Fields of conflict: journalism in the construction of Sydney as a global city 1983–2008

by Chris Nash

A thesis submitted for the award of Doctor of Philosophy in the School of Social Sciences and International Studies University of New South Wales

July 2010

Acknowledgements

I would like to acknowledge and thank my supervisors Dr Paul Jones and Dr Jocelyn Pixley for their generous support and excellent contributions to what has been a most rewarding intellectual journey.

Originality Statement

I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgment is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project’s design and conception or in style, presentation and linguistic expression is acknowledged.

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Abstract

This thesis examines the relationship between media reporting and Sydney's construction as a global city over the period 1983-2008. Following Friedmann, Sassen and others it views globalisation as a process of consolidation in command and control functions in the global economy, financed through the massive creation of liquidity via expanding debt, and enabled by producer services located in a network of ‘global cities’.

Theoretically, it considers major debates in urban sociology and the sociology of journalism and seeks to reconcile approaches in the two fields to achieve a theoretically coherent framework for analysis that can encompass the changing political economy of Sydney and the ways in which media representation is related to this process.

In globalisation studies it examines the meta-theoretical post-industrial/ network society arguments associated with Bell and Castells, and compares them with the neo-Marxist spatiality theses associated with Harvey and Arrighi, and Foster and Magdoff on financialisation. It then discusses the global cities literature in the context of Australian urban studies.

In media sociology it starts with the debate about source-journalist power relations. Following Schlesinger and Benson, it offers a critical evaluation of Bourdieu's field theory. It then adopts a framework drawing on Bourdieu, together with Harvey and Lefebvre on spatiality and Gell on temporality, to consider the complexity of dynamic power relations between journalists and other sources of power.

There follow two complementary empirical case studies of communication contests over (i) debt-induced growth in the Sydney residential real estate market and (ii) the demutualisation of the largest Australian general insurer, NRMA Insurance Group Ltd. The case studies examine the differing field relations of journalistic reporting and investigation of those activities in select newspapers. It argues that the journalism was deeply engaged with and/or influenced by the interests and activities of its sources in the primary field of concern, with power being exercised in both directions but overall in the structural interests of powerful sources, though not necessarily in their personal interests.

The thesis concludes with an assessment of Bourdieu's field theory in the light of the analyses, and advocates a more reflexive understanding of relations within and among fields, particularly with respect to orthodoxy/heterodoxy, autonomy/heteronomy and symbolic violence.

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Table of Contents

Chapter 1 Introduction 6 Sydney – Australia’s global city 14

Chapter 2 Globalisation and global cities 27 The meta-theoretical debates 28 Critiques of Bell/Castells 33 The political and economic response 36 Situating David Harvey’s project 37 Globalisation and global cities 44

Chapter 3 Communication contests 52 Journalists and their sources 53 Bourdieu’s contribution 62

Chapter 4 Space, time and fields 74 Introducing the empirical case studies 84

Chapter 5 Reporting real estate: the background 87 The historical context of the Sydney property market 92

Chapter 6 Media coverage of the 1997–2003 real estate boom 101 Media Overview 101 Methodology 104 House Prices 1996 107 House Prices 2003-2004 111 Housing Affordability and First Home Buyers 116 Taxation: Capital gains and Negative gearing 121 Household Debt 125 Homelessness 129 Discussion 130

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Chapter 7 Demutualisation of NRMA Insurance Group Ltd 143 Methodology 145 Background 148 Demutualisation: 1996 – 2001 154 Discussion 171

Chapter 8 Conclusion 180

Bibliography 187

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Chapter 1 Introduction

The research task for this thesis is to understand the relationship of journalism practice to a process of rapid and major social change in the activities and role of a major city in its international context. It is a task that has multiple facets and levels of engagement. What is the nature of “rapid and major change”? This is a meta-theoretical question. Are we – author and reader – looking for epochal change akin to the agricultural and industrial revolutions, as some scholars and many media pundits have suggested? If so, where do we look for the evidence to test the claims for that level of change, and if not, is the change a continuation, albeit intensified, of forces and processes at work in the current epoch of industrial and post-industrial capitalism, and what evidence is adequate to test those claims?

Beneath the meta-theoretical level, at the level of disciplinary theory, how do we reconcile the concepts and debates in urban studies and geography on the one hand, with those in journalism and media studies on the other, to get a coherent analysis linking the two? What we need is a rigorous interdisciplinarity capable of responding to the conceptual requirements of both disciplines – urban studies and journalism studies – to generate empirical methodologies that are coherent, complementary and cogent in examining different aspects of the question.

Finally, at the level of empirical research and analysis, out of the myriad range of activities that make up the life of a large city, what are the case studies that sit at the crux of the processes underway, and how do we deal methodologically with the different dimensions of the processes in a way that is theoretically coherent? Most importantly, how do we account for the relationship between large structural change at a global level, and the actions of individual agents doing what they think is most appropriate thing to do in the situations that confront them individually and collectively. All of this, in a situation where the changes are rapid and oftentimes contradictory.

These are big questions, and Sydney is a relatively minor player in the socio-economic changes at work in globalisation. Nonetheless, hopefully an examination of the Sydney experience will throw some modest light on the larger processes at work, and at the same time clarify some theoretical points that might assist further research.

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On March 11, 1983, a new Labor government was sworn into office in Canberra following the Federal election six days earlier. It was the first of five successive electoral victories, an unprecedented record of electoral success at the national level for Labor. The new Prime Minister was Bob Hawke, and his deputy, Paul Keating, became Treasurer. Together they were to lead a process of radical restructuring and change in the economic field that contrasted with the stability of office they maintained in the political field.

While in Opposition under Bill Hayden, Hawke's predecessor as leader, the Australian Labor Party (ALP) had vigorously opposed the recommendations of the Campbell Report (Committee of Inquiry into the Australian Financial System, 1981), which argued for the rapid and far- reaching deregulation of the Australian financial system. However, on December 12, 1983, without consulting Cabinet, the Treasurer with the support of the Prime Minister announced the overnight floating of the exchange rate for the Australian dollar. Thus began a period of radical deregulatory change in the structure of the Australian economy (Edwards, 1996: 206-232; Jaensch, 1989).

A quarter of a century later, in July 2007, the collapse of two hedge funds associated with the Wall St investment bank Bear Stearns precipitated the onset of a financial crisis in the US economy that quickly spread to the international level. However, perhaps underestimating the local implications of the Global Financial Crisis (GFC) that was unfolding, the Reserve Bank of Australia (RBA) continued to lift interest rates until March 2008, “in order to contain and reduce inflation over the medium term” (Stevens, 2008a), and later that month even defended further rate rises by the commercial banks in the belief that “Australian banks remain well- placed to weather the sub-prime storm” (Stevens, 2008b). By early September, the RBA’s view had shifted markedly, and it began a series of rate cuts that brought interest rates to record low levels.

On 15 September, 2008, the long-established Wall St investment bank Lehman Brothers filed for bankruptcy.

In an act of high drama, Federal Reserve Board Chairman Ben Bernanke and Secretary of the Treasury Henry Paulson appeared before Congress on the evening of September 18, 2008, during which the stunned lawmakers were told, in the words of Senator Christopher Dodd, “that we’re literally days away from a complete meltdown of our financial system, with all the implications here at home and globally.” (Foster and Magdoff, 2009: 112)

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Confirmation that the hegemony of deregulatory neo-liberalism was open to serious challenge was confirmed the following month with the admission of failure by its leading champion, Chairman of the US Federal Reserve Dr Alan Greenspan, in testimony before the US Congress on October 23, 2008:

“This modern risk-management paradigm held sway for decades,” he said. “The whole intellectual edifice, however, collapsed in the summer of last year.” (‘Greenspan concedes error on regulation’, The New York Times, 24/10/2008: 1)1

Governments in the advanced industrial economies, Australia included, began a process of orthodox and unorthodox fiscal and monetary measures that signaled an abrupt end to the policies of neo-liberal deregulation that had sustained the globalisation process of the previous decades. As the UK Guardian newspaper commented in parody of Richard Nixon: “We’re all Keynesians – again” (Weisbrot, The Guardian, 25/1/2008).

The GFC varied in the severity and character of its national impacts. Australia was the only advanced industrial economy to escape a technical recession in the early stages of the GFC, although a massive government stimulus was necessary to maintain fiscal stability. Capital investment and hours of work declined in many industries, domestic savings rates increased as households tried to pay down record levels of debt, and retail expenditure declined and then stagnated (For an early overview and analysis of the impact of the GFC in Australia see the special edition of the Journal of Australian Political Economy, No 64, Summer 2009-2010). Prime Minister Kevin Rudd published a long essay denouncing the greed of unbridled capitalism and the failures of neo-liberalism (Rudd, 2009), the government moved very quickly to a set of neo-Keynesian economic policy settings, and generally moved to position itself as an ideological opponent of neo-liberalism.

The GFC wasn’t the first such crisis in the period of de-regulation that began in the early 1980s:

It represents a development both familiar in the history of capitalism and in many ways unprecedented. It was preceded by a whole series of lesser economic shocks, of growing magnitude over the last two decades, most notably: the U.S. stock market crash of 1987, the savings and loan crisis of the late 1980s and early 1990s, the Japanese financial crisis and Great Stagnation of the 1990s, the Asian financial crisis of 1997-1998, and the New Economy (dot-com) crash of 2000.

1 Newspaper and media journalism references will be referenced in the text with all details required to locate them in databases (and with headlines when significant) and will not be included in the bibliography.
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(Foster and Magdoff, 2009: 7)

There was little doubt in Australian party-political circles that large sections of the electorate had been sceptical of the supposed benefits of globalisation and deregulation for quite some time, costing Prime Minister Keating government at the 1996 elections, and Prime Minister Howard both government and his own parliamentary seat at the 2007 elections. A singularly clear harbinger of the future fate of the Howard government appeared on March 17, 2001, when it suffered a two-party preferred swing of 9.69% to lose the formerly safe Liberal seat of Ryan in Queensland to the Labor Opposition (AEC, 2001). From its proclamation as an electorate in 1949 until this election Ryan had only ever returned Liberal candidates at the polls. The result in Ryan followed two massive losses by the Coalition parties at the State level in the previous weeks. In Western Australia the Court Coalition government lost power with a negative swing of 8.6% in its primary vote on February 10 (WAEC, 2001), and in Queensland a week later the Beattie Labor government was returned to office in a landslide that reduced the combined Coalition primary vote to 28.5%, with a primary vote swing of 10.4%, to Labor (ECQ, 2001). By March 2002, every State and Territory government in the country was in Labor hands, for the first time ever in the nation’s history.

The Ryan election results coincided with the announcement of the first quarter (ending December 2000) for nine years of negative economic growth (- 0.6% of GDP, subsequently revised to 0.1% positive growth, thus continuing an uninterrupted run of growth since the 1991 recession), and on March 15, the value of the Australian dollar fell below US$ 0.50 for the first time. Overseas, in the week ending March 24, the Dow Jones Industrial Average Index on the New York Stock Exchange (NYSE) plunged through 10,000 towards 9,000, and at 20% below it's record high of one year previously was considered by many analysts to be at the threshold of a bear market (Stern, Bloomberg.com 22/3/01). In Europe, the plunge was even more severe: stock prices in France and Germany were more than 30% below their peaks (AFR, 24-25/3/01: 3). In New York the information technology-based NASDAQ index was trading at under 2,000, more than sixty per cent below its record high of 5,132 on March 10, 2000. On March 8 Kiichi Miyazawa, the Finance Minister and former Prime Minister of Japan, Australia's largest trading partner, had said that the Japanese Government was effectively bankrupt, with the level of Japan's public debt at 130% of GDP, and the ten-year long economic recession in Japan showing no signs of lifting. (SMH, 9/3/01: 8).

Collectively, these electoral and economic events underlined a view that had been building for some time among journalists and media pundits: the period of robust deregulatory reform in Australian economic policy pursued by both Labor and Coalition governments since 1983 was
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at an end, and both the political and economic platforms on which it had been built were compromised. Even the conservative press was scathing in its assessment. Alan Kohler, senior columnist and former Editor of The Australian Financial Review (AFR), writing on the day of the Ryan by-election, quoted John Maynard Keynes thus: 'Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose' – J.M. Keynes, The Economic Consequences of Peace, published 1919 …. Australia's authorities cannot really escape the proposition that they have debauched the currency …. a reduction of more than 50 per cent in a couple of decades and 25 per cent during the life of this government is not to be sneezed at. (AFR, 17-18/3/2001: 56 italics in original).

Writing in The Weekend Australian (AU) on the same day, International Editor and former Editor of The Australian, Paul Kelly wrote:

The Howard Government is in shock. It is being stoned by the voters and humiliated by the markets. Its governing paradigm is being torn to pieces. The economic rules by which it aspired to live have failed to deliver in an election year …. This seems to me to be a more systemic crisis for Australia …. Welcome to the new banana republic. (Kelly, 2001: AU March 17-18: 23)

As it turned out, the Howard government went on to victory in the subsequent national elections held on 10 November 2001, and the economy returned to more robust growth. However, the 2001 political and economic crisis for the conservative political parties signaled an end to the period when the argument for economic reform could be placed centre stage in the political field and pursued on it own merits.

From the announcement of the floating exchange rate by Treasurer Keating on December 12, 1983, through to the defence of his government's reform record in 2001 by Prime Minister Howard, a common plank in the arguments for economic reform, deregulation and privatisation had been the proclaimed inevitability of 'globalisation', accompanied by the admonition to embrace the process in the national interest. From 1983 till 2001 support for globalisation formed a bipartisan backdrop to debate between the government and opposition in the national parliament, no matter which party occupied the government benches (Megalogenis, 2006).

