affected the German working class?

Ulrike Eifler: Germany is a country where militarization is felt very strongly, more so than in other countries. This is my impression from discussions with comrades abroad. From my perspective as a trade unionist, I would say we can already see the impacts of militarization on society and the world of work.

Several professions and sectors of society and the labor market are being militarized. Teachers must invite soldiers into their classrooms for recruitment. Employment agency staff are required to steer the unemployed toward the military. And nurses are required to undergo evacuation training and learn how to treat war injuries. 

Following decades of marketization of the healthcare sector, we are now facing its militarization. This places an immense burden on nursing staff. Last summer, at a meeting at Berlin’s Charité hospital, the Berlin Hospital Association, the Berlin Senate, and the Bundeswehr prepared employees for a scenario involving significantly increased strain – the federal government anticipates 1,000 wounded soldiers per day in case of war. Consequently, the recommendation to nursing staff was to strengthen their personal resilience: a bit more exercise or yoga might help them prepare for this situation, apparently. Very cynical, I’d say. 

But [in the case of war] the strain on nursing staff will also increase because the very nature of their work would change. The goal would no longer be to lead people to health and improve their quality of life, but rather to patch them up for their next deployment at the front. The professional identity of healthcare workers is being turned upside down. The same applies to other professions. 

Militarization is restructuring the relationship between capital and labor and intensifying it in ways we could not have imagined during the era of capitalism prior to these war preparations. I believe we have to adapt our strategies so they reflect the fact that the workplace is now also a place where we have to fight against war. 

This development is not yet being sufficiently discussed within trade union circles – though I must admit we have already made enormous progress in the debate. Still, I would say that anti-militaristic positions of trade unions outside Germany are clearer than those in Germany itself. Judging from previous experience, that could prove to be a big problem: during the last financial crisis in Europe, we saw austerity measures imposed all over the region partly because local politicians didn’t feel enough pressure from trade unions here. So it’s very important to have strong class struggles in Germany alongside strong class struggles elsewhere. 

One of the greatest challenges in organizing resistance to armament currently stems from attacks by the federal government: these aim not only to dismantle the welfare state but also to break the backbone of the unions. There is also the government’s aggressive attempt to co-opt the unions into its policies of social cutbacks and war preparations. This strategy builds on the decades-old practice of so-called “social partnership” between capital and labor, a relationship traditionally managed and pacified through joint dialogue. The government is now attempting to revive this approach. This must be prevented at all costs, as the aim is to weaken the unions. 

Finally, unions are currently also struggling to generate their own answers to the societal crises. [In this situation,] the political left must not simply join social protests: it needs to place them within the context of current preparations for war. Doing so would also strengthen the unions.

BT: A common argument put forward by governments and employers is that military-driven reindustrialization will secure or create jobs, even amidst economic stagnation following decades of austerity. What do you make of this military Keynesianism?

UE: The deepening industrial crisis in Germany demonstrates that the argument that investment in the arms industry could save the industrial sector is flawed. The federal government’s industrial strategy centers on expanding the arms industry through state contracts, guaranteed government orders, and subsidies. Billions upon billions have been poured into the defense sector over the past four years. Yet 15,000 industrial jobs are currently being lost every month. Last year, 120,000 jobs were lost; the year before, 100,000. That means the government’s strategy is failing. 

Comparative studies show that investments in education, infrastructure, or socio-ecological transformation lead to greater growth and more jobs. Investments in armaments generate virtually no growth; instead, they heighten the risk of war. Germany’s experience thus serves as a prime example of how a focus on the arms industry accelerates deindustrialization rather than preventing it.

Secondly, I think we need to say clearly that “military Keynesianism” can work only if war actually breaks out. This implies that uninterrupted arms production must be guaranteed by shifting to a war economy. However, such a transition is incompatible with labor and trade union rights. The eight-hour day, occupational health and safety regulations, collective bargaining, the right to strike, and even the very existence of trade unions stand in the way of uninterrupted wartime production – and are thus placed at risk.

