"The idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society ... Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganised industrial life, and thus endangered society in another way." - Karl Polanyi, The Great Transformation - the political and economic origins of our time, 1944
The world economy is now as close to a self-adjusting market as it has ever been since 1914. Australia is at the fore of this regression. Does this help explain why history has not ended, and why Australia has failed to produce a response to global change that protects social viability? The question emerges >from a book, released last week, on inequality and economic change.
Unfortunately, the book - Work Rich, Work Poor, edited by Jeff Borland, Bob Gregory and Peter Sheehan - has arrived without visible impact on public opinion, thanks to the events of September 11 and the subsequent manoeuvring for the high ground by Australia's main political parties before what will almost certainly be a khaki election.
But those who want an insight into one reason for Australia's discontents should try to get their minds around the central findings of this book.
The authors show that during the 1990s - a period of relatively strong economic growth - total employment grew 1.1million, or 17per cent, yet full-time employment grew by only 282,000 or 5.5per cent. Part-time employment grew 848,000 or 61per cent.
Overwhelmingly, the new jobs are badly paid. The study shows that in 2000 earnings, 87per cent of the new jobs paid less than $500 a week. The number of jobs paying less than $600 a week was 1.2million. This figure is greater than the total increase in jobs, suggesting the number of well-paid, full-time jobs actually contracted.
For most of the 20th century Australia led the way in aspects of employment protection (the basic wage, eight-hour day and 40-hour week). For 80 years, growth in well-paid, full-time jobs underpinned family prosperity and social equality.
The book rejects the idea that the growth in part-time employment reflects employee choice: "It is not plausible that there has been no increase in employees over the decade, in occupations other than managers and professionals, seeking work in other than part-time casual jobs."
And while labor-market deregulation and the shift in bargaining power to employers may have had some effect, this "cannot be considered a major explanation for the fact that, during the 1990s for occupations other than managers and professionals, there was a decline of 438,200 in full-time permanent jobs and, indeed, of 240,500 in all full-time jobs".
The answer lies in the structure of the demand for labor. In the 1990s, at 2000 values, the number of jobs in the $600-1400 bracket has shrunk.
The authors argue that when all net employment growth has been in relatively poorly paid jobs - earning less than $600 a week - it is hard to keep the social fabric intact.
The bottom line of our failure is the balance of payments deficit, rising foreign debt and a sinking Australian dollar. This stems from the declining relevance of traditional commodity trade, and the failure to restructure industry that has led to the deficit on trade in elaborately transformed manufactures growing from less than $30billion in 1990 to more than $50billion now.
Our failure stems from a primitive, neo-liberal view of globalisation built on an ideology of deregulation, which created the lush environment for the paper-shuffling entrepreneurs of the 1980s and their bankers. Their malign influence is still working its way through the economy despite the optimistic twaddle of mainstream media, who claim their policies leave Australia better able to cope with the coming storm.
Kenneth Davidson is an Age columnist.