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Indeed both Labor and Coalition parties in government over the period asserted their own superiority as thorough-going reformers in comparison to their opponents.

On the Monday after the Ryan by-election, Glenn Milne, chief political correspondent with the Seven television network and columnist for The Australian wrote: How did it get so bad so fast? While the Liberal Party ponders this question, former ALP president, Barry Jones, may have already come up with the answer. According to Jones' theory, the whirlwind Howard reaped in Ryan was not his alone. Jones says that the 10 per cent plus swing away from the Government was the product of not five years of frustration, but 18. That's right, 13 plus five. In other words, Howard is paying the price for being seen by voters as a continuum of the pro-globalisation, pro-reform years of the Hawke-Keating era. (AU, 19/3/2001: 13)

This view was immediately contested by the Prime Minister and Treasurer.

Mr Howard said Ryan contained lessons for the Government, but there could be no turning back on economic change. He did not see the vote as calling for the Government to alter its fundamental policy direction. It was willing to make "sensitive adjustments [to policy] at the margin" while maintaining its commitment to overall reform. Mr Howard said there was "a certain weariness in the community about reform. But we have no alternative. We can't stop. We can't go backwards. It's not that kind of world." (SMH, 17/3/2001: 1)

Later that week Treasurer Peter Costello similarly confirmed the government's commitment to continuing its policy direction when he asserted that "globalisation" was a process, not a value: "Globalisation is not a value any more than a telephone is a value …. and what is more [these changes] are not reversible". (SMH, 23/3/2001: 6). The government’s subsequent actions belied this defiance, and in the following months ‘economic reform’ disappeared from the government’s lexicon as it sought to regain electoral support.

The 2001 election results were not the first instance of community dissatisfaction with neo- liberal economic policies. At the electoral level, the convincing Labor victories at the previous state elections in Tasmania (1998), New South Wales (1998) and Victoria (1999), each with their own local characteristics but all in opposition to the continuation of the privatisation and de-regulatory policies of their Coalition opponents, had signaled that the balance in the electoral mood had tipped. A new political formation had appeared on the populist Right of politics with the election of Pauline Hanson to the Federal House of Representatives as an independent in

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1996, followed by her formation of the One Nation Party, which went on to win seats in the Queensland, New South Wales, West Australian and national parliaments in subsequent elections. It was One Nation’s success in securing more than 10% support in the 2001 elections in Queensland and Western Australia that split the conservative vote and handed government to the Labor Party in both states (O’Neill and McGuirk, 2002: 254). One Nation’s support base was among regional and working class voters. Both Labor and the Coalition parties vigorously courted One Nation supporters while repudiating (belatedly and ambivalently on the Coalition's part) the pronouncements and policies of Hanson and her colleagues on race and ethnicity issues.

In response to this move to the populist right by the major parties, support for the Greens on the left strengthened in the 2001 elections. As well as securing the balance of power in the upper house of the West Australian parliament with five seats, the Greens directed their preferences to assist Labor in the other state elections. In West Australia and Ryan, Green preferences were crucial. The Greens doubled their national vote and their Senate representation at the Federal elections in November 2001, with support strongest in the inner city electorates of Melbourne and Sydney, which were those areas most strongly benefiting from economic and cultural globalisation.

The Coalition government was able to salvage its electoral standing by its local response to the terror attacks in North America of September 11, 2001, when the World Trade Centre towers in New York were destroyed by hijacked airliners, and the Pentagon building in Washington was damaged in a similar attack. The September 11 attacks were followed within weeks in Australia by what became known as the ‘Tampa crisis’, when the Norwegian cargo ship Tampa entered Australian territorial waters off Christmas Island in the Indian Ocean, seeking to disembark several hundred asylum-seekers it had rescued at sea south of Indonesia. The Tampa episode presented the Howard government with an opportunity to assert strident nationalist values, and the Prime Minister received enormous popular support for his depiction of the Tampa episode as illegal immigration threatening border security. The Labor Opposition was wrong-footed by this characterisation, and supported the government’s position in a confused and ambivalent manner. Howard played strongly on the theme of border protection to retain power at the federal election held on 10 November 2001 (Marr and Wilkinson, 2004). The border protection campaign, combined with Australia’s support of the subsequent US-led invasions of Afghanistan and Iraq, were the local version of the Bush and Blair governments’ so-called ‘war on terror’ in response to the attacks in New York in 2001 and London in 2005, and played upon the burgeoning rise of identity politics identified by Castells (1996, 1997, 1998) and Sassen (2001) as a concomitant of the globalisation process.
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However, in spite of this electoral victory by a government strongly committed to neo-liberal economic reform, the 2001 electoral events marked a pause in the triumphalist period in Australia of deregulatory economic reform. They revealed the scale of voter disaffection with what were perceived as the consequences of globalisation. This is not to say that deregulatory policies would not continue to be pursued by the major political parties, but that the communication campaigns in their support would have to be less direct, less transparent and more complex if they were to be successful. Indeed, these events amply demonstrated that what transpires in the ideological or symbolic field bears no necessary relationship, over the short to medium term at least, with what is occurring in the political and economic fields.

The strong stand Howard made against unregulated international flows of people contrasted starkly with his argument in favour of unregulated international capital flows, but this contradiction worked in his favour. In repulsing the ‘boat people’ Howard was appealing to precisely those voters strongly opposed to the impact of the economic globalisation he championed. The 2001 federal election campaign was a virtuoso performance in symbolic politics linking the media, political and military fields, securing the passionate support for the Howard government of precisely those voters most disaffected by the policies it had been pursuing in the economic field. It was the very irony of this achievement that demonstrated that the public campaign for economic reform had lost its persuasive power with the electorate at large.

This lesson in the volatility and vicissitudes of electoral politics reveals several phenomena that are central to the thinking in this thesis. Firstly, that public opposition to many aspects of the globalisation process was strong, and therefore that its proponents on both sides of politics had to defeat or at least manage this opposition to achieve their objectives. Secondly, that the struggle to achieve or retain power to continue pursuing unpopular policies in the face of such opposition could be achieved by fighting contests in other, ostensibly disconnected fields, such as the threat of terror attacks and irregular immigration in this instance. Thirdly, that its proponents were confident that globalisation could be presented as a natural and inevitable process linked to technological innovation and beyond rational opposition. Fourthly, that journalistic reporting and commentary on the processes was volatile and could not be taken for granted, even from quarters normally sympathetic to the globalisation process.

In short, it demonstrated that the achievement of socio-economic change in the face of substantial opposition was a complex multi-faceted process demanding differential engagement in distinct fields of social relations, not the least being the media. It is the relationship between
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the media and these different fields that is the nub of this research project. In exploring this issue, this research starts from a position informed by two theoretical insights. The first is Schlesinger’s admonition that “media sociology has been far too media-centric” (Schlesinger, 1990: 61-62, emphasis in original) and that in order to understand the social power of the media in relation to other locations of social power it is necessary to ‘de-centre’ the media as the object of study. The second is the point made by Harvey (1973: 294) and Hall (1982: 57) among others that disagreements of substance between theoretical approaches are usually due to differences at the meta-theoretical level.

Sydney – Australia’s global city

The period 1983–2008 presents a clearly delineated period of major change when the processes and participants in the restructure of the Australian economy were more or less observable in the public arena. It was a period that began and ended with severe economic downturns, and during which the majority of Australians experienced turbulent and contradictory economic fortunes. In 1982 the country had experienced its worst recession since the Great Depression of the 1930s, and the political upshot of this was the 1983 election that saw the conservative Coalition parties (with John Howard as Treasurer) lose government to the Labor Party. In the following decade, as part of the restructuring process, the real wages of the bottom six deciles of wage-earners went backwards (Saunders, 1994; Raskall, 2002: 288), and then in late 1990 the economy plunged again into recession (Tingle, 1994: 69 ff). The then Treasurer Paul Keating memorably described it as ‘the recession that Australia had to have’ (Tingle, 1994: 112), but three years later, in seeking re-election, acknowledged the hardship when he said

This generation of Australians … have done, I think, all that could be asked of them to sacrifice so much to go chasing the future for themselves and their children and that’s why the struggle is worth it. (Tingle, 1994: frontispiece)

This recession marked a turning point from the instability of the previous decade to a long upswing (Lloyd, 2008; Broomhill, 2008). Climbing out of this recession, the Australian economy was to experience its longest period of uninterrupted economic growth, predicated in overlapping succession upon the ‘dot.com boom’ on the New York Stock Exchange, the boom in residential real estate led by Sydney, and then the resources boom supplying the expanding Asian commodity markets. It was underpinned structurally by an exponential increase in levels

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of household indebtedness (Keen, 2007), identified by Pusey (2003: 53 ff) as one of the factors driving the electoral anger that was manifesting itself in the polls. But throughout this period, the economic restructuring continued, as did the increasing spatial disparities in economic benefit from the process (O’Connor et al. 2001; Raskall, 2002; Searle, 2002).

While this transformation in the international and Australian economies was analysed and represented by scholars, pundits and policy-makers as the product of larger abstract socio- economic trends and forces, the specific structural and spatial transformations, along with their social and political consequences, were the cumulative result of a series of strategic and tactical decisions in a range of policy arenas over almost two decades. Many of these individual decisions were controversial, for a range of reasons both general and particular, and often success was not achieved without a struggle. Indeed, as we saw above, the 2001 electoral repudiations of 'economic rationalism' (the shorthand by which deregulatory neo-liberal economic policies were referred to in public debate) were discussed in the media as the culmination of contests over particular policy decisions and their consequences over the previous eighteen years (AU, 19/3/2001: 13)

Crucial to those contests were the communication activities required to persuade key stakeholders and constituents of the need to accept or resist change. The triumphalism of the proponents of change emboldened them to be outspoken and unabashed in arguing their case, identifying specific goals and mounting campaigns to achieve them. Similarly, opponents of change in some fields became increasingly sophisticated and outspoken in their campaigns to modify or prevent the proposed developments. At the same time, as these contests were won and lost the social and physical environments were themselves being transformed by the process, thus modifying the political, economic and symbolic environments in which the contests were taking place.

The contests and campaigns were complex and multi-faceted, and were waged by individuals, organisations and communities who saw advantage or disadvantage for themselves in the potential outcomes of specific contests. Sometimes they involved precisely identifiable groups of people, from corporate teams or government committees through to voting constituencies for the election of legislative representatives or the boards of corporations. Other times the target constituencies were amorphous, as in the demographic targets for gentrifying inner-city real estate markets, the readership of newspapers and fashion magazines, or the passing parade of street life. Sometimes the campaigns involved personal lobbying, sometimes editorial content in the news media, other times the use of certain modes of transport or travel routes, or the experience of cultural ambience in a particular place, be it a retail outlet, shopping mall,
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neighbourhood or public street. Sometimes the outcomes were identifiable policy decisions by governments or organisations, other times they were transactions in a marketplace, or perhaps the successful conduct of an event or activity. Success or failure might be recognised in a judicial verdict, a planning approval, the achievement of a certain price in a commercial transaction, or the momentary assessment of a fashion statement in a local café. The contests linked the transformation of the physical and social environments with recognition of change in personal and social subjectivities. It was this latter which gave some contests their passionately partisan edge, as individuals and communities embraced or resented the shifts in their socio- economic status and the changing temporal and spatial rhythms of their lives.

A crucial dimension of the economic restructuring was the transformation of spatial relationships, as was implied by the very term globalisation. That transformation reached down into national economies to restructure the relations between particular cities and their regional hinterlands, and with international economic processes. The city of Sydney achieved a special place in this process of transformation, because overall it was the major Australian beneficiary of the spatial dimension of the restructuring process. It achieved the status of Australia's only 'global city', and thus the national gateway to the international economy. In press comment at the release of its 1999 Report (Yates and Wulff, 1999) the Australian Housing and Urban Research Institute stated that the most significant national geographical division was no longer between city and country, but between Sydney and the rest of Australia. This division had economic, social and political dimensions, but also a symbolic or discursive element that depended upon the previous emergence internationally of the discursive concept of the global or world city. In Chapter Two we will examine in detail the theoretical underpinnings of this phenomenon, and the debates over its usefulness and development. Here we will briefly trace its conceptual emergence and application to Sydney.

The ‘world city hypothesis’ appeared in the urban sociology and planning literature in the early to mid 1980s (Friedmann and Wolff, 1982; Friedmann, 1986). It rapidly achieved a currency and was developed within a range of theoretical approaches. Castells (1989) coined the related term ‘informational city’, and Sassen (1991) ‘global city’, to analyse a phenomenon that researchers wanted to distinguish (Sassen, 2001, xix) from metropolitan centres of international trade and commerce in earlier historical periods in both Asia and Europe (Abu Lughod, 1989; Braudel, 1984; Hall, 1966; King, 1990). The essential difference between previous ‘world cities’ and the new ‘global cities’ was that the latter’s core economic relationships had shifted away from their national or regional hinterlands into a global network or space of flows (Castells, 1989: 348) or, put differently, they had become supra-national, ‘highly concentrated command points in the organisation of the world economy’ (Sassen, 2001: 3). Cities were
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argued to be replacing nations as the key agents or ‘nodal points’ in the ‘new economy’, and global cities were linked in a dynamic international network that in key respects had cut loose from their national and regional contexts.

The new conceptualisation was both looking backwards to account for observed empirical changes in the advanced industrial economies in the period since the accumulation crisis of the early 1970s (Harvey, 1989; Foster and Magdoff, 2009), and at the same time looking forwards to delineate and grapple with the elements of what they perceived to be a new world order flowing from these changes.