If you want job security in the context of military Keynesianism, you have to switch to a war economy, and that means abolishing all labor rights, even the right to organize in a union. We have to read very carefully what the government is telling us. And that, in my opinion, means that the existence of the trade union movement is at a very critical point right now.

Here, too, internal trade union discussion remains insufficient. Initial, significant resolutions opposing militarization and rearmament have emerged from unions in major industrial enterprises such as Ford, Volkswagen, and ZF. These efforts need to be broadened. At the same time, the trade union debate requires an alternative to the federal government’s stance – one that makes it clear that industrial policy lacking a commitment to peace is not in the interest of working-class people. 

BT: What is the connection of unions to other initiatives in the broader peace movement, including the student movement, which employs strikes as a means of opposing war and rearmament?

UE: There are some initial, yet truly significant initiatives. In Munich, trade unions joined forces to form an initiative for increasing social expenditure instead of arms expenses and organized an initial demonstration in autumn 2024 against rearmament and cuts to social services. In Bavaria, the education union GEW filed a lawsuit against the law requiring teachers to invite soldiers into the classroom. And within IG Metall, advisory services regarding conscientious objection to military service are available in some locations. 

Furthermore, at its federal congress this May, the German Trade Union Confederation (DGB) took a clear stand against NATO’s 5% spending target and the federal government’s concept of making society “war-ready.” Particularly noteworthy, however, was the DGB federal congress’s resolution opposing military conscription. Following a debate at the congress, the entire trade union family now rejects conscription, aligning itself with the youth. The importance of this cannot be overstated, as it places the unions in opposition to the federal government on a central issue regarding preparations for war. 

The school strike movement is probably the most interesting and radical part of the German peace movement at the moment. The students who took to the streets against conscription feel very clearly that they are part of war preparation, and they refuse to participate, even under intense pressure. There are examples where school directors threatened punishment if students attended strikes, or where students were locked in their classrooms by teachers. Even the secret service came to try to intimidate them. So there is a lot of pressure, and it also has a logic: a government that prepares for war can’t afford a whole generation on the streets, politicized by the question of peace and war. 

Initial contacts between school strikers and trade unions are taking place in some cities. This practice needs to be expanded in the coming weeks and months: the DGB decision is only valuable if it compels us to stand with the youth and protect them. I witnessed a very powerful example of this when I was at the school strikes in early May: a woman working at a home for the elderly came to the microphone and said, “I deal with elderly people every day who are still feeling the consequences of World War II, and they are fearful now. These experiences of war are so terrible that we have a responsibility to avoid repeating them forever.” I think experiences like these show that we have to unite different parts of society and support the students. 

BT: You recently attended the International Conference Against War in London alongside hundreds of activists and movements. What key insights did you take away from that meeting?

UE: The London conference successfully brought together the anti-war movement and segments of the labor movement. There was a massive presence of trade unions and trade union confederations, from Spain to Britain to Italy and Greece. This is crucial because, without unions, we cannot halt our governments’ preparations for war. 

Several events were mentioned at the conference that will be important to support: October 10, the action day against the genocide in Gaza; November 21–22, action days across Europe against militarization and conscription; and the dockworkers’ international day of action. That date isn’t fixed yet, but it’s really important to support the dockworkers because, at the moment, they are the only branch organizing anti-war action in their workplace. They are the only branch where we have strikes against rearmament. Our goal must be to expand these actions to other sectors. 

Additionally, from my perspective, there are three defining issues that can help us further unite the anti-war movement and the trade unions. First, attacks on public services and welfare – measures that not only serve to finance rearmament but are also part of war preparations. [Keeping in mind the experiences in Germany,]  I would say this is not only an attempt to destroy our welfare state, but also an attempt to break the backbone of the trade union movement, our experiences, and our past class struggle. 

Second, the militarization of the workplace: while this upends professional activities, it also offers us the opportunity to turn the workplace into a central arena of struggle. 

And third, an end to the genocide in Gaza. The ongoing killing and death in Gaza, combined with Western support for the Israeli government, deeply stirs people, prompting them to take a stand, choose sides, and become politically active. At the same time, the expansion of Israeli military operations into Lebanon demonstrates that Gaza was not an exception, but a blueprint. International law is playing an increasingly marginal role. And the very governments that disregard international law also fail to respect workers’ and trade union rights and dismantle social safety nets. It is on the basis of this debate that the anti-war movement and the trade union movement can be brought together.

