the political economy of australian urbanisation

The Political Economy ofAustralian Urbanisation

MICHAEL BERRY

Department of Social Science, Royal Melbourne Institute of Technology, Melbourne,Victoria 3000, Australia

Progress in Planning. Vol. 22, pp . 001-083, 1984.

0305-9006/8450.00+ .50Printed in Great Britain . All rights reserved .

Copyright ® 1984 Pergamon Press Ltd .

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Contents

Introduction - Acknowledgements 5

1 . White Settlement, The Origins of Colonial Capitalism and the Colonial City :1788-1847 71.1. Before Colonisation 71.2. Impact on Aboriginal Society 101.3 . Primitive Accumulation, the State and Spatial Organisation 14

2 . Commercial Accumulation and the Commercial City : 1848-93

252.1. Emerging Spatial Patterns 252.2. International Specialisation and Uneven Development 282.3. The Role of the State 332.4. Economic Crisis and Spatial Reorganisation 352.5. Summary 43

3 . Industrial Accumulation and the Industrial City: 1894-1939/45 453.1. Industrialisation and Structural Change 463.2. Structural Change and Spatial Reorganisation 493.3. The Suburban Solution 563.4. Summary 58

4 . Corporate Accumulation and the Corporate City : 1946-Present 604.1 . Post-war Expansion and Structural Change 604.2. Manufacturing Concentration and Metropolitan Growth

624.3 . Non-Metropolitan Urban Growth 644.4. Suburbanisation: New Solutions 664.5. Crisis and Restructuring 704.6. Conclusion 78

Bibliography 80

Introduction -Acknowledgements

It has often been said that Australia is the most urbanised society in the world . Few havebothered to clarify this claim beyond pointing to the tendency for white Australians tocrowd themselves into a few settlements around the edges of the continent . Historians,in particular, have been strangely quiet . Urban questions, and the spatial organisationof social life in general, are either ignored in traditional Australian historiography orfigure as arbitrary containers, empty boxes, which serve to delimit the primary historicalsubject - wars, Federation, nationalism etc. More recently, social and economichistorians have stressed urban themes but - as I argue elsewhere (Berry, 1983a) - in away which fetishises spatial relations (Walker, 1978b) . The present essay is therefore anattempt to outline, from a Marxist perspective, a coherent historical account of urbanand regional development in Australia, from British Colonisation at the end of theeighteenth century to the early 1980s .

The theoretical framework and methodological assumptions which inform thefollowing, admittedly schematic, account stem from the lively debates among Europeanand American Marxists on the nature of capitalist urbanisation, which erupted duringthe 1970s, and from a renewed interest among Marxists generally in the concept of `longwaves' of capitalist development . Urbanisation is here analysed in terms of the forces ordynamic determining the movement of capital and labour over - and theirconcentration in - space; as the dynamic driving, and structural constraints limiting,the process of capital accumulation change, so too does its spatial expression .

The process of capital accumulation in Australia has been conceived in relation tofour long waves of expansion and decline in the capitalist centre (Mandel, 1975) . Thepattern and pace of development in each stage was, I argue, conditioned by thestructural constraints deriving from the particular manner in which Australia has beenintegrated into the world capitalist system, expressed through, in Castells' (1977) terms,the characteristic mode of domination defining Australia's place in that system . Theproblematic here focuses on the way in which these processes unfold in space ; with eachstage of development, I suggest, one can identify a characteristic pattern of spatialorganisation which expresses or contains it. The overriding concern has been to seeAustralian urban and regional development as an element or moment of the unevenglobal process of capital accumulation over the past two hundred years (for a fullerdiscussion of this approach see Berry, 1983a, pp 15-33) .

A number of people read and commented on parts or all of earlier drafts of this paper .Thanks especially to Peter Williams, Frank Williamson, Graeme Davison, Chris Paris,

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Progress in Planning

Andrew Wells, Margo Flett and Brian McLoughlin . An earlier draft of Chapter 2appeared in Conflict and Development: Urban Studies Yearbook 2, published by GeorgeAllen & Unwin (Australia) while a shortened version of Chapters 3 and 4 appeared inAustralian Society: Introductory Essays, 4th edition, published by Longman-Cheshire .My thanks to the publishers for permission to reproduce this material .

CHAPTER 1

White Settlement, The Origins of Colonial Capitalism andthe Colonial City: 1788-1847

White settlement of Australia in the last decades of the eighteenth century was notaccidental, nor was its early development determined primarily by local factors ofclimate and physical environment . From the start, white Australia was constituted as aplace within an expanding, European-centred world economy which was internallydifferentiated, in political and cultural as well as economic terms, along lines determinedby the rise and consolidation of the nation-state . In order to grasp this point we need tobriefly specify the nature of Aboriginal society prior to colonisation and identify themain features and consequences ofevolving production forces and social relations inlate eighteenth century Britain, as a basis from which to analyse the constitution,penetration and domination of the Australian colonies in the first phase of convictsettlement and the emergence of capitalism, especially in terms of the appearance of adistinct spatial form or pattern . Thus, analysis of the first phase of Australianurbanisation should raise and answer the following basic questions :

(1) What was the initial impact of colonisation on traditional Aboriginal society,particularly in light of the spatial organisation of social life, in comparison to theeffects of capitalist penetration of indigenous cultures in South America, Asia andAfrica?

(2) What form did primitive (capital) accumulation take in the Australian colonies, andhow was this process expressed in and constrained by evolving spatial form?

(3) What role did the State - at the imperial and colonial levels - play?

1 .1 . BEFORE COLONISATION

The social organisation of Aboriginal life before white settlement was intimatelybound up with the territorial differentiation (and defense) and communal use of thebasic means of production - i.e. land (Stevens, 1970 ; Middleton, 1977) . Thehunter-gatherer mode of production coupled a relatively primitive technology with anundeveloped division of labour - the basic form of economic specialisation wasbetween men who provided meat and women who provided vegetable foods . The basicsocial unit, comprised of several extended families, established a generally recognisedprimary claim to a particular territory, and joined with similar groups to form loose-

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knit common-language communities, rarely numbering more than a few hundredpeople, and primarily organised around religious and marriage concerns . Thereproduction of the material basis of Aboriginal life necessarily reproduced the totalsocial complex, reinforcing the traditional forces and relations of production -including the semi-nomadic cycle of life over space - through millennia . Over 40,000years Aborigines were remarkably successful in adapting to and interacting with thephysical environment in reproducing their existence at a subsistence level, withoutbenefit of domesticated animals or agriculture and without substantial changes in thesocial and spatial structure and rhythms of life . Perhaps in no other society is the spatialor territorial element so central in gaining an understanding of the social whole . Theland was not just the prime economic fact of life ; it also held deep religious significancefor Aborigines and, in fact, constituted an essential part of their humanity :

"The Aborigines lived as an integral and integrated part of the natural environment rather than beingalienated from it - not dominating or exploiting nature - and their social structure reflected thisharmony and the co-operation between men and women (the biological division of labour) andbetween groups that made it possible . This was the antithesis of individualism and competitiveness, asociety in which the highest value was placed on the collective nature of its constituent communities . onco-operation and sharing between its members" (Middleton, 1977, p . 362).

Thus, by 1788, some 300,000 Aborigines (including 2,500 in Tasmania) were sparselydistributed over the vast continent, though concentrated in larger numbers in the wellwatered, game-rich coastal areas, divided by language and physical barriers and lackingany centralised political cohesion or internal dynamic of social change. The same canhardly be said for contemporary developments on the other side of the world .

According to Hobsbawm (1969), by 1750, England was already constituted as amarket economy based on the wide circulation of money . Markets and the cash relationwere historically established over several centuries through or as a result of continuingurban growth, improved transportation networks, the growth of foreign trade and, mostimportantly, the concentration of land-ownership after the 1688 Revolution - whichled to the wholesale expropriation of the peasantry from the land . This was the periodthat Marx was to term `primitive accumulation', an age which witnessed the dualcreation of a growing class of propertyless workers, on the one hand, and anincreasingly powerful class of profit-oriented landowners and merchants, on the other .Manufacturing, organised along traditional cottage and craft lines and based on 'theputting out' system, was well established and widely distributed over the rural landscapeby the mid-eighteenth century . Not all people forced from the land could be absorbed inthe cities or colonies . Those remaining either became a drain on the local poor rates orincreasingly moved into full-time manufacturing work, so partly laying the basis for thesubsequent rise of new industrial towns, especially in the North of England . Hobsbawn(1969, p . 30) drew attention to two important and linked consequences of the ruraldecentralisation of manufacturing industry prior to large-scale industrialisation . In thefirst place, it gave large rural landowners a direct and obvious economic interest in thedevelopment of manufacturing and mining activities situated on their land andsupporting high and rising rents . Second, it meant that manufacturing interests werealready in a strong position to determine favourable public policy, through the landedaristocracy's House of Lords and the rural squires' Commons, before industrialisation,

The Political Economy of Australian Urbanisation

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unlike the situation in later industrialising nations, including Australia, wheretraditional land owning or merchant interests prevailed politically . Both factorsencouraged rather than obstructed the subsequent development of manufacturing .

Wright (1978, pp . 170-72) suggests that the major structural constraints onaccumulation during the stage of primitive accumulation related to limits onprofitability due, firstly, to the restricted size of the working class and, secondly, to theabsence of close supervision of workers by capitalists in the production process (and thegenerally low level of productivity in the agricultural sector producing basic wagegoods) . To these reasons can be added the loss of profits due to embezzlement or theftby the far-flung army of cottage producers and commercial middlemen, and the highturnover time of capital invested in industries requiring the incessant physicalmovement of vast quantities of raw materials and finished products over the length andbreadth of the land. For all these reasons, the average rate of profit - and, hence, thecapacity for profits to be re-invested - remained low. With hindsight we can trace thebroad outlines of the 'structural solutions' which emerged . Driven by competition andthe need to defend and extend individual profit margins, capitalists as a class succeededin creating both the basis for an expanding working class (through the lengthy processof expropriation and pauperisation mentioned above) and the institutional formconducive to labour control and a speed-up in the average turnover time of capital - viz .the factory system . This dual process implied a transition to the stage of manufacture, inMarx's terms, prior to the application of technological innovations, generally, andsteam driven machinery, in particular, to industry in any significant way . Thegeographic concentration of the growing working class in centres of factory productionlaid the spatial basis for the subsequent bursts of industrial development and theemergence of city-country conflicts, culminating at the political level in growing conflictbetween urban manufacturing interests and the squirocracy in the middle third of thenineteenth century. By this time the `First Industrial Revolution' - Mandel's (1975)first long wave - had flowed and ebbed, revolutionising the cotton textile industry (butlittle else) and concentrating it in Lancashire .

During the period of primitive accumulation in the sixteenth, seventeenth and earlyeighteenth centuries, the colonies served as important sources of plunder and theassociated trade in luxuries . In this context, as Blainey (1980) has argued, it is hardlysurprising that Australia was not colonised earlier; regardless of any 'tyrannies ofphysical distance', Australia had nothing of contemporary economic worth to offer .However, towards the end of the eighteenth century, the readjustments forced by therise of manufacture led to substantial changes in the relations of colonies to the imperialpowers. English manufacturers and their political representatives were vitally interestedin securing cheap and expanding supplies of raw materials, on the one hand, and incarving out and defending new market outlets for their finished products, on the other .Intense competition within and across the national boundaries of the lagging Europeaneconomies led to the frantic construction of State-supported trading empires, especiallyin the English case where foreign policy and the British Navy were strongly oriented tocommercial expansion . At first sight, Australia offered little in the way of directcommercial benefits, except, perhaps, in the supply of timber and flax for the RoyalNavy (Blainey, 1966 ; Frost, 1980) . However, it did offer prospects for safe ports of call

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for English commercial and naval ships in pursuit or defence of the lucrative China teatrade, for example, and provided a geo-political basis for English capital to create andbetter exploit trade opportunities throughout the whole region : 'In short, here was anew Diego Garcia of the future, providing the English with a headlong start when thePacific was opened up by those profit-chasing sea-captains and ship-owners of Europe .'

Recognition of the strategic commercial importance of Australia to a late eighteenthcentury Britain undergoing the initial stages of a massive internal economic and socialtransformation, should not blind us to the other side of the same process . By the 1780s,English rural life had already suffered substantial social dislocation leading to economicand social pauperisation different only in degree not kind to that which followed duringthe first and second phases of industrialisation . Problems of social control loomed largein eighteenth century Britain, reflected both in the rapid growth of the gaol populationand by the variety of schemes proposed to deal with it - schemes which ranged fromBentham's abstract, utilitarian and physically deterministic visions of optimal gaoldesign and administration (the panopticon) to the physical export of the problem by wayof new overseas penal settlements to replace those lost in North America after the Warof Independence . Thus, traditional explanations of the reasons behind white settlementof Australia, culminating in 1788 in the founding of Sydney as a gaol colony, need notbe opposed to others which stress the commercial requirements and opportunities forcapital accumulation on an expanded scale ; at least this is so when both explanations arerelated to the same historical process transforming British society at the time ofsettlement .

1 .2 . IMPACT ON ABORIGINAL SOCIETY

We can now return to the first question raised earlier-viz . the impact of whitesettlement on Aboriginal society . There have been a number of recent descriptiveaccounts of the social (and in many cases, physical) destruction of traditional aboriginallife (e .g . Rowley, 1974 ; Butlin, 1983) . Although most of these authors offer some sort ofexplanatory account of this process, most often highlighting the insensitivity and greedof the white settlers, none present a coherent argument linking imperial and colonialstate policies and emerging (dependent) colonial political economy in complexarticulation or interaction with a pre-existing, non-capitalist society . Virtually alone,Hartwig (1978) has pointed the way in this latter direction in his important attempt torefine Wolpe's (1975) critique of the theory of `internal colonialism' . Hartwig suggeststhree possible forms of interaction between societies organised along capitalist(dominant) and non-capitalist (marginal) lines . In the first place, the dominant societymay extract surplus product (especially food) from the marginal or subordinant societyin order to reproduce the material pre-conditions for its survival . Surplus product canbe extracted through trade, plunder or tribute . Secondly, the dominant society mayextract, not surplus product but labour from members of the other society. Again theform of extraction may be `voluntary', based on a relatively free market for labourpower, or dependent on extra-economic coercion, the clearest example of which isslavery . In these first two cases political and ideological forms will tend to emerge which


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facilitate the conservation or maintenance of the marginal mode of production . Thirdly,reproduction of the dominant society may require or imply the decline or evendestruction of the other . This possibility is most likely where the local development ofcapitalism entails the wholesale denial of access of the indigenous population to thebasic means of production, especially land . At the levels of ideology and politicalenforcement, appropriate forms normally emerge which legitimate and facilitate thegrowth of capitalism at the expense of the pre-existing mode, though, of course, thistendency is neither automatic nor conflict free .

Using this framework, we can distinguish two stages of interaction between colonialand Aboriginal societies in the period in question . Up until about 1820 both societiesfunctioned (largely) independently . Due to the peculiar political circumstances ofsettlement, the colonial state assumed extreme coercive powers ; due to the precariouseconomic situation those powers were turned towards securing basic subsistence . SinceAborigines produced little or no exchangeable surplus (and since their productivetechniques and output related so closely to their social needs) the first form ofexploitation noted above -viz . the extraction of subsistence goods with the attendentneed to conserve the social base - was not possible (Hartwig, 1978, p . 132). On theother hand, Aborigines did exist as a potential labour supply and, hence, as a possiblesolution to the chronic labour shortages evident in the earliest stages of colonialaccumulation. However, this labour source could not be tapped in the manner mostconducive to the short-term requirements of rapid capital accumulation, that is, throughthe conservation of traditional social forms and the part-time participation ofindigenous people in capitalist production . Aborigines, not caught up in an exchangeeconomy, had no need or incentive to `volunteer' for service and slavery appears not tohave been seriously considered, possibly because the colonial State was fully occupied inabsorbing and managing the forced productive labour of convicts in a situation wheresignificant elements of the State apparatus (especially the Army) were primarilyinterested in accumulating wealth through mercantile activities and land acquisition .Consequently, St -..te policy focused on the need to retrain and resocialise Aborigines forwork alongside emancipists and free settlers in the emerging capitalist economy, which,if successful, would have spelt the end of traditional Aboriginal society . This latterconsequence would, in turn, not only have ensured a growing labour force but, bydenying Aboriginality, also have obliterated any pre-existing rights of Aborigines to theland, thereby legitimating the initial and unilateral appropriation of all land to theCrown. In fact, as Hartwig (1978, pp . 133-34) points out, these attempts atresocialisation failed resoundingly; partial absorption of Aborigines into the capitalisteconomy would have to wait until large-scale land appropriation, murder, Europeandiseases and the growth of the half-caste population due to forced prostitution and rape,increasingly destroyed the social basis of traditional life . In this early period, however,both societies drew back upon themselves, socially and spatially, the one to clusteraround the penal port settlement dependent on sea communication for survival, theother to people at low densities, the vast and inhospitable interior . Spatial apartheidresulted not only from the weak reach of colonial society but, more importantly, alsofrom the prevailing socio-spatial structure of Aboriginal society . The small size of thebasic living unit, the sparse distribution of the population and the semi-nomadic way of

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life ensured that a very small proportion of Aborigines would come into contact withEuropeans concentrated in a handful of coastal settlements . When contacts did occur,where, in particular, local food supplies were threatened, the Aborigines could and didmove on - after all, they had been doing this in response to other local natural disastersfor thousands of years .

From the 1820s onward this initial pattern of (non) interaction rapidly disintegrated .White settlement pushed out into the interior, driven by an inflating British demand forraw wool, the investment of surplus colonial and, especially, British capital in pastoralexpansion, and the intended and unintended consequences of State land policies .Between 1822 and 1828 the acreage of land alienated through grant and sale (primarilyfor pastoral use) exceeded the total alienated prior to 1822 four times over (McMichael,1979, p. 54) . Most of this land fell outside the Cumberland plain surrounding Sydney, atrend which accelerated in the 1830s, in spite of imperial and colonial State policiesaimed at limiting the spread of settlement in favour of more intensive, planneddevelopment (Jeans, 1975) . Illegal squatting ran far ahead of government survey andcontrols so that by 1850 most of the south-eastern corner of the continent had beenoccupied (Williams, 1975). During this period, Melbourne, Adelaide and Perth werefounded as ports for the opening up of the new grazing and agricultural lands, whileBrisbane, initially established as an extension of the penal system, soon came to servethe supply and export interests of a growing pastoral industry in what later became thenew state of Queensland . During this period also, wool established itself as the colonies'major export and the major supplier of the British woollen textile industry . Thewholesale appropriation of land for grazing necessarily meant the expropriation ofAborigines whose sensitive, symbiotic relationship with the natural environment couldnot withstand the transformations wrought by sheep, cattle and Europeans : `Thematerial bases of Aboriginal culture were easily destroyed as the rest of the naturalenvironment was turned to new uses . It is inextricably rooted to topography, flora andfauna, all of which were wrecked by farming and stock, new grasses, fences, etc .,(Rowley, 1974, p . 22) . The destruction of natural economy in the previously food-richsouth-eastern region forced a relatively rapid adjustment or a new `equilibrium' betweenAboriginal society and the depleted environment, an equilibrium which meant, inpractice, a continuously declining overall population as pastoral expansion unfolded .Consequently, the Aboriginal population had fallen to 67,000 by 1901, less than aquarter of its size on the eve of the First Settlement (Lancaster-Jones, 1970, p . 4) . By theend of the nineteenth century, virtually the entire eastern half of the continent had beenappropriated by pastoral capital, along with significant regions of the north-west andwestern coastal belt . In this process the decimated Aboriginal population had beenpushed back into the northern and north-western regions, where some were finallyabsorbed on the margins of pastoral capitalism . However, by this time, the tiny isolatedAboriginal population was largely irrelevant to white capitalist society, alreadynumbering several millions, concentrated in the capital port-cities and south-easternregion and about to undergo substantial industrialisation .

In some respects, the fate of the Aborigines paralleled that of other indigenouspopulations experiencing capitalist penetration over recent centuries . In North andSouth America many of these peoples were ruthlessly swept aside to make way for


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colonial expansion which increasingly assumed a capitalist form . Thus, for example, thespatial solution to `the Indian problem' in the United States entailed the geographicconcentration of remaining tribes on isolated, government controlled reserves ofmarginal land, a solution which also emerged in the Australian colonies in the secondhalf of the nineteenth century . However, there were significant differences in the formand outcome of capitalist penetration, differences which stemmed, at base, from theparticular historical conditions in which this process unwound . Consequently, in someareas of Africa, Asia and the Americas, native populations were `conserved' andintegrated into the capitalist world economy. This occurred, for example, in India,Mexico and Peru, where pre-existing ruling classes provided the institutional means forcoercing local labour into foreign controlled capitalist enterprises . In other situations,the conservation of native populations may actually have prevented or delayed the localemergence of capitalist relations of production; Rey (1971) has argued this case in hisstudy of Congo-Brazzaville. In a third category of situations, capitalist penetration haslargely destroyed indigenous cultures by integrating the natives into the mainstream of alocally emerging capitalist economy ; Arrighi and Saul (1973) argue that this occurred inRhodesia during the nineteenth and early twentieth centuries . Australia falls into afourth category where a thriving local capitalism emerged at the expense of and largelywithout drawing labour from the pre-existing society . A similar situation had arisenmuch earlier in some of the territories of Spanish colonisation . For example, in Haiti,the Arawaks perished due to the ruthless but unsuccessful attempts of the Spanish toforce them into plantation work. Dupuy (1976) has attributed this outcome primarily tothe communal, classless nature of Arawak society which did not allow its members to beeasily re-socialised into a class-stratified existence, especially one as ruthlessly and short-sightedly imposed as that by the Spanish gold miners and sugar planters . Thisexplanation is similar to Hartwig's analysis of the impact of English colonisation onAboriginal society, noted above, and to the extent that it stresses the nature of theindigenous society, can also be compared to Rey's approach . However, by focusing ononly halfthe question, we are likely to over-stress similarities of development . As Iargued above, it is necessary to consider the nature of both indigenous and colonisingsociety in the context of the historically specific interactions unfolding . Thus, Haitianand Australian colonisation occurred almost three hundred years apart, in worlds atsubstantially different stages of capitalist development . The primary local need ofsixteenth century Spanish gold seekers and planters was labour and one of the mostlucrative outlets for a poorly developed and tightly constrained capitalist enterprise wasslaving. A recalcitrant indigenous population was eventually replaced by importedAfrican slaves, as part of the overall development of the triangular pattern of capitalisttrade: trinkets and guns from Europe to Africa, slaves from Africa to the West Indies,and gold and sugar from the West Indies to Europe, the last movement of crucialsignificance to the process of primitive accumulation in Europe, encouraging thecreation of internal market exchange and cash economy, on the one hand, and theconcentration of wealth in an emerging class of merchant capitalists, on the other hand .Three hundred years later the primary requirement for the development of capitalism inAustralia was sufficient land and capital in order to realise profitable opportunitiesopened up by the first and middle stages of industrial capitalism in England . Necessary

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colonial labour was recruited, in the short-term, by convict assignment and, in thelonger term, through British immigration, the supply of migrants swelled by the initialpauperisation effects of English industrialisation and the impact of English control ofIrish agriculture . In this sense, Australian Aborigines were more marginal, moreexpendible and more of an obstacle to capitalist penetration than the Haitian Arawakhad been - especially where, as in Tasmania, the former contested the pastoralists'appropriation of the land .