Sydney was first re-conceptualised into this new structure by Australian researchers in 1992 (Daly and Stimson, 1992) and quickly assumed a place in the lists of global cities compiled by international scholars (Sassen, 1994; Knox, 1995). At the same time, the New South Wales and Australian governments adopted, implicitly or explicitly, a spatially differentiated approach to economic and urban development in their planning and discussion documents (eg Lepani et al., 1995; Stimson and O’Connor, 1995; Searle, 1996; NSW Dep’t of Transport, 1998a, 1998b).

Australian scholars, in agreement with their international counterparts, recognised that the changes they were now analysing as a global restructuring of the spatial economic order had been underway since the mid-1970s (Searle, 2002: 320). In Sydney’s case, it had commenced under the Wran Labor government (1976-1988) when elected to office in NSW. The government had initially continued at the state level the interventionist approach of rational- comprehensive planning characteristic of the long boom in the post World War II period, and particularly of the national Labor government of Gough Whitlam from 1972 to 1975 (Searle and Cardew, 2000). However, in response to the impact of the 1982-3 recession, the Wran government moved to attract international investment in the new information and services industries to central Sydney. This approach fitted with the deregulatory policies being initiated at the national level by the fellow Labor government led by Hawke as Prime Minister and Keating as Treasurer.

Underpinning this policy re-direction was the shift from managerialism to entrepreneurialism in urban governance during the 1970s and 1980s – a shift away from the belief that it was the role of city governments to plan and manage the provision of infrastructure, services and welfare for its citizens, and towards the belief that city governments needed to compete in innovation and development at a global level in order to attract business investment, particularly in the new economy industries of information and producer services (Harvey, 1989; Hall and Hubbard, 1998). As part of this shift, governments, planners and academics sought to identify the
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characteristics of global cities so they could be acquired, or at least the pre-requisites put in place. Glen Searle did this for Sydney in a discussion paper commissioned by the NSW Department of Urban Affairs and Planning titled ‘Sydney as a Global City’ (Searle, 1996).

There are competing accounts of the characteristics necessary for a city to acquire global status which we will discuss below, but loosely they can be summarised as: • Financial integration with the world economy • Advanced telecommunications and media infrastructure • An educated and flexible workforce • Suitable corporate and residential real estate for corporate headquarters, their staff and families • Appropriate transport infrastructure (particularly for air and road transport) • Cultural amenity (for both visitors and residents) From the time when Sydney first appeared in the lists of global cities, it was held generally to meet these criteria, and certainly by the turn of the century there was no doubt among academics (eg Raskall, 2002: 283), business and local government (Sydney Media, 2004) that Sydney met the criteria. Key decisions and events in the production of Sydney as a global city of Sydney included • Deregulation of foreign exchange (1984); relative deregulation of banking and finance (1980s); privatisation of the Australian Stock Exchange (1998-99); reduction of tariffs and subsidies (1980s); deregulation of foreign investment (1980s) • Relative deregulation of telephone and telecommunications services (1980s); cross- media ownership regulation (1987); rollout of cable and satellite TV services (1990s); emergence of internet related services (1990s) • Building of freeways and tollways, especially M2, M5, Harbour Tunnel, Eastern Distributor, airport tollway; building of Third Runway at Sydney Airport (Fitzgerald, 1999), and proposal for second Sydney Airport at Badgerys Creek; redevelopment of Port Botany as a container port. • Planning decisions for office, hotel and residential accommodation in CBD, North Sydney and Chatswood; new industrial zone at North Ryde; commercial and residential redevelopment in Central Industrial Area (South Sydney and Botany Local Government Areas); medium density housing policies introduced across metropolitan Sydney; City West Development in Ultimo-Pyrmont; rise in real estate prices in global Sydney and flow-on areas. • Redevelopment of Darling Harbour as tourist and convention centre, including Star City Casino; redevelopment of Sydney Showground for Fox Studios; hosting the 2000 Olympics;
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Henceforth Sydney’s global city status provided a new terrain upon which debates and contests could be waged in the economic, political, social, cultural and ideological domains. Precisely what the implications of that might be, though, was itself to be a matter of contestation among the protagonists.

Global cities are not unified entities: Castells early identified the ‘dual city’ phenomenon (Castells, 1989) and this divide became a commonplace of both the academic and the government planning literature in Australia (see, for example Brotchie, et al, 1991; Brotchie at al, 95; O’Connor and Stimson, 1995; Searle, 1996; Murphy and Watson, 1997; Dept of Planning, 1995; Department of Urban Affairs and Planning, 1997, 1998; Baum et al., 1999).

By the time that global city status was entering general economic and planning discourse, Australians had been experiencing substantial socio-economic change for about a decade. The deregulation of the exchange rate and floating of the Australian dollar in 1983 commenced a period of rapid regulatory reform that removed barriers to international trade in both goods and services, and especially financial flows. Tariffs on goods were rapidly lowered, foreign banks were admitted, bank borrowing and lending were deregulated, real wages fell, government- owned businesses were corporatised and/or privatised and budgets moved into surplus (Edwards, 2000: 21). In parallel with these changes, there was a massive increase in the current account deficit, and from the mid-1980s it averaged 4 per cent of gross domestic product or more. While the deficit had been higher at times in the nineteenth century, and sometimes in the twentieth (Edwards, 2000: 22), it was the changing composition of the debt that was unprecedented. By 2006 there was no net public debt and corporate private debt had stabilised within historic parameters after the 1990-91 recession. But on the other hand, since the early 1980s when real wages started to fall, there had been a steady decline in the level of domestic savings from around 13% of household disposable income, passing rapidly into negative territory in 2001 to hover around -3% up until 2005. Over the same period household debt as a proportion of household disposable income more than tripled to 150%, and although up until 2002 the decline in interest rates kept interest paid mostly within the 6-8% range of household disposable income, from 2002 it rapidly blew out to about 11% (Source: RBA, ABS in AFR, 6- 7/5/2006: 18).

This profound change in the financial structure of the Australian economy, its integration with international capital flows, and the flow-on impact on domestic financial circumstances, strongly affected Sydney compared to the rest of Australia. O’Neill and McGuirk summarise the changes thus, drawing on the inaugural City of Sydney Yearbook of 1999 (Sydney City Council, 2000):
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Sydney [with 21% of the national population] has only recently (and spectacularly) taken over from Melbourne as the nation’s site of financial, corporate and political power. Most head offices of Australia’s largest listed companies are housed in Sydney, as are the regional headquarters of 250 global corporations operating in the Asia-Pacific (compared with Melbourne’s 83) …. By 1996, 54.6 per cent of the Sydney City2 workforce was employed either in financial or business services …. Between 1986 and 1997, the amount of floorspace in Sydney City dedicated to property and business services increased by 72.1%, while finance and insurance floorspace increased by 36% (Sydney City Council, 2000) …. Sydney City’s leading employment sector is property and business services (17.6 per cent of all city workers) followed by accommodation, restaurants and cafés (12.3 per cent), retail trade (9.3 per cent) and finance and insurance (8.6 per cent); these four sectors totalling nearly half of the city’s workforce. And the financial economy is not just an inner city event: for the entire Sydney metropolitan area, these four sectors secure a hefty 35.7 per cent of all workers. Moreover, reflecting Sydney’s business services role, more than half of the city’s workforce falls into the top three high-skill occupation categories: 26.1 per cent being professionals, 15.5 per cent associate professionals and 10.3 per cent managers or administrators (Sydney City Council, 2000). (O’Neill and McGuirk, 2002: 246) The trend towards increased employment in the producer services associated with the new economy continued: by 2001, law firms were occupying more floorspace in the city than retail shops (SMH, 21/12/2002: 1).

Compared to the rest of Australia, Sydney was streaking ahead.

In 1999 the 240,000 workers in inner Sydney earned, on average, 40 per cent more income than equivalent workers in other capital cities. High and rising Sydney real estate prices reflect demand for quality housing by well-remunerated households. Between 1987 and 1999, Sydney’s median house prices at sale increased three times. For the same period, the Sydney Prosperity Index, a measure of the change in a typical Sydney household income plus assets less cost-of-living rises, increased by 50 per cent (SMH 3/3/2001: 49). Reflecting the strength of the wider city labour market, the unemployment rate for the Sydney metropolitan area at the end of 1999 was 4.7 per cent, 50 per cent below the national average and the largest gap in Australian history (Sydney City Council 2000)’ (O’Neill and McGuirk, 2002: 248).

2 that is, the Local Government Area [LGA] of the City of Sydney, not the metropolis of greater Sydney and its suburbs
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However, the distributional effects of this prosperity, which got seriously underway after the 1991 recession (Raskall, 2002: 282), were complex. They built upon a radical shift in income distribution that had occurred over the period 1981-90 and precipitated the shift towards an accentuated spatial polarisation characteristic of global cities – the ‘dual city’ phenomenon (Castells, 1989: 172) which distinguished the metropolis of greater Sydney from ‘global Sydney’. Global Sydney occupies the land shaped like a boomerang or arc running north from Sydney Airport at Botany Bay up through the central business district, over the Harbour Bridge to North Sydney and Chatswood, and then north-west out along the M2 Motorway to ‘Silicon Ridge’ at North Ryde, overall about thirty kilometres in length.

There had been clear winners and losers in the dynamic distribution of this newly emerging wealth. Firstly, the top decile of income earners almost doubled their real average income over the decade, while the lowest six deciles had seen their real average income decline over the same period, the bottom decile by over 60 per cent. Perhaps more significantly for the attempt to construct a political constituency to support the economic changes, the top decile was out on its own while the next three deciles down, the middle to upper income earners, barely increased their real average income at all – the second top decile by less than one per cent a year over the decade (Saunders, 1994). These trends continued through the 1990s and into the new century.

Secondly, this increasing divergence in the real average incomes of the population coincided with another phenomenon: the case of the declining middle. The National Institute for Economic and Industrial Research (NIEIR) in 1998 report on the State of the Regions for the Australian Local Government Association (NIEIR, 1998) documented the shifts in income distribution between 1986 and 1996 across the different spatial regions of Australia, categorised as • Core Metro – at 6.3 million people with one third of the national population, connected to national and global industries and markets, and the one global region being Global Sydney • Dispersed Metro – with 3 million people, the outer suburbs of Sydney, Melbourne, Adelaide and Brisbane and the NSW central coast • Production – with 3.4 million people, the industrial suburbs of the larger cities where manufacturing industry is based • Rural – with 3.4 million people, the agricultural commodity-producing regions • Resource – a small and shifting population producing minerals and energy • Lifestyle – a growing population based on tourism and retirees, mainly based along the eastern seaboard (NIEIR, 1998: 11-15)

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What is striking about the data is that • in all localities in all regions there was a decline in the proportion of the population in the middle income bracket ($25,000 - $50,000 p.a. gross income, standardised to 1991 dollars), typically by about 4% or more over the decade • out of 45 localities covering the entire country, in only five (the Australian Capital Territory, Global Sydney, Inner west Sydney, Core Melbourne and the Pilbara mining area in Western Australia) did the growth in the upper income bracket (more than $50,000 p.a. gross income) exceed the growth in the lower income bracket • in all localities except the Pilbara the proportion of the population in the lower income bracket (less than $25,000 p.a. gross income) exceeded 60% of the population, and in the overwhelming majority it was 70-80% • even in Global Sydney, the percentage of higher income earners was only about 12%, of middle income earners was about 25%, and lower income earners was about 63%

The Australian data confirms the international experience of the polarisation of the electorate in class and spatial terms in response to globalisation processes (Friedmann, 1986: 324; Castells, 1989: 197). Putting these two sets of data together (and acknowledging that they do not cover the same precise period, but overlap to cover the first two thirds of the period we are concerned with), the experience of economic reform and globalisation for the great majority of income earners was at the very least a continuation of lower income levels; for middle income earners if they shifted category they were more likely to shift downwards rather than upwards in real income; and even in Global Sydney the high income earners who were held to embody the success of the new economy accounted for only about 10-12% of income earners.

To achieve these income levels over the period 1980 to 2000, Australians worked the highest annual number of hours in the OECD countries. In 1980 the average number of hours worked per year by Australians was 1878, and that number declined by only 23 to 1855 in 2000, compared to a mean decline across the OECD of 118 to a total of 1645 hours). This Australian average in 2000 included the contribution of the 27% of workers who had part-time jobs, and not surprisingly that of the 26% of workers by 2000 who were working more than 45 hours per week (Tiffen and Gittins, 2004: 82-83). The composition of the workforce also changed, with the proportion of women increasing from 36.8 to 43.7% of the total workforce from 1980 to 2000 (Tiffen and Gittins, 2004: 68).

Thirdly, ethnicity became a factor in levels of unemployment, which also had a spatial dimension, with some researchers alleging (Healy and Birrell, 2003) and others disputing
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(Burnley, 1999) that the concentration of high levels of unemployment in certain geographic areas characterised by high levels of Non-English Speaking Background (NESB) population amounted to ghettoisation. While Burnley’s rebuttal of the ghettoisation thesis is convincing, he does document the high levels of unemployment and poverty in certain communities, particularly Vietnamese and Lebanese (both Christian and Muslim) (Burnley, 1999: 1308-9). The ethnic dimension of socio-economic opportunity and status was a potent factor in the emergence of the populist right-wing politics of Pauline Hanson’s One Nation Party and the political manoeuvring around the ‘border protection’ issue, as discussed earlier in this chapter.

