Arbitration & the ALP: Union strength or impasse?

A class is dominant in two ways, namely it is ‘leading’ and ‘dominant.’ It leads the allied classes, it dominates the opposing classes. Therefore, a class can (and must) ‘lead’ before assuming power; and when it is in power it becomes dominant, but continues to lead. … There can and must be ‘political hegemony’ even before assuming government power, and in order to exercise political leadership or hegemony one must not count solely on the power and material force that is given by government.

– Antonio Gramsci, Q1 §44

Critical and Marxist literature on the unique arbitration processes of the antipodes has primarily focussed on whether arbitration produced ‘dependent union movements’ in Australia and New Zealand (Markey 2002; Gahan 1996; Howard 1977). The dependency thesis argues that the evolution of unions and arbitration has been closely enmeshed in Australia, and that each has been dependent on the other. The import of this has been argued in relation to a number of issues, including: the process of rebuilding of the unions after the defeat of the ‘Great Strikes’ of the 1890s; the level of union density; the development of union goals; and the structural form unions have taken. The pivotal account of this position, by W A (Bill) Howard, argues that arbitration meant Australian trade unions developed to address the requirements of arbitration, as opposed to their own members, and have been incapable of ‘carving out for themselves an industrial role that is independent of the arbitral system’ (1977, 255). He and others argue this led to unions remaining relatively small, narrowly focussed on individual professions (as opposed to being industry-wide), ‘thinly’ organised, and organisationally and industrially weak (Barry and Walsh 2007, 58). Yet the trade unions have been a significant component of the industrial landscape and Australian politics, the latter through their close relationship to the Australian Labor in particular Party (ALP). While other research has unsettled the simplicity of the dependency thesis (Gahan 1996), it is clear compulsory arbitration has moulded the general shape of Australian trade unions and that the relationship between unions and the state has been central.

The trade union movement in Australia began in the first half of the 19th century, with enduring movement structures establishing from the 1850s (Hagan 1977, 9). The fastest growing decade of that century was the 1880s, ‘where prosperous economic conditions and a tight labour market’ contributed both to union development and the pursuit of improved wages and conditions (Howard 1977, 260–261). While unions were not welcomed by employers and their representative bodies, they did not ‘encounter the determined opposition of the state and the judiciary that occurred elsewhere’ – such as in Britain and the US (Howard 1977, 261). The economic boom of 1860-1890 saw capital accumulation accelerate on the basis of land and labour reforms of the preceding two decades and, in particular, high commodity prices and the discovery of gold in Victoria. From 1851 the population ballooned, doubling from half a million to a million people between 1852 and 1858 alone (McMichael 1984, p. 23). So important was the discovery of gold that Karl Marx remarked, in the Preface to A Contribution to the Critique of Political Economy,that its discovery ‘in California and Australia’ seemed to propel England into a ‘new stage of development’ (Davidson 2011, pp. 81-85).

The boom ended when a severe economic crisis and drought occurred in the 1890s, involving the collapse of the banking system and a global depression – an event felt with particular force in Australia (Dyrenfurth and Bongiorno 2011, 27). The early years of the 1890s also involved the defeat of what are known as ‘The Great Strikes’, which involved 50,000 workers and impacted on the majority of the economy (ibid). The period signalled a turning point in Australian history, not simply because the economic crisis followed a long boom and strikes were so widespread as to involve most of the economy, but because it was the first generalised class confrontation in Australia. ‘The Great Strikes’ involved maritime workers (1890), shearers (1891 and 1894), and the Broken Hill miners (1892) (McKinlay 1988, 7–9; Dyrenfurth and Bongiorno 2011, 25–26). The strikes centred on ‘“freedom of contract’:  whether members of trade unions should have the right to say with whom they could work, or whether the employers could hire whomever they pleased, unionist and non-unionist’ (Hagan 1977, 17). Protracted unsuccessful industrial action weakened the unions, and this was compounded by the collapse of the economy in 1892 – in particular the falling prices for farm produce and rising unemployment (McKinlay 1988, 7). W A Howard has gone as far as to argue that the union movement was all but obliterated by the defeat of the strikes (Howard 1977, 261). In the period of the strikes, the state moved from a more neutral position to directly repressing industrial action. Various unionists were jailed, including some on an island off the coast of the Colonial mainland, and police and the military were used to break up demonstrations and suppress organising efforts (McKinlay 1988, 8).