BT: Finally, there is also a trade union conference for peace that will take place in Würzburg at the end of July. How does this conference build upon the discussions held at previous events and other forums over the past few months?

UE: This will be the fourth trade union conference of this kind. To date, it has helped us initiate and sustain an internal union debate regarding the impact of war preparations on the working class. The trade union congress resolutions I mentioned earlier are the result of this work. Until now, the nature and agenda of these conferences have focused on preventing the trade unions from becoming complicit in policies preparing for war.

However, I believe we have reached a point where merely debating the issue is no longer enough. Hundreds of events addressing this topic have taken place within the unions over the last three years – an impressive track record. Now we need to move from quantity to quality. We need genuine movement and mobilization against the war. Yet this does not happen on its own; it must be built up. It is therefore crucial to focus on establishing an alliance structure, like the ones in Britain or France, that can support us in organizing protests. Furthermore, the stance of the international trade union movement needs to be discussed more extensively within German trade unions. 

Ultimately, I believe that organizing and holding an international anti-war conference – similar to those seen in Paris and London – could play a vital role in shifting the balance of power within our unions and also across the country. I’m sure that could change a lot.

Courtesy: Breakthrough News

Climate
There’s a class struggle under the sun; the heat is eating away at wages


Monday 13 July 2026, by Luigi Pandolfi



Three per cent of average annual income has already been eroded by climate change, with 5.6 million Europeans pushed into poverty: a devastating toll

It’s hot. For some, it’s just a matter of temperature. For the working class, however, it’s already a matter of health and finances: less income, higher prices, greater vulnerability. “The severe heat wave sweeping across Europe threatens people’s health, their livelihoods, and their ability to work,” Jessie Ruth Schleypen, a climate economist at Climate Analytics, told Bloomberg.

What appears to be a current emergency is actually a trend that has been underway for years now. A study published last Wednesday in the international journal Global Environmental Change shows that between 2004 and 2022, droughts and heat waves have already eroded nearly 3% of the average annual income of European households and pushed another 5.6 million citizens into poverty. And looking ahead, if the 1.5 °C limit set by the Paris Agreement is not met, household income could plummet by more than 21 percentage points by the end of the century.

Most at risk

The group most at risk is the poorest 20% of the population. Construction and logistics workers, farmhands, and manual laborers who bear the brunt of the climate’s impact. It’s a matter of class. Those in air-conditioned offices are protected, to some extent; those who work outdoors are not. Madrid is a prime example: according to the study, the Spanish capital has seen an income decline of nearly 10% in recent years, solely due to the effect of heat on productivity.

There are major problems for agriculture and livestock farming. In France and Spain, crops are paying the price for record-breaking temperatures, water shortages, and rising production costs. The situation in France is the most critical: 72 departments are on red alert, and hundreds of thousands of farm animals—especially poultry—have died due to the extreme conditions. In Spain and the United Kingdom as well, the heat is reducing productivity in livestock farming and fruit and vegetable production, putting pressure on entire supply chains. Among the hardest-hit crops is corn, which is suffering from reduced water resources and uncertainty about yields. The consequences are already visible in the markets: according to Euronext, corn futures have risen by 9% since mid-month, fueling fears of greater instability in global agricultural prices. Speculators could have a field day.

Meanwhile, demand for electricity is skyrocketing in cities. On Tuesday, June 23, European energy prices hit record highs: air conditioners running everywhere, the grid under strain, and insufficient supply. In Belgium, prices reached a staggering peak of 1,038 euros per megawatt-hour.

Food and energy

Food and energy becoming more expensive means higher inflation. And for low-income households—which allocate the largest share of their household budget to food and utility bills, with no ability to cut back on other expenses—rising prices have an immediate and disproportionate impact. According to economists, climate change could add between 0.3 and 1.2% per year to global inflation starting in 2035.