1 .3 . PRIMITIVE ACCUMULATION, THE STATE AND SPATIAL ORGANISATION

The second and third questions posed earlier, concerning the nature of primitiveaccumulation in the Australian colonies and the role of the state, cannot be answeredseparately . Indeed, the state, at the colonial and imperial levels, played a central role inthe relatively rapid emergence of fully capitalist class relations in Australia.Consequently, both questions are addressed together, below .

This first stage can usefully be divided into three periods : 1788-1820, 1830-47, andthe transitionary decade of the 1820s . The former period saw the beginnings of colonialcapital accumulation, land concentration, foreign trade and free labour markets withinthe coercive framework of a penal colony, situated, in turn, within a rapidly expandingworld market dominated by the expansive phase of the first industrial revolution inBritain. In the 1820s the colonial economy entered a period of transformation andgeographic expansion, culminating in the short-lived emergence of a staple (wool)export-oriented economy during the 1830s as a consequence of the pastoral boom . Aftera general economic crisis in the early part of the 1840s, the economy diversifiedsomewhat and by 1847, with the cessation of convict transportation, it was possible tosee the firm foundations of capitalist relations of exchange and production, if not quitethe universalisation of the capital-labour relation . The entire period, according toMcMichael (1979, p . 68), gave rise to a novel `settler capitalism' entailing a process ofprimitive accumulation as an emerging system of expanded commodity production notyet based on either the progressive application of technology to production or thepredominance of wage-labour .

During this period, capital was extracted, concentrated and invested in a number ofways. English capital and government revenue was increasingly supplemented by localcapital generated through commercial enterprise and the appropriation of the surpluslabour of direct producers, both convict and free . Up until 1820, the colonial statefigures as the central economic force . Initially, it provided the institutional basis for theemergence of colonial commerce, since the salaries of military officers and civil officialscould be (and were) used to monopolise the import trade (Connell and Irving, 1980, p .38). As an administrative-coercive apparatus, the state controlled (directly andindirectly) the allocation of convict labour and land . Finally, as the largest consumer,the commissariat provided a ready-made market for local and imported goods . Somehistorians have seen in the early predominance of government, a form of primitivesocialism (e.g. Butlin, 1959), while others have stressed its slave-like basis eventuallyovercome, only after 1830 or 1840, by fully capitalist social relations (Dunn, 1975) . In


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reply, Connell and Irving (1980) and McMichael (1981) have argued for adevelopmental view which sees capitalism as an original and integral element ofAustralian history, which sees, in short, the form and actions of the state in terms of,rather than opposed to, the emergence of capitalist social relations and dates thisprocess from the beginning of white settlement . It is this latter view which guides thefollowing discussion .

Colonial capital accumulation, as noted above, emerged from within the bowels ofthe state apparatus. The salaries of government officials and military officers, sent outfrom England to administer the penal settlement, were early turned to speculativeenterprise, both through the monopolisation of imports and the purchase of the surplusproduct of small farmers and artisans, In the latter Case, monopolistic agreements by theofficers not to compete among themselves in the purchase of agricultural produceensured the extraction of maximum commercial profits and hastened the appearance ofa debt-encumbered peasantry/petty bourgeoisie, the first step in theirproletarianisation . Land was granted into private ownership almost immediately . Smallland grants, originally intended to keep emancipated convicts from returning toEngland on expiry of their sentences, were quickly extended to officials, army (officersand men) and the bare trickle of free settlers : thus began a process of alienation,concentration and centralisation of land ownership which resulted in the creation of asmall elite of large land owners and the expropriation of small farmers and others eitheruninterested in or unable to take up their grants .

In the first fifteen or twenty years of settlement the emergence of landed and merchantcapital went hand-in-hand, reinforcing the social position and political power of thesmall elite who were held together by mutual interest and a common statusidentification with the English squirocracy . However, the personal links between landedand merchant capital began to break down early in the nineteenth century with thearrival of British merchants to challenge the local trading monopolies of the officers andgentlemen. The latter drew back to concentrate on their landed interests, while theformer were joined by a few successful emancipists who had initially turned to trade orsmall manufacture having had their access to land ownership denied due to lack ofcapital and political contacts . Foreign and local merchant capital was increasinglyturned to small-scale productive enterprise, concentrated, in the first instance, on theexploitation of the marine hinterland ; sealing and whaling provided the colony's firststeady export earnings and were not surpassed by wool until about 1820 (Stevens, 1969) .

Private investment in manufacturing and construction also grew, although thistendency was severely limited by the smallness of the local market, shortage of skilledworkers, and the fact that the profits of merchants were tied to the continuingimportation of English manufactured goods . This represented the first case of `capitalswitching' from one circuit to another in response to a localised crisis (Harvey, 1978), aswitch which entailed the movement of capital from the sphere of commoditycirculation to the sphere of production . The tentative beginnings of manufacturing andthe thriving state of the maritime industries substantially increased the demand forlabour (especially skilled labour) and encouraged the growth of a free labour market .Even where assigned convict labour predominated, wage-like incentives were often usedand convict working conditions were, to some extent, regulated by conditions in the free

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labour sector (Connell and Irving, 1980, p . 37) . In addition, from early in the century,urban land (i .e . land within the Sydney settlement) was sold into private ownership,opening up new outlets for merchant capital, establishing the basis for a fledgling (andlabour intensive) building industry, the growth of mortgage finance and the appearanceof land speculation .

Between 1810 and 1820 the colonial population more than tripled to 35,000 ; three-quarters of this increase was accounted for by foreign arrivals, the vast bulk of whomwere convicts. McMichael (1979, p . 52), following Fitzpatrick (1970), argues that thislarge influx was primarily due to the changing policy imperatives of the imperial state .The demobilisation of British troops following the Napoleonic wars intensified socialunrest already high due to the inability of city capitalists or rural parishes to absorb ordefuse the effects of mass pauperisation throughout the English (and Scottish)countryside . A rising relative surplus population led to increasing emigration, especiallyto North America and South Africa, and - via a rising crime rate and growing gaolpopulation - to a jump in the number of convicts transported to N .S.W. A burgeoningnational debt (and escalating Parish poor relief bill) led to attempts by the Britishgovernment to cut public expenditure, especially in the colonies . In Australia this meanta concerted attempt to achieve both a greater degree of self sufficiency, especially infood, and a substantial reduction in the costs to the Exchequer of supporting a growingconvict population. The colonial state responded by `farming out' or assigning convictsto larger land owners, in particular . Complementing this policy, the average size of landgrants increased significantly through the decade at the same time as the Britishgovernment began easing the restrictions on free emigration . Size of grant and access toconvict labour were closely and deliberately matched to the amount of capital owned bythe applicant, further reinforcing the centralisation of land ownership encouraged bythe appearance of an increasingly free land market and the increasingly routineconcentration of colonial capital. Conversely, the rising numbers of emancipists,effectively denied access to land through inadequate capital ownership, were thrownonto the labour market in the search of subsistence .

The spatial pattern generated by and reinforcing the emerging class and state relationscould be summed up as -'Sydney out' . The settlement of Sydney town as a port-gaol,under the highly unfavourable social and natural conditions prevailing, necessarily ledto a tight concentration of population and activity around this centre in the initialstages. For the first thirty years settlement pushed tentatively outward, almost totallyconstrained within the twenty or thirty miles to the immediate west of Sydney . Throughadministrative regulation and direct control over convict labour, the colonial state,based in Sydney, began laying down new townships (e .g . Parramatta) oriented towardsadministrative functions related, in particular, to government attempts to stimulatelocal agriculture . Convict labour, under military control, built roads, bridges, publicbuildings, churches and other infrastructural supports, tying this stunted and dependentspatial network to Sydney as the political and commercial centre . In 1803 the Britishgovernment attempted to found an independent convict settlement in Port Phillip Bay,on the south-eastern coast of the continent, apparently intending to secure strategiccontrol of Bass Strait thereby ensuring British access to the Pacific region . Thesettlement failed miserably and within a few months was relocated across the waters to


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Van Dieman's Land, resulting in the founding of Hobart and the first tentative inklingof urban development outside the Sydney region . Shortly after, a second settlement wasestablished on the northern coast of Van Dieman's Land, near present-day Launceston .However, leaving Van Dieman's Land aside and with the exception of small penaloutposts established at Newcastle and further north on Norfolk Island, developmentduring this period - such as it was - remained locked within the Sydney region .

This spatial pattern arose, initially, out of the exigencies and priorities of a harriedcolonial state armed with an uncertain claim on the British Exchequer and a none toospecific set of instructions from the British government which, nevertheless retained thefinal legislative and executive authority . Similarly, in the sphere of commerce, as notedearlier, British merchants were increasingly penetrating the colonial economy andintegrating it within a system of international flows of trade and credit spatially centredand directed from London. In other words, many of the political and commercialfunctions associated with the growth of cities in the stage of mercantile accumulation(dating from the sixteenth century) were firmly located in the major cities of the OldWorld, leaving Sydney and Hobart as second, third or lower order commercial-administrative centres . The role of Sydney in this early period can be compared to therole of North American cities like Boston, Baltimore and New York prior toIndependence . Here too, according to Gordon (1978), major commercial and politicalfunctions were removed to London, leaving local cities to fill the twin role of transportnodes - collection and transhipment points for the movement of commodities into andout of the colonies - and centres for the production of luxury consumer goods forwealthy residents . Clearly urban growth was tightly constrained by the limiting natureof these functions . Moreover, British commercial and colonial policy imposedadministrative restrictions on the spatial flows of commodities and labour, effectivelylimiting international trade to the port cities named above (Gordon, 1978, p . 31) . In thecase of the Australian colonies, too, British policy, expressed through the decrees ofsuccessive New South Wales (N.S.W.) Governors, deliberately sought to concentratedevelopment around officially designated and controlled centres, with Sydney pre-eminent as both port and administrative seat . A complex of regulations specifyinglanding and trading rights and customs duties forced ships to land their cargoes inSydney Harbour, there to take on their return loads, rather than stopping at the ports inVan Dieman's Land which were several sailing days closer to England (Clarke, 1970, p .46). The settlements in Van Dieman's Land were also restrained from growing by otherSydney-directed policies limiting the economic activities of locals (e.g. the prohibitionon boat building), policies enforced by Lieutenant-Governors directly responsible, until1825, to the N .S.W. Governor of the day . In similar fashion, the earliest private exportindustries - sealing and sandalwood - were forced to re-export their product throughthe port of Sydney thereby both contributing revenue to the Government andencouraging growth there rather than at the point of production .

Although some similarities can be identified in the developmental patterns of earlycolonial American and Australian cities, separated in time by a century and more,consideration of the theoretical approach suggested here should caution us againstpushing the comparison too far . Colonisation and urbanisation proceeded, in each case,at different stages in the generalisation of capitalism, under a different conjunction of

JPP 22 :1-B

18


circumstances, in a world characterised by different levels of technology, differentbarriers to capital accumulation and a different international division of labour .

The particularity of Australian urbanisation can be glimpsed through a considerationof the factors both encouraging and limiting the development of local manufacturingindustry . Prior to 1810, manufacturing activity was limited to those commoditiesdesperately required for survival, and difficult if not impossible to import . Foodprocessing and construction dominated here, leading to the early appearance of flour-mills, salt works, timber mills and brick works . However, after 1810, Australianmanufacturing entered a new phase with the growth of certain import replacingactivities - for example, brewing, soap making, tanning, coarse woollen textiles andboat building (Linge, 1975) . Clearly, most of these industries were based on theprocessing of local raw materials, though some like metal working and printingdepended on imported materials. Reasons for this modest burst of new activity aregenerally sought in the growth of local markets, following the rapid influx of convicts,and in the parsimony of the Crown, limiting the supply of foreign exchange and thecapacity of the colonies to import . However, at a deeper level, we can point to theincreasing local accumulation and importation of private capital seeking profitableoutlets and the growing availability of skilled labour, both convict and free . Commercialaccumulation quickly ran up against limits imposed by the tenuous and undevelopedstate of foreign trade . Moreover, the British commercial crisis of 1810-11 reverberatedthrough the colonies leading to a temporary over-accumulation of merchant capital orthe freeing of capital for investment in productive uses, including manufacturing .Alternative investment outlets were limited, especially for small capitalists, since, asnoted earlier, rural land was increasingly being concentrated in the hands of a wealthyelite ; manufacturing, on the other hand did offer an outlet for small capital, since, priorto the generalisation of technically efficient, large-scale production methods in thetwentieth century, small-scale operations were economically feasible . The colonial statealso reinforced the move to local manufacturing by providing financial incentives, asecure market and a growing supply of more suitably skilled convicts . Finally, the veryspatial concentration of the colonial population encouraged the growth of privatemanufacturing by minimising the distribution costs linking production andconsumption (a factor which also stimulated the growth of tertiary services) . Notsurprisingly, manufacturing activity was clustered in Sydney, close to theadministration, the port and the market, further reinforcing the trend to urbanconcentration. However, although all these factors continued to underwritemanufacturing through to the middle of the century, their collective impact was severelylimited by certain broad structural changes in colonial and imperial political economy,dating from the 1820s. In order to understand the continuing marginal status ofmanufacturing and the evolving spatial organisation of colonial life it is necessary tofocus on these broad changes, briefly noted in our earlier discussion of the consequencesof white settlement for traditional Aboriginal society .

In the first half of the nineteenth century, the value of British exports increased by60%, about a third of which was accounted for by cotton and woollen textiles . Theproduction of British woollen and worsted products increased by 1-2% per annumbetween 1815-1824 and at more than twice that rate in the next two decades,


19

significantly less than the more dynamic and economically important cotton industrybut more than sufficient to outstrip the domestic supply of raw wool . Consequently,British raw wool imports doubled in the decade after 1814 and almost doubled again inthe following decade (Mitchell, 1973, p . 783) . By 1830, Australia had displaced Spain asBritain's second largest supplier of wool, reaching and surpassing Germany as its majorsupplier in the mid 1840s (Barnard, 1958, p . 218). The quantity of wool exported fromN.S.W . increased fivefold between 1815 and 1821, and at a similar rate during the 1820s(Abbott, 1971, pp . 37, 87) .

This rapidly accelerating process of pastoral expansion was, as noted above, directlyunderwritten by colonial state land and labour policies . However, it also resulted fromthe emerging inner dynamic of colonial capital accumulation, many of the pre-conditions for the routine reproduction of capitalist exchange and production relationshaving been painfully established in the preceding years. In particular, significantprivate wealth had been invested in building up land and livestock holdings, with localcapital increasingly supplemented by British capital brought in directly by the steadilyincreasing stream of wealthy free settlers and, less directly, through the formation of thefirst limited liability companies (Connell and Irving, 1980, pp . 39-40) . Government andprivate investment in transport, and the development of financial and commercialinstitutions -e.g . the local formation of the Bank of N .S. W. in 1817 and the furtherpenetration of British banks and trading agencies - greatly facilitated the flows ofcommodity and money capital, in sectoral and geographic terms, in search of thesubstantial profits promised by pastoral enterprise . All these trends converged andincreasingly assumed the routine form of the self-expansion of capital . In short, the1820s saw the beginnings of the integration of the Australian wool industry with thecircuit of industrial capital in textile manufacture, geographically centred in the Northof England.

At the level of spatial organisation, pastoral expansion led to the rapid spread ofsettlement at low densities . The practice of squatting - the strictly illegal occupationand use of Crown lands - greatly reinforced this tendency without effectively extendingaccess to the land to workers . Substantial capital was still required to stock and tend theflocks, and to transport the wool to market . Although the shortage of rural labour(especially shepherds) was chronic, grazing was not a labour intensive industry . Most ofthe jobs created by wool appeared not at the point of production but in thetransportation, processing and weaving stages, centred in the port-cities of Australiaand England and the industrial towns and rural cottages of the latter . Thus, pastoralexpansion continued to underwrite urban growth and concentration, in both countries,a trend which was reinforced by the continuing centralisation of governmentadministration and the increasing involvement of city-based merchant and financecapitalists in the wool trade .

At the political level, divisions based on the underlying differentiation of landed andmerchant capital hardened between 'exclusivist' and `emancipist' factions, giving rise toopposing ideological perspectives on the ideal form of colonial society (Connell andIrving, 1980, pp . 61-66) . These ideological and political conflicts, which increasinglyassumed a country versus city form, were necessarily related to the determination of theappropriate character and function of the colonial state. However, with continuing

20


pastoral accumulation in the 1830s, the exclusivist vision collapsed as British and localcapital flowed in, concerned far more with the prospects of profits than thejoys of agenteel, rural, aristocratic lifestyle . Moreover, the increasing involvement of localmerchant and financial capital in the wool trade partly undercut the economic basis ofcity and country conflicts. At the same time, the changing imperatives of British colonialpolicy shifted attention to the nature of the links between the local and imperial states .In particular, the replacement of land grants with a system of land sales in 1831 (theRippon Regulations) directly threatened the tenure and profits of squatters, raising theissue of self-government and the probable future replacement of convict by freeimmigration - especially with respect to workers granted assisted passage on theproceeds of Crown land sales .

Pastoral accumulation and spatial expansion accelerated in the 1830s, driven - untilthe end of the decade - by a thriving British demand for wool, based, in turn, on abuoyant world demand for woollen textiles (especially in the United States) and thesubstantial increase in productive capacity of woollen textile manufacture following theextensive (though far from complete) application of the new technologies and forms oflabour organisation (McMichael, 1980) . However, other factors were also important .During this period surplus British capital was freed for export to the colonies . By the1830s, the British economy was running out of steam - literally . The revolutionisingimpact of the steam engine had (as argued above) been largely confined to the textilesector during this first phase of industrialisation - elsewhere life went on as before .Britain was now well into the declining phase of the first long wave and clearly sufferingthe effects of chronic crisis tendencies : `Early industrial Britain passed through a crisiswhich reached its stage of greatest acuteness in the 1830s and early 1840s (Hobsbawm,1969, pp . 72-73) . British capitalists - entrepreneurial and rentier - faced a generallyfalling rate of profit due not to the consequence of any pervasive rise in the organiccomposition of capital (this would come later) but to the barriers to accumulation posedby the continuing high cost of reproducing labour power and the limited potential forexpanding home (and export) markets . Internal limits on Britain's domestic marketwere inherent in the extreme inequalities of wealth produced during the earliest stages ofindustrialisation, including the process of social pauperisation noted above . Thecontinuing high cost of reproducing labour power - or minimally feeding, housing,clothing, procreating and raising workers - followed both from continuing lowproductivity in food and other basic subsistence industries and as a result of `the landbarrier' which tended to keep the prices of these commodities artificially high . In thelatter context, the interests of a traditional land owning elite were reinforced by statepolicies like `the Corn Laws' which imposed duties or levies on the importation ofcheaper foreign foods, and allowed land owners to appropriate surplus profits flowingfrom high domestic food prices in the form of ground rent. However, high food pricesmeant higher than normal wages which cut into the profits of industrial capitalists anddampened the rate of capital accumulation . With respect to the woollen textile industry,domestic supplies of raw wool were increasingly costly and uncertain as land was turnedover to mixed farming . Since the development of the German textile industry (andagriculture) was in the process of limiting the access of British manufacturers to Germanwool, they increasingly turned to Australia and New Zealand for a cheap alternative,


21

creating lucrative new outlets for idle British capital in the process . Some of this surpluscapital also found its way into the mercantile and financial activities which increasinglydetermined (rather than merely supported) the pace of colonial accumulation, tying theAustralian wool industry ever more tightly into the global circuit of British textilemanufacture (McMichael, 1980, p . 67) . In Castells' (1977, pp . 43-49) terms, the `colonialmode of domination' constraining Australian development was breaking down, to bereplaced by a new pattern of dependent development which would subsequently andfully unfold during the second stage of colonial accumulation, discussed in the nextchapter .

During this expansive phase two new cities were founded - one legally, the otherillegally. In 1835 speculators and pastoralists from the northern coast of Tasmaniabegan to settle the Port Phillip Bay district on the south-eastern tip of the mainland inthe region that would soon become the Crown colony of Victoria. Initially opposed bythe government in Sydney, this speculative venture and its gateway - the River Yarrasettlement - were soon officially embraced and a superintendent despatched to imposeorder. The settlement was named Melbourne . In 1836 Adelaide was founded as thecapital of a new colony, South Australia . Both cities quickly established metropolitandominance over their respective hinterlands, though (partly) for different reasons whichreflected their differing circumstances of settlement .

Melbourne was founded and grew under the twin impact of pastoral expansion andland speculation . As port and administrative centre it offered access to the rich grazinglands inland . Conversely, with the promise of continuing pastoral expansion,commercial prospects and land values boomed in Melbourne itself . If, as one urbanhistorian has argued, land speculation is a national hobby in Australia, in Melbourne ithas always been a business (Sandercock, 1979) . The first (auction) sales of central cityland were held in 1837 . Within three years the average market value of the half-acreblocks had increased tenfold, although even this rate of increase grossly understates thereal escalation in the wake of continual re-subdivision and resale down to minimal blocksizes (Turner, 1968) . Land sales beyond the city limit (in today's inner and middlesuburbs) continued through the 1840s so that by 1851 virtually all land within ten milesof the centre had been subdivided for sale . Paradoxically, the pace of speculation wasprobably intensified by the temporary check to pastoral expansion caused by the onsetof a generalised economic crisis in the colonies in the early 1840s . This crisis, due tocertain structural contradictions in colonial pastoral accumulation and British textilemanufacture (McMichael, 1980), created surplus capital in Sydney and London, some ofwhich was switched into urban land speculation and, to a lesser extent, construction .With the recovery, Melbourne continued to grow strongly through the remainder of thedecade due to the rapid development of the port and the clustering of relatedcommercial and government services .

Adelaide, on the other hand, started as the administrative centre of a semi-officialcolony but was, in reality, an experimental staging point for the new ideology ofcapitalist colonisation . The theory of `systematic colonisation', invented and promotedby Edward Gibbon Wakefield and his supporters, envisaged the cloning of capitalism inthe new territories . English capital was to be attracted through the freehold sale ofurban and rural land . The proceeds of land sales were to be used to import a stable

22


working population on assisted passages . With the increasing demand brought about bya rising population and routine dynamic of local capital accumulation, more land wouldbe sold financing an increasing inflow of workers, and so on . This self-reinforcing andself-financing programme promised to resolve three basic dilemmas facing the imperialstate in its relations with the other colonies . Firstly, it relieved the British Exchequer ofany financial commitment ; secondly, it ensured an adequate and free labour force ;thirdly, by selling rather than granting land, it prevented the monopolisation of land bya small exclusivist elite . The reality was somewhat less cheering . Early land sales didfinance an influx of workers . However, the purchased land was generally held forspeculation not development and the new migrants arrived to find few jobs available .Consequently, they clustered in and near Adelaide, increasingly supported by a harriedAdministration which was forced to issue bills to creditors which the British governmentsubsequently refused to honour . A financial crisis was only averted in 1842 when theBritish Government reconstituted South Australia as a full Crown colony andgrudgingly honoured past debts . Thereafter, Adelaide grew fairly quickly, reaching apopulation of about 10,000 by 1850, and subsequently serving as the major port for thedevelopment inland of agriculture and, from an early date, copper mining .