In sum, despite the congruent discourse about the necessity and benefits of globalisation (McNeill et al., 2005) emerging from both government and opposition parties in parliament, from the business community and the trade union leadership, and from the media, and despite Sydney’s privileged place in that process, at least when the city is conceived as a metropolitan whole, there is ample evidence of vulnerability and disadvantage in significant communities defined by class, gender, ethnicity, age and location. Some of these communities are of a significant size and political influence, so the interesting question is: how did this happen? What were the processes that took place to persuade crucial constituencies at crucial times and in crucial places to support, or at least acquiesce in, decisions that would advance this process? That is the research imperative for this thesis.

This question raises a complex set of methodological and empirical issues. Firstly, what is the nature of this process called globalisation? How is it to be understood as an economic and social process with respect to cities and workforces? In responding to these questions, the signal scholarly and theoretical debates need to be considered not just in terms of their conceptual adequacy but also as part of the historical development of the period including contemporary political and economic debates, rather than as objects outside the social environment within which they were produced. So for example, while Alan Greenspan might in 2008 have acknowledged that the intellectual edifice underpinning his policy settings at the US Federal Reserve had collapsed as quoted above (‘Greenspan concedes error on regulation’, The New York Times, 24/10/2008, p. 1), I will present the different approaches to the ‘new economy’, ‘informational society’ and globalisation as understood and debated at the time, as well as consider them on their merits. This is because theory and scholarship, like every other social artefact, are the product of the social conditions of their production, and have to be considered in that light. Further, we will consider these debates at two levels, the meta-theoretical level that Harvey, Hall and others have characterised as the crucial level of difference, and also at the applied theory level of urban studies and media studies.

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At the meta-theoretical level there are two main competing positions on the nature of the changes taking place. On the one hand there is the post-industrial/ information society thesis advanced in different ways by Daniel Bell, Manuel Castells and others to the effect that these changes are of an epochal scale comparable to the agrarian and industrial revolutions, and that technological innovation is leading to new forms of social relations not able to be analysed within the conceptual framework of industrial capitalism, or communism for that matter. This is the approach underpinning the attitude of Australian Treasurer Peter Costello quoted above when he equated globalisation with the telephone (SMH, 23/3/2001: 6). Opposed to that is a range of positions that could be characterised as neo-Marxian, led by thinkers such as David Harvey, Giovanni Arrighi, John Bellamy Foster and Fred Magdoff. Harvey argues that so- called globalisation is a spatial response or ‘fix’ to the continuing crisis of accumulation that erupted in the 1960s and 1970s, and takes the form of a move from Fordist modes of accumulation to ‘financialisation’ and ‘flexible accumulation’ on an increasingly international scale. Arrighi argues that as the international scale increases in size, East Asia will replace North America as the prime site of capitalist accumulation. For Foster and Magdoff, following in the footsteps of Baran and Sweezy (1966), the crisis is a direct consequence of the ‘crucial problem of modern monopoly-finance capital – the stagnation of production and the growth of financial bubbles in response’ (Foster and Magdoff, 2009: 7). For all of the latter scholars, the process is a further manifestation of capitalist relations of production and accumulation, rather than a supplanting of those relations. This is a crucial distinction, because it involves consideration of agency by human and social protagonists in the production of historical development, including by journalists and their sources in the media. We will discuss this debate in Chapter Two.

The persuasion of constituencies requires mediated communication processes that are multi- dimensional, that are thoroughly contested by their participants and that encompass not only the content of message texts, but also the constitution and manifestation of individual and collective subjectivities of participants in communication processes. Mediated communication processes are necessarily exercises in symbolic and ideological power, and we need to consider debates about the nature of power relations in media production processes. At the level of specific contests over the production of meaningful media texts, a crucial dimension is the power relations between journalists and their sources. While there has been much scholarly amplification of this issue over recent decades, the salient debate remains between the ‘structures of dominance’ paradigm argued by Stuart Hall from a culturalist Marxian position, versus the ‘level playing field’ paradigm championed in our discussion by Richard Ercison from a liberal pluralist perspective. These two opposing positions share some important understandings in common, and in seeking the elements of a resolution we will explore them in
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Chapter Three with reference to subsequent contributions to this debate by Phillip Schlesinger, Pierre Bourdieu, and recent interpreters of Bourdieu.

The fundamental theoretical issue in framing this research project is the question of the relationship between what happens in the material sphere of economic relations and what happens in the symbolic sphere of communication. In what ways do these spheres interact, and how can we understand causal relations linking activities in the two spheres? Following on from Schlesinger and Benson, I will argue in Chapter Four that approaches in field theory, particularly as advanced by Pierre Bourdieu and Michael Mann, open up fertile approaches to these issues that are amenable to empirical investigation using a field analysis of the selection and representation of sources by journalists.

The selection of case studies is a significant step. Because the effects of globalisation on social, economic, political and cultural life in Australia were so thorough and widespread, and so widely discussed in the media, there are many potential sites of fruitful empirical research, and the academic literature on this topic over the last two decades bears witness to that. In making the selection, I have been guided by the political economy thesis which argues that, at its core, globalisation was a process of restructuring and concentration of the command and control functions in the global economy; it was achieved in the marketplace using capital created by the massive growth in financial liquidity produced by the explosion of debt and its derivative financial instruments. The largest source of debt was the property market. In short, the housing bubbles around the industrialised world were the basis of globalisation in this period. The flow of Asian savings into the North American mortgage market via the financial services industry of the City of London was the primary circuit of capital (to the tune of US$2 billion per day by the turn of the century) that established the entire global cities phenomenon.

Locally, from the late 1950s, the rising value of real estate had changed the patterns of wealth accumulation in Sydney, and spawned a major shift in the sources of advertising revenue for newspapers and the media’s approach to reporting real estate. In the late 1980s house prices began to outstrip income levels, and households incurred increasing levels of debt to purchase shelter. Inevitably, the idea of ‘home as intimate domestic space’ was challenged by the concept of ‘home as financial instrument’, with far-reaching implications for levels of household indebtedness, the national financial balance sheet and ballooning levels of liquidity in the international financial system. The first case study, in Chapters Five and Six, explores the media representation of the beginning and end of the 1997-2003 Sydney property boom when house prices doubled, home affordability became the worst in the OECD and levels of household indebtedness reached dangerous heights.
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In Chapter Seven, we consider the other side of the globalisation coin: the use of the available liquidity to concentrate command and control in the Australian financial sector. Our case study is the decade-long struggle to demutualise the largest general insurer in the country, established and controlled by the National Roads and Motorists Association (NRMA), a NSW-based automobile club. Because the demutualisation required the consent at plebiscite of three quarters of the voting membership (NRMA elections were third only to national and state government elections in size), and because its demutualisation was bitterly and publicly contested on many fronts over nine years from 1992 to 2000 and beyond, it provides an excellent case study for interaction among the symbolic, economic, political and coercive spheres.

Chapter Eight will offer a conclusion, drawing together the implications of the case study analyses to reappraise the theoretical debates discussed in the earlier chapters. Overall, the thrust of this research is to present a theoretical and empirical account that is nuanced yet cogent, using case studies that exemplify key sites of struggle in a particular period of socio- economic globalisation as it pertained to nodal points such as Sydney in the international network of global cities

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Chapter 2 – Globalisation and Global Cities

A new conceptualisation of the world or global city appeared in the urban sociology and urban planning literature in the early to mid-1980s (Cohen, 1981; Friedmann and Wolff, 1982; Friedmann 1986). In 1986, John Friedmann advanced a ‘world city hypothesis’ comprising seven interrelated research theses “as a framework for research …. neither a theory nor a universal generalisation about cities, but a starting point for political inquiry” (Friedmann, 1986: 69).

The seven theses were: 1 The form and extent of a city’s integration with the world economy, and the functions assigned to the city in the new spatial division of labour, will be decisive for any structural changes occurring within it. 2 Key cities throughout the world are used by global capital as ‘basing points’ in the spatial organisation and articulation of production and markets. The resulting linkages make it possible to arrange world cities into a complex spatial hierarchy. 3 The global control functions of world cities are directly reflected in the structure and dynamics of their production sectors and employment. 4 World cities are major sites for the concentration and accumulation of international capital. 5 World cities are points of destination for large numbers of both domestic and/or international migrants. 6 World city formation brings into focus the major contradictions of industrial capitalism – among them spatial and class polarisation. 7 World city growth generates social costs at rates that tend to exceed the fiscal capacity of the state. (Friedmann, 1986)

Writing ten years later, Friedmann distinguished between an hypothesis and a paradigm and was able to “conclude that the emerging world city paradigm has not only been productive of interesting research hypotheses but is sufficiently robust to guide our efforts in the years ahead. Our work has only just begun.” (Friedmann, 1995: 43). A further seven years on, he re- confirmed his view of its value, and while acknowledging that “history and the role of the state were (at least initially) stressed insufficiently”, he defended the hypothesis as “a theory of structuration in Giddens’ sense (1984)”, and on that basis rejected the argument for a tri-polar world comprising North America, Europe and East Asia (Stallings and Streek, 1996; Hill and Kim, 2000) in favour of a hierarchy (Friedmann, 2001: 2536). However, his argument on that

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last occasion was brief and cited transient empirical phenomena; we will return to the theoretical issues below.

Abu-Lughod characterised the paradigm thus:

Contemporary scholars, trying to define the “global city”, imply that it is a relatively new phenomenon (emphasis in original) that has been generated in the present period by the development of an all-encompassing world system – variously termed late capitalism, post-industrialism, the informational age, and so on. Among the hallmarks of this new global city are presumed to be an expansion of the market via the internationalisation of commerce, a revolution in the technologies of transport and communications, the extensive transnational movement of capital and labour, a paradoxical decentralisation of production accompanied by a centralisation of control over economic activities, and the increased importance of business services, particularly evident in the growth of the so-called FIRE economic sector – finance, insurance and real estate. Accompanying these changes, and often thought to result from them, is a presumed new bifurcation of the class structure within the global city and increased segregation of the poor from the rich. (Abu-Lughod, 1999: 2)

Friedmann (Friedmann, 1986: 69) identified the genesis of the paradigm and hypothesis in earlier methodological shifts in urban studies linking the growth and development of cities to larger historical shifts in industrial capitalism, and attributed the initiative in these shifts to Manuel Castells (Castells, 1972) and David Harvey (Harvey, 1973). Harvey took an explicitly Marxist approach in Social Justice and the City, relating the spatial re-organisation of cities to the changing relations of production in industrial capitalism, and specifically applying Marx's labour theory of value to the theory of urban land use (Harvey, 1973: 153-190). Castells started off with a Marxian political economy approach, but went on to become a major theorist of what he termed informationalism (Castells, 1989) and the network society (Castells, 1996, 1997, 1998), a paradigm that increasingly resonated at a meta-theoretical level with Daniel Bell’s post-industrialism.

The meta-theoretical debates

Daniel Bell first published The Coming of Post-Industrial Society: a Venture in Social Forecasting in 1973, and then again with new forewords in 1976 and 1999. While Harvey’s

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empirical concern was with urbanism as a phenomenon, Bell’s was with the processes and products of social transformation. However they mapped out the meta-theoretical frameworks of the neo-Marxist and liberal approaches respectively that have informed debates in the political economy of globalisation and its urban dimension since that time. Each explicitly and extensively engaged with the methodology they were opposing in order to debunk it: Marxism for Bell was a manifestation of outdated thinking that science was superceding; liberalism for Harvey was methodologically inadequate to the task of explanation in geography.

This methodological dispute is fundamental to any discussion of what ‘globalisation’ is: either a radically new stage in social development whose impetus – the instrumental reason embodied in science and technology – must inevitably triumph over merely human understanding and intention, or else an extension of existing social processes whose impetus – the need for capitalist enterprises to extend the scope and depth of their economic activities in the vital search for profits – is irretrievably dependent on human understanding and intention, however flawed and misconceived in any particular instance. It is also fundamental to understanding the relationships between different fields of social activity – the economic, political, legal/coercive and cultural/ideological – in the development of globalisation, and in particular does activity in any one field have a determinant impact on other fields, and if so how? For the purposes of our study, the crucial question is: how does activity in the communications field relate to activities in the economic and political fields?

Bell soon recognised the challenge, and three years later published a second edition to his book with a new Foreword (Bell, 1976) that underlined his opposition to Marxist approaches. The central plank in his position was that

The "economics of information" is not the same character as the "economics of goods", and the social relations created by the new networks of information … are not the older social patterns – or work relations – of industrial society. We have here – if this kind of society develops – the foundations of a vastly different kind of social structure than we have previously known. (Bell, 1976: xv)

For Bell, capitalist society was characterised by horizontal conflict between classes defined by their relationship to the ownership of property, but in post-industrial society, while occupations are stratified with the professional stratum at the top, class conflict disappears as the major form of conflict to be replaced by vertical competition between ‘situses’, defined as locations of occupational activities in five categories: economic enterprises and business firms, government

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(bureaucratic: judicial and administrative), universities and research institutions, social complexes (hospitals, social service centres, etc.), and the military (Bell, 1973: 375).

The transformation to post-industrialism is, for Bell, of the same epochal status as the agricultural and industrial revolutions (Bell, 1999: lxxxv). He argued that new information and communication technologies (ICT) were the transforming force: “In effect, what a post- industrial transformation means is the enhancement of instrumental powers, powers over nature and powers, even, over people.”[Bell's emphasis] (Bell, 1976: xxi). Bell used the term ‘post- industrial’ to define a social condition that he distinguishes from ‘capitalist’ society (Bell, 1976: 377). In this usage, capitalist society is effectively just one possible mode of industrial society, and “[i]n that historical sense “communism”, then, is not a “next” stage in history but simply one of a number of alternative modes of industrialisation” (Bell, 1973: 74).

