Earlier this week, Tim Gurner – the founder of Australian property giant Gurner Group – was forced to apologize over comments he made at the Financial Review Property Conference. Gurner told the assembled delegates that one of the main problems the Australian economy faced was ‘arrogant’ workers, who simply ‘decided that they didn’t want to work so much’. 

He argued that ‘workers have to be reminded that they work for the employer, not the other way around.’ Gurner emphasised to his audience the importance of ‘killing’ workers’ bad attitudes, acknowledging that this would undoubtedly cause some damage to ‘the economy’. 

He then praised central banks around the world for tightening monetary policy on the basis that doing so would discipline workers into submission. But he wanted to see central banks go further, arguing that unemployment would have to rise ’40-50 percent’, in order to ensure the necessary ‘pain’ was inflicted on the economy. 

This statement displays Gurner’s profound ignorance about economics. Were unemployment to increase by 50 percent, the macroeconomic implications would be profound. In fact, the last time such an event took place was at the start of the pandemic, when the Australian unemployment rate rose from around 5 percent to 7.5 percent. 

Needless to say, the fallout from this shock was significant. With businesses cutting investment and laying off workers, demand contracted. There were worries about financial contagion as households were unable to service their debts. 

Naturally, the Australian state stepped in with a bailout package that predominantly benefitted Australian businesses – many of which went on to pay out huge dividends to shareholders. Had the state failed to provide this rescue package for the capitalist class, it is businesses like Gurner’s that would have suffered the most. 

Gurner is undoubtedly ignorant of the scale of the shock for which he is calling. When a capitalist states that ‘sacrifices need to be made’, he is invariably imagining that those sacrifices will be borne by anyone but himself. 

Nevertheless, a more modest increase in unemployment of the kind that the Australian central bank is likely targeting as it raises interest rates will cause some economic damage. And the property sector will undoubtedly be affected, perhaps seeing lower profits as demand for new properties cools. 

Why would a property investor be advocating a policy trajectory that would be likely to lower his own profits? 

The answer is very simple: power. 

Mainstream economic theory doesn’t tend to deal with questions of power, preferring instead to view the operation of the economy as akin to a machine. Productivity goes up, so wages go up. Interest rates go up, so unemployment goes up. 

But this model avoids uncomfortable questions about the class foundations of capitalist economies. Wages only increase in line with productivity when workers have the bargaining power to demand their fair share of the business’ profits. And unemployment only goes up with interest rates if workers are unable to organize to protect their jobs at the expense of capitalist profits. 

Policymakers, however, are not as naïve as their academic cousins. They know that the operation of economic policy hinges on power – or, to use the economic euphemism, ‘institutional variables’. In the 1990s, for example, Janet Yellen spoke of unemployment as a ‘worker-discipline device’. 

This disciplining device is foundational to the operation of capitalist economies. If workers are not sufficiently scared of unemployment, they will be more likely to organize to demand higher wages and better conditions. 

In the short term, this is likely to erode capitalist profits. But, then again, high rates of unemployment also suggest a shortage in demand that could also reduce profitability. 

The far more important factor is that confident workers are far less likely, over the medium to long term, to accept the social division of labour upon which the functioning of capitalism depends. In other words, they’re less likely to accept the idea that there needs to be a divide between workers who sell their labour and bosses who own the means of production and govern labour.  

The implications of such a breakdown in respect for the status quo are profound, as the world saw in the 1970s. After several decades of rising worker power in the global North, the energy crisis of the 1970s stoked a new and intense round of conflict between workers and bosses. 

Workers not only demanded wages in line with inflation, they also sought the right to bargain with management over decisions related to investment, such as the pace and scale of automation. The result was, as Gregoire Chamayou notes in his book The Ungovernable Society, a crisis of ‘governability.’

The natural hierarchy of manager over worker was being threatened, at the same time as new social movements were threatening the material and ideological power of the state. This crisis was only resolved with the election of neoliberal governments that used the economic and violent power of the state to crush workers and protestors.  

Gurner was forced to apologise because you are simply not allowed to say these things out loud in a capitalist economy. It is critical to the maintenance of neoliberal hegemony that the violent and coercive power of both capital and the state remain invisible. 

For the legitimacy of the system to be maintained, we have to believe that our fates are sealed by ‘the market’ – a faceless power that no one can control. 

In reality, the decisions of the powerful are just as important as the operation of the market in determining workers’ fate. In fact, the two cannot be separated. 

Equally as important are levels of organization among the working class itself. According to recent data, the number of days lost to industrial disputes in Australia increased by a third between the first and second quarters of 2023. Perhaps Gurner is right to be worried.