To summarise, by mid-century, the economic, political and spatial organisation ofsocial life had been well and truly laid in Australia . Each of the colonial capitals,* whichtogether account today for two-thirds of the national population, had established a highdegree of dominance over their respective hinterlands . There were no inland centres ofany note and not many smaller coastal towns . Melbourne was already more than halfthe size of Sydney and these two cities have maintained and extended their primacythrough to the present day. At the 1851 Census, Melbourne housed more than a third ofVictoria's population, while Sydney and Adelaide accounted for slightly less than athird of their populations (McCarty, 1970, p . 121). The dominance of Melbourne andSydney was reflected in and reinforced by the concentration there of commercial,government and other tertiary services, and to a lesser extent, manufacturing .Melbourne, in particular, outdistanced the competition of other Victorian ports -Geelong and Portland - thanks to the economic influence of a government presence .More importantly, as I have argued, these two cities grew according to the logic ofpastorial accumulation in the context of an expanding world capitalism . The case ofAdelaide, however, raises problems since it quickly established a degree of dominancesimilar to Melbourne and Sydney in a colony where pastoral expansion played a lessimportant role . McCarty offers an unconvincing explanation here which stresses the`centality' of Adelaide with respect to its `compact' hinterland and the inferred absenceof significant intra-state transport costs (McCarty, 1970, p . 124). However, as I argueabove, it is far more fruitful to place a city like Adelaide with respect to the particularflows of and barriers to capital accumulation and the impact of government policies inthe context of particular historical circumstances . In Adelaide's case, therefore, weshould stress the (unintended) effects of land policy, the centralising impact ofgovernment and the movement of capital between productive and speculative activities,

"Victoria and Queensland were formally separated from N .S.W . in the 1850s .


23

which, at the broadest level, were not so different from the situations of other cities atthe time, especially Melbourne. Hobart and Brisbane, on the other hand, were lessdominant in their regions, a trend which has persisted . Clearly, certain geographicdisadvantages limited Hobart's development since it was relatively inaccessible tomining and agricultural developments opening up on the western and northern coasts .Moreover, having escaped the political clutches of Sydney, Hobart was in the process ofturning into an economic dependency of Melbourne whose rapid commercial and portdevelopment was capturing a major share of the colonial re-export trade . To the north,Brisbane had barely passed 3,000 in population by 1851 and was still subject to politicalcontrol from Sydney. Pastoralists in the region were sending their wool to Sydney and,even, Melbourne for export, ignoring Brisbane's inadequate facilities . On the other sideof the continent . Perth also stagnated, a tiny, isolated centre in a vast territorycontaining a mere 5,000 whites, awaiting the artificial insemination of some 10,000convicts over the next two decades to induce self-reinforcing growth .

Throughout the period of pastoral expansion the development of colonialmanufacturing was limited, playing a secondary and supporting role in the evolution ofa distinctive spatial form . Why, we can ask, did Australian manufacturing not developas it did earlier in Britain where this sector assumed a central role in the process of rapidurbanisation? The answer to this question lies, initially, in a consideration of the verydifferent forms assumed by the intra- and inter-national divisions of labour . Britishmanufacturing arose, as argued earlier, on the basis of small-scale rural industry in acountry with a spatially decentralised population and well developed internal market ; inparticular, British infant industry arose before the explosion of foreign trade inmanufactured goods which, in fact, British industrialisation unleashed . Australianmanufacturers, on the other hand, from the start faced competition from moretechnically advanced and concentrated British manufacturers, producing at larger scalesand consequently at lower costs. The degree of natural protection afforded localproducers by physical distance continually fell with improvements in transport linkswith Europe . Moreover, the barriers to capital accumulation in Britain posed by thelong downswing and assuming the form of chronic over-production in the domesticmarket, intensified the British export drive and the attempt to penetrate colonialmarkets . In addition, whereas British landowners initially saw profitable outlets forinvestment in rural manufacturing, Australian pastoralists saw their profits tied securelyto wool exports in a new international division of labour which centred manufacturingindustry in Northern Europe. Consequently, rising export income from wool salesfinanced a rising volume and range of imported manufactures, threatening domesticproduction and absorbing local capital (which, under different circumstances, may havebeen directed to manufacture) into city-based commerce . Finally, pastoralism blockedlocal manufacturing in two other and more indirect ways. Firstly, in the most sparselypopulated and isolated areas, pastoralists were encouraged to provide for their ownneeds, especially in the case of basic manufactured goods like flour . This tendencyrestricted the growth of inland markets, raising further barriers to the development ofmanufacturing . Secondly, the balance of political power in the colonies turned on theopposition of pastoral capital and a loose urban alliance in which manufacturinginterests were marginal. Consequently, the latter were never in a position to enforce

24


favourable public policies in a way that their British competitors had earlier during thestage of manufacture and were then in the process of doing in the transition to the stageof modern industry .

Turning, finally, to the internal spatial form of the capital cities, this first period alsosaw the emergence of definite patterns of segregation, both with respect to land-uses andresidential differentiation . Similar patterns can be observed in older English cities andcan be traced all the way back to medieval times . Clearly, however, medieval survivalsare irrelevant in the Australian context . Gordon's (1978) analysis of internaldevelopment in American cities also seems to miss the point. He argues that, prior tosignificant industrialisation from the middle of the nineteenth century, American citiesdisplayed a relatively fluid and homogenous internal form ; la.nduses and social classesintermingled . Australian cities, on the other hand, differentiated and segregatedthemselves almost from the start - long before the spectre of industrialisation -through the continuing process of suburban development . Industrialisation late in thecentury overlaid and intensified patterns of segregation earlier established. For the olderconvict cities the official stamp of the penal administration obviously ordered spatialarrangements - at least, this is true in the earlier years . However, by the I840s thesedirect controls had been relaxed and Sydney and Hobart developed increasingly to therhythms of commercial accumulation . Interestingly it was in the 'free enterprise' cities,Melbourne and Adelaide, that suburban segregation was most quickly and decidedlyestablished (Barrett, 1968 ; Davison, 1978) . Since suburbanisation and segregation areenduring themes in the lives of Australian urban dwellers, we will return to them in theremaining chapters .

CHAPTER 2

Commercial Accumulation and the Commercial City :1848-93

In the second half of the nineteenth century, the period of the second long wave inBritish-led world capitalism, the Australian colonies emerged as fully-fledged, thoughdependent, capitalist societies . 'By the end of this period, there would be a reduction inthe sphere of the state, an expansion of property relationships, and, inevitably, a declinein the opportunities for self-employment . The triumph of urban capital, whichestablished a "fully fledged market system", increasingly transformed work into wagelabour' (Connell and Irving, 1980, p . 105). New barriers to colonial capitalaccumulation emerged - partly expressed in and reinforced by existing spatial forms -which led to new 'solutions' entailing some significant changes in the spatialorganisation of colonial life .

2 .1 . EMERGING SPATIAL PATTERNS

Table I summarises the now familiar story of urban population growth andconcentration during this period . At the national level, the proportion of people livingin the capital cities fell during the 1850s- the decade of the gold rushes in EasternAustralia - increased slowly through the sixties and seventies, rose rapidly in theeighties only to stagnate in the severe depression years of the 1890s . There were,however, clear differences between the colonies . Melbourne, in particular, and Brisbanelost primacy during the fifties and sixties and did not regain their positions until the lateeighties . Sydney and Adelaide, on the other hand, barely faltered during the early periodand grew significantly faster than their non-metropolitan populations from the 1870s .Perth exactly maintained its position with respect to the rest of the state, while Hobartprogressively lost primacy so that by the end of the century it accounted for only one-fifth of the Tasmanian population . In absolute terms, Sydney and Melbourne grewquickest in the fifties and eighties, Adelaide in the fifties and seventies, Brisbane afterthe fifties and Hobart barely at all . Conversely Perth grew very quickly in the 1890s(coinciding with the discovery of gold in Western Australia) when the other capitalsgrew slowly or stagnated . Throughout the period, Sydney and Melbourne, takentogether, roughly maintained their size superiority over the four smaller capitals andmoderately increased to just over one quarter of the total colonial population (see Table2).

25

26


TABLE 1. Metropolitan concentration and growth : 1851-1901

Source : .1. W. McCarty (1970, pp. 119-2 1) .

Melbourne surpassed Sydney during the gold rushes but was itself overtaken in the1890s . Sydney consistently grew at twice to three times the rate of rural N .S.W .throughout the period, while Melbourne grew even more rapidly in relation to ruralVictoria, albeit much less consistently (see Table 4) . Brisbane, on the other hand, grewin line with rural Queensland over the 1861 to 1901 period . Non-metropolitan urbancentres also grew rapidly, increasing their share of total population in the eastern statesthreefold over the entire period, although almost all this relative gain was compressedinto the fifties and sixties (see Table 3) .

TABLE 2. Relative size dominance of Melbourne and Sydney, 1851-1901

Source : J . W. McCarty(1970, pp . 119-21)

Capital City 1851 1861 1871 1881 1891 1901

Melbourne :29 125 191 268 473 478. population (thou .)

. average annual population growth(%) - 15.7 4.3 3 .4 5 .8 0 .1

. percentage of State population 38 23 26 31 41 40

Sydney :54 96 138 225 400 496. population

. average annual population growth (%) 5.9 3 .7 5 .0 5 .9 2.2

. percentage of State population 28 27 27 30 35 37Adelaide :

18 35 51 92 117 141. population. average annual population growth (%) - 6.9 3 .9 6 .1 2 .4 1 .9. percentage of State population 28 28 27 33 37 39

Brisbane :population 3 6 15 31 94 119

. average annual population growth (%) - 7.2 9 .6 7 .6 11 .7 2 .4

. percentage of State population 20 13 14 24 24

Perth :- 5 - 9 16 61. population

. average annual population growth - 2 .8 5.9 14.3

. percentage of State population 33 - 30 32 33Hobart :

25 26 27 33 35. population. average annual population growth - 0 .4 0 .4 2 .0 0.6. percentage of State population - 28 25 23 22 20

Population Ratio

1851 1861 1871 1881 1891 1901

Melbourne/Sydney

.54 1.30 1.38 1 .19 1 .18 .96

Melbourne

Nationalplus

/ Population .19 .20 .22 .27 .26Sydney

3.13 3 .58 3 .10 3.36 2 .74Melbournplus

~OtherCapital

Sydney Cities


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TABLE 3. Relative size dominance or metropolitan and other urban centres in EasternAustralia,- 1851-1901

All Eastern capital citiesas percentage of colonialpopulations of EasternAustralia

All Non-metropolitan urbancentres-- as a percentageof colonial populations ofEastern Australia

Eastern capital cities/other urban centres inEastern Australia

All Eastern urban centresas a percentage of colonialpopulations of EasternAustralia

"Eastern Australia comprises : N .S.W ., Victoria, Queensland and South Australia .**Arbitrarily defined as all centres, excluding the capital cities, with populations

exceeding 2,500 .Source : Calculated on basis of data presented by R . V . Jackson (1977, p . 93, p . 99) .

TABLE 4. Percentage population increase by decade : Queensland, N.S.W ., Victoria, 1861-1901

Source : Calculated on the basis of data presented by N . G . Butlin (1964 . p . 185).

1861-1871 1871-1881 1881-1891 1891-1901 1861-1901

Queensland :1 . Brisbane 200 100 158 17 1,7162. Other Urban 267 91 119 II 1,588

(I) divided by (2) .75 1 .10 1.33 1 .55 1 .083 . Rural 360 66 44 47 1,613

(I) divided by (3) .55 1 .52 3 .59 .36 1 .06(1) +(2) divided by (3) .67 1 .45 2.98 .30 1 .02

N.S.W . :] .Sydney 65 56 65 25 4272. Other Urban 98 98 79 24 760

(1) divided by (2) .66 .57 .82 1 .04 .563 . Rural 21 27 23 12 211

(1) divided by (3) 3.09 2 .07 2.83 2 .08 2 .02(1) + (2) divided by (3) 3.62 2 .63 3.09 2.08 2 .56

Victoria :1 . Melbourne 66 33 79 neg . 2972 Other Urban 102 12 15 14 197

(I) divided by (2) .65 2 .75 5 .27 neg . 1 .513 . Rural 4 12 8 6 33

(I) divided by (3) 16 .50 2 .75 9 .88 neg . 9.00(1)+(2)divided by (3) 20 .50 1 .92 6 .38 .83 7 .70

1851 1861 1871 1881 1891 1901

29 26 27 30 36 36

5 12 14 13 15 16

5.8 2.2 1 .9 2 .3 2 .3 2 .3

34 38 41 43 51 52

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After 1880, the capital cities started growing more quickly than other urban centresagain, except in N.S.W. where Sydney did not catch up until the 1890s (Table 4) . Allurban centres taken together grew much more quickly than rural areas, especially in thelarger states of Victoria and N .S.W. (Table 4); by 1891 more than half the totalAustralian population(s) lived in urban centres (Table 3) . Finally, no other urban centrearose to threaten the dominance of the established capital, except in Tasmania ; in 1891Melbourne was more than ten times as large as the next biggest Victorian city, Ballarat,while Sydney was eight times as large as N .S. W.'s next largest town, Newcastle .

At the same time as the capital cities were growing, they were spreading from thecentre out. Suburbanisation was the form in which the big cities developed, especially inthe case of the later starters, Melbourne and Adelaide . In Melbourne, from 1860onward, the central city and inner suburbs grew much less rapidly than the outersuburbs (McCarty, 1970, p . 27), while in Adelaide, the central city population fell fromaround one half to one quarter of the metropolitan population between 1860 and theend of the century (Williams, 1978, p. 124) .

2 .2. INTERNATIONAL SPECIALISATION AND UNEVEN DEVELOPMENT

In order to offer, or at least suggest, possible answers to these and related questions itis necessary to reinterpret the patterns of development described within the context ofthe following problematic :

(i) What patterns and levels of trade and capital transfer developed between Britainand the Australian colonies ; to what extent did these patterns express unequalexchange? (and what does unequal exchange mean?) .

(ii) What role did the state -imperial and colonial -play in all this?

My general thesis is that this second stage or period of colonial accumulation wasprimarily ordered through commercial relations of domination, in the context of thesecond great wave of industrialisation in Britain and the implications this had for theconstruction (and destruction) of British hegemony in world economy . The `commercialmode of domination' here refers to the ordering of development through the mechanismof international trade, resulting in a definite, asymmetric pattern of specialisation on aglobal scale, expressed through and reinforced by emerging class forces and politicalrelations .

As a first step to establishing this thesis, consider the following question : why didn'tthe Australian colonies turn into peripheral capitalist formations during this period asso many other colonies and former colonies were in the process of doing - in LatinAmerica, for instance? Amin (1976-77) has identified four characteristics of peripheralstatus in the world system : the dominance of agrarian capitalism ; the appearance locallyof a parasitic, comprador merchant class ; the rise of autonomous, bureaucratic stateapparatuses; and, the limited, stunted nature of the process of proletarianisation . It wasprecisely in this period that these characteristics - to the extent that they ever existed inthe Australian colonies - were in the process of rapidly breaking down . The colonial


29

economies grew and diversified, though within limits imposed by the emerginginternational division of labour . A relatively strong and independent class of localmerchants (many of whom were British migrants) tightened their control over colonialeconomy and state policy, while bureaucratic state regulation gave way to policiesstrongly supportive of local capital accumulation within a constitutional systemguaranteeing a significant degree of self government . The explosive increase in the adultpopulation of Eastern Australia due to the mid-century Gold Rushes, reinforced by thelimits to strictly alluvial mining, the cessation of convict transportation and themarginality of Aborigines, formed the basis of a ready made working class and the nearuniversalisation of wage labour. The task becomes to understand the way in whichAustralia developed rather than stagnated in this period, to understand in what senseAustralian capitalists and workers were both victims and partners of British imperialism(Clark, 1975) .

From the late 1840s to the early 1870s, Britain experienced a long upswing associatedwith the general application of steam generation and rapid development of heavyindustry, especially steel, railways and shipbuilding . This process unfolded by way of aquantum shift in the scale and composition of foreign trade . Thus, between 1850 and1870, the total value of British exports trebled (Mitchell, 1973, pp . 797-99), representinga distinct shift away from the traditional textile sector towards the new fixed capitalgoods (Hobsbawm, 1969, pp. 109-10) . In effect, this entailed the construction of a newinternational division of labour in which Britain increasingly specialised in theproduction and export of manufactured consumer and capital goods, and increasinglyimported food and raw materials. This emerging system of international specialisationwas expressed through and reinforced by the brief reign of free trade in the middle thirdof the century ; McMichael (1981) has persuasively argued that free trade, along with thedevelopment of London as the central international clearing house for financial andcommercial capital and the special role of the railways in integrating the worldeconomy, constituted the substantive basis for British hegemony in world economy inthis period . However, - and this is the crucial point - the form assumed by theinternationalisation of capital imposed an international division of labour whichguaranteed the uneven development of capitalism on a world scale. It is to the way inwhich foreign trade led to world uneven development, and to the particular role orposition of the Australian colonies, that we now turn .

In an important article, Shaikh (1979-80) has extended Marx's theories of value andmoney within a nation to account for foreign trade between capitalists of differentnations . In a world governed by a relatively high mobility of capital and free trade, heargues, capitalists in any industry will face the same home and international price . Thus,in developed capitalist regions (DCR) where productive efficiency is significantly higherthan average in most industries, (like Britain during this period), capitalists enjoy higherthan average profits, while less efficient capitalists elsewhere in the world suffer lowerthan average profits . In such a situation capital will tend to move out of low profit intohigh profit industries and regions, resulting in a pronounced tendency for DCRcapitalists to monopolise home and export markets in all those industries where theyenjoy absolute cost advantages based on greater efficiency . As capital flows into theseindustries/regions, expanding outputs lower prices driving less efficient producers

30 Progress in Planning

elsewhere in the world out of business, and driving profit rates in the former downtowards the average level whereupon further capital inflow to these areas ceases .

Of course, this trend towards the domination of world markets by DCR capitalistswill never reach its logical extreme - the complete annihilation of capital outside theDCR. There will always be space - albeit limited or tightly constrained - for somecapitalists in the under-developed regions (UCR) . In the first place, the competitiveforces noted above take time to work themselves out, allowing marginal UCR capitaliststo survive in the interim . Even in the long-run these less efficient capitals have a role toplay whenever world demand for the particular commodity runs ahead of the immediatecapacity of DCR capitalists to meet it . In a second and more important sense, UCRcapitalists will gravitate towards those few industries in which they enjoy an absolutecost advantage, either because of a greater local efficiency or the possession ofcommodities peculiar to it . 'On the whole, these types of commodities will reflect somespecific local advantages great enough to overcome the UCR's generally lower level ofefficiency : a good climate, an abundance of particular natural resources, a propitiouslocation, and soon' (Shaikh, 1979-80, p . 39) . Thus, local UCR capitalists will be limitedby international competition to the local production and export of those commoditiespeculiar to it (like natural resources), those commodities like particular foods and rawmaterials which depend on the qualities of local land and climate, and thosecommodities which are not (yet) being produced in adequate quantities by DCRcapitalists . The latter, on the other hand, will progressively extend their control overworld markets as the competitive pressure to defend and extend profit margins forceseach to continually revolutionise production methods through technological advanceswhich widen the gap in productive efficiency and further entrench the internationaldivision of labour and pattern of uneven development .

This emerging pattern of international specialisation entails the build-up of chronicbalance of payments surpluses for the DCR and chronic deficits for the UCR, resultingin rising relative interest rates in the latter. Eventually financial capital is exported fromDCR to UCR in search of the higher interest rates . This capital naturally flows intothose few industries and sectors of the UCR which return profits in the harshcompetitive world, further reinforcing the existing pattern of uneven development . Inthe short-term, balance of payments deficits are certainly eased in the UCR in the wakeof capital inflow, thereby increasing the potential for domestic capital accumulation .However, in the long-run, the increasing burden of interest and principal repayment tothe DCR will reinforce the balance of payments constraint forcing the UCR to limitimports to its capacity to export, re-emphasising the double-edged nature of unevendevelopment ; accumulation or growth in the UCR is severely limited in the overall senseand tightly concentrated into a few sectors of the economy, while the situation isprecisely the reverse in the DCR .

The above analysis of trade is independent of any consideration of wage differentialsbetween UCR and DCR (the basis of Emmanuel's (1972) theory of unequal exchangeand uneven development). However, when wage differences are introduced, DCRcapitalists do have an incentive to relocate production to the UCR whenever lowerwages more than offset lower productivity. In other words, capital export in the form ofdirect investment rather than financial capital threatens to revolutionise production in


31

the UCR, bringing with it the possibility of generalised development . There are,however, likely to be strong obstacles blocking wholesale relocation . Individual DCRcapitalists will not relocate production to the UCR unless a number of other pre-conditions are met. In particular, where what Marx called the general conditions ofproduction - ports, roads, railways, power supply and the like - are absent, localproduction will be highly unprofitable (in spite of low wages), if not impossible .Similarly, where the UCR state is unable to guarantee security of property, rule ofcontract, etc ., foreign investment will be discouraged . Finally, in the era of competitivecapitalism, prior to the concentration and centralisation of capital which eventually ledto the global reach of the multinational corporation, capital lacked the organisationalmeans with which to generalise production on a world scale . Thus, foreign investment inthis period, at least, will be limited to those regions where these general obstacles arelowest and those industries which are most profitable under existing conditions - i.e .within the existing international division of labour . Foreign investment can therefore beexpected to reinforce the existing pattern of uneven development, both within andbetween regions, especially where the UCR state plays a traditional or passive role .

This analysis suitably modified, can, I suggest, be used to understand the particularway in which Australia developed in this period . Britain did run up chronic balance ofpayments surpluses during the second half of the nineteenth century, interest rates didfall and capital was exported in increasing quantities, first as interest-bearing loans andlater in the form of direct investment . The Australian colonies, on the other hand, didcome to specialise overwhelmingly in the export of wool and gold, did come to dependon a wide range of manufactured imports (and British shipping, insurance and relatedservices), and were the recipients of a large and sustained capital inflow . Although thecolonial economies diversified to some extent, capital still tended to flow into thetraditional export industries and those areas of the home market (productive andunproductive) which enjoyed some degree of natural protection against the crushingimpact of British imports . However, Australia did not stagnate in the general sense ;total population, real income and real income per head rose significantly (Catley andMcFarlane, 1981, pp . 26-27) . It was precisely in this period that the Australian coloniesdistanced themselves from other UCRs, embarking on a path of dependent developmentand moving towards a third or mid-way status in world capitalism .

Thus, although colonial accumulation accelerated during this period, its effects wereconcentrated or constrained within limits imposed by the strengthening internationaldivision of labour. The special and short lived impact of gold mining during the 1850sgave way in the sixties and early seventies to pastoral development and construction asthe major areas of activity with pastoralism, accounting for the bulk of fixed capitalinvestment and most of the increasing inflow of British capital (ignoring, for themoment, the public sector) .