In both modes ‘the economy’ was the formative social force. However, perhaps unduly impressed by the apparent impact of the New Left and radical social movements on American society at that time, he argued

[t]he decisive social change taking place in our time … is the subordination of the economic function to the political order …. The autonomy of the economic order (and the power of the men who run it) is coming to an end, and new, and varied, but different, control systems are emerging. In sum, the control of society is no longer primarily economic but political. (Bell, 1973: 373)

The causal agent in the development of the new society was ‘science’ manifested as instrumental or technological power. Science thus conceived stands outside social situations but has a causative impact on them, and the nature of historical progress is an inexorable development whereby human organisation comes to reflect the rationality of science.

A new social system, contrary to Marx, does not always arise necessarily within the shell of an old one but sometimes outside of it …. The roots of post-industrial society lie in the inexorable influence of science on productive methods, particularly in the transformation of electrical and chemical industries at the beginning of the twentieth century …. And science, as a quasi-autonomous force would extend beyond capitalism. By this token, one can say that the scientific estate – its ethos and its organisation – is the monad that contains within itself the imago of the future society (Bell, 1973: 378).

Bell from the outset repudiated the charge of technological determinism, arguing that

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one can avoid single-minded determinism, such as an economic determinism or a technological determinism, in explaining social change, yet single out a primary logic within a given conceptual scheme. One forgoes causality but emphasises significance. (Bell, 1999: 12) In 1999 he reiterated this stance, but citing the scale and range of social change in the previous twenty-five years (Bell, 1999: xv – xvii) he confirmed his thesis that technological science is the primary agent of change:

The techno-economic realm does not determine the political and cultural spheres, but as the initiator of change it poses problems for the political order (often of managing the disruptions created by change) and the cultural realm in confronting the claims of instrumental reason as it spreads through the society. (Bell, 1999: xix)

Despite these attempts at a qualified determination, Bell’s approach poses a problem for the analysis of communications and cultural factors, because from the outset in relation to the agency of science it establishes social factors as merely responsive (whether in support or opposition) to the asocial scientific or ‘techno-economic’ imperative. Any possible conclusion from research about the relationship of communication and cultural contests to economic processes is implicit in the theoretical premise: it is either irrelevant, or responsive. Ironically, this is an anti-Marxist argument that employs the science/ideology dichotomy of vulgar Marxist epistemology: the ‘false consciousness’ of ideology and its social manifestations will crumble before the transformative powers of scientific reason, and the new social structures will reflect, unencumbered and transparently, the functional truths of scientific rationality.

By 1999, in his new Forward to the third edition of the book entitled ‘The Axial Age of Technology’, Bell’s position had mellowed somewhat, perhaps because the demise of the Soviet Union had removed any sense of urgency from the anti-Marxist case, and the rapid restructure of the advanced capitalist economies seemed to demonstrate the power of economic forces over political opposition. Indeed, Bell nominated Marx’s analysis as “one of the most acute about Western capitalist society for the period 1750 to 1970” (Bell, 1999: xxviii). By implication, of course, if Bell is wrong about the epochal stature of post-industrialism, then we are still located within capitalist society where Marx’s insights retain their acuity.

Extending his view of the privileged role of science, Bell argued that the previous two centuries “had been the ‘axial age’ of technology”, thus equating the historic impact of technology with that of the great religions which had emerged in the period around 500 BCE (Bell, 1999: xiii). He argued that society comprises “three realms – the techno-economic, the political and the

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cultural, each organised and obedient to different principles. These cohere at different times and in different ways. And they sometimes change in radically different ways.” (Bell, 1999: xix). Thus the former Soviet Union and the United States could both be industrial economies while having opposed political systems, but those systems would be superseded by a post- industrial form of society in response to the scientific imperative.

Castells, one of the major 1970s innovators in the field of urban studies, increasingly came to embrace major elements of Bell’s paradigm, although not Bell’s claim that capitalism itself had been replaced. For him, it was rather restructured, so that just as ‘Keynesian capitalism’ replaced the laisser-faire mode, now the informational mode was replacing Keynesianism: “[t]he overpowering of labour by capital, the shift of the state towards the domination- accumulation functions of its intervention in economy and society, and the internationalisation of the capitalist unit to form a worldwide interdependent unit working in real time are the three fundamental dimensions of the restructuring process” (Castells, 1989: 27). Harvey has a similar set of stages, though rather than informationalism, he characterises the last stage as one of flexible accumulation (Harvey, 1989b: 256-278).

Castells concurs with Bell that the Industrial Revolution was characterised by the socially transformative impact of technology, and that therefore the new digital technologies have precipitated a commensurate new social order which he calls ‘the network society’. In industrial society the defining process was the application of energy (steam, electrical, petrol/diesel, gas turbine) to the manufacture of goods in an environment where the economies of space were critical. In post-industrial or network society, the defining process is the application of information to the manufacture of information in an environment where space is obliterated: “the core new technologies are focussed on information processing [whose] raw material itself is information, and so is its outcome” (Castells, 1989: 13. Italics in original). Information is both the input and the output of the new economy, which state of being he characterises as ‘informationalism’. Computer software development, nano-technologies, bio- technological engineering, and sophisticated financial processes are typical examples of the new industrial processes. This is congruent with Bell’s argument that the driving force of socio- historical change is science manifest as technological process and development. And just as Bell argued that “the scientific estate – its ethos and its organisation – is the monad that contains within itself the imago of the future society” (Bell, 1973: 378), so Castells argues that the new social mode is ‘the network society’ constituted by the ‘space of flows’ (Castells, 1989: 348; 1996, 410-20 & 423-8). The key structural characteristic of this network society is that it is a ‘space of [information] flows’ between nodal points of management and control, rather than a ‘space of places’ for production. The city is a key nodal point in the network structure, and
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certain cities, where the professionals who staff the new industries are located, assume leadership roles in a flexible hierarchy or set of hierarchies (Castells, 1996: 29-65).

Critiques of Bell/Castells

As van Dijk points out in reviewing Castells’ approach (van Dijk, 1999: 136), the proposition that instrumental technology produces autonomous development is effectively a determinist position, is linear rather than dialectical in its understanding of causality, and fails to account for the ways in which technological development is itself a product of social activity. Bell and Castells effectively locate the impetus for social change outside society, and elevate the laws of the natural and mathematical sciences to a quasi-divine status where they govern not only the biological, physical and mathematical processes from which they derive, but also social ones. There is a problem here of incommensurable logical fields. Further, they elevate a contingent set of technological and economic developments from a particular historical and geographical situation (for which the exemplar could be Silicon Valley in the 1970s and 1980s) to a vanguard status as prototype of the future to which the rest of humanity can aspire (‘California Dreaming’ on a global scale). While Castells acknowledges the rise of opposition movements to this linear progression, in the form of fundamentalist religion, organised crime, entrenched poverty in the ‘Fourth World’, etc (Castells, 1998) these are essentially conceived as obstacles to an otherwise orderly historical progression, much as Bell conceived culture and politics as obstacles to science-led development. It is a perspective that resonates with the Cold War theses of Bell’s End of Ideology (1962) and Fukuyama’s End of History (1991), and arguably is driven by the same North American triumphalism, which we will discuss below.

On the question of the epochal impact of technological change, Eric Hobsbawm has argued convincingly that technological advance played a secondary role in the unfolding of the industrial revolution in Britain from 1780. Indeed, British scientific knowledge was decidedly inferior to that of the French up until about 1830; the key scientific innovations (eg textile machinery and the steam engine) of the initial revolutionary period were based on the relatively crude and untheorised engineering knowledge of the workshop, and it wasn’t till well past seventy years into the revolution, in the second half of the nineteenth century, that massive technological change and the factory system were introduced to transform the industrial production process (Hobsbawm, 1964: 45 ff).

Hobsbawm argued that the key ingredients that enabled the industrial revolution to begin in Britain in the decade 1770-80 were social: the concentration of land as capital in a relatively few aristocratic hands (a significant section of them, the Whigs, with a desire to use this capital
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to generate further wealth), the consensus among the English governing elite from 1680 that the proper and principal role of government was support for the generation of wealth, and the availability in India of a mass market for cotton goods (later to be articulated with the African slave trade to the Caribbean) (Hobsbawm, 1964: 1949 ff).

None of this is to say that technologies, including information and communication technologies, cannot impact on social relations and historical development with epochal effect. Benedict Anderson in Imagined Communities (Anderson, 1991) argues that the Gutenberg revolution in print technologies helped to precipitate the onset of Western modernity, in a series of fits and starts in geographically dispersed locations over ensuing centuries. However, he regards technological innovation as only one of three necessary causes for this epochal development, the other two being decidedly social: the availability of a small group of entrepreneurial printers in the European towns who quickly became print capitalists, and what Anderson calls the fatality of language, or the happenstance of linguistic diversity that meant there were never- ending new markets for the printers’ products once the Latin-reading market had been exhausted within 150 years of 1456 (Anderson, 1991: 37 ff). In this analysis, the potential for epochal change resided in “the explosive interaction between capitalism, technology and human linguistic diversity” (Anderson, 1991: 45), whereby the social and cultural factors were not impediments to historical change as Bell and Castells would have it, but rather essential ingredients in the process.

From another perspective, Harold Innis in The Bias of Communication (Innis, 1951) argued that communication technologies have an intrinsic bias towards extending power over space or time, and that print had a bias towards space, with major social implications. While Innis was a staunch liberal-pluralist in common with Bell (and in contrast to the neo-Marxism of Anderson), as Carey points out he was always at pains to recognise and explore the role of social agency (the ‘priests’ and ‘pharaohs’ respectively for time- and space-biased technologies) through political economy and history with respect to the impact of technological change (Carey, 1992)

Nor is the Bell/Castells argument about technology the same as that made by environmental scholars about the extensive social consequences of environmental factors, for example, decreasing bio-diversity, genetic engineering, greenhouse gas emissions, degradation of habitat, etc. (eg Diamond, 2005a, 2005b; Flannery, 1998, 2003, 2005). The argument in these instances is about a complex set of interactions between the social and bio-physical domains. There is a robust and extensive interdisciplinary debate about environmental history and historiography, and the theoretical interface between the natural and the social sciences (see McKenzie (1997) for an account of the state of the field in environmental historiography) which spans the
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Holocene period (Roberts, 1989) as well as the successive global waves of human activity in more recent centuries (Crosby, 1986; Abu-Lughod, 1989; Griffiths and Robin, 1997)

Regarding the stratification of social structure, Bell’s proposition that contestation among professional elites in their bureaucratic organisations would replace class struggle as the new axis of social relations was an extension of the ‘new class theory’ that was popular at his time of writing (Gouldner, 1979; Schlesinger, 1982). In essence this argument was that the capital- owning class could no longer be personified or even caricatured as in the nineteenth or early twentieth centuries, because ownership of capital had shifted from individuals and families to institutions, primarily the joint stock corporation, which employed managers to administer them, so the bosses (who used to be capital owners) were in fact employees. This argument is based on a sociological understanding of class, rather than on an understanding of the abstract relations of production that produce in any given historical and geographical instance a material social and economic manifestation of those relations (Garnham, 1979: 128). That is to say, for example, that while the US economy is sociologically distinct from the Japanese, and the French, and the British, etc, each of them manifests the underlying capitalist structure of wealth production in a way that is distinct to their historical and geographical development (Hall and Sockice, 2001). Or again, just as the 19th century Yorkshire miner is of limited value as an archetypal proletarian for the 21st century, so is the 19th century factory owner or banker no longer the archetypal capitalist.

Garnham’s review of that theoretical moment (Garnham, 1995) situates it at the apogee of what Mulgan has called ‘strong control’ (Mulgan, 1991) exercised through expanding bureaucratic hierarchies in both public and private sector organisations. A radical culling of middle management from corporate and bureaucratic organisations accompanied the so-called flattening of management structures, with devastating effects on the people involved, often middle-aged middle-class men (see Leser, 2000, for a contemporary Australian account of this phenomenon). If this social caste holds the reins of power in a new social order, that power wasn’t sufficient to withstand the caustic winds that winnowed their ranks in the decades that followed this moment.

So, from a variety of theoretical positions in a range of relevant disciplines, the conceptual foundations of post-industrialism/informationalism as advanced by Bell and Castells have been found to be wanting. But despite the power of these critiques, their proposition suited the times, and the concepts and approach have been endorsed by proponents in the economic, political and symbolic fields as providing an incontrovertible basis for radical socio-economic transformation.
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The political and economic response

Interestingly in Australia and Britain, thinkers associated with the Labor and Labour Parties respectively embraced the argument about the necessity of socio-political transformation in response to new technological imperatives – the essence of Bell’s theory of how society develops. In Australia, Barry Jones, later Minister for Science and Technology in the Hawke Labor Government, was an early starter with Sleepers Wake: Technology and the future of work (Jones, 1980 and five subsequent editions through till 1995), followed from the converging right and left wings respectively of the Australian Labor Party (ALP) by Mark Latham with Civilising Global Capitalism: New thinking for Australian Labor (Latham, 1998) and Lindsay Tanner with Open Australia (Tanner, 1999). In Britain, Anthony Giddens in Beyond Left and Right: The Future of Radical Politics (Giddens, 1994) argued that globalisation and the impending ecological crisis had made the modernising stance of normal radical politics (whether of the left or right) dangerously moribund, and that the most appropriate political stance for the times was a new conservatism. This approach was taken up and labelled ‘New Labour’ by Tony Blair in his victorious campaign to become British Prime Minister in 1997.

