146. The post-war reconstruction of world capitalism on the basis of the industrial and financial strength of the United States led to a major expansion of the global economy. However, notwithstanding Keynesian claims that government intervention could now regulate the capitalist system, this expansion did not signify that the contradictions that had led to the breakdown of 1914 and the ensuing 30 years of turmoil had been overcome. On the contrary, it gave rise to a new disequilibrium.
147. In order to expand its own markets and forestall social revolution, the US had been forced to rebuild the war-torn economies of both Western Europe and Japan. But by the late 1960s, the Western European powers and Japan were emerging as powerful economic rivals to the US. The beginning of the protracted decline in US hegemony was marked by a crisis of the dollar and a widening balance of payments deficit.
148. The United States had entered World War II faced with the task of organising the world. The war aims of American imperialism were not to fight for democracy against fascism and militarism, but to ensure that the world remained open to penetration by American capital, goods and finance. As the Great Depression had so powerfully revealed, American capitalism had outgrown the continental framework in which it had developed—it now required the whole world. US imperialism could not tolerate a world that denied it access to vast areas of Europe because of a German empire, nor a world where the Asia-Pacific region was under the domination of Japan. Likewise, as Churchill was to discover, it was also hostile to the British Empire.
149. The opposition of the United States to the empires of its rivals had enabled it to pose as an anti-imperialist power. The democratic mask, however, soon began to slip. Victory in the war meant that the US now had to shoulder responsibility for suppressing the revolutionary struggles of the masses in the former colonial countries of Asia. No sooner had the Korean War armistice been signed than the US began to intervene more directly in Vietnam, following the staggering defeat of the French army at the Battle of Dien Bien Phu in May 1954. In 1965, it sponsored a coup in Indonesia, which brought the army general Suharto to power and resulted in the death of up to one million workers and peasants. By the middle of the 1960s, as the real face of US imperialism was emerging with its escalating troop commitment in Vietnam, opposition began to increase both internationally and at home.
150. The Australian bourgeoisie had aligned itself with the US under the 1952 ANZUS alliance (Security Treaty between Australia, New Zealand and the United States) and fully backed US policies in the region. Speaking at a New York meeting in July 1966, Australian Prime Minister Harold Holt expressed his support for the Indonesian coup, with the chilling remark: “With 500,000 to 1 million communist sympathisers knocked off … I think it is safe to assume a reorientation has taken place.” The Labor Party likewise endorsed the bloodbath. Years later, in 1992, Prime Minister Paul Keating declared, on behalf of the entire Labor Party, that “the coming to power of the New Order government [the Suharto regime] was arguably the event of single greatest strategic benefit to Australia after the Second World War.” In 1966 the decision by the Liberal government to send conscripted soldiers to fight in Vietnam led to a radicalisation of youth and students, part of a growing international upsurge.
151. Changes in the post-war structure of world capitalism were now beginning to impact on the Australian economy and break up the material foundations that had underpinned the national reformist program of Laborism and the ideology of Australian exceptionalism.
152. Before World War II, iron and steel production, together with shipbuilding and ship repair, had been the mainstays of industry. After the war, the development by the US of multinational production led to the establishment of a number of large-scale factories, starting in 1948 with the General Motors car plant in Melbourne. This, in turn, gave an impetus to the growth of domestic white goods industries, as well as increased steel production and the expansion of metal industries. In 1939, on the eve of the war, the manufacturing industry contributed 16.3 percent to gross domestic product and 23.9 percent to employment. By 1963 it comprised 27.6 percent of GDP and 28.2 percent of employment. The expansion of infrastructure and services, as industry and the population grew, augmented the size and social weight of the working class. The wave of post-war immigration, the rise in living standards and the increasing availability of transport, particularly airline travel, and more advanced media and communications, especially television, began to break down the shut-in, parochial character of Australian cultural and political life.
153. The expansion of industry saw a growth of the working class, largely through immigration, and a strengthening of its organisational capacities and militancy, which began to increasingly strain against the constrictions of the arbitration system. In 1967–68 a major conflict developed over the powers of the arbitration system, as employers in the key metal trade sector sought to absorb so-called over-award payments into the general wage. They were resoundingly defeated in a series of struggles that brought a significant development of shop-floor organisation in metal workshops in a number of major cities.
154. As the arbitration system was being challenged, another central pillar of the so-called “Australian Settlement”—the White Australia policy—was also eroding. Prior to the war, Australian capitalism’s relationship to the world market had been mediated by the British imperial preference system, in which agricultural goods were supplied to the British market. But the United States had ended Britain’s role as a world power, with the coup de grace coming during the Suez crisis of 1956. With the disintegration of the imperial preference system, Britain turned to Europe, while Australian capitalism became steadily integrated into the economic framework established by the US in the Asia-Pacific region. This centred on the rebuilding and then rapid expansion of Japan. In 1957, the Australian government formalised the new orientation when it signed a trade treaty with Japan, opening the way for the export of increasing quantities of coal and iron to supply the Japanese industrial expansion of the 1960s—an expansion that saw GDP rise at an annual rate of 10 percent throughout the decade. Australian capitalism’s growing dependence on its economic relations with Asia, and especially Japan, rendered untenable formal adherence to White Australia. However, so wedded was the Labor Party to this racist policy that it took a decision in the early 1960s to ban its members from belonging to any one of a number of organisations that were pressing for changes to Australian immigration laws. As a consequence, a number of leading Laborites resigned from such groups. In Western Australia, the Labor Party expelled one of its members after he refused to do likewise. The racist “objective” was finally removed in 1965.
155. The rise of the civil rights movement in the United States from the mid-1950s onwards—exposing to an international audience institutionalised racism, segregation and discrimination—had a significant impact in Australia. It began to raise questions about one of Australian capitalism’s dirtiest secrets—the criminal policies carried out against the Aboriginal population historically and the ongoing oppression and discrimination. In 1967 a majority of almost 91 percent voted in support of a referendum to change the Australian constitution—to give the federal government power to make laws with regard to the Aboriginal population and to include it in the census. While citizenship and the right to vote had already been formally granted, the referendum was regarded as a call to the federal government to redress the political and economic injustices inflicted on the Aboriginal people. In 1966 and 1967 Aboriginal stockmen walked off the Wave Hill pastoral station owned by the British aristocrat Lord Vestey in support of a demand for equal pay, and received backing from workers around the country. The Communist Party intervened in their struggle, raising the demand for land rights in order to head off the development of a unified and independent class movement.