The important role of construction followed from the unprofitability of importcompeting industries and represented - in Harvey's (1978, 1982) terms - a chronictendency for capital to switch from the primary to the secondary circuit . Manufacturing,although growing quickly from a very small base, still retained its secondary status . Inthe first place, manufacturing failed to surpass construction and pastoralism, either inits contribution to total product or rate of fixed capital formation and technological

32


advance . In the second place, it served a subsidiary or service role, increasinglydependent on the supply of materials and equipment to the construction sector, miningand agriculture, and consumer goods to residents of towns and cities dependent on theincreasing prosperity of pastoralism . Finally, with improving transportation and fallingcosts in British industry, Australian manufacturers faced increasingly severecompetition across a number of industries which previously enjoyed a degree of naturalprotection, a threat which hit N .S.W. manufacturers especially hard . The relativelymarginal role of manufacturing in this period, indeed through the whole century, wasreflected in and reinforced by the unwillingness of banks and other financial institutionsto lend money to these capitalists who were forced to depend on retained profits in orderto finance expansion . The tendency of British industry not to relocate production in thecolonial periphery was decisively enhanced by the fact that colonial wages weregenerally higher than British wages throughout this period . All this is broadly consistentwith the theory of trade and uneven development outlined above . We can also note thatcapital not engaged in the productive uses just noted was confined in the first place, tothe supporting commercial and financial sectors whose operations tied Australiandevelopment into the international circuit of industrial textile capital and, in the secondplace, to the range of tertiary services (productive and unproductive), the scale of whichhas struck puzzled observers and economic historians over the past century ; services, onthe whole, are precisely those commodities which are, by their nature, impossible toimport .

Pastoralism, in particular, attracted overseas and local capital as surplus profitsresulted from the relatively productive nature of the Australian industry in a worldcontext . Capital inflow was progressively used to finance fixed capital formation -fencing, dams, buildings, machinery, etc . - as squatters sought to improve theirproperties having increased their security of land tenure as a result of the leaseholdlegislation of the late forties . These improvements, in turn, increased productivity andprofitability, attracting further capital . The new Land Acts of the early sixties forcingsquatters to buy their land freehold, unleashed a further sustained burst of borrowingfor land purchase as well as capital improvement in the seventies and eighties as theseActs became effective . We will return to this point later .

Consideration of these developments enables us to understand the emerging spatialorganisation, described earlier . Rapid pastoral and (labour intensive) miningdevelopment in the fifties and sixties provided the economic base for a proliferatingspread of urban settlement in eastern Australia . The fact that the form of proliferationentailed the repeated cloning of small towns (and excluded the growth of large towns,especially in Victoria), reflected their local service role and the continuing primacy ofthe metropolitan cities (Cloher, 1975) . The country towns, new and existing, formedlower order nodes in an increasingly integrated and rapidly expanding system of tradeflows, regulated by merchants located in the capital cities and London . The diversion oflocal capital generated by the rapid rate of colonial accumulation into construction andmanufacturing reinforced this proliferating pattern of growth . Constructing theenvironment of the new towns provided, directly and indirectly, large pools of local jobswhich attracted new residents, many of whom were driven from the gold fields as theeasily accessible surface gold ran out. Local manufacturers also sprang up to meet the


33

needs of the local building industries (and gold mining), though the volume and range oftheir activities were restricted by the import of British building materials, managed bythe metropolitan merchants . Indeed, as Linge (1975, p . 161) has shown, this periodwitnessed a degree of decentralisation of manufacturing, in general, focused on theemerging country towns, especially those - like Ballarat in Victoria - which served therequirements of gold mining.

However, the spatial impact of manufacturing did differ from colony to colony .Manufacturing grew fastest in Victoria, in the wake of rapid population growth anddecentralisation caused by the much more important role of gold mining in the colony .It was much less important in N.S.W. during this period and of negligible importance inQueensland until later in the sixties . When manufacturing did emerge in Queensland itwas concentrated in particular industries like sugar refining, located in the string ofsecondary ports on the northern coast which rose to challenge the commercialhegemony of Brisbane . The fact that Melbourne and Brisbane lost primacy in thisperiod (while Sydney did not), in spite of very different manufacturing histories,underscores the secondary role of colonial manufacturing, highlighting the greaterimportance of the immediate effects of gold mining in Victoria andagricultural/pastoral development in Queensland given the system of internaltransportation which had evolved, prior to the explosion in railway building from themid-sixties onwards (Rimmer, 1975). Sydney, on the other hand, maintained its share ofthe colonial population, in spite of lagging manufacturing industry and, interestingly, asteady leakage of international trade to the port of Newcastle, one hundred miles to thenorth (Rimmer, 1975, p . 194). This would suggest that other factors, such as the role ofthe construction industry and tertiary services including finance and the professions,and the impact of an established government administration, significantly influencedthe pattern and rate of Sydney's development in this period,

2 .3 . THE ROLE OF THE STATE

The third quarter of the nineteenth century also marked significant changes in theform and functions of the colonial state . During the 1850s responsible self-government,under the constitutional umbrella of Empire, was granted to all the Australian colonies,with the exception of Western Australia . This political restructuring of the imperialsystem grew out of the changing balance of class forces in Britain and Australia,reflecting the rising power of the industrial bourgeoisie in the former and the loosealliance of city based merchants, financiers, manufacturers and professionals in thelatter (Connell and Irving, 1980, Ch . 3) . The creation of self-governing colonies,pursuing appropriate policies, backed by the reserve powers of the British state, wasfully consistent with the liberal rhetoric and substance of British free trade policy . Theanti-squatter alliance, led by metropolitan merchants and bankers, increasinglydominated the colonial Legislatures (Lower Houses) and emerging public services .Squatters were driven back into the Upper Houses and Magistracy, forced to accept anavalanche of liberal legislation, but with the paradoxical result of reinforcing the leadingrole of wool in colonial economy .

JPP 22 :1-C

34


Clearly, the political struggles over land during the 1850s were crucial here, both withrespect to the subsequent pattern of capital accumulation and the form and functions ofthe colonial state . Land legislation - especially the Robertson Acts (1861) in N .S. W .and the Duffy Acts (1862) in Victoria - formally ended the practice of squatting,forcing squatters to purchase `their' land freehold from the Crown . However, the effectsof the Acts were complex, uneven and delayed (generally not enforceable until the latesixties or early seventies) . Economic historians are generally agreed that although theland Acts formally extended access to rural land to small selectors, the overwhelmingconsequence was to confirm the squatters' tenure, albeit at a high price as the latter weredriven into massive indebtedness to city banks and pastoral finance companies and,through these institutions, to British money lenders (Wells, 1981) . I argue, below, thatthis process was closely related to the general acceleration of capital accumulation in thewool industry from the 1870s onwards, as wool re-established itself as the leading exportsector.

The colonial state emerged during this period as an interventionist state . Not only didthe colonial governments engage in `market regulating' activities which guaranteed thebasic legislative and institutional order of a capitalist economy, they also acted tosupplement and sometimes replace market relations, both modes of intervention whichtended directly and indirectly to improve the conditions for profitable capitalaccumulation . The massive public investment in railways, in particular, (and, to a lesserextent, roads, buildings and local authority works) after 1860 - which approachedpastoral fixed capital investment and residential construction in scale - increased theaverage rate of profit by cheapening the costs of production of private capital andreducing the turnover time of capital generally .

Improvements in communications were clearly important to pastoralists in order toreinforce their productive edge (and, hence, source of surplus profits) over foreigncompetitors. Such improvements were, if anything, even more crucial for the fortunes ofcolonial merchants and manufacturers, since they resulted in the formation of colonialmarkets on a much expanded scale. Moreover, merchants, in particular, gained in asecond, more indirect way through the manner in which public works were financed .Revenue from land sales consistently improved the budgetary positions of the colonialgovernments, (especially in the 1870s) allowing surplus revenue to be applied to publicworks, supplementing foreign borrowings and easing the burden which would otherwisehave fallen on the major revenue source, customs - in other words, reducing the imposton foreign trade and, therefore, raising the profitability of colonial commerce (Butlin,1964, p. 349).

Direct state intervention in this period can be seen as a vital support for anddeterminant of the pattern and pace of colonial accumulation, including the emergingspatial organisation already described . More specifically, it appears that thedecentralisation of political/administrative functions from London to the colonialcapital cities further concentrated development in the latter, while the growth of localgovernment regulation in non-metropolitan areas, dating from the gold rushes,reinforced the development of country towns ; Connell and Irving (1980, p . 118) alsopoint to the political mobilisation of merchants and, to a lesser extent, manufacturers incountry towns against pastoral interests and political representatives . Perhaps the only

The Political Economy of A astral/an Urban/sat/on

35

area in which public policy partly cross-cut the general direction of change wasmanufacturing . Manufacturers, although a minor partner in the `urban alliance' againstpastoral capital, were partly successful in securing government support . It seems likelythat Australian manufacturing would have been even less important economically butfor this support . Colonial tariffs played a minor role here, generally too low in thenineteenth century to effectively protect 'infant industries', which were much moreeffectively supported by the award of government contracts to local manufacturers,government incentives for industrial development, etc . (Linge, 1975, p . 160). Moregenerally, we can summarise the impact of the state on capital accumulation during thisperiod as follows :

"The plantation ideal of the pastoralists was weakened as the public sector legitimated the ideology ofdevelopment and pastoral capital was absorbed into mercantile capital as the economy expanded onthe bases of government activity. The mercantile capitalists emerged as the leading fraction of thereconstituted bourgeoisie . Thus, the term'pubtic' in public sector really meant' system-maintaining' ;economically and ideologically, the constitutive rote of the state was prominent in this period ."(Connell and Irving, 1980,p . 112) .

2 .4 . ECONOMIC CRISIS AND SPATIAL REORGANISATION

The last quarter of the nineteenth century has been described by British economichistorians like Hobsbawm as 'The Great Depression', by which they mean, not rampantunemployment and social dislocation but a period of economic stagnation anduncertainty such as that which characterised British capitalism during this period .

The responses of British capital to the intensifying crisis are well known . Capitalexport accelerated as idle capital accumulated at home. More importantly for Australia,this flow of capital was redirected away from Europe and the United States to theEmpire and South America . There was also a significant but less substantial shift ofBritish exports to the dominions in a world where international trade stagnated (asopposed to the explosive phase of growth in the previous period). British hegemony inworld economy was increasingly challenged by the newly industrialising nations --especially Germany and the U .S . - a challenge which was expressed through thegathering attack on free trade at both the ideological and institutional levels (BarrettBrown, 1970, p . I10) .

The Australian colonies were well placed to benefit from the changing structure ofworld economy, though at a cost which was not apparent until the catastrophicdepression of 1890s. Colonial accumulation accelerated during the 1870s and 1880s butin a way which largely reinforced and extended the pattern of development alreadyestablished . A large and rising capital inflow was concentrated overwhelmingly intopastoral finance and colonial government securities . Capital accumulated locally wasdirected into construction, services and colonial commerce, with manufacturing growthslowing after the mid-seventies (Linge, 1975, p . 160). In short, during this period theAustralian colonies perfected their role in world economy in the twilight of Britishhegemony and the liberal or competitive form of capitalism, prior to the outbreak of asevere and general colonial crisis which forced a radical restructuring of Australiancapital and the Australian state .

36


From the early 1870s, pastoral investment increased rapidly, especially until themiddle eighties, reaching and maintaining a high plateau in the late eighties beforecrashing in the nineties . This burst of activity coincided with rising land purchasesforced by the implementation of the Land Acts, placing a double burden on pastoralaccumulation, or rather on the capacity of pastoralists to find sufficient capital tosupport this rate of accumulation . Consequently, as Butlin (1964, pp . 119-22) hasdemonstrated, pastoralists increasingly found themselves unable to meet the demands ofexpansion from internal sources, notably retained profits, and were forced to dependmore and more on mortgage finance from the commercial banks and specialisedpastoral finance companies . Butlin (1964, pp. 148-65) has also shown that as thesefinancial institutions rose to prominence in the pastoral sector, their source of fundsshifted decisively in favour of British depositors and debenture holders ; in short, thebanks (some of them with majority British shareholdings) and pastoral financecompanies served as increasingly efficient conduits for British loan capital enteringAustralian pastoralism - and, as noted earlier, entering, indirectly through Crown landsales and public infrastructural investment, the construction of the Australian builtenvironment .

The pastoral sector apart, fixed capital investment stagnated elsewhere in the colonialeconomies, with the partial exception of the commercial sector which experienced arapid burst of fixed asset formation in the second half of the eighties . Fixed capitalinvestment in manufacturing declined to about 20% of the level in pastoralism duringthis period (Butlin, 1962, p . 18), suggesting that production processes generally(excluding the pastoral sector) reproduced traditional, labour-intensive and, by globalstandards, relatively inefficient methods, reinforcing Australia's dependent role in theexisting international division of labour .

This movement of British capital represented, in Harvey's (1978) terms, both ageographical switching crisis and a sectoral .switching crisis . Over-accumulation in theBritish primary and secondary circuits of capital, expressed through a sharp fall in theaverage rate of profit, encouraged capital to flow into particular sectors of theAustralian secondary circuit - viz. pastoral fixed capital investment and the builtenvironment for consumption and production (i .e. residential construction andrailways). Some evidence for the geographical switch of capital between the British andAustralian sub-circuits in the 1880s is presented in Fig . 1 . The reasons for and themechanisms through which these flows eventuated - and, in particular, the crucialmediating role of credit and state institutions - are briefly discussed below beforetracing the implications of these developments for spatial reorganisation .

British capital, mobilised by the banks and pastoral finance companies, continued toflow into Australian pastoralism in search of surplus profits . However ; individualpastoralists came under increasing competitive pressure, reflected in the secular declinein international wool prices from the mid-seventies onwards . The decline in the price ofproduction of wool followed from the international generalisation oftechnical advancesin wool growing, processing and transportation . Thus, the source of surplus profits inAustralian pastoralism weakened during this period, due partly to the generalisation ofproduction methods, partly to the expansion of the industry onto more marginal lands,and partly to the fact that, in consolidating as the world's major supplier, Australian


Total built /environment (Britain)[excludingrailways

iw_/

II

1

i

1 I

Lr(Railways (Britain]4I1It87!

Ibei

1881

e

as,

FIG. l . Investment In the built environment In Britain and Australia, 1861-1900 .Source: Harvey (1978, p. 117) ; Bullin (1964, p. 224).

conditions of production increasingly figured as the world average conditions on whichlong term prices of production formed. Australian pastoralists therefore had a strongincentive to expand output and cut unit production costs by further fixed capitalinvestment . As Shaikh (1978) has demonstrated, such a response, resulting in aprogressively increasing profit margin is the normal manner in which individualcapitalists defend and extend their competitive positions . The incentive to act in thismanner is accentuated when capitalists depend on loan capital for expansion . The twogeneral grounds on which credit institutions advance loan capital relate, firstly to thelevel of security offered by the borrower and, secondly, to the latter's capacity to meetrepayment of principal and interest . In the case of Australian pastoralism, the firstrequirement was met in the 1860s when colonial governments passed legislationallowing banks to accept land, especially leasehold land, as security for mortgageadvances. The capacity to service debt, on the other hand, depends on the scale ofoutput and profit margin achieved . Thus, in order to attract finance to secure landtenure and protect their competitive positions, pastoralists were forced to improve theirproperties and production methods through fixed capital investment which increasedprofit margins thereby increasing their capacity to attract finance for further expansionin a steadily tightening competitive world . The overall consequences of this competitive

37

38


process, I would argue, account for the dramatic and sustained acceleration of pastoralaccumulation during the seventies and eighties .

The other major area ofprivate expansion in the colonial economies during thisperiod was residential construction, Butlin (1964, pp . 245-66) argues that capital wasdirected to this sector primarily through the agency of building societies, buildingcompanies and the so-called land and mortgage banks . Building societies appear to haveplayed the most important role here, especially in Victoria and South Australia, andwere largely dependent on the mobilisation of local rather than British capital . Thesuccess of building societies and related institutions in attracting capital away fromother uses - viz. manufacturing - was, of course, not just a consequence of some deepseated and universal drive for owner-occupation among the populace but a very realindication of the relative unprofitability of these other areas . Apart from mortgageloans to owner-occupiers . building societies also advanced mortgage finance tolandlords and short term credit to speculator-builders . Larger, established builders weremore likely to depend for their finance on the banks, insurance companies, land andmortgage banks and the stock exchanges . There is some reason to believe that Britishcapital played a larger direct role here, especially in the latter part of the eighties, thanButlin's generalisation suggests . In the first place, as Butlin himself points out, aminority of building society deposits - probably between 10-20% - were British .Secondly, building societies came to depend more on bank overdrafts (especially inN,S.W .) and therefore, indirectly on the build-up of British deposits in Australianbanks . Thirdly, British investors held about half the liabilities of land, mortgage andbuilding companies, usually in the form of debentures, by the late eighties (Butlin, pp .429-30). British investment in these housing/land speculation companies rosedramatically in the years 1888 to 1890, as did the provision of mortgages by Britishinsurance companies ; in 1888, the peak of the great land boom in Melbourne, Britishinvestment in these two areas exceeded that in the banks . Finally, and related to theprevious two points, we can note that although pastoral accumulation - the majordestination of bank finance - peaked in 1886, the inflow of British deposits toAustralian banks continued to rise until 1889 and remained high until 1892, suggestingthat some of this increasing capital was diverted directly and indirectly, to the residentialsector. In summary, it appears likely that at least part of the increase in residentialconstruction in Australia during the eighties resulted from the switch of capital out ofthe British residential sector and, indeed, built environment in total (see Fig . 1) .

If there is some doubt as to the extent of the geographical switch of capital from theBritish to Australian built environment in the case of housing, there is none concerningrailways . In the last quarter of the century, investment in Australian railwaysconsistently moved in opposition to investment in the British built environment and(with the exception of the early eighties) railways_ The colonial governments were thedominant mediating institutions, borrowing large sums in the London money marketfor the construction of the railways which were operated as public enterprises ; in fact,the colonial governments accounted for about two-thirds of overseas borrowings duringthe 1880s, most of which was directed into railways .

It is now possible to grasp some of the ways in which the spatial organisation andreorganisation of colonial life in this period both reflected and supported the emerging


39

rhythms of capital accumulation described . In particular, the re-emergence of thecapital cities over smaller urban centres after 1870 (except in N.S.W.) - in short, the re-establishment of metropolitan primacy - resulted primarily from both thestrengthening of pastoral accumulation with the associated metropolitan centralisationand growth of commercial and financial capital, and the pervasive impact of stateintervention . The first factor was especially important in the case of Victoria whereMelbourne overtook Sydney as the major financial and commercial centre in thecolonies, partly accounting for Sydney's more modest rate of growth in comparison tonon-metropolitan urban growth in N .S.W. Nevertheless both Melbourne and Sydneyretained and, in fact, extended their size and functional superiority over the smallercapital cities, especially in the 1880s, reflecting the strengthening of Australia's role inthe international division of labour. The commercial hegemony of metropolitan capitalwas immensely strengthened by the infra-structural, especially railway, investment ofthe colonial governments . The intra-colonial boom in railway development, peaking inthe late 1880s, focused tightly on the capital cities (with the partial exceptions ofQueensland and Tasmania) reinforcing their international commercial functions andthreatening the small, fragmented and previously protected markets of non-metropolitan areas. In the case of South Australia, Williams (1977, p . 23) has argued :

"Of course, the indented coastline of South Australia did encourage the development of regional ports,each served by a short feeder railway, but in every case except Port Lincoln, the expanding tentacles ofthe Adelaide-focused railway system drained them of their trade and stunted their growth . . . Adelaide'sbiggest intercensal population increase . . . occurred between 1871 and 1881 just when these new linkswere being forged" .

Metropolitan growth also encouraged (and accelerated on the basic of) the increasingdiversion of capital to residential construction. Butlin argues that the scale of urbanpopulation growth, in fact, understated the urban focus of construction during thisperiod, since dependent populations, especially wives and children, were over-represented in towns and cities in comparison with more mobile, male-biased ruralpopulations. In addition, Butlin (1964, pp . 212-13) suggests, the lower averagestandards of rural housing increased the significance of urban construction in the total .This latter point can be restated in terms of our analysis by noting that the geographicconcentration of profits and higher wages in the cities underwrote rapid residentialaccumulation there, in the provision of both capitalists' and workers' housing . Thesespatial trends intensified during the 1880s as the inflow of British capital expanded thebasis of but not the structural constraints on colonial accumulation . The fact that thoseconstraints necessarily biased accumulation towards residential construction in thecontext of a pervasive urban bias in this sector, accounts, in part, for the significantgrowth of the capital cities, and Sydney and Melbourne in particular (see Tables 1 and2) .

In a similar fashion, and as a secondary reinforcing factor, Australian manufacturingretreated to the capital cities, a factor of greater significance for Sydney and Melbournesince N .S.W. and Victoria were the major manufacturing states (Linge, 1975, p . 179).Given their dependence on local markets it was inevitable that manufacturers wouldfollow population growth . However, more basic centralising forces were also at work .Thus, the progressive improvements in communications, intra- and inter-nationally,

40


intensified competitive pressures on small, marginal non-metropolitan manufacturers,unleashing the prospects of significant economies of scale as well as agglomeration formetropolitan competitors . The directly supportive (and competitive) policies of thecolonial states no doubt also encouraged metropolitan location, since they accountedfor a major part of the market in some industries .In summary, spatial reorganisation emerged as one moment of the overall

restructuring of colonial political economy as a result of intensifying crisis tendencies inworld economy. However, in the case of the Australian colonies, the local culminationof these tendencies resulted in the actual outbreak of a generalised crisis - i.e. in thecoming of a prolonged and widespread depression that lasted for much of the 1890s .The preceding analysis suggests that the outbreak of crisis is fully explicable as a`natural' outcome of the structural changes leading up to it, changes which involved theswitch of British capital to, and concentration of Australian capital in, the constructionof the built environment of (and linking) the cities . At one level, this conclusion appearssimilar to Butlin's (1964, ch. VI) theory of long-run structural disequilibrium, and,hence, to his stress on `internal' rather than `external' factors . According to Butlin, thedepression resulted from the peculiar pattern of Australian economic development,resulting, in turn, from the distinctive pattern of investment, concentrated in the builtenvironment and the pastoral sector, which emerged during the long boom . Leadingexport and import replacement industries did not expand quickly enough through the1880s to finance the increasing influx of producer and consumer goods imports andoutflow of interest and dividend payments to British investors . The chronicdeterioration in the balance of payments placed a brake on foreign capital inflow after1888, and hence on investment, especially in the built environment, leading to a rapidfall in general economic activity after 1891, reinforced but not caused by falling woolprices and capital flight .