“We’re starting to see a situation where a new shock occurs every year,” argues Maximilian Kotz, a researcher at the Barcelona Supercomputing Center. And these shocks no longer affect only specific products: they impact entire supply chains, from energy to transportation, including insurance, water, and food.

But that’s not all. The climate crisis has also become a new source of financial instability. For some sectors of the economy, extreme events are taking on a significance comparable to that of geopolitical crises. Some market participants are already developing financial instruments to speculate on the frequency and intensity of phenomena linked to El Niño and climate anomalies. Les Finemore, chief investment officer at Moreton Capital Partners, has announced, in this vein, a new fund dedicated to trading on climate risks: “We’ve been focused on the war in Iran. The next event will be El Niño.”

A clear paradox: while extreme heat reduces workers’ incomes, increases the cost of living, and makes those with fewer resources more vulnerable, a segment of the financial sector is turning the very same phenomenon into an opportunity for profit.

And in Italy?

And in Italy? Things aren’t any better. According to a stress scenario developed by Allianz, between 2026 and 2030 the country risks a cumulative loss of nearly 150 billion euros in GDP. The hardest hit would be investment, which could plummet by 12.8% due to shrinking corporate profit margins. This combination opens the door to a stagflationary spiral: rising prices, falling productivity, and rising unemployment. The fiscal deficit is estimated to worsen by another 1.9 percentage points of GDP.

In this way, the climate crisis also functions as a social tax. But it is not a progressive tax. It hits those who have the least, with steep utility bills, more expensive food and mortgages, lost workdays, and growing health risks. The bottom line: temperatures are rising for everyone, but the cost of the heat continues to be distributed in a deeply unequal manner.

27 June 2026

Translated by International Viewpoint from Il Manifesto.

The Absurdity of World Trade Arrangements

Prabhat Patnaik |





The US is holding a gun to the heads of countries to make adjustments, insisting on a favourable deal for itself.


Consider a very simple picture, of a world in which there are only two countries that are engaged in trade. One of the two has a current account surplus while the other, by definition, has an identical current account deficit. It is reasonable to assume that since the surplus country is obviously more successful as an international competitor, it would be close to full capacity-use in a regime of free trade, while the deficit country that is weaker in its competitiveness would have much larger unutilised capacity.

Now, suppose the surplus country enlarges its domestic absorption of goods by increasing, say, the consumption of its workers; since it does not have much unutilised capacity, this larger absorption would entail a reduction in its exports and hence in its current account surplus. Since its surplus must be identical with the deficit of the other country, a reduction in it must mean a reduction in the second country’s current account deficit.

The mechanism through which this would occur is the following: as exports of the surplus country into the deficit country get reduced, the domestic producers in the latter can now get access to larger domestic markets, and hence produce more by utilising their unused capacity. The output, employment, and hence domestic consumption in the deficit country, therefore, will increase as a consequence of an increase in workers’ consumption in the surplus country.

Put differently, if the surplus country is forced to “adjust”, that is remove the current account imbalance between the two countries, then taking the world as a whole (which in the present case consists of only two countries), there will be larger output, employment and consumption, even as the current account imbalances are removed. 

It stands to reason, therefore, that the removal of current account imbalances must be sought through “adjustments” by the surplus country, since it leads to a better outcome for all concerned.

The current international trading arrangement, however, is just the opposite of this: it forces not the surplus country but the deficit country to make the adjustment by reducing its domestic absorption of goods and services. The argument here is that a reduction in domestic demand in the deficit country will mean a reduction not just in its domestic output but also in its imports, which would reduce its current account deficit (and ipso facto the current account surplus of the first country) and thereby achieve the desired adjustment. In the process, however, demand in the world economy goes down, and with it, world output and employment; and needless to say, the level of consumption in the world economy gets reduced by such adjustment.

We thus have two possible ways in which adjustment to eliminate current account imbalances can be made: if the surplus country is made to adjust then world output, employment and consumption increases, while if the deficit country is made to adjust, then world output, employment and consumption falls.

