Date created:23 October 2002
Last modified:23 October 2002
Maintained by: John Quiggin
John Quiggin

Breaking the camel's back

Australian Financial Reviee

26 September2002

The last ten years have not been good ones for producers in Australia, whether the item produced is as basic and solid as steel or as abstract and intangible as academic research. Work is central to life, but disillusionment with and demoralisation about work has never been greater. Demoralisation is particularly evident among those groups of workers who derive meaning from theh good or service they produce, rather than just their paypacket. Examples include nurses, teachers and many workers in skilled trades.

It is not surprising that producers are having a hard time. Public policy has been dominated by economists who are openly hostile to 'producer interests' and see their mission quite explicitly as 'shifting power from producers to consumers'.

The attack on producer power was the theme of the 25th Centre for Independent Studies anniversary lecture, presented by CIS research director Peter Saunders last year, Saunders' definition of the economists' mission is accepted by most supporters of what is known, for want of a better term, as 'economic rationalism'.

A particular focus has been the attack on the professions, spearheaded by the National Competition Council. The working assumption has been Shaw's aphorism that 'the professions are a conspiracy against the laity'. The rules and standards of the professions are seen as a more exalted version of the 'restrictive work practices' imposed by blue-collar unions. The aim of reform is to replace professional standards with the forces of market competition.

Economic rationalists are open enemies of producers. A more insidious attack has been made under the banner of managerialism. The central claim of managerialism is that there exist a generic set of managerial techniques that ensure that any organisation can be made to serve the interests of the outside group that owns it. In the private sector, managerialism is closely tied to the doctrine of 'shareholder value'. The public counterpart is 'new public sector management'.

The fundamental doctrine of shareholder value is that organisations have, and should have, no obligations to their employees beyond those of contract (and even these obligations can often be dodged). Hence, for example, profitable companies should have no qualms about mass sackings if the result would be to make them still more profitable.

Whereas economic rationalists seek to exposes producers to the chilly winds of market forces, managerialists seek to change the culture of organisations from within. This inevitably involves seeking to use the beliefs and values of workers to induce them to act against their own interests.

Professionals are particularly vulnerable to this kind of manipulation. In many cases, they have committed much of their lifetimes to organisations whose new leaders have abandoned notions of quality and service in favour of an alien rhetoric of enterprise and competition.

In addition, the hierarchical structure of organisations means that many professionals are morally compromised by the advent of managerialism. In their own capacity as managers, they are required to implement the dictates of the new corporate leaders.

The combination of market forces and managerialism can work wonders in the short run, particularly in organisations that begin with a strong producer ethic. Faced with cuts in staff and resources, producers see no alternative but to work harder to 'get the job done'. In any case, having committed a lifetime to a particular trade or profession, they have little alternative in the short run.

Moreover, in most organisations, there is some slack that can be tightened. Managerialists are experts in this process, though a good deal of the money they save is dissipated in additional layers of management with ever-higher salaries and perks. In Australian universities, for example, the number of students per academic staff member has nearly doubled over the past decade. Meanwhile, growth in the number of senior managers has consumed enough resources to operate a medium-sized university. This is par for the managerialist course.

The long-term effects of managerialism are less pleasing. Eventually, the producers take redundancy or just burn out, and the new managers suddenly discover that they lack the skills that have previously been taken for granted. Australian hospitals, the subject of waves of reform in the 1990s, are reaching this position as the shortage of nurses starts to bite.

The fable of the straw that broke the camel's back is, among other things, a warning about overburdening those who actually do the work. Economic reformers and enterprising managers have been adding straws to the bundle for at least a decade. It's time to reduce the burden.

Professor John Quiggin is a Senior Research Fellow of the Australian Research Council, based at the Australian National University and Queensland University of Technology.

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