Butlin's analysis is directed against earlier economic historians, notably Fitzpatrickand Cogh]an, who located the cause of the depression in external factors - viz . thewithdrawal of British capital following the Baring crisis of 1890 and the wool pricecollapse . Butlin certainly produces compelling evidence on the question of timing ; inparticular, residential expansion peaked in 1888 well before wool prices and pastoralinvestment fell significantly and before British capital was rapidly withdrawn throughthe banking system. Nevertheless, in terms of the analysis developed earlier, it ispossible, indeed vital, to reject the false dichotomy of internal and external factors .Butlin is able to raise this dichotomy because he treats Australian investment as anindependent variable, focusing on the subjective criteria of individual Australiancapitalists in accounting for the observed pattern and pace of investment . This approachis fully in keeping with the Keynsian paradigm within which investment behaviourreduces to `the animal spirits' of capitalists and, consequently, is unable to provide astructural explanation of either the real factors conditioning the rate of accumulation orthe continuing concentration of accumulation within the leading sectors of the colonialeconomies. However, when colonial investment patterns are seen in the context of anemerging international division of labour and, therefore, as the mechanism throughwhich relations of domination and dependence are imposed, any distinction betweeninternal and external factors disappears . Colonial investment developed in the


41

directions that it did and at the rate it did because of Australia's developing role in worldeconomy .

In the analysis presented here, the explanation for the outbreak and progress of thedepression must be related to the real factors leading to a generalised halt in the processof colonial accumulation . It was noted earlier that the falling rate of profit led to over-accumulation of British capital and the consequent build-up of idle capital in the creditsystem, part of which was switched to the colonies . Through the 1880s the globallyinduced fall in the average rate of profit created the conditions for the general over-accumulation of capital in the colonies, expressed by increasing competition betweenindividual colonial capitals and resulting in an intensified switch of colonial (and, to alesser extent, British) capital into the built environment where profits on productiveinvestment (i .e . in new construction) fell sharply in the second half of the decade . Thatis, competition between individual capitalists to realise profits intensified as the globalmass of surplus value stagnated. Increasing competition, in turn led to falling prices,devaluation of fixed capital, initial bankruptcies leading to a chain effect, and so on -in short, intensifying competition signalled the appearance of general over-accumulation (on the notion of over-accumulation, see : K . Marx, 1974, pp . 251-5 ;Shaikh, 1978, p. 237; M . Itoh, 1980, pp. 106-18 ; Harvey, 1982, pp . 190-203) . At thisstage, capital flowed increasingly into speculative ventures - particularly thoseassociated with the buying, selling and financing of urban land in Brisbane, Sydney and,especially, Melbourne. Since speculation in land and existing buildings involves merelythe transfer of titles to previously produced or naturally provided commodities, thisinvestment flow is unproductive. Moreover, since speculation is generally a self-reinforcing process in the short term as escalating market values reflect the creation of'fictional capital' through the credit system, (Harvey, 1982 pp . 266-70, further capital isattracted away from productive uses, as well as idle hoards, intensifying the tendency forthe rate of profit to fall . Speculation is, therefore, both symptom and cause of thestruggle between capitals to appropriate profit under increasingly unfavourablecircumstances - circumstances which delay the collapse but increase the certainty andseverity of its eventual impact. Construction and speculative activity did turn downsharply in 1888-89, as Butlin shows, setting off a partial chain of bankruptcies in relatedproductive and financial sectors . A general crisis was averted as long as pastoralaccumulation maintained its high level driven by the peculiar dynamic described above,and public infrastructural investment did not falter . These pre-conditions disappearedbetween 1890 and 1892, setting off a new and more far-reaching chain effect,progressively increasing the pool of idle capital (and labour) and, thus, the competitivestruggle to realise profits . The severity of the crisis was underlined by the fact that in aperiod when conditions for accumulation in the leading sectors of the Australianeconomies collapsed, alternative profitable outlets for colonial investment had been pre-empted by the development of Australia's specialised role in world economy during thelong boom. The severity of the crisis during the 1890s also forced substantial structuralchanges in colonial political economy, culminating eventually in the rise of industrialcapital, the decline of the competitive structures in key sectors and the demise of freetrade, to which we turn in the next section .

It is now possible to place the internal development of the capital cities during this

42


period in perspective . The general process of suburbanisation entailed both the rapidincrease in residential construction and population in suburbs beyond the original citylimits and a speculative burst of land sub-division and sale . The fact that this processunwound first in Adelaide, in the second half of the 1870s, indicated the peripheralstatus of South Australia as local capital was driven into increasingly speculativeventures in the face of the overwhelming competition of productive, commercial andfinancial capitals located in Eastern Australia and Britain . The collapse of Adelaide'sland and building boom in 1880 and the continuing out-migration of capital and labourto the eastern colonies pre-figured both the form and fate of developments throughoutEastern Australia later in the decade . It was in Melbourne that the switch of capital intoresidential construction and, especially, land speculation was increasingly concentrated,reflected in the residential decentralisation of a rapidly increasing population to theouter suburbs and the massive spate of speculative sub-division which ran far ahead ofactual development (Sandercock, 1979, ch . 1) .

Residential expansion and speculation was seemingly predicated on the basis of arising and, by world standards, high rate of owner-occupation. Davison (1978, p . 181),in line with Jackson's (1970) study of Sydney, argues that owner-occupation rates inMelbourne were greater in the (then) outer suburbs developed under the impact ofspeculation, than in the inner city where a class of petty landlords predominated .Conventional explanations for this difference stress the higher densities and land andbuilding costs in the inner city, factors which, in this view, partly overcome theindividual advantages of owner occupation and attraction of the home ownership idealwhich are held to apply to `all sections of the population' . The only attempt tohistorically locate urban home ownership within a marxist framework appears in astudy by Mullins (1981), whose analysis, in fact, attempts to explain observeddifferences between rather than within the capital cities in the twentieth century . Mullinsargues that the concentration of property capital in the provision of rental housing tendsto be greatest in cities where industrial development is located, ' . . . because of the need tolocate industrial workers close to factories' (Mullins, 1981, p . 68) . Alternatively, in othercities, notably Brisbane, `the relative absence of manufacturing industry meant thatthere was no need to concentrate workers around industries because few factoriesexisted' (Mullins, 1981, p . 68), accounting for the desertion of property capital and therise of owner-occupation as the only means by which workers could house themselves .Might not the same forces also explain the intra-metropolitan differences in rental andhome ownership rates observed in Melbourne (and Sydney) in the latter part of thenineteenth century ; after all, industry, such as it was, was located in inner suburbs likePort Melbourne and Collingwood where owner occupation rates were relatively low .

The answer to the above question is clearly 'no' . The argument as Mullins presents itthreatens to degenerate into a functionalist truism . He nowhere establishes the nature ofthe link between the process of industrial accumulation and the attraction (i .e .profitability) of the landlord role for property capital nor - and this is a separatequestion - does he explain why, in the case of the desertion of property capital from thesphere of rental housing, owner-occupation necessarily arises to fill the gap . Thedesertion of property (landlord) and industrial capital and the rise of owner occupationmust be explained in terms of the historically specific analysis of colonial accumulation


43

offered earlier ; capital entered or left the spheres of rental housing, construction,industry or the financing of owner occupation according to the specific structural andconjunctural forces determining the overall pattern and pace of development . Thus,capitalists did not rush to provide rental housing in Melbourne's outer suburbs becausemore profitable investment outlets existed elsewhere, although these outlets were, as Ihave noted, disappearing at an alarming rate as the crisis tendencies intensified . Giventhe build-up of idle capital in the credit system, property and commercial capitalgenerally was diverted to speculative activities in both land and building designed toturnover quick profits in order to meet rising short term financial obligations in anincreasingly uncertain world . Speculative builders and sub-dividers could not afford totie up their capital for long periods in rental stock, especially in the case of distant sub-divisions and `spec' housing provided well in advance of demand and, therefore, a rentalreturn . Consequently, speculators and financiers attempted to manipulate `the suburbanideal' of home ownership in a losing effort to underpin the speculative spiral - aprocess considerably aided by the railway building activities of the VictorianGovernment. On the other hand, rental housing may well have been more profitable ininner suburbs, fitfirstly because `trapped' submarkets provided the basis for the extractionof surplus or `absolute' rents and secondly, because inner city land and buildings couldmore readily be turned to non-residential uses when profitable opportunities arose .

By concentrating on the differences in owner-occupation rates across Melbourne itwould be easy to ignore the important fact that these rates everywhere fell during the1880s . This fact, embarrassing for proponents of the substantive reality of the suburbanideal, demonstrates the contradictory nature of capital accumulation . In spite ofstructurally determined forces encouraging the expansion of owner-occupation, theprocess of social reproduction in a society dominated by the capitalist mode ofproduction leads to a decline . Capitalism necessarily reproduces inequalities andperiodic unemployment, limiting the field for the expansion of owner-occupation ; theselimits tighten in a period of intensifying crisis, reducing the proportion of householdsable to support a mortgage and increasing the likelihood of default and eventualdiversion of finance to property investors in a general shake-out of rapid propertytransfers and falling property prices . At this point, reached in Melbourne by 1889, landand building development stagnates and the driving force behind suburbanisationtemporarily disappears .

2 .5 . SUMMARY

The second stage of colonial accumulation, culminating in the Great Depression ofthe 1890s, saw the maturing of the capitalist mode of production in a British-led-and-lost world economy in its competitive phase, which constrained Australian developmentthrough the rise of global free trade and the construction of a new international divisionof labour. British capital inflow further underwrote the hardening pattern of colonialspecialisation imposed by Australia's integration as a relatively dependent element in aworld economy. In this dual sense, Australia's particular form of dependentdevelopment emerged as an historically specific instance of the commercial mode of

44


domination . At the political level, colonial merchants headed a loose alliance of theurban based bourgeoisie which successfully agitated for the introduction of a system ofliberal or parliamentary democracy, the form of government historically appropriate tothe universalisation of fully capitalist relations, thereby overdetermining the emergentform of dependent development . Within this political economic context - and onlywithin this context, I have argued - is it possible to account for the key features ofcolonial spatial organisation - in particular, the rate and form of urbanisation, thequestion of metropolitan primacy and the dynamic of suburbanisation .

CHAPTER 3

IndustrialAccumulation and the Industrial City :1894-1939/45

The great depression of the 1890s laid bare glaring structural weaknesses in theeconomies of the Australian colonies . In spite of relatively high wages and livingstandards, generally, Australian workers (and capitalists) had to pay the price fixed bytheir relatively dependent status in the capitalist world system . Nevertheless, thedepression did unleash forces for restructuring and reorganisation at the economic andpolitical levels which led to fairly rapid economic recovery in the short-run andsignificant changes in the nature of dependent development in the longer term . It is withthese long-term structural developments, as they unwound in space, that this chapter isconcerned .

Cochrane (1980, p. 10) has suggested that the main feature of reorganisation prior tothe First World War was the switch away from wool to the development of otherprimary export industries (wheat, dairy products, meat and sugar) and large-scalecapital intensive mining . These changes, in turn, reinforced the development anddiversification of local manufacturing industry through the competitive requirements ofprocessing prior to export, However, the growth of manufacturing was also encouragedby other factors - by the maturing of vital pre-conditions for development . In the firstplace, as is widely recognised by economic historians, the political Federation of theStates helped constitute a truly national market by freeing trade between the ex-colonies, Federation, by itself, would have had a minimal effect but for the fact that itcapped rapid population growth, pronounced urban - especially metropolitan -concentration, high wages and vastly improved communications, all brought aboutduring the previous long boom. In the second place, there now existed something likeadequate numbers of potential factory workers, appropriately skill-differentiated andgenerally acquiescent, and appropriately concentrated close at hand in the major cities .As a bonus, manufacturing capital benefitted initially from the awesome discipliningeffects of the depression on workers, in the wake of widespread unemployment and thesuccessful efforts of Australian capitalists and governments to (temporarily) halt the riseof the trade unions.

Conventional measures show a significant pattern of manufacturing development anddiversification, especially in the inter-war period (Liege, 1977 ; Forster, 1970 ; Boehm,1979), raising the important question as to how this could have happened given theparticular pattern of dependence forged during the stage of commercial accumulation asdiscussed in the preceding section . In other words, to the extent that the new

45

46


developments were not simply tied to the processing of local raw materials, whatenabled more Australian manufacturers to successfully compete with larger, moreefficient foreign exporters? The answer, in the first instance, is that the mechanisms bywhich Australia's specialised role in the world economy was imposed began breakingdown in the latter part of the nineteenth century . Free trade was in retreat as countrieslike Germany industrialised behind tariff and other protective barriers thrown up bytheir national governments . By the first decade of the twentieth century, the UnitedStates and Germany had both surpassed Britain in the production of manufacturedgoods and, given their generally higher degree of productive efficiency, were threateningto take both British export markets and British profits . British manufacturers respondedby further developing the internal market and exporting more to the Empire, especiallyAustralia - i.e. to countries with which they had long-established economic andpolitical ties and in which they could expect favoured treatment . British imperial policysimultaneously shifted in favour of a limited degree of protection and import-replacement, at least in the Dominions, in order to forestall or pre-empt the incursionsof 'foreign' (i .e . non-British) exports . In summary, the prime factors responsible for theparticular pattern of Australian development in the second half of the nineteenthcentury - viz. free trade and British industrial supremacy - were fast disappearing .

A recognition that past structural constraints have relaxed, allowing the possibility ofsome new developments, does not explain how and why those developments actuallyarose nor what new structural constraints conditioned or limited their impact . I arguebelow that the emergence of this noticeably new pattern of dependent development waspredicated on a qualitative change in the primary mode of domination through whichthe Australian economy was integrated as a subsidiary element in the (changing)capitalist world system undergoing a third long wave of expansion and decline at thecentre .

3 .1 . INDUSTRIALISATION AND STRUCTURAL CHANGE

Initial Australian recovery from depression, in the period leading up to World War 1,depended on the stimulatory or positive multiplier effects of rising exports whichindirectly encouraged the growth of local industry, particularly manufacturing, on thebasis of the maturing pre-conditions noted above . Australian development was stilldependent on being able to successfully assume the specialised role in the internationaleconomy perfected during the long boom . Nevertheless, this was increasingly a roleplayed from memory . The average productivity gap between British and Australianmanufacturers ceased to widen noticeably while the continuing growth of local marketsincreased prospects for economies of scale and further productivity gains for localproducers (Forster, 1970, pp . 128-41) . Consequently, the structural conditionsnecessary for significant local import-replacement seemed to be emerging . However,this would depend on other foreign capitalists, more efficient than their Britishcompetitors, not capturing growing Australian markets . In addition, the othermechanism through which Australia's traditional role had been fixed - foreign (i .e .British) investment - turned more slowly in this period . After a moderate though short-


47

lived recovery in the second half of the 1890s, British investment dropped to near-zerofor the remainder of the pre-War period (Boehm, 1979, p . 136); indeed, between 1904and 1911, Australia was a net lender (Cain, 1970, p . 98) . Capital for local manufacturingexpansion therefore came from Australian sources, notably retained profits and thequickly developing stock exchanges, thereby tending to concentrate effective control inthe hands of Australian managers .

The prospects for rapid, diversified and unconstrained industrial growth in Australiareceived an initial check after World War I with the progressive recovery ofinternational trade, and the sharp increase in the share of Australian markets capturedby U.S . exporters . In short, these developments carried with them the likelihood of arapid return to nineteenth century patterns of development, with Australian capitalforced back into areas in which special local advantages or natural protection prevailed .However, since Federation, a new structure and balance of class forces had emerged,strongly favouring industrialisation as the cornerstone of national economic policy .Australian workers (especially those mobilising in the newer and stronger unions) andmanufacturers had a clear common interest in pushing for high levels of tariff protectionand other forms of government assistance to manufacturing . Through the inter-warperiod, the structure of the Australian ruling class changed significantly as capitalistswith strong (though not always exclusive) interests in manufacturing successfully foughtto extend their political influence and control over state policies, The battle for highlevels of protection was quickly won culminating in the introduction of the Massey-Greene tariff of 1921 .

"What occurred . . . was a crisis, more exactly a series of crises which catalysed sweeping changes in theruling class and enabled it to establish hegemony on a new economic and political basis . This changeoperated at many levels : the construction of a welfare state, the massive expansion of suburbanhousing, the advent of the motor car and mass retailing ; but above all, it centred on a restructuring, ofthe economy around manufacturing ." (Connetl and Irving, 1980, p . 270) .

However, Australian industrialisation was far from open-ended and progressedwithin ever-tightening structural constraints . Clearly, the smallness of the home marketand limited export prospects constrained manufacturing development here . But beyondthese factors - grounded in the lagging productivity of local producers - deeper forcespushed Australian development along particular paths . With the appearance andmaturing of definite crisis tendencies in the capitalist centre reversing the earlier (long)upswing in average profit rates, pressures built for the export of idle capital to profitableoutlets in the periphery . British investment in Australia picked up with a vengeance inthe 1920s. The major share (some 80%) of this capital inflow was in the form of loans tothe Federal, State and local governments, with the far from insignificant remainderfinding its way into the private sector (Boehm, 1979, pp . 135-36). The uses to which thiscapital was put, I suggest, go a long way in accounting for the structural shifts takingplace in the Australian economy and capitalist class .

Public infrastructural investment ran at four to five times pre-War levels during the1920s, located in rural as well as existing urban areas . However :

"While expenditure in both spheres was heavy, the provision of an urban infrastructure came to be themajor area of overseas investment. The demand for urban facilities preoccupied state governmentsafter Federation and was primarily responsible for the relative increase in public capital formation

48


from 48% of the total (1861-91) to 62% between 1900/1901 and 1938/39 . . . The urban activities were ofcourse closely linked to the rapidly changing private structure, principally the growth of manufacturingindustries ." (Cochrane, 1980, p . 37) .

Public investment underwrote manufacturing development in two main ways . In thefirst place, government purchases - biassed towards local producers - directlyexpanded the markets of supplying firms, and through backward linkages, the marketsof their suppliers, while initiating positive multiplier effects through the entire domesticeconomy. In the second place, a substantial proportion of infrastructural investmentwas indirectly productive, improving efficiency and profitability, although these effectswere, no doubt, unevenly spread across the private sector . Perhaps the clearest exampleof indirectly productive infrastructure was provided by the large electrificationprogramme centred in the cities and large towns . Electrification benefittedmanufacturing capital, directly through improvement to production methods andindirectly through reinforcing the effects of parallel expenditure on railways andtelephone systems . Electrification, by radically altering the productive base of localindustry (and lifestyles of Australian households), also rendered it more dependent onBritish technology, imports and emigrant labour :

"The economic infrastructure was the precondition for the local production and importation of thenew consumer goods and technology connected with this form of power . Not surprisingly, then, dieBritish government was eager to hasten the electrification process in Australia . Indeed the provisiongenerally of an urban infrastructure was the raison d'etre of the expanded export of capital to .Australia,and it constituted the necessary groundwork for much of the inter-war trade with Britain and othercountries . Appropriately, British legislation and engineering skill was turned to the task of facilitatingelectrical power development in Australia, Using British technology ." (Cochrane, 1980, p . 38) .

British capital also flowed directly into Australian manufacturing ; much of thisinvestment was direct (as opposed to portfolio) in the sense that it entailed the setting upof local branches or the takeover of existing Australian firms by British firms . In somecases these moves followed simply from the need to avoid the tariff. In other cases,however, the prime aim was to pre-empt the non-British penetration of Australianmarkets and facilitate the imports of British parent companies for whom local branchesacted more as distribution channels than productive plants . Significant British-fed localdevelopment tended to be concentrated in areas - like the new Steel industry -responsible for the processing of bulky raw materials which would otherwise have beencostly to transport .

These last comments suggest that there were definite limits to the shape of Australianindustrialisation as it emerged during this period . High wages, a strong labourmovement and an ability to gain preferential trade treatment through government-to-government negotiation dissuaded most British producers from transferring operationsto Australia . International trade was still the major mechanism by which Australiandevelopment was moulded but it did not work in quite the same way as it had in thepast. Australian economic development and specialisation increasingly emerged, not asthe `natural' competitive outcome of international flows of money and commoditycapital, but through the direct and indirect controls over local production exerted byBritish capital inflow to the public and private sectors, which (temporarily) reinforcedBritish trading hegemony here . Beyond these structurally located forces which led to an


49

uneven, truncated though definite degree of local economic diversification, the generallymuch higher levels of efficiency of British and American industrial capital continued tolimit or bias Australian development via the imperialism of trade, as described in theprevious chapter . In Castells' terms, Australian development during this period wasincreasingly and primarily structured through the industrial/financial - rather thancommercial - mode of domination, though the latter continued to exert a secondarydetermining effect.

There are two subsidiary senses in which we can say that Australia moved from thestage of commercial to industrial accumulation during this period . Firstly, the internalchanges in the structure of Australian industrial capital (with the rise of manufacturingat the expense of pastoralism) were associated with changes in the relationship ofindustrial capital as a functioning whole to other forms or fractions of capital . Inparticular, commercial and financial capital increasingly assumed a subsidiary andfacilitative role vis-a-vis industrial capital, as had occurred at the capitalist centre in thelatter part of the nineteenth century ; in Australia this represented a distinct role reversal,since, as argued earlier, local industrial development prior to Federation had beentightly constrained by and through the operations of financial and commercial capitalwhich were, in turn, subordinated to the dynamic of industrial accumulation at thecentre. Secondly, Australian industrialisation unwound through and expressed internaltransformations in both the dominant conditions of exploitation of labour by capitaland the form of competition between individual capitalists (Gibson and Horvath, n .d .) .Increasing centralisation and concentration of capital led to the progressivemonopolisation or oligopolisation of key sectors of the Australian economy, whichincreasingly determined the conditions under which the remainder of the economyoperated. The trend towards monopolisation was strongly concentrated in the miningand manufacturing sectors which were, as I have argued, critically dependent on theimportation and application of foreign technology and capital .

3.2 . STRUCTURAL CHANGE AND SPATIAL REORGANISATION

It is now possible to retrace these developments on the ground . Table 5 shows that thecapital cities continued to grow much more quickly than non-metropolitan areas duringthis period, accounting for almost half the national population by 1933 . Sydney andBrisbane grew particularly quickly, especially after World War I, while Hobart lagged .The rapid growth of Perth up to the(First World) War seems to have been a special case,following the effects of the western mining boom, significant overseas migration and thenatural protection afforded local producers by isolation from the eastern states . Thegrowth of Sydney and Melbourne, on the other hand, clearly reflected the uneven spatialdistribution and concentration of the new manufacturing developments . N.S .W. andVictoria, together, increased their share of national factory employment from 70% in1909 to 76% in 1939, while retaining a constant share of national population (Table 7) .A significantly greater and increasing proportion of the population of these two stateswas directly employed in the manufacturing sector (Table 8). Particular industries wereespecially prone to concentration . Thus, Forster (1970, p. 144) has noted that, even by

JPP 22 :1-D

*Figures in bracket represent average annual inter-censal growth rates .Source : D. T . Merrett (1977, pp . 5-8) .

1909, around 50% of workers in chemicals, glass, agricultural implements, tanneries andkey sectors of the textile and footwear industries were located in Victoria, generally,and, in Melbourne, in particular . Similarly, in 1901, Sydney contained 64% of the state'sfactory workers but only 36% of its population ; these percentages had risen to 79 and48%, respectively, by 1933 (Forster, 1970, p. 145) . In fact, between 1922/23 and1938/39, 85% of the increase in N .S. W.'s factory workforce was concentrated inSydney, and a further 13% in Wollongong (Port Kembla) and Newcastle (Linge, 1975,p. 450) . The growth of the latter two cities was strongly and directly tied to heavymanufacturing, notably the new steel industry .