The rise in world consumption incidentally must occur in the first case, even if the increase in domestic absorption in the surplus country is not effected through a rise in workers’ consumption; since the output and employment in the deficit country increases, total world wage-bill and world consumption increases, no matter how the surplus economy increases its domestic absorption.

Amazingly, however, the world trading arrangements are such that the inferior mode of adjustment is carried out whenever there are imbalances, and not the superior mode of adjustment. This is the irrationality of the world trading arrangements under which we live.

When the Bretton Woods system was being set up in 1944, economist John Maynard Keynes had mooted the idea of making surplus countries also undertake some adjustment. But the US those days was an economy with a persistent current account surplus and opposed the idea of making surplus economies undertake adjustment: it preferred holding claims on other countries which gave it power over them, compared to increasing domestic absorption, the most obvious way of doing so being by raising workers’ consumption. A capitalist economy in any case would scarcely prioritise raising workers’ consumption.

Much, of course, has changed since 1944 when the Bretton Woods conference was held; the US which had been a surplus country then and for a long time after the war, started posting persistent current account deficits from the mid-1970s. Why, it may be wondered, did the US not start asking for adjustment by surplus countries when it stopped having surpluses itself?

There are three obvious reasons one can cite why it did not do so. First, having a deficit is something that the “leader” of the capitalist world would have to accept as part of the duties of “leadership”; for instance, the “leader” has to maintain a string of military bases around the world for its counter-revolutionary activities, which entail incurring expenditures abroad and hence a current account deficit. The US, therefore, was not unduly shocked or surprised by the current account deficits it started experiencing.

Second, since the US dollar played the role of being de facto “world money” which the rest of the world was willing to hold in almost unlimited amounts, the US had no problems in financing its deficit by making dollars (and dollar-denominated assets) available to surplus countries, and hence felt no need for any adjustment on its part or on the part of the surplus countries, at least no urgent need for any adjustment.

Third, much of the exports being made to the US by the surplus countries, in East Asia for instance, were produced by American capital itself relocating its manufacturing activities to these countries. Insisting on a reduction in the surplus of these countries therefore might mean hurting the interests of American capital which obviously no US administration would do unless urgently required.

For all these reasons, despite the changed international situation that saw the US incurring persistent current account deficits, there was no immediate demand on the part of the US to bring about any change in the world trading arrangements.

The US was content to let dollars and dollar-denominated assets pour into the world economy as the means of settling its current account deficit. Matters, however, have taken a different turn of late. With China moving away from holding dollar foreign exchange reserves, and with the threat of de-dollarisation looming on the horizon (however distant that threat may be as yet), the US now feels the need to reduce its current account deficit; but it is not concerned with altering the world trading arrangements in a way that would benefit the world economy as a whole. The recent Trump measures testify to that.

The Trump measures are not meant to overcome the irrationality of the world trading arrangement that we discussed above; they are meant only to ensure that the US does not suffer from its deficit position, that it overcomes its predicament of being a deficit country without making the usual adjustment involving a reduction in its domestic demand that a deficit country is supposed to do. Indeed, on the contrary the Trump measures are meant to reduce the US deficit even while increasing its domestic output and employment. Let us see how.

The two basic weapons used by Trump are: punitive tariffs, and unequal trade treaties imposed on trading partners (of which India is the first instance); these unequal treaties stipulate the exact amounts that a country is supposed to import from the US (without stipulating anything in the opposite direction). In fact, punitive tariffs are used as the punishment inflicted on any country that does not accept the unequal treaty; and countries accept the unequal treaty as the lesser of the two evils.

As the trade deficit narrows through such coercive means, the demand for domestic goods increases within the US and hence domestic output and employment too. But this does not amount to any alternative trading arrangement for the world economy as a whole that would be universally beneficial and hence constitute an embodiment of rationality. It is the US holding a gun to the heads of countries and insisting on a favourable deal for itself.

In fact, with a better deal for itself, it will join with even greater gusto in enforcing the irrational world trade arrangement that forces deficit countries to undertake adjustments, an irrational arrangement that the US itself had been instrumental in imposing on the world.

Prabhat Patnaik is Professor Emeritus, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. The views are personal.