In the wake of these defeats, the union movement turned its focus to the political arena, and the ALP was formed from a combination of various political currents and the remnants of the unions themselves. While the collapse of union power and the economic crisis were central to the foundation of the party, they were not the sole driver. Sections of the union movement had previously endorsed electoral candidates for parliament and ‘several unions that covered rural workers engaged in mining, shearing and transport were already unified in a body called the Australian Labor Federation, which had political as well as industrial ambitions’ (McKinlay 1988, 7). Crucially, the unions in the colony of NSW decided to field labour candidates in the 1891 election under the auspices of the Labor Electoral League of New South Wales. Soon after federation in 1901, labour electoral formations entered into a coalition that saw their leader Tom Price become Premier in South Australia in a minority government with breakaway liberals (Moss 1985, 165) and, for a week, the world’s first labour government was elected in Queensland with Anderson Dawson as Premier (Fitzgerald 2008). The Commonwealth’s first Labor Prime Minister, Andrew Fisher, was elected as part of a majority government in 1910. The ALP, formed in part out of the labour movement, dramatically reshaped the nature of Australian politics. While a key political division in the 1800s had been between protectionists and free traders, from the formation of the ALP onwards these tendencies were united in opposition to the Labor Party and Australian political society was from then oriented around labourism (Griffiths 1998).

Armstrong argues that prior to the 1890s there was no widespread support for ‘compulsory state arbitration, though on occasion [unions] had participated in voluntary conciliation and arbitration’ (Armstrong 1998, 18). Moreover, ‘even in the immediate aftermath of the Maritime Strike, despite the enthusiasm of Labor politicians for Arbitration, it still received only minority union support’ (ibid). Despite the subdued feelings of most unions, Arbitration was increasingly sought by labour parliamentarians. The attitude of employers shifted as well, as highlighted by Sir Malcolm McEacharn, a Commonwealth Member of Parliament and shipping industrialist:

There was a time when I was utterly opposed, not only to unionism, but to conciliation and arbitration…The unionism to which I had been accustomed during the great strikes…was of a more arrogant and ‘stand-and-deliver’ type than the unionism of to-day. I hope that the newer unionism … which has enabled those of us who are employers to meet our men with pleasure and discuss matters in a conciliatory spirit, may continue (Buckley and Wheelwright 1988, 218).

Arising in the moment of federation, where the separate colonies were bought together in a federated Commonwealth, the new party of labour emerged as a formation not of the working class but a labourist party dedicated to the dominant class’s agenda and focussed on the ‘national interest’. The ALP was a key component of the ‘Australian Settlement’ (Kelly 1992), ‘integrally identified with the social and economic programme of the new Australian Commonwealth – White Australia, Arbitration, protection and the primitive beginnings of a welfare state’ (Armstrong 1998, 27). The party incorporated the institutional labour movement into political society and the running of the new federal state, in a manner that necessitated managing the tension of being connected to the trade unions and a social democratic party deeply rooted in a nationalist project. In this way, ‘the ALP must be seen as a national party of crisis management, a party that seeks to integrate the representatives of the major organised power blocs into a corporatist political structure while it expands the ranks of the marginal and claims to represent all people’ (Beilharz and Watts 1983, 29).

