They’re tackling Coles and Woolies, but who’ll dare break up the political duopoly?

It’s just a little over five years since the final report of the banking royal commission – which was damning. But just as damaging to the banks was the protracted lead-up to the creation of the commission in 2017. Through many months, pressure rose as public anger was vented via politicians, as Labor, then the Nationals, then the Liberal Party folded to the Greens push.

One would think that media storm might have been a warning to other massive businesses in Australia. In fact, it didn’t even seem to work as a warning to the banks. Earlier this year, the Commonwealth Bank was fined for underpaying more than 7000 workers – a practice that continued after the commission report was handed down. Last year, BHP admitted it had underpaid 28,000 workers. Qantas, meanwhile, underpaid workers, and began selling tickets on flights that had been cancelled; last week, the ACCC stated that senior management knew about these “ghost flights”.

Illustration: Joe BenkeCredit:

Then you have last week’s other major revelation from the ACCC: that it was taking Coles and Woolworths to court over allegations they had raised prices, then cut them a little, and called that a discount despite the fact it was higher than the original price. To illustrate, the ACCC said for two years Coles sold Strepsils for $5.50. Then, for a month, it raised the price to $7. Then it changed the price to $6 and promoted this as a reduction.

A free market should correct all this, right? Customers or workers find out about such abuses and go elsewhere. But what do you do when there aren’t many places to go? And when you can bet many of the other businesses around are doing the exact same thing?

Some will say, OK, so those particular markets aren’t working well. In fact, the term “market” may be part of the problem – convincing us that something fair and transparent is in place anywhere these days. The sociologist William Davies, drawing on the work of historian Fernand Braudel, recently observed that a market economy is indeed transparent – but has not really existed since the 19th century. Since then, we’ve had capitalism, “a world of opacity, monopoly, concentration of power and wealth”, based around protecting the already-rich.

We often make the mistake, in public debate, of assuming “markets” and “capitalism” are the same thing, which is a propaganda win for the capitalists: if we can be persuaded that markets can work, we assume our economic system should work too.

The distinction is important because many of the arguments that big business deploys depend on the idea that if we could make markets work a little better – by scrapping regulations and cutting taxes – everything would be dandy. This makes it seem as though the great productivity slowdown of recent years could be solved with a couple of tweaks.

But what if, as more and more economists are arguing, our productivity problems are actually the logical result of the operation of “capitalism” as we know it, in which monopolies, duopolies (like Coles and Woolworths) and oligopolies become the norm? The small number of companies with massive power don’t have to innovate.

What is both fascinating and disturbing about this is that one cause of our short-term financial pain (big companies ripping us off because they’re so big they can) may also be the cause of our long-term financial pain (big companies failing to become more productive because they’re so big they don’t have to). There is, arguably, a direct line between deceptively priced Strepsils and our country’s lacklustre wage growth. If you accept that, then we are in a very different political world, in which what is needed is a serious reshaping of our economy.

In Australia, our banks’ horrible behaviour led to anger and political action. I was struck, reading Don Watson’s recent Quarterly Essay on America, by his argument that bankers were central to Donald Trump’s rise. Not because they helped Trump get rich, but because they made so many Americans poor during the global financial crisis – and because the then Democratic president, Barack Obama, did so little about it.

“There would be no Trump had Obama made American workers his resounding cause, and made the bankers at least seem to pay a price for their rapaciousness,” Watson writes. Nor did the Democrats fix their mistake: “Eight years later, Hillary Clinton had her chance to say there could be no democracy without economic democracy, or something of that kind. But if she did, it was not so anyone heard.”

Reading the essay, I found myself toggling between two different views: was Australia different from America or simply behind it? Is the Albanese government taking enough action – on wages, say – to keep us from Trump-like developments? Or is it repeating Obama’s mistakes, by failing to realise the depths of anger felt by workers and customers at businesses that just keep on taking advantage?

Labor is aware of problems with what currently passes for a market: in June, frontbencher Andrew Leigh wrote a column titled “How monopolies hurt the economy”. And Labor’s Future Made in Australia policy rests on the idea that markets have been failing. But some commentators, such as Bernard Keane and Tim Dunlop, suggest Peter Dutton’s actions have taken him even further outside of the old economic consensus, especially with his calls for increased powers to break up the supermarket giants.

Mostly, though, the two major parties seem unwilling to do much more than respond piecemeal to specific outrages, like the Colesworth allegations – by, say, telling a clear and sharp story about just how badly workers, customers and citizens have been let down by an approach that has been consistent across too many large corporations for too long. On one level, that’s understandable: a duopoly, be it political or corporate, is a comfortable place to be. But with the teals and Greens creeping up on the major parties, it could be worth a rethink: it’s not clear the old business model is working anymore.

Sean Kelly is a regular columnist and a former adviser to Julia Gillard and Kevin Rudd. He interviewed Don Watson at an event for his Quarterly Essay.