In the United States in particular, economic thinkers and analysts argued that digital information and communication technologies had transcended the old cycle of boom and bust to bring in a ‘new era’ of unending growth (Lloyd, 2008: 31-32; Shiller, 2000: 96 ff). The argument ran that innovation in ICT was demolishing spatial limitations to economic activity, and therefore inaugurating a new era where real market competition more closely matched theoretical models of perfect competition to drive productivity and growth. Alan Greenspan, Chairman of the US Federal Reserve Board, although wary of “irrational exuberance” in the markets, was publicly ambivalent about ‘new economy’ thinking, and certainly wasn’t prepared to disavow it (Schiller, 2000: 14). As ‘momentum trading’, ie following the market trends, replaced a careful assessment of the ‘fundamentals’ as the basis for trading in stocks and shares linked to the so- called ‘dot.com’ sector, the price of shares on the New York Stock Exchange skyrocketed, shedding any linkage to corporate earnings (Shiller, 2000: 6, 8). Apart from the impact on the personal wealth of speculators and the professionals who worked in the market, the bubble financed a wave of mergers and acquisitions in the private sector as companies with highly liquid balance sheets sought to convert their monetary wealth into real assets. Likewise in the public sector, corporations available for demutualisation or privatisation were assured of an apparently benign environment in which to enter the marketplace. From a communications perspective, the market’s extraordinary performance, linked to the symbolic role of money, constituted a powerful frame within which individuals and institutions assessed their socio- economic position and the options available to them.
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Even the dot.com crash in March 2000 didn’t puncture confidence in the new economy model. With only a minor hiccup in the stock and financial markets there was a transfer of speculative capital into the housing market, but with the innovative addition of new financial derivatives, in particular collateralised debt obligations (CDOs) and corporate default swaps (CDSs). Initially, these derivatives were secured against high quality mortgage debt, but as the demand for them in the financial markets expanded, increasingly they were secured against subprime mortgage debt, and then ‘cubed’ and ‘quadratic’ synthetic CDOs were invented that were secured against other CDOs, so that buyers and sellers of these products could not know what real assets underwrote the risk (Foster and Magdoff, 2009: 94-95; Lewis, 2010, 200 ff), Until fear gripped the financial markets in 2007, none but an apparently small number of market participants understood that because these derivatives were ultimately secured by the sub-prime mortgages they therefore effectively had no real collateral behind them,

From the end of 2005 until the middle of 2007, Wall Street firms created somewhere between [US]$200 and $400 billion in subprime-backed CDOs. No one was exactly sure how many there were. Call it $300 billion, of which roughly $240 billion would have been triple-A-rated and thus treated, for accounting purposes, as riskless, and therefore unnecessary to disclose. Much, if not all, of it was held off balance sheets. By March 2008 the stock market had finally grasped what every mortgage bond salesman had long known. Someone had lost at least $240 billion. (Lewis, 2010: 234)

The subsequent GFC represented a particularly savage twist on Castells’ 1989 characterisation of the informational city as a place where space is obliterated and “the core new technologies are focussed on information processing [whose] raw material itself is information, and so is its outcome” (Castells, 1989: 13. Italics in original). Behind the opaque information that constituted these derivative products was the void.

Situating David Harvey’s project

In contrast to Bell, David Harvey, a geographer, argued that so-called post-industrialism and post-modernity, while certainly different in some respects from the period of Keynesian orthodoxy that preceded it, are most fruitfully analysed and understood not as the beginning of a new epoch, but as a new stage in capitalism as an economic, social and cultural system. This difference from Bell’s approach was not a matter of differing interpretations of the available

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evidence using agreed criteria and common analytical tools. Indeed for Harvey, whose subject matter was urbanism (of which globalisation and ‘global cities’ are an advanced development), the key disagreement was methodological: “The argument over urban origins can thus be represented as an argument over method and in particular over ontological presuppositions. Once these fundamental questions of method are resolved much of the argument over the evidence will disappear.” (Harvey, 1973: 294).

Harvey launched his project in 1973 with Social Justice and the City, comprising a series of essays produced and published over the previous period, augmented by an introduction and three interpretative chapters. It constituted both evidence and analysis of his intellectual journey thus far into a rigorous interrogation of Marxian thought in relation to spatialisation and urban geography. These theoretical and methodological issues, and their relationship to the human praxis that he observed in the built environment, have been the focus of his work since that time.

Harvey argued several fundamental propositions. Firstly, facts cannot be separated from values, objects from subjects, things as having identities independent of human perception and action. Rather, “it is vital to understand how categories are established and in particular how they take on meaning and are transformed in and through use”. Similarly with verification (and hence epistemology): From an initial position in which verification is viewed as a matter of establishing (by some generally accepted means) the empirical relevance and applicability of certain abstract propositions, I progress to the view that it cannot be separated from social practice in general …. Verification is achieved through practice which means that theory is practice in a very important sense. (Harvey, 1973: 11-12. emphasis in original) This ontology contrasts starkly with Bell’s scientism discussed above, and resonates strongly with Bourdieu’s reflexivity, which we will discuss in Chapter 4. It further constitutes a framework for understanding how both Bell’s and Harvey’s accounts, and indeed any scholarship, are products of their time and place.

Secondly, space is a social construct. In other words, there are no philosophical answers to philosophical questions that arise over the nature of space – the answers lie in human practice. The question ‘what is space?’ is therefore replaced by the question ‘how is it that different human practices create and make use of distinctive conceptualisations of space?’ …. space becomes whatever we make of it during the process of analysis rather than prior to it. Further,
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space is neither absolute, relative or relational in itself, but it can become one or all simultaneously depending on the circumstances. (Harvey, 1973: 13-4)

Thirdly, and flowing from this, urbanism becomes defined relationally, as an evolving product of the transformation of its own structure, affected by transformations underway in other structures, most importantly in the economic structure, and therefore it becomes “a vantage point from which to capture some salient features in the social processes operating in society as a whole – it becomes, as it were, a mirror in which other aspects of society can be reflected.” (Harvey, 1973: 16) In other words, there is a symbolic or expressive dimension to the very structure of urban life and environments, and that structure has to be understood dynamically as a set of social relations in constant transformation. As an aside presaging our discussion in the next chapter, Garnham, in the media studies field, supports this interpretation of Marx’s concept of expressive totality as being relational rather than determinist (Garnham, 1980: 127)

Harvey uses the term ‘operational structuralism’ coined by Piaget to describe his (Piaget’s) and Marx’s approach to epistemology: It adopts from the start a relational perspective, according to which it is neither the elements nor a whole that comes about in a manner one knows not how, but the relations among elements that count. In other words, the logical procedures or natural processes by which the whole is formed are primary, not the whole, which is consequent on the system’s laws of composition, or the elements.” (Piaget, 1970, quoted in Harvey, 1973: 288). Harvey endorses this approach, and goes on: It follows from Marx’s ontology that research has to be directed to discovering the transformation rules whereby society is constantly being restructured, rather than to finding “causes”, in the isolated sense that follows from a presupposition of atomistic association, or to identifying “stages” or “descriptive laws” governing the evolution of totalities independent of their parts. (Harvey, 1973: 290)

Harvey argues that the totality of any society is historically and geographically specific, and made up of component structures. A structure must be defined … as a system of internal relations which is in the process of being structured through the operation of its own transformation rules …. Structures may be regarded as separate and differentiable entities when no transformation exists whereby one may be derived from the other. (Harvey, 1973: 290-1).

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The most significant relations are those related to economic production, and he quotes Marx approvingly to the effect that changes at the base ultimately transform the superstructure:

Changes in the economic foundation sooner or later lead to the transformation of the whole immense superstructure. In studying such transformations it is always necessary to distinguish between the material transformation of the economic conditions of production, which can be determined with the precision of natural science, and the legal, political, religious, artistic or philosophic – in short ideological forms in which men become conscious of conflict and fight it out. (Marx, preface to A Contribution to the Critique of Political Economy, quoted in Harvey, 1973: 197)

But he immediately goes on to quote from Engels in clarifying the time scale Marx had in mind:

[T]he ultimately determining element in history is the production and reproduction of real life. More than this neither Marx nor I have ever asserted. Hence if anyone twists this into saying that the economic element is the only determining one, he transforms the proposition into a meaningless, abstract, senseless phrase. (Engels, letter to Bloch, quoted in Harvey, 1973: 198. emphasis in original).

In other words, mutually non-reducible elements or structures such as the economy, culture, politics, and so on can have a determining effect on each other, but ultimately the economic sphere will have the definitive influence, because it generates the surplus that enables the activity in all of the other spheres. Therefore, the continuing viability of the economic structure is fundamental to the reproduction of society in a way that cultural, political and legal structures are not.

However, precisely how this generative determination will play out is a matter of the prevailing historical and geographic contingencies, and indeed structures and elements from a previous epoch may survive and prosper in changed circumstances over many centuries, witness the strength of both fundamentalist and feudal religious institutions in the most advanced capitalist economies (Harvey, 1989b: 200 ff; Castells, 1997). Hence, in any given historical-geographical situation, there will be a number of interacting structures at play in contestation and confluence, each of them with its own internal contradictions as well. Modern society is a maelstrom of “creative destruction” (Harvey, 1989c: 16) being fought out by

three kinds of forces making for social differentiation within the population: 1 A primary force arising out of the contradiction between capital and labour 2 A variety of secondary forces arising out of the contradictory and evolutionary character of capitalism which encourage social differentiation along lines
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defined by (a) the division of labour and specialisation of function, (b) consumption patterns and lifestyle, (c) authority relations, (d) manipulated projections of ideological and political consciousness, and (e) barriers to mobility chances 3 Residual forces reflecting the social relations established in a preceding or geographically separate but subordinate mode of production. In general we can see a perpetual struggle amongst these forces between those that create configurations antagonistic to the perpetuation of the capitalist order and those that create social differentiations favourable to the replication of capitalist society. (Harvey, 1989b: 117) This characterisation of different fields of social power in contestation with each other over the different time periods is reconcilable with the definition of social fields developed by Bourdieu and Mann, which we will discuss in Chapter 4.

For Harvey, using Marx’s theory to understand these forces and processes requires abstract concepts “such as value and surplus value, class relations and productive forces” (Harvey 1989b: 9) which are not amenable to direct observation, but need to be derived theoretically in much the same way as the abstract laws of physics. At a lower level of abstraction are “concrete abstractions” (Harvey 1989b: 59) such as work, money, time and space, all of which are socially produced and closely involved in the process of urbanisation. Money, finance and credit form a hierarchically organised central nervous system regulating and controlling the circulation of capital as a whole and expressing a class interest, albeit through private action (Harvey, 1982: chapters 9 and 10). Financial markets separate out from commodity and labour markets and acquire a certain autonomy vis-à-vis production. Urban centres can then become centres of co-ordination, decision-making and control, usually within a hierarchically organised geographical structure (Harvey, 1989b: 22).

This is a very fertile conception, and can be expanded to contribute to an alternative model of explaining globalisation. Money is a measure of account in the circulation of credit, which is the basis of the financial system (Weber, 1978; Harvey, 1982, 1989b; Ingham, 2004; Pixley, 2004). It can thus provide a means of determining exchange value for commodities in a spatially and temporally dispersed market system. It is an abstraction, but concrete in the sense that people have a clear if multi-dimensional grasp of its meaningfulness for them (Zelizer, 1997). Similarly space and time are abstract conceptions, but socially produced and concrete in their apprehension and application by people in their daily lives (Carey, 1992: 201-238). The successful construction and development of these concrete abstractions according to the requirements of an underlying set of principles organising economic life is central to the
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effective operation of capitalist economies, in empirically verifiable ways (Harvey, 1989b: 165- 199). The value of money needs to be maintained for the effective circulation of credit, which is the foundation of monetary and economic systems larger than a primitive barter system; linear time is a component unit of measure of the value of labour, and therefore intrinsic to the extraction and maximisation of surplus value from that labour; space is integral to the law of uneven development whereby differential levels of surplus value can be extracted from a geographically dispersed production and distribution of commodities in the competitive drive to maximise profits (Harvey, 1996: 207 ff).

Harvey argues that money, time and space conceptualised and actualised in terms supportive of capitalist economic relations provide temporal and spatial ‘fixes’ (Harvey, 1989b: 33), whereby capitalism resolves its recurring crises of over-accumulation by either drawing into the capitalist marketplace those parts of advanced economies that were non-capitalist (for example, by privatisation or demutualisation of public sector entities, or by the commodification of existing, non-commodified goods and services such as education, leisure and domestic activities) or by extending capitalist relations of production and consumption into new territories either real – as in old-fashioned neo-imperialism – or unreal – as in synthetic financial products such as CDOs and CDSs. With respect to material production, the efficacy of the spatial fix is greatly enhanced by the capacity of new communications technologies to overcome distance barriers, or as Harvey puts it, to annihilate space through time, ie to overcome spatial barriers to instantaneous and continuous market activity through the speed of communications.