This trend towards the metropolitan concentration of manufacturing was commonthroughout the states (the situation reached by the end of the Second World War isdepicted in Table 9). This is not surprising given the local market or import-replacingorientation of Australian manufacturing in the light of the prior concentration ofpopulation, subsidiary services, government and communication networks in the capitalcities . Beyond these factors, the rapid intensification of British-financed stateinfrastructural expenditures in the 1920s, which (as argued earlier) were focussed on theexisting cities, facilitated manufacturing concentration through the provision of anappropriate built environment for production . At the same time, the continuing andsteeply rising flow of capital into the agricultural and pastoral industries brought with ita significant degree of mechanisation and the marginalisation of small, less efficient


TABLE 5: Population growth of the capital cities, 1901-1933

1901 1911 1921 1933

Capital cities as apercentage of Statepopulation :`

Sydney 36(2 .6) 38(3.6) 43(2.6) 48Melbourne 41(1 .8) 45(2.7) 50(2.1) 55Adelaide 45(1.6) 47(3.0) 52(1 .7) 54Brisbane 24(1 .6) 23(4.2) 28(3.0) 32Perth 20(11 .4) 38(3.8) 47(24) 47Hobart 20(1,4) 21(2 .7) 24(1 .2) 26

All Capitals 35(2 .4) 38(3.3) 43(2.4) 47

Capital Cities' Shares 1901-1I 1911-21 1921-33of States' inter-censalpopulation increase(%) :

Sydney 48 59 67Melbourne 83 82 78Adelaide 56 75 67Brisbane 19 47 47Perth 72 94 49Hobart 26 52 57

All Capitals 53 66 64

Sydney :natural increaseintra-State migrationinterstate migrationoverseas migration

Melbourne :natural increaseintra-State migrationinterstate migrationoverseas migration

Adelaide:natural increaseintra-State migrationinterstate migrationoverseas migration

Brisbane :natural increaseintra-State migrationinterstate migrationoverseas migration

Perth:natural increaseintra-State migrationinterstate migrationoverseas migration

Hobart :natural increaseintra-State migrationinterstate migrationoverseas migration

All Capital Cities :natural increaseintra-State migrationinterstate migrationoverseas migration

Source: D . T . Merrett (1977, pp . 25-6) .

holdings, thereby displacing agricultural labour and unleashing a rush for the cities suchas has never been seen, before or since, save, perhaps, for a few years immediately afterthe Gold Rushes. Table 6 shows that, between 1911 and 1947, more than 40% of capitalcity growth stemmed from rural-urban drift and more than 50% from total internalmigration, thereby providing the unskilled surplus labour force on which the factorysystem depended - especially for further growth.

Clearly not all newcomers could be or were absorbed into urban manufacturing,limited, as the latter was, by the emerging pattern of dependence described above .Consequently, labour and capital - to the extent that it did not remain idle (andunemployment was by no means insignificant in the 1920s) - tended to switch into


51

TABLE 6. Demographic components of capital cities' population growth, 1911-1947

1911-1921 1921-1933 1933-1947 1911-1947(%) (%) (%) (%)

44 .2 39 .9 48.6 43 .023 .8 44 .6 51 .8 40.013 .8 4 .8 9 .2 8 .018 .2 10 .7 -10.0 7 .0

49 .2 43 .3 39.3 43 .032.2 42 .0 50.0 42 .010 .7 8 .8 13.7 11 .07 .9 5 .8 -3 .0 3 .0

46.2 48 .3 42.0 45 .036.9 36 .2 55.1 43 .010.8 10 .3 13.0 11 .07 .7 5 .2 -10.1 0 .0

40.8 38 .9 38.2 39 .029.6 41 .1 57.8 44 .08 .5 14 .4 13.7 12 .0

21 .1 5 .6 -9.8 3 .0

47.9 48 .1 42.4 45 .018.8 28 .8 59.1 38 .04.2 3 .8 -1 .5 1 .0

29.2 19 .2 0.0 14.0

58.3 87 .5 47.1 59 .025.0 25 .0 35.3 29.08.3 0 .0 17.6 10.08 .3 -12 .5 0.0 0 .0

46.0 42 .5 43.0 43 .027.7 41 .6 52.6 41 .011 .2 7 .4 10.9 9 .015.3 8 .6 -6.6 5 .0

Source : P . Mullins (1980, p. 218) .

Source : Boehm (1979, p . 48) ; Forster (1970, p. 143) ; G. J. R . Linge (1977, p . 476) .

three areas which both depended on urban concentration and further reinforced it -viz. tertiary services, residential construction and land speculation . Dowie (1970) hasdemonstrated that service employment increased its share of the workforce during theinter-War period but at a very slow rate by comparison with contemporary U .S .developments (and earlier Australian experience) . The remainder of the `tertiary sector',

TABLE S. State factory employment per thousand population,1904-1939


TABLE 7. Spatial distribution and concentration of manufacturing Industry, 1909-1947

1909 1920 1921 1939 1947(%a) (%) (%) (%) (%)

N.S.W . :share of national population 37.3 38.6 39.4share of national factoryemployment 34.4 38.3 40.5

Victoria :share of national population 29.5 28.2 27.1share of national factoryemployment 36.5 36.3 35 .7

South Australia :share of national population 9.1 9 .1 8 .5share of national factoryemployment 9.7 7.7 7 .7

Queensland:share of national population 13 .4 13 .9 14.6share of national factoryemployment 11 .1 10.9 9 .6

Western Australia :share of national population 6.1 6 .1 6 .6share of national factoryemployment 4.8 4.0 4 .1

Tasmania :share of national population 4.5 3 .9 3 .4share of national factoryemployment 3 .5 2.7 2 .4

1904 1911 1921 1929 1939

N.S.W . 47 65 67 75 84

Victoria 66 87 92 92 103

S.A. 51 69 61 65 73Queensland 40 62 50 50 54

W.A . 55 55 49 52 50

Tasmania 47 56 44 50 58


53

TABLE 9 . Metropolitan concentration of factory employment In mainland Australia,1946/47

Source: Linge (1975, p. 481).

notably construction and public utilities, grew much more rapidly, accounting for mostof the shift from the primary sector (Dowie, 1970, p. 231). Figure 2 shows thatconstruction of the built environment for consumption and production rose andremained high until the late 1920s, while investment in manufacturing plant andequipment peaked much earlier in the decade . Residential construction was stronglycentred in N.S.W. during the 1920s ; in 1925/26, half of all housing constructed inAustralia was in N .S.W. which accounted for little more than one-third of the nationalpopulation (see Table 10) . It is not possible to disaggregate these data at the infra-statelevel but other evidence suggests that N .S.W . construction was even more tightly

c4 mxrciolbuitdingsMarufoctulIplmt,etd

Monufactunng(buadirp)

N ,

s

FIG. 2 . Patterns of fixed capital formation in Australia, 19011/1-1936/7 .Source. Calculated from Bailin (1%2, pp. 340-44).

Percentage shareof State population

Percentage shareof State factoryemployment

Sydney 56 .6 78.3

Melbourne 62 .9 83 .1

Adelaide (1949/50) 60 .4 83 .5

Brisbane 40 .3 57 .8

Perth 60 .3 77.7

54


TABLE 10. interstate distribution of population, residential construction, manufacturing output and publicinvestment

"Negligible"Excluding expenditure by the Commonwealth government .Source: Boehm (1979,p-48) ; Butlin (1962, p . 169, pp. 329-31, pp . 399-400),

concentrated in Sydney (Spearritt, 1978, ch . 3). Commenting on Sydney's growth duringthe 1920s, Spearritt (1978, p . 27) states :

"The boom took many forms : the filling in of older residential suburbs, the beginning of new ones, thedevelopment of a large subdivision investment market, an expansion of retail and office building in thecity centre, and pressure on government departments and public utilities to keep pace with thesedevelopments ."

The building boom in Sydney goes some way towards explaining Sydney's rapid rateof growth (especially) by comparison with Melbourne, in spite of the latter's capacity toattract manufacturing development and public investment . Capital was also flowinginto speculative ventures in Sydney real estate, absorbing - while boom conditionslasted - a proportion of the growing workforce . Spearritt (1978, pp . 46-52) notes thatthe amount of subdivided vacant land increased by 50% in Sydney during this decade,fuelled by an energetic real estate lobby, the further improvement (especiallyelectrification) of the railways and roads and the spread of car ownership .

The developments briefly outlined above repeated - within the changed structuralconditions - the strengthening pattern of structural imbalance which emerged in the1880s. The initial growth and then decline of manufacturing output, the switch ofcapital into the built environment and the appearance of large-scale speculation and idlecapital all occurred in line with falling average profit rates through the capitalist world,developments which rendered the Australian economy especially vulnerable to theactual outbreak of crisis in the capitalist centre at the end of the decade and its speedytransmission throughout the system. The severity of the Great Depression wasintensified by the conventional economic policies of the State and Commonwealthgovernments, which insisted on meeting the considerable interest and debt redemptioncharges due to British lenders (swelled by the urban infrastructural policies of the

(1921) (1925/26) (1925/26) (1925/26)

N.S.W . 38 .6 49 .3 42 .5 33 .8

Victoria 28 .2 21 .7 30 .0 25 .1

S.A. 9 .1 13 .6 8 .9 14 .8

Queensland 13 .9 6.9 11 .5 14.9

W.A . 6 .1 8 .5 5 .4 8 .3

Tasmania 3 .9 * 1 .9 3 .2

Percentage Percentage Percentage Percentageof of of of

Australian Australian Australian AustralianPopulation Residential Manufacturing Public

Construction Output Investment"


55

previous decade) by imposing deflationary policies on an already deflated domesticeconomy (Catley and Macfarlane, 1981, pp . 52-55) .

Nevertheless, the depression did reinforce - albeit it, in an uneven and anarchicfashion - the dominant structural changes already well established . Thus,manufacturing output and investment turned up in 1933 at the depth of the trough andquickly regained their pre-crisis levels, several years earlier than export prices andearnings and public investment (Barnard and Butlin, 1981, p . 362). Manufacturingrecovery occurred through forced reorganisation brought about by chain bankruptciesas smaller, less efficient firms were taken over or asset stripped at bargain prices bylarger competitors, reinforcing the uneven trend towards monopolisation . Recovery -i,e, profitability - was also stimulated by replacement investment or demand for plantand equipment, increasing since the mid-twenties, and the state enforced decline in wagelevels . More generally, the depression re-emphasised once again, the dangers of over-dependence on primary exports in the context of the balance of payments constraint,encouraging Australian governments at all levels to reaffirm their commitment tomanufacturing development, further entrenching protectionist and supportive policiesand the political power of manufacturing capital .

Thus, although urban growth slowed in the 1930s and early 1940s, the capital citiescontinued to grow at twice the rate of the remainder of the country, driven - at least inN .S.W ., Victoria and South Australia - by the development and further spatialconcentration of manufacturing . All capital cities grew primarily through the process ofinternal (especially intra-state) migration ; Table 6 shows that this factor accounted formore than 60% of metropolitan growth in the 1933-1947 period . However, rural-urbandrift was particularly strong in Queensland, Western Australia and Tasmania, the verystates in which manufacturing lagged (see Table 8), suggesting that metropolitan growththere depended more on continual labour displacement in the primary sector and thecapacity of the urban tertiary sector to absorb it . The increasing scale andmonopolisation of manufacturing, added to continuing improvements incommunications, enabled Sydney and Melbourne-based producers to more effectivelyexploit the growing national market . In other words, the concentration andcentralisation of manufacturing capital led 'naturally' to the spatial concentration ofproduction in Sydney and Melbourne as producers there extended their commercialhegemony over markets in other cities and regions at the expense of smaller, lessefficient local firms ; the former were abetted by the supportive policies of anincreasingly sympathetic state . This latter point was most clearly demonstrated in thecase of the one exception to the strengthening pattern of Sydney-Melbournedomination - viz. the march of industrialisation in South Australia (again apparent inTable 8) . Thus, Stretton (1974, pp . 136-44) has pointed to the deliberate planninginterventions of conservative South Australian governments from this time onwardwhich were designed to supply cheap housing, land, credit and, above all, wages in orderto attract industry from the eastern states, as well as a significant share of new foreigninvestment . For example, in the interests of lower housing costs and, therefore, wages :'The establishment in 1936 of the South Australian Housing Trust ("while the rest of theworld was founding conscience-stricken Housing Commissions to clear slums andshelter the suffering poor") was an essential part of the industrialisation of the state'

56


(Sandercock, 1975, p. 53). Sandercock and Stretton both claim a degree of success forthese hot-house policies, which expressed a growing convergence of interest betweenmanufacturing capital and the state, extending beyond the local political economy ofSouth Australia and beyond the coming of a second global war .

The internal spatial form of the capital cities also reflected and entrenched theseforces. Manufacturing developments, both in established and new industries, tended tobe located in the traditional areas, a case of past patterns of land-use frozen in the builtenvironment exerting a constraining influence over contemporary developments . InSydney, for example, increasing factory employment and building continued to beconcentrated in the city and suburbs to the immediate south and west, althoughsignificant industrial development also occurred hugging the rail line to the outer-western suburbs of Auburn and Granville (Spearritt, 1978, pp . 116-22). These were theareas offering manufacturers an existing stock of usable buildings (including multi-purposes warehouses), vacant land, access to port and rail facilities and local councilsprepared to use their regulatory powers to help rather than hinder development . Theseareas also threw up costs or `negative externalities' for manufacturers (and residents)associated with accelerating congestion and pollution stemming from the rapid,unplanned and anarchic pattern of development which Lojkine (1976, pp . 133-5) hasargued is an inherent feature of capitalist urbanisation . Many of these costs followedfrom the increasing dependence of industry on trucks and motor transport, generally, inthe context of an increasingly inadequate nineteenth century road system .Manufacturers reacted by placing ad hoc, particularistic and, often, conflicting demandson local and state governments (including the plethora of semi-autonomousinstrumentalities of the latter) whose equally ad hoc policies generally reinforced theemerging pattern of land-use without confronting or even comprehending theirrationalities embedded in it .

3 .3 . THE SUBURBAN SOLUTION

At the same time as manufacturing development was intensifying old spatial forms,suburbanisation ushered in new ones . The factory system, wherever it has become thedominant organisational principle of production, has resulted in a radical separation ofliving place from workplace . Industrialisation therefore provides the social basis of (butnot imperative for) mass suburbanisation. Commenting on this relationship in the caseof American cities, Walker (1978a, pp . 191-92) argues :

"The geography of the classic nineteenth century industrial city involved, on the one $t

n implosivebringing together of production, circulation and the labour force, while, from the other, it volved aradical separation of people and activities in space . This separation proceeded especially along the linesof the division of labour in production, between production and circulation, work place and livingplace, and among classes and national cultures . As in a centrifuge, this separation of the urban solutionwas led by its outermost elements, the cream seeking the top. The suburbs were launched at the poleopposite from the slums and the central business district, but as part of the same dialectic ofurbanisation under capitalism ."

However, we must be careful not to uncritically transplant the `classic nineteenthcentury city' from American to Australian soil . As was argued earlier, unlike the


57

situation in the United States, Australian suburbanisation preceeded as well asaccompanied industrialisation . Thus, the spatial impact and especially suburban formof Australian development between the wars overlaid pre-existing forms, bothreinforcing and cross-cutting them . Nevertheless, many of the general factors raised byWalker can be usefully considered when coming to grips with the historically specificexperience of Australian suburbanisation during this period, and serve to guide theanalysis below.

Rapid inter-war suburbanisation entailed substantial new house construction inmiddle and outer lying areas of the capital cities, often ahead of basic services likesewerage, thereby contributing to both the 'urban sprawl' and the commuter demandfor public transport services and infrastructural supports. Indeed a substantialcommitment by the state to intervene in this way was a necessary pre-condition for rapidsuburbanisation, a pre-condition which was, as I have argued above, clearly satisfiedduring the 1920s . A second facilitating condition related to the availability of idle capitalfor redirection through private and public channels to these ends ; I argued that thiscondition too was met during this period . Beyond these basic pre-conditions, however,continuing industrial development either removed obstacles to or positively encouragedfurther suburbanisation. In the first place, with the development of large firms andhierarchical forms of management, top managers were freed from the need to personallysupervise production in the plant and, therefore, to remain close-by on call . Lower levelmanagers were able to take advantage of higher salaries (i.e . higher than wages),deriving from an increasingly differentiated and hierarchical reward structure, to extendtheir residential choices . Secondly, the parallel process of working class fragmentation,based on an intensifying division of labour and expressed in a hierarchical pattern ofwage differentials, also allowed higher paid workers to extend their range of locationaland tenure choice. Thirdly, the accelerating deterioration of the physical environment inthe central industrial areas, brought about by rising pollution and congestion levels,provided a strong inducement (for those who could find and afford housing elsewhere)to move .

Fourthly, increasing occupational differentiation intensified and extended existingstatus (as well as material) differentials, encouraging those in the higher reaches of theworking class (and lower reaches of the capitalist class) to turn social distance intophysical distance by moving out of traditional working class areas - areas which weresocially defined as `slums' . In some cases this move was associated with the desire to livein areas better served by location-specific services like `good' schools or open space . Atanother level, suburbanisation may be seen as the spatial image or expression of apervasive instrumental view of work . A suburban location allowed people to raise aphysical barrier between the workplace in which income was acquired and the homewhich provided the material and psychological supports for emerging consumption-oriented lifestyles .

Fifthly, rising inner city land values, demolitions and the change of buildings fromresidential to commercial or industrial uses reduced the supply of houses in centralareas, increasing housing costs there and encouraging residents to move outward in thesearch for cheaper rents and house prices .

Sixthly, for those able to afford a mortgage, the move to the suburbs opened the

58


prospects and promises of owner-occupation - security of tenure, control over one'sliving space, low life-time housing costs, capital gain and influence over localgovernment policy . On the one hand, owner occupation, concentrated in the expandingouter suburbs expressed and reinforced status differentials generated in the workplace ;the owner-occupier became a respectable citizen with `a stake in the country', bycomparison with the shiftless 'slum-dweller' . On the other hand, the unequal capacity ofpeople to escape into suburban owner-occupation, meant that the residential form ofthe large city came to express - on the ground- the changing structural features ofAustralian capitalism during this industrialising phase - and, in particular, to fix inbricks, mortar and asphalt, the changing income and wealth distributions generated bythe process of class fragmentation and the impact of state intervention . Nevertheless, itis important to note that there were definite limits to the growth of owner-occupation,limits inherent in the relationship of high house-land prices to average wage levels .Thus, Spearritt (1978, p . 31) shows that, for Sydney in 1928, average house prices in theouter south-western suburbs of Bankstown and Canterbury were £585 and £869,respectively, compared to average male annual earnings of £267; not surprisingly hesuggests, the metropolitan owner-occupancy rate remained constant between 1921 and1933. In fact, owner-occupancy rates remained constant throughout Australia duringthis period (Hill, 1957, p . 7) . Mullins (1981, p. 71) has also shown that in the periodbetween 1921 and 1947, all capital cities, with the exception of Hobart, eithermaintained constant owner-occupancy rates or, as in the case of Melbourne,experienced a falling rate . Clearly, the drive towards an owner-occupied suburbia didnot overtake the overall level of metropolitan growth or rate of new householdformation in this period .

Merely listing the forces behind suburbanisation does not explain how they interactedto produce the historically specific patterns observed, including the differences betweencapital cities . Surprisingly little work has been done in this area . To push further in thisdirection, a task beyond the scope of this paper, would require a concrete attempt totrace the manner in which developers, landlords, speculators, financial capitalists andthe state structured the built environment in each city, in the context of pastdevelopments and contemporary constraints ; such an attempt would also require thetheorisation of an adequate theory of urban ground rent .

3 .4 . SUMMARY

This third stage of capital accumulation saw significant changes in the form andoutcome of Australia's dependent development as manufacturing emerged as a majoreconomic and political force . These changes arose, I suggested, from the maturing ofcertain pre-conditions established in the previous stage, the impact of conjuncturalfactors like Federation, and the new manner in which Australia was integrated as part ofa world economy during the expansive and declining phases of the third long wave . Inthe latter context, the structural limits of Australian development were increasinglyestablished through the selective import of British capital to the public and private(especially manufacturing) sectors, rather than simply as a result of specialisation


59

enforced through the global circulation of traded commodities . The spatial form ofdevelopment, increasingly constrained by this industrial/financial mode of domination,saw the increasing metropolitan concentration of capital and labour, the increasingdominance of Melbourne and Sydney-based capital (with the partial exception of thestate-sponsored industrialisation drive in South Australia, centred in Adelaide) and anew wave of suburbanisation . Although these processes slowed during the depressiondecade of the thirties, recovery, (culminating in the Second World War and thebeginnings of a new long boom after it) laid the basis for significant changes in the post-war pattern of Australian development .

CHAPTER 4

Corporate Accumulation and the Corporate City:1946-Present

Like any depression in a capitalist society, the Great Depression forced a degree ofeconomic restructuring as a basis for eventual recovery . However, in this case (like fortyyears earlier), recovery occurred within, and expressed substantially altered, structuralconstraints . Consequently, the form of dependence and pattern of Australiandevelopment changed significantly during the long post-war boom and beyond, a periodincreasingly characterised by what might be termed the rise of corporate accumulation .

4.1 . POST-WAR EXPANSION AND STRUCTURAL CHANGE

The long boom which resulted in sustained expansion of the Western economieslasted from the end of World War II until the late-1960s and was fuelled by theconjuncture of several mutually reinforcing factors ensuring high and rising profit rates .In the first place, war, the influx of refugees from Eastern Europe and massdemobilisation of the armed forces, created pools of surplus labour which acted to keepwage levels low . This tendency was facilitated by the prior destruction or co-option oftrade union movements during the war. Secondly, capitalists in the centre continued tobenefit from cheap raw materials exported by third world countries, many of whichwere still formal colonies. Thirdly, the Bretton Woods agreement in 1944 laid the basisfor the reconstruction of international trade under U .S. leadership. Rapidly expandingworld trade was also underpinned by the equally rapid recovery of the war-devastatedeconomies of Germany and Japan, based on the large-scale import of American capitalin the one case, and the extended capacity to accumulate from internal sources whichwere no longer required to fund massive military expenditure, in both cases . The large-scale and increasing export of American capital initially represented a switch out of thedomestic war economy . However, more important than the fact and destination ofcapital switching, was the form assumed by this flow, embodying, as it did, far-reachingtechnological improvements, increasing the profits of innovating capitalists at theexpense of those dependent on existing techniques and intensifying the competitivepressure to `accumulate or perish' . Indeed, Mandel (1975) ultimately grounds this fourthlong wave of capitalist development in the revolutionising impact of developments inelectronics and cybernetics (in short, `automation') on the processes of production andexchange; the new technologies tended initially to be spinoffs from wartime

60


61

developments, a relationship which persisted in the post-war period as the defenceestablishments, especially in the U.S., continued to fund pure and applied scientificresearch .