Arbitration was a process where the state bought labour and capital together, in an institutionalised form, in order to settle matters in the national (and therefore the dominant class’s) interest. In reflecting on Gramsci’s words that open this post (penned in consideration of the different political currents in the Risorgimento in Italy), it is necessary for us to ask how the dominant class came to lead and dominate the labour movement in this way. The emergence of arbitration in the period of federation – celebrated by many unionists and Marxists as a symbol of the strength of labour in the colonies – should be seen as a key mechanism by which the hegemonic class led allied classes and dominated opposing ones. In this way, it is also a moment of failure – the failure of an independent working class project to emerge and the subsumption of labour’s interests into the dominant class’s project. This took place not simply because the strikes were defeated in the midst of economic crisis, but because of the development of arbitration as a mechanism of class hegemony to manage class conflict over the longer term. Arbitration, from this perspective, was an integral part of constructing class rule in Australia and the ability of the dominant class to lead all others in that historic moment.

This story is incomplete, though, with the precise class mechanisms that bought the ALP in to being insufficiently elaborated in the literature to my mind. Gramsci’s formulation, above, points us in the right direction however. Rather than seeing the ALP as simply the positive expression of the labour movement, should it not also be understood as the incorporation of labour into the project of the dominant class? The narrative that posits the emergence of the ALP as the victory of more conservative sections of the labour movement over the militant sections, at their point of weakness, fails to understand the emergence of the ALP as a positive project of capitalist class hegemony. While the construction of the ALP was an authentic project of the working class, it was integrated in to the political objectives of the ruling class around securing stable capital accumulation and stable political rule in the new federation of the colonies. Ultimately, the integration of the militancy of labour into the capitalist class project of Australian nationalism – via both the emergence of the ALP and the arbitration system – produced one of the most stable social democratic formations in the world. That this occurred not through direct capital-labour relations, whether at the point of production or more widely, but through a set of relations embedded within the state illustrates how bourgeois hegemony in Australia was bedded down not via the independent initiatives of the capitalists themselves, but always through a state that stood ‘over against’ all the individuals and classes of Australian capitalist society (Marx 1976, Part I, D).


Armstrong, Mick. 1998. “Origins of the Australian Labor Party”. Socialist Alternative.

Barry, Michael, and Pat Walsh. 2007. “State Intervention and Trade Unions in New Zealand.” Labor Studies Journal 31: 55–78.

Beilharz, Peter, and Rob Watts. 1983. “The Discovery of Corporatism.” Australian Society, November, 27–30.

Buckley, Ken, and Ted Wheelwright. 1988. No Paradise for Workers: Capitalism and the Common People in Australia 1788-1914. South Melbourne: Oxford University Press.

Dyrenfurth, Nick, and Frank Bongiorno. 2011. A Little History of the Australian Labor Party. Sydney: UNSW Press.

Fitzgerald, Ross. 2008. “Premier for a Week, Forgotten by the Ages.” The Spectator, November 26.

Gahan, Peter. 1996. “Did Arbitration Make for Dependent Unionism? Evidence from Historical Case Studies.” Journal of Industrial Relations 38 (4): 648–98.

Griffiths, Phil. 1998. “The Decline of Free Trade in Australian Politics: 1901-1909”. Honours, Macquarie Univeristy.

Hagan, James. 1977. The ACTU: A Short History on the Occasion of the 50th Anniversary, 1927-1977. Terry Hills: AH & AW Reed.

Howard, W A (Bill). 1977. “Australian Trade Unions in the Context of Union Theory.” Journal of Industrial Relations 19: 255–73.

Kelly, Paul. 1992. The End of Certainty: The Story of the 1980s. St Leonards: Allen & Unwin.

Markey, Ray. 2002. “Explaining Union Mobilisation in the 1880s and Early 1900s”. Working Paper, Faculty of Business, University of Wollongong.

Marx, Karl. 1976. The German Ideology. Moscow: Progress Publishers.

McKinlay, Brian. 1988. A Century of Struggle: The ALP, Centenary History. Melbourne: Collins Dove.

Moss, Jim. 1985. Sound of Trumpets: History of the Labour Movement in South Australia. Netley, SA: Wakefield Press.

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