The splitting of production into many specialisations permits much greater sensitivity to geographical variation, thus allowing capitalists to exploit the differentials and accumulate capital much faster than before. Detail functions can also split up over space under the planned control of the corporation. This applies not only to the separation of design, planning, production and marketing functions but also to the elements of a complex production system which can be produced in many different locations throughout the world before assembly into the final product. Such geographical separations have major impacts upon trading patterns and become feasible only to the degree that integrated production schedules can be organised efficiently over space. (Harvey, 1989b: 20)

For economic activities of any sophistication and scale to occur, there needs to be a set of markets – financial, labour and commodity – where economic transactions can occur. These markets will compete among themselves, with assistance from political, cultural and coercive factors but primarily in terms of economic efficiency, and any set of markets in competition will

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coalesce into a hierarchy. Any hierarchy will be unstable in both time and space, and contingent on the activities of the participants in seeking to maximise their own competitive advantage. The widespread availability of digital communication technologies has enabled a new stage in both the geographic expansion of market scale (‘globalisation’), and also a temporal expansion of activity as international markets operate continuously and also with an instantaneous transaction time. Cities have a particular role to play in this process as they provide a physical ‘pied-à-terre’ for markets in regulatory purposes and also the location of the professionals staffing the producer services of finance, insurance, real estate, legal and communication activities.

In sum, the differences between Bell and Harvey, representing liberal and Marxist approaches, can be characterised as follows. Bell argues that post-industrial society is a radically new and distinct epoch, supplanting both capitalist and communist versions of industrial society; Harvey argues that post-industrialism or ‘flexible accumulation’ is an extension of capitalist modes of industrialisation. Bell argues that the historic imperative for the development of this new social structure resides in the instrumental reason of science manifest as technological development; Harvey argues the imperative lies in the contradictions of capitalist relations of production in search of a temporal-spatial fix to the crisis of economic stagnation that developed in the industrialised capitalist economies in the 1960-70s. Bell argues that the class conflict that was the defining form of social structure under industrialisation is to be replaced by competition among competing workforces established in different types of organisation; Harvey argues that class conflict continues as the underlying dynamic of social change, but on a reconfigured geographical scale, and manifesting itself in different socio-cultural forms and activities.

This detailed comparison of the approaches taken by Bell and Harvey is not intended to reduce meta-theoretical debate on this issue to a binary opposition. There are a range of positions taken within and between these two polar stances. However, because both authors explicitly engage in a critique of the other’s generic position (though interestingly without focusing on each other’s personal contributions to the debate), and because they have both been extremely influential – Bell in mainstream media and political discourse as well as academia, Harvey more in scholarly discussion – they provide together a convenient way to characterise the major points at issue at the meta-theoretical level, which as Harvey pointed out in 1973, is where the issue really needs to be resolved (Harvey, 1973: 294).

Globalisation and global cities
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Below the totalising level of meta-theory, there is a vast array of research and scholarship on globalisation (see Held and McGrew, 1999 and Held at al. 2000 for an overview) and global cities. The defining characteristic of a global city is that it has a significant proportion of its economy linked into international economic transactions, and plays a significant role in the network of cities managing those transactions. This in turn has the effect of differentiating that city from other parts of the host country or region in terms of patterns of employment, income levels, types of ‘producer services’ available, types of infrastructure, levels of ‘cultural amenity’, real estate prices, and so on.

Friedmann, Sassen, Harvey, Castells, Knox and Taylor are among the most prominent scholars arguing for a hierarchical ranking of global cities. Sassen (1991, 1994) identified the first rank of global cities as New York, London and Tokyo. The crucial criterion for such status was the significance of the city’s role in global capital flows, and East Asia (initially Japan, followed by Taiwan, South Korea and China) via (initially) Tokyo banks was the major exporter of internationally available capital, the United States via New York was the importer and the City of London had a highly developed and innovative financial sector for processing the flows and providing the necessary ancillary services. These capital flows were structured around the sale and purchase of corporate entities, shares, bonds and other financial products, and from the late 1990s constituted a net flow of about US$2 billion a day into the US economy. Below this primary troika, there was a level of secondary or sub-global cities identified by various researchers, each using slightly different criteria (Friedmann, 1986; Sassen, 1991, 2001; Knox and Taylor, 1993; Knox, 1995; Daly and Stimson, 1992; O’Connor and Stimson, 1995). Sydney appears in all of them, sometimes as the only global city in the southern hemisphere and one of as few as four in Asia (Knox, 1995). The role of these cities was to host markets where national and regional capital flows could occur, and likewise was structured around the sale and purchase of corporate entities, shares and bonds. The production and transaction of synthetic financial products remained primarily based in New York.

There is a debate about whether the global status of a city is determined by the number of transnational corporations that have their global or regional headquarters resident in that city (Knox, 1995), or whether the determining factor is the presence of the producer services firms required to transact the business (Sassen, 2001: 7). Empirically, the two often go hand in hand, but the argument is important to the cities that are seeking to achieve global status by attracting the right sort of business operations to their precinct. Sassen’s position is more convincing, because the transactions require the venue of a stock and/or money market, and professional services cluster around those markets: Osaka, Chicago and Los Angeles are cities with
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significant but declining proportions of their workforces engaged in producing global capital transactions, even though they continue to host significant numbers of corporate headquarters engaged in national and international production and distribution (Sassen, 2001: 155-162; Abu- Lughod, 1999: 321-357).

Global national and city economies are reportedly typified by declining proportions of their workforces engaged in industrial manufacturing industries, and increasing numbers engaged in the producer services sector, leading to a major transformation in the composition and structure of workforces in those cities (Castells, 1996: 201ff; Sassen, 2001: 127 ff). . Sassen regards world cities as “production sites for the leading services industries of our time …. [with] distinct locational and production characteristics (Sassen, 1991: 63)] However, there are a number of queries one can raise about the applicability of this claim beyond the Anglo-Saxon economies. Although the decline of secondary industry as a sector in the advanced economies is marked, it varies from one economy to another, and in two leading economies – Japan and Germany – industrial manufacturing still is responsible for more than 20% of GDP (though one has to take account of different ways of characterising sub-sections of workforces) (Castells, 1996: 303- 305). Tokyo itself has retained a high level of industrial employment, even through the deflationary period of the 1990s, and “[o]ne quarter of Tokyo’s labour force continues to work in manufacturing (as against less than 10% in New York City), primarily in high-tech, research intensive pilot plants (Fujita and Hill, 1998), and the headquarters of Japan’s major manufacturing companies continue to concentrate in Tokyo to be near government ministries.” (Hill and Fujita, 1995) Hill and Kim argue that this is due to markedly different relationships between the political and economic spheres, between state and business, in the Anglo-Saxon economies and the rest of the industrialised world (Hill and Kim, 2000: 2176). They further suggest that the global city hypothesis is based on New York as a model, and while it might have a general applicability to cities in the Anglo-Saxon world, the pattern elsewhere is different.

It is interesting to explore this claim with respect to the other two members of the leading troika: Tokyo and London. Taggart Murphy analyses the refusal of the Japanese financial and political authorities to bow to the pressures of Washington, delivered bilaterally and also through multi-lateral institutions such as the IMF and World Bank, to adopt neo-liberal policy reforms in response to the Japanese deflation which started in 1990 (Taggart Murphy: 2000, 2006). He traces this obstinancy to a set of policy approaches regarding industrialisation and economic policy that have been consistently applied since the Meiji restoration of 1868 (with the exception of 1931- 45). The aim of this set of policies is to achieve economic growth by embracing and excelling at industrialisation on the Western model, but at the same time to
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remain independent of Western colonisation, or latterly, neo-colonisation. Taggart Murphy argues that the strategy underpinning this set of policies for the Japanese elites was to play “a deft and high stakes game in positioning themselves in a financial-cum-military order revolving around [first] the City of London and after its eclipse by Wall St, with the United States.” (Taggart Murphy, 2006: 25) It is this strategy that leads the Japanese to become the major purchaser of US Treasury bonds, thus underwriting the continued expansion of the US economy and importation of Japanese and other Asian manufactured goods, even at the almost certain cost of a long-term inability to realise the nominal value of those bonds when eventually they come to be sold, because the sale of such a huge number of bonds, even over a period, would deflate their value (Taggart Murphy, 2006: 62). Taggart Murphy argues that the financial cost of this eventuality, which may well be avoidable if the economic value of a ‘super yen’ can offset the currency losses, is preferable for the foreseeable future to the bureaucratic elite that runs Japanese political and economic policy than the alternative: collapse in US political hegemony in East Asia that will follow a dollar collapse (Taggart Murphy, 2006: 62). Taggart Murphy believes that this commitment to financial stability in the service of geo-political stability is so strong, he and other commentators have given it the sobriquet ‘Bretton Woods II’ (Taggart Murphy, 2006: 41 ff).

The import of this argument is that even when scholars such as Friedmann and Sassen are critical of the impulses they research and analyse in the global city paradigm, they are still embedded in and reproducing what is effectively a North American/Anglo-Saxon frame of reference that fails to recognise its own conditions of production. Effectively, the argument runs, they have been seduced by the triumphalism of the post-Cold War environment in North America, the same triumphalism that arguably contributed to the hubris underpinning the dot.com boom (Bernstein, 2004; Lichtenstein, 2004) and subsequently the subprime mortgage boom that precipitated the GFC (Harvey 2010, Lewis, 2010; Foster and Magdoff, 2009). It amounts to an instance of Harvey’s point about theory: “ [v]erification is achieved through practice which means that theory is practice in a very important sense” (Harvey, 1973: 11-12. emphasis in original).

What the Taggart Murphy analysis also highlights is the complete contingency of the current pattern of capital flows from Japan via London to New York. London’s position is particularly fragile, as has become apparent in the unfolding of the GFC. In the post-1971 environment after the collapse of the Bretton-Woods system proper and following the 1973 and 1979 rapid rises in the price of oil , there was a sudden surge in the number of US dollars requiring to be re- invested by the oil-exporting countries, the so-called Petro-dollars, which quickly became Euro- dollars when they were deposited with European banks. The producer services professionals in
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the City of London financial sector assumed the dominant role in the Euro-dollar market, and hence acquired an efficiency and scale that enabled the City to assume the brokerage of the rapid rise in the US current account deficit after Ronald Reagan assumed the US Presidency in 1980. However, as Augar (2000) demonstrates and Ingham confirms (Ingham, 2002) New York producer services firms swiftly moved in to acquire and manage the British firms, not only changing the culture of the City, but also repatriating the profits across the Atlantic to their North American owners.

In sum, even at the level of the top global cities there are substantial differences in the way the producer services sectors operate both in relation to their international colleagues and also their local political, economic and cultural environments. These differences flow from the historical and geographical specificities of each city’s development, and underline how dependent their current status is on the contingencies of their mutual relations: it is the relations between the three and the rest of the world that determine the paths of their development, and these are contingent on a range of political, economic, cultural and military factors and events over recent centuries.

There are several alternative frameworks to the unified global hierarchy proposed by Sassen, Friedmann and others. Weiss argues that the national and regional variations in the scale and direction of international capital flows are such as to support the thesis of regionalisation rather than globalisation (Weiss, 1997). Stallings and Streeck (1996) concur in this assessment, and along with Hill and Kim (2000) propose a tri-regional structure of North America, Europe and East Asia. Weiss using figures provided by Stallings and Streeck (1996: 75) elaborates thus:

The US, Europe and Japan are not simply regional traders. However, current trade patterns do make it clear that intra-regional trade is increasingly important for the Big Three. Exports within North America, Asia and Europe rose from 31% of total world exports in 1980 to 43% in 1992. Thus overall trade within the three regions has grown to overshadow trade among its members (US-Japan, US-EU, Japan-EU) (Weiss, 1997: 12. Emphasis in original) Weiss further argues, in agreement with Hirst and Thompson (1996) and Zevin (1992) that the levels of both export trade and international capital flow relative to global output in the 1980s were lower than those achieved during the period of the Gold Standard prior to 1913 (Weiss, 1997: 7), so in fact the scale of transnational capital flows is not exceptional by historic standards (at least until the turn of the 21st century and the development of synthetic financial derivatives), though the speed may be; and secondly, the scale may well diminish, or change directions or involve different partners, if differential conditions at the national and regional

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levels warrant it. Such changes were sharply demonstrated when international credit markets froze in late 2008 following the collapse of Lehmann Brothers investment bank on Wall St, with different European, North Amercian and East Asian responses to the crisis.

Another perspective takes an historical approach to argue that cities have always played a major role in international trade, and that in each major period there have been ‘world cities’ that played central roles in financing and organising international trade. (Marcuse and Kempen, 2000; Abu-Lughod, 1989). The nature of the role played by individual cities depended on the structure of the trading relations at the time (as it does now), and while the scale and capacity of command and control functions in the latest period, enabled by new communication technologies, certainly seems to be new, the underlying structure of the relationships is not a radical departure from the capitalist past, from at least as far back as the thirteenth century (Abu-Lughod, 1989).

World systems theorists such as Arrighi and Wallerstein take this historical approach a step further to argue that there is a structured and predictable pattern to historical developments, that the peak of North American financial and political hegemony has passed, and that rather than the period from the 1970s to the present exemplifying the consolidation of North American hegemony, it is indicative of a decline in the face of the rise of East Asia. (Arrighi et al., 1999; Arrighi, 2005a, 2005b; Wallerstein, 2006, 2004, 2003). However, in response to what they see as “premature declarations of US hegemony’s demise”, Panitch and Gindin (2005: 123) give a sobering assessment of the scale and reach of current US power in international political, military and economic relations (2005: 113-115) and suggest that the decline of such power will take more than several decades to transpire. Nonetheless, leaving aside the question of speed of transition, Arrighi’s argument is based on the evidence of a cycle of rises to hegemonic prominence by capitalist economic powers followed by financialisation and subsequent decline. By financialisation is meant the shift in accumulation strategy away from investment in material production and extracting surplus value from competitive advantage in that sphere to maximising profits from financial exchange and arbitrage. Citing Braudel (1984: 157) he starts the cycle with Genoa, succeeded by the Dutch, British and North Americans (Arrighi, 1994: 27- 84). There is some dispute as to the accuracy of the historical parallels, but for our purposes the key observation is the move to ‘financialisation’ in the mature phase of a power’s hegemony, precipitating the subsequent decline as capital relocates in an attempt to maximise returns (Arrighi, 2005b).