Australia's post-war role in this global system was determined by the emergence ofdistinctly new relations of dependence . In the first place, the geographic locus ofdominance shifted from Britain to the United States . Beresford and Kerr (1980) arguethat the period 1942-52 was the crucial turning point in this respect and trace the seriesof inter-governmental negotiations which established the framework for Americanglobal hegemony. Although the Labor governments of the 1940s were hesitant inunderwriting these agreements- rightly concerned at the potential power of newinternational organisations like the I .M.F. to interfere in the domestic economies of thesmaller states - they eventually acquiesed since their committment to accelerated localindustrialisation, export diversification, full employment and the welfare statenecessitated expanding international trade and the sustained growth of Australia'strading partners . Beresford and Kerr (1980, p . 166) therefore conclude : 'The strategyemployed by the Curtin and Chifley governments had led to a cutting of the apronstrings which tied Australia to a declining British Empire, to a development ofAustralian manufacturing capital and to the reorientation of trade flows and capitalintake towards the increasingly powerful American economy' .

Labor's hesitancy in recognising the blessings of foreign capital inflow was sweptaside after 1949 by the incoming Menzies Liberal government . The latter's open doorpolicy facilitated a four-fold increase in net capital inflow (in money terms) during the1950s, by comparison with the 1920s, and it increased three-fold again in the 1960s .Between 1947 and 1975, American capital matched British capital, each accounting forapproximately 40% of the total inflow ; however, in the period 1966-1975 the Americanshare reached 41% while the British declined to 26% (Boehm, 1979, pp . 136-38),suggesting that the transition to U .S. dominance proceeded over most of the period inquestion .

The second aspect of change related to the form of dependence relations . Privatecapital accounted for about 90% of total inflow between 1950 and 1965, reversing thedominance of public overseas borrowing in the inter-war period . Of this proportion,more than 80% was direct as opposed to portfolio investment (Boehm, 1979, p . 137),suggesting that post-war capital inflow was much more oriented towards the control ofkey sectors of Australian industry . By 1966, about 25% of Australian manufacturingwas foreign owned and 29% foreign controlled . These measures had increased to 36 and54%, respectively, by the early 1970s (Boehm, 1979, p . 142). The form in whichincreasing overseas control arose entailed further (uneven) internal transformations inthe capitalist mode of production, expressed at the institutional level by the increasingreach of the transnational corporation (TNC) . The latter phenomenon has resulted inthe increasing division of production and re-division of labour across nationalboundaries, imposing constraints on the pattern and pace of development withinparticular national economies like Australia (see below). The penetration of TNCs hasbeen concentrated in the Australian mining and manufacturing sectors, especially in thefastest growing sectors of the latter - viz., metals, heavy capital goods, includingtransport equipment, and chemicals and related products . It is precisely these industries

62


which have become critically dependent on the new capital intensive technologies,which, because of their high research and development costs, tend to be monopolised bythe incoming TNCs . Consequently, smaller Australian capitalists have becomeincreasingly dependent on these large concerns for access to the technologies necessaryto maintain competitiveness . Where this access is denied, the former have been forcedback into a subsidiary or servicing role to TNC capital or into less profitable anddynamic areas of the domestic economy of no interest to the latter . Thus, to summarise,the expansive phase of the post-war long wave expressed a qualitative change in thelocus and form of dependence relations, causing Australian development to beincreasingly constrained by what could be termed `the corporate mode of domination' .

The spatial organisation of the processes described above involved the continuingconcentration of population and economic activity, especially manufacturing, in thesouth-eastern corner of the continent ; intensification of metropolitan primacy ; an initialburst of non-metropolitan urban development which later tailed off but did expresssignificant changes in the location and functions of growth in this sector ; and quitesignificant changes in the internal form and functions of the capital cities . Each of thesepoints is taken up in turn below .

4.2 . MANUFACTURING CONCENTRATION AND METROPOLITAN GROWTH

The population shares of the six states were fairly constant during the 1950s and1960s, as were the shares of total factory employment. However, these crude data maskimportant trends . The smaller states, with the partial exception of South Australia, wereunable to capture an even or balanced spread of new manufacturing developments . Inaddition to the concentration there of older industries like textiles,N.S.W.and Victoriaattracted the lion's share of new investment in chemicals, transport equipment andheavy capital goods . Manufacturing in the smaller states gravitated to the processingrequirements of localised raw materials, notably in minerals and timber products . Thatthese latter developments occurred, against the prevailing trend of Victorian andN.S.W. domination, was critically dependent on the development policies of the smallerstate governments . With positive inducements related to taxation concessions and cheapinfrastructural provision and the distribution of leases controlling natural resourceexploitation as a bargaining lever, state governments competed against each other formanufacturing investment, both foreign and domestic . `During these two decades theparliaments of Queensland, South Australia, Western Australia and Tasmania passedabout forty acts setting out agreements of this kind, mostly in relation to capital-intensive and long-term developments like alumina refineries, aluminium smelters, ironand steel works, pulp and paper plants and oil refineries' (Linge, 1975, p . 477). Theoutcome was not the emergence of diversified and evenly balanced state economies, asthe developmental rhetoric claimed, but the disjointed and uneven pattern briefly notedabove. The social and economic costs imposed on Australian workers and capitalists bythis anarchic interstate scramble, based on the motto, `all and any development is good',have risen further during the current long swing down-a point to which we will returnbelow .


63

It appears that, of the smaller states, Tasmania and South Australia were mostsuccessful, albeit within the limits noted, in attracting new investment during the longboom. However, in the Tasmanian case these developments were particularly selectiveand occurred from a very small base . They also depended disproportionately onpublically subsidised infrastructural support, most especially in the form of cheap,reliable and increasing supplies of electricity . This requirement has placed ever-increasing demands on State expenditure, tying Tasmanian prosperity to the continueddevelopment of existing industries, and limiting development (including social welfareprovision) in other fields - an outcome which has significantly narrowed the options ofsuccessive state governments. The South Australian industrialisation programme, onthe other hand, started from a larger base, was more broadly organised at the level ofpolicy and enjoyed a greater degree of success . The programme which was, as notedabove, established just prior to the war, resulted in the partial displacement of the local'marsupial capitalist' establishment, entrenched in the primary and commercial sectors ;in this sense, development followed the lead established by Victoria and N .S.W. in theinter-war period. Wanna (1980, pp . 9-10) has provided a very useful account of theimplementation of this programme by the Playford Administrations, including a clearstatement (if somewhat mixed metaphor) of the zero-sum game set up among the States :

"Playford, more than most of his contemporaries, was acutely aware that Australia as a federal systemoffered six 'open doors' to potential foreign investors and not one door as under a unitary system .These six 'open doors' were perceived to be locked in cut-throat competition with one another to securethe maximum quantity of foreign pieces of silver. Metaphorically speaking, the state offering thechoicest 'bait' on its 'hooks' stood to profit at the expense of the others in fishing the internationalmonetary waters of emerging monopoly capitalism ."

This is not the place for a detailed discussion of the factors responsible for SouthAustralian development. Nevertheless, it is clear that a large part of the explanationmust draw on the implementation and timing of selective public policies . In particular,the continuity maintained by thirty years of conservative government rule provedattractive to large foreign and local capitalists keen to sink large portions of capital intolong-term projects - this was especially relevant in the context of the significant levelsof political instability apparent in the other states and federally over the same period .On this firm basis, the implementation and extension of pre-war policies aimed at lowhousing costs, low wage-goods prices, industrial peace and 'functional' physicalinfrastructure (i.e . functional for big capital) lured new investment, especially fromincoming national and transnational oligopolists, sought out by State governmentnegotiators on a one-to-one basis .

Within each state the capital cities continued to grow faster than non-metropolitanareas (see Table 11) . Merrett (1977, p . 26) has demonstrated that, between 1947 and1961, internal migration played a minor role in capital city growth, especially bycomparison to the pre-war period . However, overseas migration accounted for almost40% of the metropolitan increase, virtually identical to the impact of natural increase . Inthe case of Melbourne and Adelaide, overseas migrants represented almost half the totalincrease, well ahead of natural increase . Sydney's growth also depended significantly onoverseas migration, though it also experienced an above average inflow of Australian-born from non-metropolitan N .S.W. Almost 80% of overseas migrants, more than half

64


of whom came from non-English speaking (NES) countries, settled in the mainlandcapitals (Price, 1970) . This rapid influx of skilled and unskilled workers, poorlyorganised, desperate and riven by cultural differences, provided a necessary and highlyexploitable source of labour power for expanding manufacturing capital . NES migrants,male and female, came to play a crucial role in the lower reaches of the industrialoccupational order (Collins, 1975) . The capital cities maintained or slightly extendedtheir shares of state manufacturing activities over this period, especially in the majormanufacturing states of N.S.W., Victoria and South Australia where around 80% ofstate factory employment and output was concentrated in the capital cities (Linge, 1975,p. 481). The fact that imported `factory fodder', as well as manufacturing capital,gravitated to Sydney, Melbourne and Adelaide was not coincidental but clearly reflectedthe sustained and successful attempts of conservative federal and state governments toguarantee the extended reproduction of labour power at minimal cost to the capitalistclass. The successful wooing of the major motor vehicle manufacturers by the SouthAustralian government, backed by state-provided (subsidised) housing, infrastructureand migrants best illustrates this point .

4 .3 . NON-METROPOLITAN URBAN GROWTH

Away from the capital cities, the smaller country towns also grew quickly in theimmediate post-war period, increasing their share of national population from 18 to25% between 1947 and 1954 ; thereafter this share was barely maintained until the early1970s when it began to fall (see the final row of Table 11). Non-metropolitan growthappears to have been driven, in the first instance, by the continuing restructuring ofagriculture . Increasing fixed capital investment displaced rural labour, some of whichwas absorbed in the tertiary sector of inland service towns and smaller port-cities on thecoast. Clearly, however, the absorptive capacities of these towns were Limited .

TABLE 11. Population concentration in the capital cities, 1947-76

Note : The figures represent, for each State in a given year, the percentage of Statepopulation located in capital cities, smaller urban centres and rural areas .Source : Quoted in Logan, Whitelaw and McKay (1981, pp . 65 and 84); Merrett(1977, p.6) .

Metropolitan Other Urban Rural

1947 1961 1976 1947 1961 1976 1947 1961 1976(%a) (%) (%) (%) (%a) (91) (%) (%) (%)

N.S.W . 49 .8 56 .0 63 .0 22 .2 25 .9 28 .0 11 .1

Victoria 59 .8 65 .0 71 .3 11 .3 16 .6 28 .9 121

S.A . 59 .4 61 .0 72.0 10.2 12 .8 30 .4 - 15 .1

Queensland 36 .4 41 .0 46.7 23 .4 - 33 .7 40 .2 19 .6

W.A . 54 .2 57 .0 70.1 10.3 - 13 .7 34 .9 - 16 .2

Tasmania 41 .0 33 .0 40.3 29 .2 35 .1 29 .8 - 24 .9Australia 50 .7 56 .3 63 .9 18 .1 25 .9 22 .3 31 .2 17 .9 13 .8


65

In other cases, manufacturing appeared to provide the growth impetus . Thus,between 1947 and 1954, 37% of new manufacturing jobs arose outside the metropolitanareas, a trend dependent on unusual short-term factors associated with war-inducedbottlenecks in the reconstruction of an adequate built environment for manufacturingexpansion in the big cities and the impact of Labor's short-lived post-war reconstructionprogramme. However, in the following decade non-metropolitan areas managed tocapture only 22% of new manufacturing jobs, half of which were concentrated inWollongong, Newcastle and Geelong (Linge, 1975, p . 480) . This latter point highlightsthe special role of a few centres in catering for a narrow range of heavy manufacturingindustries. Thus, the development of Newcastle and Wollongong has and will continueto depend critically on the fortunes of B .H.P.'s steel-making activities . Such centreswere initially located with good access to coal or other necessary raw materials andtransport, generally close to the metropolitan areas. However, direct and indirect stateintervention was also a critical factor in encouraging rapid growth . Whyalla is perhapsthe clearest example of this, having been established as a steel town in the 1930s throughdirect negotiation between the South Australian government and B .H.P. Subsequently,B.H.P. added shipbuilding to its Whyalla operation, along with other activitiesnecessary to stamp the community as a company town. Throughout the 1950s and 1960sWhyalla grew rapidly only to suffer a sharp reversal in the past decade, a point taken upbelow, Similarly, since the mid-1960s, the Victorian government has sponsored thedevelopment of heavy industry in the Westernport Bay area, based on initial`sweetheart' negotiations with a select number of oligopolistic companies in the oil andmetal products industries (Timlin, 1974) . Other non-metropolitan industrial centresdepended on the routine state support provided by cheap railways, port facilities,favourable tax treatment and selective subsidies.

A third category of town growth involved the emergence of centres catering for theinterrelated activities of tourism, retirement and property speculation . The phenomenaldevelopment of Queensland's Gold Coast, followed later by the Sunshine coast andparts of the northern and central coast of N,S.W., best illustrate this process . In a morerestricted sense, satellite centres in the 'ex-urban' belts of the capital cities have alsocatered for retirement, along with long distance commuting, as witness the rapid growthof Gosford-Wyong (located between Sydney and Newcastle) during the 1960s .

Finally, the continuing development of mining towns like Mt . Isa in Queensland andGeraldton in Western Australia during the 1950s and 1960s explains part of the story ofnon-metropolitan urban growth - but not as loudly as in the past fifteen years .Nevertheless, a consideration of developments in mining as well as manufacturing atthis point does raise the question of the spatial impact of the structural andorganisational changes unwinding in those industries . With the rise of significantmonopolisation across and within national boundaries, traditional patterns of spatialorganisation have begun to break down . The internal organisation of large capitalistenterprises, where the division of labour is intense and hierarchically ordered, has led tothe fragmentation of production over space in the form of multi-plant operations andthe separation and locational specialisation of the sales, financial and different levels ofmanagement. Instead of a clearcut regional pattern and hierarchy of urban centres,space threatens to turn into what one geographer has termed a complex 'mosaic' of

66

Progress in Planningcompeting determinations (Walker, 1978b), with activities distributed over space in linewith the internally co-ordinated interests of different corporate groups which haveincreasingly come to express a global reach . The only clear pattern to emerge out ofthese developments has been for TNCs to locate their `head offices' for the co-ordination of Australian and near-Pacific operations in the centre of the capital cities,notably Melbourne and Sydney (Connell, 1977, pp . 64-65) . In this case, thesubordinated growth of smaller urban centres to the capital cities is not the result oftraditional centre-hinterland interaction (or based in Myrdal's [1963] timeless world of`spread' and `backwash' effects) but the outcome of pervasive and uneven changes in theinstitutional organisation of advanced capitalism . This point too is developed furtherbelow.

4.4. SUBURBANISATION : NEW SOLUTIONS

The capital cities also expanded rapidly over space during this period - the comingof the so-called post-war suburban sprawl - a process which imposed new andpermanent patterns of internal differentiation on existing structures . For the differentcapital cities it was a case of historically situated variations around a common theme .The residential populations of the inner suburbs fell significantly, partly as a result ofupwardly mobile workers buying into home ownership on the urban fringe, partly dueto the construction of public housing estates in the middle and outer suburbs and partlyas a result of rising land prices forced by the intrusion of non-residential land usesdisplaced from the central city . At the same time, the ethnic composition of theremaining populations was changing as recent migrants, especially NES migrants,utilised the stocks of terrace housing to meet their immediate needs for shelter,community and wealth accumulation . Middle suburbs grew, resulting in the rapiddecline of vacant land and the beginnings of redevelopment at higher densities . In thelatter case, the 1960s witnessed a flat building boom for both rental and owner-occupation, especially in Sydney and Melbourne (Clarke, 1970) . Outer suburbs grewfastest of all, reflecting the availability of plentiful land, most of which was poorlyserviced, the self-reinforcing dynamic of property speculation, the mechanics of rapidnew household formation and the spread of car ownership . A particularly dramaticmanifestation of this phenomenon occurred in the municipality of Doncaster-Templestowe, a sleepy, semi-rural community on the north-eastern edge of Melbourne .Doncaster-Templestowe's population jumped from 3,786 in 1947 to 64,286 by 1971 asthe sprawl of dairy farms, market gardens and small villages was replaced by a sea of redbrick, terracotta tile and three-car garages (Lyne, 1974) .

Other factors were at work decentralising jobs . The central business districts lostmanufacturing, warehousing and other blue-collar jobs as private office developmentand the growth of government employment replaced them with white-collar jobs . Risingcity land values also pushed lower order commercial and professional activities out ofthe C.B .D. into the near-lying suburbs . Manufacturing burst the spatial limits imposedby a built environment first laid down in the late nineteenth century, relocating to newindustrial estates in the middle and outer suburbs (Logan, 1964 ; Rimmer, 1969).


67

® C.S.D.Stage of development

Pro 1889-1928

FIG . 3 . The growth of Melbourne, 1835--1971. Source : Morris (1981) .

I

Retailing decentralised, clustering around new regional sub-centres (Logan, Whitelawand McKay, 198 1, p . 90) .

These changing spatial patterns depended on certain historically specific conditionsbeing met - notably, continuing and rising economic growth and hence rising averageliving standards, and a growing population. Beyond those pre-conditions, admirablysatisfied in the 1950s and 1960s, state intervention at different levels and in variousforms was of central importance . Thus, the residential sprawl was driven by thecontinuing and rapid increase in government-sponsored home ownership, unlike the1920s when, as argued in the preceding chapter, increasing ownership barely kept pacewith increasing population (see Table 12) . Federal government policies encouragingowner-occupation ranged from the provision of (very) low interest mortgage financethrough the defence forces scheme and the terminating building societies to directcontrols over the banking sector and extremely favourable taxation treatment (Kemeny,1983). State governments have played their part through the self-financed sale of public

68


FIG. 4. The growth of Sydney, 1788-1971 . Source : Jeans and Spearritt (1980) .

housing at subsidised rates and the guarantee of building society viability . The political`penetrability' of owner-occupation as the housing issue was no more evident than in the1982 Victorian election where the major parties at both levels frantically outbid eachother in an effort to demonstrate their overriding concern for the `plight' of the `poolhome owner. An unwary visitor, casting his or her eye over the confusing panoply ofpromises concerning mortgage interest subsidisation, unfrozen mortgage funds, therelease of 'new-home-packages' and the offer of last-ditch finance to stave off mortgageforeclosure, might be forgiven for thinking that tenants lived in clover . The reverse is thecase (Berry, 1983b), understood by recent and repeated claims from within the realestate sector that average rent levels in Melbourne are likely to continue to jump by 15to 20% per annum in the 1980s .

The intended and unintended effects of government planning policies have alsocontributed to the changes described above . More to the point, the tardy, fragmentedand ineffectual development of town planning in Australian cities, especially in thisperiod, followed rather than directed urban development, facilitating the changes noted(Sandercock, 1975). As statutory planning controls were developed and delegated to thenumerous regional and local government authorities, the latter used them, along with

!PP 22 :ne

Source: From Mullins (1981, p. 71).

their existing powers over rates and building regulations, to attract new non-residentialactivities . Some Melbourne municipalities like Knox and Broadmeadows managed toattract large manufacturers like Ford to their new industrial estates with a package ofinducements related to low rates, `flexible' building and other regulations, and theavailability of large tracts of topographically suitable land . In some cases the Stategovernment became directly involved, as where the Bolte Victorian governmentnegotiated with General Motors Holden to set up a large plant in Doveton onMelbourne's south-western fringe . In return, the Victorian government agreed toconstruct a public housing estate for G .M.H . workers nearby . The South Australiangovernment had earlier lured G .M.H. to Adelaide by building, through the SouthAustralian Housing Trust, a satellite suburb (Elizabeth) to house company workers .Other municipalities less endowed with suitable tracts of industrial land sought to boostrate values by securing large commercial developments like regional shopping centres .As always, control over zoning and other planning tools resulted in the generation ofspeculative gains and the prospects for political corruption (Sandercock, 1979, 1983a) .

Although residential, employment and commercial decentralisation were proceedingtogether, these processes were largely uncoordinated and essentially chaotic .Consequently, problems of intra-urban mobility worsened noticeably as sprawlinggrowth `fuelled' by widespread and increasing car-ownership generated complex radialand cross-town trip patterns (Manning, 1978) . Government reactions, institutionalisedin the Commonwealth-State roads agreements, reinforced emerging patterns byembarking on major road building programmes and allowing public transport systemsto run down. These policies were enshrined in the metropolitan transport studies carriedout for most of the capital cities in the 1960s and entombed in the partly completedintra-urban freeway systems subsequently built . The spectacular, unfinished, Westerndistributor leading from the Sydney Harbour Bridge stands like a silent witness to boththe ambitions of the freeway builders and the political forces which stopped them .

Rising owner-occupation during this period certainly cut across class tines givingAustralian workers the highest owner-occupancy rates in the world. However, at thesame time, patterns of inter and intra class differentiation were being re-established overspace, at least in the capital cities. With the continuing outward spread people were

The Political Economy ofAastralian Urbanisation

69

TABLE 12. Owner-occupancy rates in the capital cities, 1947-1976

Year Brisbane Perth Hobart Adelaide Sydney Melbourne(%) (%) (%) (%) (%a) (%)

1947 60 55 49 54 40 40

1954 71 67 63 66 55 63

1961 74 73 70 73 68 72

1966 73 73 70 74 69 73

1971 70 66 67 70 66 70

1976 73 72 73 74 69 74

70


being more effectively segregated according to class position . For Sydney's workers itwas a case of westward home, while middle and upper class citizens decanted to thelower North Shore . One urban historian has aptly described this process as a'choice'between the dress circle and the stalls (Spearritt, 1978) .

Increasing spatial segregation expresses the impact of long established and self-reinforcing differences in land or site values, which, in turn, express pre-existing patternsof ground rent differentiation, protected by the exclusivist planning policies of localgovernments acting in defence of property values . In short, it opens up the prospect forwide differentials in the accumulation of wealth through property ownership . Theincreasing physical isolation and segregation of the classes in expanding cities also tendsto reinforce the impact of unequal access to location-specific urban facilities likehospitals, `good' schools, public transport and entertainment . It was this perception latein the 1960s which gave rise to the `Deprived West' debate in Melbourne and Sydneyand the federal Labor Party's urban programme in the Whitlam government . However,rather than outline these policies (see Sandercock, 1983b), it is more appropriate to tracethe changing structural conditions which led to an end of the long boom and a decidedswing down, developments which invalidated the implicit assumptions on whichLabor's brave new world were based .

4 .5 . CRISIS AND RESTRUCTURING

In the late 1960s the long upswing turned down . Average profit rates began to fall asworkers in the advanced capitalist countries continued to win substantial wage rises atthe same time as the initial wave of technological innovation in production methodsslowed (Mandel, 1975, p . 132). This tendency was reinforced, firstly, by the reversal offalling commodity prices for third world exports and, secondly, by the breakdown in theinternational monetary system and consequent interruption to world trade caused bythe collapse of the U .S. dollar as the international currency .

