Part II. The Origins and Development of Capital and Labour in Australia

Section 1. Australian capitalism

Modern Australian society is a product of the capitalist economic and political forces that have ruled most of the world since the rise of the capitalist class to power in Western Europe. The British colonisation and settlement of Australia was part of the worldwide expansion of capitalism.

The initial aim of the British settlement of Australia was to establish an outlet for Britain's large prison population, consisting overwhelmingly of the descendants of declassed peasants driven from their lands at the beginning of the Industrial Revolution.

By the end of the 1820s, however, facing widespread industrial unrest, a large prison population, and mass discontent in Ireland, the British government began also to favour mass emigration of those who could not be profitably employed in Britain's capitalist industries. Beginning in 1831, the British government began to promote emigration to Australia by the poor and the unemployed. At the same time, the Australian colonies began to assume more importance to British capitalism as a source of raw materials, particularly wool.

A settler outpost of British capitalism

From their foundation, the Australian settler colonies were integrated into the worldwide division of labour imposed by Britain, the then-dominant capitalist power. The colonial settlement of Australia was part of the same process that resulted in British colonisation of India, North America and parts of Africa. However, significant differences in these colonisations explain why Australia became a developed capitalist country while India and many other former British colonies were condemned to semi-colonial underdevelopment.

Prior to its conquest by Britain, India already had a fairly highly developed pre-capitalist economy producing a large social surplus product, particularly in agriculture. British capitalism conquered India in order to appropriate this surplus. Therefore, it sought to maintain the agrarian social relations under which this surplus was produced and expropriated. At the same time, British capital sought to open up the Indian market to British manufactures. Competition from cheaper, British manufactured goods destroyed India's large artisan class and also blocked the development of a strong, competitive industrial capitalist class. Australia, by contrast, was regarded by the European colonists as an unowned and therefore ``empty'' continent — one lacking a pre-capitalist social surplus product available for plunder by a power with a technological edge in productive capacity and military force.

In its broad outlines, the origins of modern Australia were similar to those of other British colonial settler societies such as the USA, Canada, and New Zealand.

The previously existing hunter-gatherer economy of the indigenous tribes produced only enough for the reproduction of their society. There was no significant social surplus product. The British colonisers therefore did not attempt to maintain the social relations of Aboriginal society. Instead, they sought to appropriate the lands upon which Aboriginal tribal societies depended for their survival. This policy of dispossession was accomplished through outright physical extermination of Aborigines, or their forcible herding into tightly controlled reservations.

As the collectivist hunter-gatherer Aboriginal tribes were decimated and dispossessed, a capitalist colonial-settler society was able to develop largely unfettered by pre-capitalist social relations. An Australian capitalist class began to develop as an offshoot of the British capitalist class. Australian society did not become an exploited colony of British imperialism, but a colonial settler outpost of British capitalism sharing a basically similar social structure.

As an offshoot of British capitalism directly benefiting from Britain's domination of the world market in the 19th century, and with a small population in a large and resource-rich continent geographically isolated from Europe, Australian capitalism enjoyed a rather less turbulent development than most of the other industrial capitalist societies.

With the rise of an export-oriented agricultural sector to dominance in the early 19th century and the establishment of a powerful layer of capitalist farmers, the preconditions for the development of industrial production gradually appeared in Australia. However, not until the gold rushes of the 1850s did a strong industrial bourgeoisie begin to be consolidated.

This class of wealthy merchants, bankers and industrialists benefited from the new wealth of the goldfields, the new flow of British capital into the country following the goldrushes, and the growth of wage labour and of the domestic market as a result of large-scale immigration from the British Isles.

During the second half of the 19th century, modern capitalist economies began to develop in the politically separate Australian settler colonies. These economies were fuelled by the wealth of the goldfields; favourable terms of trade for wool, wheat, and some mineral exports; and mass immigration that provided skilled labour and an expanding domestic market.

The relative geographical isolation of Australian capitalist industry in the world market, and the small size of its domestic market, limited the development of the economies of scale necessary to make Australian manufactures competitive on the world market. The small size of Australia's population also led to a relative shortage of labour compared with other industrial capitalist countries. These conditions helped to create a comparatively self-confident working class, which was able to win wages and conditions that were high by the standards of late nineteenth century capitalism.

Taken together, these factors ensured that Australian capitalism was not competitive in the world market except in large-scale primary production, which required a small labour force. Thus, while a domestically oriented manufacturing sector expanded behind the protection of high tariff barriers, in world capitalist markets Australian capitalism specialised in production of agricultural goods (wool and wheat) for export to agriculturally deficient Britain.

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