Falling profit rates and the build-up of idle capital in the capitalist centre encouragedcapital to increasingly switch between sectors and across space in search of moreprofitable outlets . Thus, the central city property booms - expressed, above all, in therush to erect high-rise office towers and, more generally, by the process euphemisticallytermed, `urban renewal' - which occurred in many American, Australian and Britishcities in the late 1960s and early 1970s illustrate the switch of capital into the builtenvironment (Massey and Catalano, 1978; Daly, 1982) . Similarly, the acceleratingrelocation of industrial capital from the north-eastern region of the United States to the'sun-belt cities' of the South West was (and still is) driven by the prospect of new,efficient infrastructure, low taxes and cheap, docile labour (Perry and Watkins, 1978).More importantly, and for similar reasons, capital was switched away from thecapitalist centre to the periphery, including Australia . Some of this capital outflow wasaimed at securing control over raw materials in order to mitigate their rising cost but asignificant portion entailed the relocation of industrial production to selected thirdworld countries - Taiwan, South Korea, the Philippines and Singapore, to name themajor recipients . Some Marxists, notably Warren (1973, 1978), see this as the natural


71

outcome of capitalism's historic task - viz . to radically transform productive forcesthroughout the world as a prelude to generalised socialist revolution . However, it isclear that this pattern of development, strongly oriented to re-export to the capitalistcentre, has been largely limited to particular third world countries and particularmanufacturing industries, with minimal 'trickle down' effects to the domestic sectors ofthe recipient countries (O'leary and McEachern, 1980) .

The process of partial third world industrialisation- and its reverse side, partial de-industrialisation in the capitalist centre - is the main element in what has been called,`the new international division of labour' (Wheelwright, 1980) . Dividing and relocatingproduction to countries like South Korea allows large industrial capitalists to maintainand even enhance profit rates by reaping the benefits of `growth ensembles' comprisinglow wages, long working hours, 'free' infrastructure and an absence of industrial unrest,all imposed by repressive, authoritarian regimes propped up by U .S. aid and militarysupport. Large TNCs are especially well placed to take advantage of theseopportunities, having evolved the institutional means for moving capital and profitsacross national boundaries within the corporate group . Increasing internal capitalmobility and an increasing proportion of international trade accounted for bycommodity flows between companies in the same corporate group, has increased thebargaining power of TNCs vis-a-vis national governments and allows them to evade andsubvert the latters' fiscal, monetary and exchange rate policies (Muller, 1979) .

Intensifying economic crisis on a world scale has both reinforced Australiandevelopments originating in the post-war boom and forced initial restructuring whichmay bring about substantial changes in Australia's position in the global capitalistsystem. In the former case it is clear that foreign, especially TNC, capital has furtherincreased its ownership and control of Australian industry, especially in the mining andmanufacturing sectors, and that Australian capital has become more dependent on andless competitive with large TNCs (Crough and Wheelwright, 1982). However, thiscontinuing pattern of foreign penetration is occurring in the context of the emergence ofwhat Catley and McFarlane (1981) have termed, 'the Pacific-rim strategy' . Australia'srole in this strategy appears to imply a large shift in economic specialisation away fromimport-competing manufacturing towards the export of minerals and other rawmaterials increasingly arising as internal flows within the TNCs .

There is some evidence to support this claim . It is clear that manufacturing industryhas been shedding jobs - between 1974 and 1979, over 200,000 jobs were lost in thissector (Stillwell, 1980, p. 48), with losses being heaviest in textiles, clothing and footwearand 'other machinery and equipment', and moderate in fabricated metal products,transport equipment, 'miscellaneous manufacturing', chemicals and non-metallicmineral products (Robson, 1979, p . 62). The forces behind this trend relate to theincreasingly successful competition of imports, especially from Asia, technologicaldisplacement due to the application of micro-processors, etc . to production (a changeendemic to advanced capitalism), the global production and trade priorities of TNCs,and the largely defensive competitive reactions of Australian capitalists 'going offshore'to set up production in South-east Asia . What is not clear is the relative strength of eachfactor. However, some tentative conclusions are possible . Increasing importcompetition in the face of declining effective protection rates has been responsible for

72


the decline of traditional industries like textiles, clothing and footwear . Transport andcommunications equipment, on the other hand, has experienced considerabletechnological change, although the motor vehicle industry is also clearly beingrestructured by two of the world's largest TNCs, General Motors and Ford, in thecontext of their new global strategies . Where a TNC controls a local firm it may wellallow it to run down through competition with lower priced imports produced by someother firm in the same corporate group, ifthat policy accords with the overall goals andpriorities of the group . It is difficult to get reliable data on these developments - forobvious reasons - as it is for the movement offshore of Australian companies . A recentstudy, however, has found almost 600 Australian-based companies producing overseas,mainly in South-east Asia ; their number and scale of operations have been growingquickly in the late 1970s (Wheelwright, 1980, p . 147) .

Apart from the restructuring of manufacturing, the past decade has also witnessedcapital switching to other sectors . Throughout the 1970s individual capital citiesunderwent periodic property booms, reflected in central city office building, outer-suburban land development and `gentrification' . However, in the last 5 or 6 years,construction - as opposed to speculation - has risen slowly (in money terms),especially in the residential area. Some employment growth has occurred in the tertiarysector during the 1970s although this depended largely on public sector growth and noton private capital accumulation . With tightening public service staff limits as well ascontinuing technological displacement in tertiary industries like banking and retailing,the prospects for significant job creation in the tertiary sector appear slim . In fact, theswitch of capital from manufacturing to the tertiary sector may well compoundunemployment by funding further labour-displacing technological change in the latter .

Mining has been a major destination for capital switching in the past few years, givingrise to the rhetoric of `the resources boom' . Between October 1979 and June 1981 . thetotal capital `committed' to prospective major resource projects climbed from $14billion to $31 billion, mainly in the oil and gas, coal and aluminium industries (Dick,1982). This was to be funded partly from new capital inflow, which experienced aquantum leap during this period, partly from retained profits generated since the lastmining boom a decade earlier (and boosted by the generous taxation and subsidypolicies of State and Federal governments) and partly by the mobilisation andredirection of local capital . The capacity of large mining TNCs to outbid othercapitalists in Australian capital markets has serious implications for local employmentprospects . Rising interest rates intensify pressures on manufacturers to rationaliseproduction, leading to further de-skilling, displacement and offshore relocation . Giventhe highly capital-intensive nature of mining development, the extra jobs created bythese projects are unlikely to significantly compensate for jobs lost elsewhere in theeconomy. Indeed, to the extent that resource projects are successful, similar andreinforcing effects may arise through balance of payments movements . The 'Gregorythesis' suggests, for example, that booming mineral exports will force exchange ratechanges which effectively cheapen (all) imports in relation to locally produced goods(Gregory, 1976) . At the same time, in order to make many of these projects viable (andattract foreign investment in the first place), the state will have to engage in substantialinfrastructural expenditure in advance of demand, especially in communications and


73

electrification. Much of this expenditure will either be irrelevant to manufacturers - asin the case of railways extensions and ports servicing the new mining centres - or, likerising interest rates, positively harmful - as in the case of rising electricity charges ortaxes to finance it . Public resources committed to mining projects obviously can not beused to shore-up manufacturing during restructuring or encourage job creation orcompensate for falling real wages through the social wage - i.e. through increasedexpenditure on housing, health, education and welfare . The fact that many of theproposed resource projects were shelved during 1982 and 1983, in the shadow of anincreasingly severe global crisis, has delayed rather than averted these problems .

It is also worth stressing that capital can switch from manufacturing and other sectorsinto mining without either direct state intervention or a call on capital marketswhenever capitalists reorient their existing operations . The prime example of thisstrategy arose when B .H.P. diversified into oil and gas during the 1970s, resulting indeclining employment levels in its steel-making and ship-building operations and theprospects of a continuing diversion of capital from these areas to mining (Larcombe,1980) .

As might be expected, these developments have begun to be reflected at the level ofspatial organisation . Much has been made of the drift of capital and population fromN.S.W. and Victoria to the resource rich states of Queensland and Western Australia,though little firm data exists, especially on capital flows . Certainly there is a tendencyfor most of the capital recently sunk in and 'committed' to major resource projects to beconcentrated in the latter states, since that is where the resources are to be found .Nevertheless, other conditions must be met before this tendency is realised . Inparticular, agreement must be reached between mining company and State governmentconcerning mining leases, royalty levels, subsidies and the like . In the case of associatedprocessing or manufacturing activities agreement is also normally required on basicpublic infrastructural provision (supply and cost) . Since large companies, especiallyTNCs, are relatively free to locate these latter activities interstate or overseas, they arewell placed to play State governments off against each other, to extract maximumconcessions in return for new investment and the extra jobs assumed to go with them .Playford's six open doors are still swinging! Nowhere is this more apparent than in thealuminium industry where the major TNCs have set up or planned refining and smeltingoperations in most States during the past decade in return for extensive transport andother subsidies and, most importantly, the guarantee of the considerable blocks ofelectricity required at prices well below other industrial and residential users . Victoriaand N.S.W. have been forced to match concessions with the smaller States in attractingaluminium smelters to Portland and the Hunter Valley, respectively . Recent projectdelays and cancellations have placed State governments in a weak political position ;having committed large sums to highly specialised infrastructural supports they arepoorly placed to withstand the tough bargaining stances of the aluminiumcompanies .

Internal migration patterns have also begun to show a population drift North (seeFig. 5) . Victoria, in particular, has suffered a net outflow of inter-state movers,numbering 42,000 in the two years to March 1981, of whom half were between 15 and 34years of age (quoted in the Age Newspaper, 25 March 1981) . In other words, much of

74


FIG. 5 . interstate migration flows for year ending 30 Jane 1980.Source: Age, 25 March 1981, p . 11 .

Note : See also McKay and Whitelaw (1980) .

this outflow is over and above the normal movement of older, retired people in search ofa warmer climate and an easier-paced lifestyle .

Migration North, especially to Queensland, is not just - or even primarily - due tonatural resource development, since the latter projects are generally capital intensivewith limited direct and indirect effects on employment. Thus, the fastest growing regionof Queensland, the Gold Coast to the south, and Sunshine Coast to the north ofBrisbane, depends not on mining or manufacturing (directly) but on intensive urbandevelopment and speculation set off by the influx of permanent residents and thelucrative tourist trade . According to Mullins (1979), Australia's `sunbelt cities' (incomparison to America's) have grown and are growing rapidly on the basis of a (mass)consumption-oriented, rather than manufacturing-oriented dynamic . Consumption ofnewly constructed luxury housing and associated consumer durables, on the one hand,and tourist and recreational facilities, on the other hand, is providing the economicbase, funded by the switch of capital from `southern' manufacturing and, in the case of asmall number of real estate developments, Japanese property capital . What Mullins (oranyone else) has not done is to show the institutional mechanism by which this processis occurring ; in what ways are financial institutions and state agencies mediating theflows of capital between and within the primary and secondary circuits in the context ofthe historically specific structural constraints outlined above? Nevertheless, at a generallevel, this is an important insight suggesting that as the crisis worsens and idle capitalbuilds up in the Australian manufacturing and even mining sectors, capital is likely toswitch into sunbelt-type development of an increasingly speculative nature inQueensland and elsewhere .

From the mid-1960s new mining towns have grown rapidly in Western Australia,Queensland and, to a lesser extent, the Northern Territory, reflecting the switch of


75

capital into iron, nickel, bauxite, uranium and the glamour mineral of the post-OPECperiod, coal (Burnley, Pryor and Rowland, 1980) . Most of these centres are 'closed' orcompany towns, administered by the company which also owns the houses and hostelsthat workers live in, as well as the shops, recreational facilities and other services . In-outmigration tends to be very high, the population biassed towards young, single men andwages significantly higher than elsewhere in the economy . In a very real sense thesetowns function like foreign enclaves or 'free trade zones' in some third world countries ;TNC capital controls indigenous labour using imported capital-intensive, high-technology methods producing primarily for export on the basis of generousgovernment subsidies, with minimal (positive) impact on the domestic economy ingeneral. The interests of the relatively well-paid but numerically insignificant workforceare increasingly separated from and sometimes opposed to the interests of indigenousworkers in general . In Australia, the clearest example of opposed interests arose overuranium with the miners and their union strongly in favour of uranium mining andexport against the declared opposition of other unions and the official stance of theAustralian Council of Trade Unions. One group, however, has been quite directly andadversely affected by new mining development . With the active support of Stategovernments mining has extended into remote areas previously regarded as worthlessand consequently reserved for Aborigines, encouraging the mobilisation of rural andurban blacks in the Land Rights movement .

Where the new mining and processing developments are focussed on existing centres,localised effects, both beneficial and otherwise, impinge on existing residents . Thus, inthe case of Portland, and particularly in Sale, the Victorian town servicing the oil andgas drilling operations in Bass Strait, boom conditions have been created in the localenvironment, at least in the short-term . However, in the long-run, after the initialconstruction phase and with the reduction in the demand for local labour and goods,local multiplier effects are likely to fade, leaving the darker side of development -inflated housing and commodity prices, rising unemployment and increasingcommunity conflict .

Other Australian towns have continued or started to decline, in line with thestructural shifts noted earlier. Existing mining towns like Mt . Isa (Queensland), BrokenHill (N.S.W.) and Kalgoorlie (W.A .) grew less quickly in the first half of the 1970s, asdid resource-related towns in the Latrobe Valley (Victoria) and Lithgow (N.S.W.) . Themost dramatic examples of decline have occurred more recently in the steel-towns ofWhyalla (S .A .) and Newcastle (N .S.W.) where, as argued above, the investment strategyof B.H .P. is resulting in a run-down of traditional operations in favour of oil and gasexploration and recovery (Aungles, 1979 ; Larcombe, 1980) .

Capital city growth rates have slackened noticeably in the 1970s, although broadly inline with the national trend . Consequently, the capital cities just maintained their sharesof state-wide population, except in the case of Perth which increased its sharesignificantly (see Table 13). The general decline in population growth has followed froma substantial drop in overseas immigration and the general ageing of the population .Internal migration has begun to reverse the drift to the cities described earlier, withSydney and Melbourne figuring as net losers by the end of the decade (AustralianBureau of Statistics, 1982a) .

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This pattern of metropolitan growth is largely explicable in the light of thedevelopments noted earlier. Perth and Brisbane are growing more quickly than othercapitals, partly in line with the positive spillover effects of resource development withintheir states but, more importantly due to the geographical switch of capital into urbandevelopment, and the absence of a heavy dependence on manufacturing industrieswhich are now in decline . Sydney, Melbourne and Adelaide, on the other hand, areexperiencing employment decline and capital flight from precisely those industries -clothing, footwear, transport equipment, metal products, chemicals, printing,household appliances, etc - which have historically been heavily concentrated in thesecities. That metropolitan decline has not been more pronounced is due, in the firstinstance, to the continuing and relatively high growth and metropolitan concentrationof industries in the tertiary sector, especially finance, government administration andpublic utilities . However, as noted earlier, the spectre of technological displacement andpublic austerity hangs over this avenue for future growth . In the case of Brisbane andSydney the switch of capital into the built environment has reinforced growth in theformer and helped stave off decline in the latter (Australian Bureau of Statistics, 1982b) .More importantly, Sydney and Melbourne have maintained and extended their controlover financial and administrative functions in the context of the increasing role of TNCpenetration of the Australian economy and the emergence of what was earlier termed,`the Pacific-rim strategy' :

"What this means in the Australian context is that, though the nation as a whole may be relativelyperipheral to world capitalism, the major cities such as Sydney and Melbourne remain important asintermediate steps in the hierarchy, serving important intra-corporation functions as regional centresfor administration, marketing, research and development, etc . Far from being peripheralised, theybecome of growing importance, in the new intra-corporation division of labour" (Stillwell, 1980, p . 74).

Melbourne and Sydney are still the major centres where the regional head offices ofTNCs are located in order to co-ordinate their Australian-wide operations andpenetration of South-east Asia (Edgington, 1983). Similarly, the bulk of foreign capital

TABLE 13: Capital cities as percentage of States' population, 1966-1976

Source : I. H . Burnley (1980) .

City 1966

1966-1971Annualgrowth

rate(9ll)

1971

1971-1976Annualgrowth

rate(9a)

1976

Sydney 60 2.4 61 0 .8 60

Melbourne 69 2.5 71 1 .4 71

Adelaide 67 3 .2 69 1 .7 69

Brisbane 43 4 .0 48 2 .7 47

Perth 60 6 .6 65 3 .3 70

Hobart 32 5 .6 33 1.2 33


77

inflow (and outflow), both direct and portfolio, is managed by associated financialinstitutions located there. Not surprisingly, the major share of new office buildingcompleted in the late 1970s was located in these two cities .The C.B.D.s of the capital cities have continued to shed retailing, warehousing,

manufacturing and small-scale professional functions, increasingly replaced bymanagerial and administrative activities located in both the public and private sectors .This process has been mediated by the property transactions of state agencies and themajor financial institutions . In spite of a brief period during the Whitlam administrationwhen policies for the decentralisation of public service employment to intra-urban sub-centres were proposed but not implemented, the public sector at the State and Federallevels remains tightly focussed on the C.B.D. where the dominant political institutionsare located . In the private sector, the large insurance companies have significantlyswitched capital into landownership and development; between 1956 and 1976, theshare of total assets held by the seven largest companies in the form of real property rosefrom less than 5% to more than 20% (Sandercock, 1983c) . Most of this investment isheld in offices rather than residential housing, and, consequently, is concentrated in theC.B.D.s. In the early 1970s this process resulted in a short-lived office building boom(Daly, 1982) . With the resulting over-supply of office space, construction has slowed butthe move of financial institutions and large property developers into central citylandownership has not . Thus, for example, by 1977, these interests controlled two-thirdsof the rentable space in central Melbourne (Kilmartin and Thorns, 1978, pp . 66-67) .With the continuing profit squeeze on productive investment and the probable slow-down in the resources boom as mining TNCs readjust to falling sales in an increasinglygloomy world market, the economic basis for a new central city office building boom isfast emerging. Such a boom would feed off the inflated capital inflow of the past twoyears and the redirection of domestic savings out of the residential sector in the wake ofinflating interest rates . This outcome would repeat history, to some extent, resemblingthe aftermath of the first mining boom in the late-1960s, but in a vastly different worldcharacterised by an increasingly severe global crisis .

The process of suburbanisation, described above, continued into the 1970s, with theinner suburbs of each capital city experiencing a sustained population decline . Forexample, in the 1971-76 period, the inner areas of Melbourne, Sydney and Brisbane lost16, 8 and 15% of their residential populations at a time when the metropolitanpopulations grew by 4,4 and 14%, respectively (Mullins, 1982, p . 48). In the case ofSydney, almost half of all new dwellings completed in 1976-77 fell into the western andsouth western regions of the metropolitan area -i .e.in suburbs on the outer fringe -while only 4% were located in the central or inner area (Stillwell, 1980, p . 96) .

This pattern of suburbanisation was associated, as in the previous post-war decades,with continuing employment decentralisation - in Sydney's case, half of allmetropolitan jobs were located outside the city and inner suburbs by 1971 (Spearritt,1978, p . 134). Between 1968-69 and 1977-78, Melbourne's inner suburbs lost 54,000jobs, while inner Sydney lost 39,000 jobs during the 1972-76 period (Stillwell, 1980, p .102). About 30% of Melbourne's loss was regained through the expansion ofmanufacturing in the middle and outer suburbs but, in Sydney, the only job gains wereclustered in the Liverpool area on the south-western fringe . To the extent that new

78


employment opportunities opened up in the cities during the 1970s, they were largelyconcentrated in other sectors, notably the tertiary. The strong centralisation of thefastest growing tertiary industries (finance, communications and public administration)in the central city has placed a break on employment decentralisation . To the extent thatnew employment opportunities did not open up, urban unemployment rose and, asseveral commentators have stressed, was spread very unevenly over the metropolitanarea (Stillwell, 1980, ch . 7) .

The likely switch of capital away from urban residential construction (excludingSydney and Brisbane) can also be expected to check suburbanisation - far more thanany further bursts of 'gentrification' . Indeed, gentrification may turn out to have been alimited, uneven and historically unique instance ofspatial reorganisation during theearly phase of the current crisis. As that crisis intensifies and idle capital builds up in theprimary circuit, including mining, it is (once again) likely to switch through to the builtenvironment and into increasingly speculative ventures, in particular . Speculativeproperty dealing may then focus on office development (as it did in the early 1970s) orlong-standing 'high status' residential suburbs, rather than result in a new burst ofgentrification . There are signs of this already occurring, especially in Sydney, with theappearance ofwhat might be called, 'the North Shore phenomenon' . Parts of Sydney'sestablished lower North Shore (Mosman, Cammeray, Hunters Hill, Northbridge, etc .)experienced a rapid property boom in the late 1970s, pushing average housing prices inthe metropolitan area to a level 50% higher than in Melbourne . The basis of price riseshere appeared to relate not just to the locational advantages or accessibility of thesesuburbs but also to a monopoly rent element based on the inherently scarce supply of'harbour-side' housing . The North Shore boom has recently subsided, due in part torising interest rates and the scarcity ofmortgage finance . However, as crisis tendenciesworsen, the boom - not necessarily focussed on Sydney's North Shore - may breakout again, reinforced by the polarisation of class-based inequalities in the wake of fallingreal wages and regressive taxation and public expenditure policies . With continuingcapital inflow and domestic restructuring it may well be a case of - in the words of anAustralian political cartoonist - "Inflation! Inflation! Man the real estate agencies!"

4 .6 . CONCLUSION

This paper has outlined a Marxist approach to the historical development ofAustralian urbanisation, through successive stages of capital accumulation on a globalscale. Each stage was defined by a dominant form of dominance-dependence relationstying Australian development into the global system and specifying a characteristicmode of urbanisation or pattern of spatial organisation as an integral element of thatdevelopment . The transformation from one stage to another was, I argued, driven bythe maturing of structural contradictions within the economies of the advancedcapitalist world or centre, expressed through four long waves of expansion and decline,which were, in turn, unique events in human history, not necessarily to be projected intothe future .


79

The attempt to fill out this approach, in order to understand Australia's uniquedevelopment, has been unavoidably uneven and schematic, partly because of the limitedscope afforded in an essay of this length, partly because of the absence of data relevantto Marxist methods and categories, and partly because of the uneven state ofcontemporary Marxist theory . Thus, in this last context, it was possible to offer a farmore complete and internally consistent analysis of Australian development in the latterhalf of the nineteenth century, than of subsequent stages in the twentieth century,because of the existence of a reasonably complete and consistent Marxist theory ofclassical or competitive capitalism . The theory of late or advanced capitalism,structured by the monopoly and global forms of accumulation, is far less developed andfar more problematic . Even less does this paper take up questions raised by theemerging `gender and space' debate (e .g . Rose, 1979; and the special issues on `Womenand the City', International Journal of Urban and Regional Research, 2(3), 1978, Signs,5(3), 1980) in the context of the wider problematic of social reproduction and sexualinequality under capitalism. Nevertheless, it is necessary to use incomplete theory, notonly in order to guide concrete historical analysis, but also as a means of developing thetheory itself-and of developing it away from the mechanical and reductionist forminevitably assumed whenever the attempt is made to encapsulate it in a few shortsentences.

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