From this perspective, the underwriting of US trade deficits by Japan, China, Taiwan, South Korea, Hong Kong, Saudi Arabia and the Gulf Emirates demonstrates a vested interest in
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maintaining a US-led financial system, at least for the present: hence the Bretton Woods II descriptor. (Taggart Murphy, 2006: 41). At the same time, it signals the crucial difference from the financialisation process in the final phase of the British imperium, for at that point Britain was the world’s largest exporter of capital and therefore its chief creditor, whereas the US is the largest importer of capital in world history and therefore its largest debtor. This is a luxurious position for the US as long as its currency is the ‘measure of account’ that its debts are written in, but if and when that situation starts to change, as indications of China’s intentions in the wake of the GFC suggest, then the fragility of Bretton Woods II will become more salient.

Arrighi, Wallerstein and other world system theorists came to the financialiation argument from a world historical and sociological perspective. Within the field of political economy, there were a number of theorists who detected its emergence in the 1960s, notably Minsky (Minsky, 1982; Kindleberger, 1978) and Baran and Sweezy (1966), and since then the theorists associated with Monthly Review, notably Foster and Magdoff (2008). Minsky argued from a neo-Keynesian perspective that there is an inbuilt instability to financial markets under capitalism, and that they go through cycles of boom and bust related to relative levels of governmental regulation (see Palley, 2010 and Foster and McChesney, 2010 for a debate about Minsky’s theory), Following the onset of the GFC, a number of prominent mainstream commentators endorsed his approach as a means of managing the crisis and preventing a recurrence (Palley, 2010: 28)

Contra Minsky, Baran and Sweezy (1966), and subsequently Foster and Magdoff (2009) take a more Marxist approach to the issue of financialisation, and argue that there is an inbuilt tendency to monopolisation and stagnation in capitalism, which reduces the levels of profit and therefore in a downward spiral restricts the options for profitable reinvestment of the profits that are being extracted. This is the problem of capital over-accumulation familiar to Marxists, and financialisation through the creation of debt and thereby increased liquidity for further financial speculation is the familiar short-term solution that creates a series of ever-larger crises. Harvey concurs with this analysis (Harvey, 2010: 28ff). The main difference between Minsky and his followers on the one hand, and the Monthly Review economists, Harvey and their followers on the other relates to whether capitalism is capable of internal regulation of this cycle of increasing financialisation in order to provide opportunities for profitable reinvestment of surplus capital (Foster and Magdoff, 2010; Palley 2010).

For our purposes, we do not need to arbitrate on any of these debates, but simply recognise a set of premises common to them all. Firstly, from a range of perspectives and based on an

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extensive array of evidence, the global economy still seems to be mired in capitalist relations of production, and has not transcended into a new epoch where the old rules don’t apply.

Secondly, there has been a significant change in the structure of the advanced industrial economies from the Keynesian policies of the Bretton Woods period to the current neo-liberal approach, accompanied by a massive increase in capital flows both within and between the three regions of the advanced economies: North America, Europe and East Asia. However, there is considerable debate about whether the levels of those financial flows relative to levels of economic activity is of a qualitatively new order, or in keeping with historic patterns. While the speed of transactions has ‘annihilated space by time’, it’s not apparent that the relations between the contracting parties – debtors and creditors – has diverged from previous patterns.

Thirdly, there is debate about whether the top level of global cities based on capital flows (New York, London, Tokyo) is a relatively stable troika sitting atop a unifying global hierarchy, or whether it represents the intersection of three competing regions (North America, Europe, East Asia) whose apparent stability is a spectre of Anglo-American triumphalism. Either way, there is agreement that contingent factors operating in the political, economic, military and cultural spheres since the rise of the US to hegemonic status began in the late nineteenth century have been crucially important in reaching the situation that pertained at the turn of the twenty-first century.

These conclusions can be accommodated, at a meta-theoretical level, by Harvey’s development within Marxian analysis of the concept of the ‘spatial fix’, which in concert with the temporal fix afforded by new communication technologies, enabled the institution of a regime of ‘flexible accumulation’ on a global level. Increasingly from the 1960s, this was accompanied by increasing levels of debt and financial speculation which in a deregulated environment spiraled into the GFC in 2007-08. Harvey’s approach, while underlining the formative importance of the economic sphere, also recognises interaction with the relatively autonomous other spheres: political, coercive and cultural. Indeed, in discussing the contemporary Middle East engagement of the US and its allies in The New Imperialism (Harvey, 2003) he agreed with Arendt that there is a recurring need in capitalism for the use of ‘primitive accumulation by dispossession’ to sustain the capitalist process: “the original sin of simple robbery, which centuries ago had made possible “the original accumulation of capital” (Marx) and had started all further accumulation, had eventually to be repeated unless the original motor of accumulation died down’ (Arendt, 1968: 28 in Harvey, 2003: 142). Harvey continues:

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The processes that Marx, following Adam Smith, referred to as ‘primitive’ or ‘original’ accumulation constitute, in Arendt’s view, an important and continuing force in the historical geography of capital accumulation through imperialism. As in the case of labour supply, capitalism always requires a fund of assets outside of itself if it is to confront and circumvent pressures of over-accumulation. If those assets, such as empty land or new raw material sources, do not lie to hand, then capitalism must somehow produce them. Marx, however, does not consider this possibility except in the case of the creation of an industrial reserve army through technologically induced unemployment. (Harvey, 2003: 143)

That is to say that capitalism, if it is to survive through continued growth, both needs to impose its relations of production on new and untapped sets of resources – human, material, financial – and so incorporate them into its own structure, at the same time as it requires the continued existence of new and untapped assets, which will of course operate according to their own structure of relations. These contradictions and challenges underpin the recurring social crises of capitalist economies. If we are to analyse and understand them as a dynamic totality of social relations, then we need ways of theorising both capitalist economic relations and also relations in other spheres, such as communications, that both recognise the specificity of their own fields and yet are reconcilable at a theoretical level. In the next chapter we will address the question of power relations in the communications fields, as it relates to the political and coercive fields, and then in the following one we will explore ways of reconciling the theorisations of the two disciplines: the political economy of urbanisation on the one hand and the journalistic production of representation in the media on the other.

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Chapter 3 – Communication contests

Communication is an activity that takes place in the symbolic sphere. Mediated communication is enabled and often produced through an industrial process, involving the activities of large corporations, extensive technologies and highly skilled and specialised workforces, in particular the journalists, photographers, sound recordists and others who work at the interface with sources of news. Mediated communication is a pervasive element in the daily lives of people in the advanced industrial economies, but itself has to be situated in the context of the larger symbolic environment of social interaction, the built and natural environments and indeed the abstract artefacts that structure our understanding of the world. This symbolic environment is composed of both material elements – trees, parks, buildings, cars, roads, clothes, hairstyles, body language and so on; in other words, all the physical objects, processes and activities that are manifest in the natural and built environment – and abstract elements (Harvey’s ‘concrete abstractions’) including money, time and space, and derivatives of them such as velocity of movement, ownership of property and employment. This large-scale symbolic environment constitutes ‘maps of meaning’ (Hall, 1978: 54) in the context of which all new meaningful events are interpreted, and which themselves are updated and developed by the events. A fundamental issue in discussing the media’s representation of other fields of social activity is the level of power and accountability that resides within the media for what it produces.

In this chapter we are looking to conceptualise the deployment and exercise of power in the production of the symbolic environment at the self-consciously discursive level of news and current affairs journalism. We will consider the major perspectives in the sociology of journalists and their sources, and examine the contribution that Bourdieu’s approach can make. In the next chapter we will locate this discursive level into the level of interpretation of the symbolic dimension of the material environment, and further, at the level of some of the concrete abstractions that structure people’s lives: money, time and space. We will then draw these different dimensions together to see if we can reconcile a way of theorising the symbolic field in ways that are compatible with theorising the material fields of urban transformation.

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Journalists and their sources

The production of content for the news media is an elaborate industrial process, involving specialised craft and professional skills in segmented workforces employed by a variety of organisations, all of which both collaborate and compete in their mutual relationships. The common professional and craft skills of the labour force provide a predictable set of capacities for employing organizations, but the varied news policies, textual genres, technological characteristics and house styles of different mastheads, programs and organizations allow the employing organizations to manage their workforces to achieve their specific organisational goals in competition with their rivals (Soloski, 1989). The Australian empirical research over an extended period in a variety of areas has confirmed this analysis (eg, Baker, 1980; Bacon and Nash, 2003, 2004).

Tactical decisions at all stages of the production process, as well as the strategic factors such as ownership, modes and technologies of production, distribution and consumption, can be contested as a normal part of the process, and therefore can be a ‘site of struggle’ (Hall, 1982: 76-79; van Zoonen, 1994: 43-65) in the determination of the characteristics of any particular instance of news coverage (including non-coverage). However, in almost all instances of news coverage in mainstream media outlets, at the centre of the process is a set of negotiations between journalists3 and their sources out of which are produced truth claims, evidence, testimony and interpretation of events which are asserted by the journalists and/or their sources to be of interest and importance to readerships and audiences. Journalists who deal with sources (as distinct from backroom staff such as editors, sub-editors and chiefs of staff) don’t have much control over the terms in which their reports are finally published/broadcast, eg the way a video sequence is edited, the layout of a newspaper page, the final length of a published article or the associated headline. Nonetheless, it is at the interface of the journalist-source relationship that the fundamental gathering of information takes place in a negotiated exchange, and it is to this exchange that appeals regarding truth, accuracy and objectivity will ultimately be held accountable in debate or even litigation.

Relationships between journalists and their sources take place in material contexts, with spatial, temporal and organisational characteristics that constitute highly specific terrains for each encounter in the relationship (Tuchman, 1978; Ericson, 1989). Underpinning the material

3 By ‘journalists’ I mean primarily the individuals who ask the questions and record the answers, in notes, on video, audio, etc, but also the auxiliary and support personnel who directly or indirectly interface with sources and news events/processes including producers, photographers and cinematographers, sound recordists, researchers and so on.
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instances of interaction is an abstract structure of professional practices and ethics defining the roles of the two parties in the production process: sources originate information and attest to its significance, while journalists produce narratives from the information which they feed into the production and distribution process.

A central issue in discussing the relative exercise of power by the two parties is whether the abstract relationship is relatively equal or unequal in power terms. In recent decades there have been two opposed approaches generally recognised as dominating scholarly debate on this question (Hartley, 1996: 232). Hall (1978) argues that the relationship is structured in dominance to the disadvantage of the media, while Ericson (1989) argues there is no underpinning structure, and the balance of power depends on the particular circumstances, often to the advantage of the media.

In principle, there is no ‘default’ position in considering this issue. That is to say, there is no a priori reason why an equal field of pwer relations is more or less likely than an unequal field. Either way, the characteristics of the field will depend on the abstract nature of the relationship. How one understands that nature will depend on the meta-theoretical framework being used to analyse it. As an aside, it is worth noting again, as Hall points out, that those meta-theoretical frameworks, while abstract in their form, are produced in distinct historical and geographical contexts that themselves have identifiable socio-political characteristics, and while he doesn’t argue that the characteristics of the meta-theories are reflections of their material contexts, he does suggest that patterns of emergence and predominance in social theory can be related to the socio-political context of their production in their historical and geographic specificities (Hall, 1982: 57ff). Similarly, Bourdieu argues that any concept can only be understood in relation to the field of knowledge that produced it, which itself is intrinsically structured by power relations (Bourdieu and Wacquant, 1992: 36 ff), and we have discussed above Harvey’s argument that theory is a form of praxis, and therefore specific to the spatio-temporal conditions of its production (Harvey, 1973: 11-12).

The first position (viz. that relations are structurally unequal) was articulated by Stuart Hall and his colleagues in their influential book Policing the Crisis (Hall et al., 1978). Their analysis was embedded in a ‘culturalist Marxist’ position, which we will discuss below, and commenced with a repudiation of any claim that the media simply and transparently report events which are ‘naturally’ newsworthy in themselves. ‘News’ is the end-product of a complex process which begins with a systematic sorting and selecting of events and topics according to a socially constructed set of categories. (Hall, 1978: 53)
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The systematisation involves both an organisational and an ideological aspect. Organisationally, news outlets “become pre-directed to certain types of event and topic in terms of the organisation of their own work-force (e.g. specialist correspondents and departments, the fostering of institutional contacts, etc.) and the structure of the papers themselves (e.g. home news, foreign, political, sport, etc,)” (Hall, 1978: 53). Hall doesn’t pursue an investigation of this organisational dimension, although it is crucial to his argument below about primary definition, but Gaye Tuchman writing in the same year explored it in detail, from a social constructivist perspective. She argued that by their newsgathering routines journalists cast a net in time and space that captures information about certain people, events and processes, and misses others. This process delivers an intersecting, complex, and (at a deep level) mutually validating set of truth claims, testimony and assertions from selected news sources to create a ‘web of facticity’ that is a key element in the construction of a social reality for the consumers of those news products (Tuchman, 1978).

Hall’s second dimension is the ideological: journalists have a set of professional news values headed by the primary news value of extraordinariness, which is further refined to include

events which concern elite persons or nations; events which are dramatic; events which can be personalised so as to point up the essentially human characteristics of humour, sadness, sentimentality, etc.; events which have negative consequences, and events which are part of, or which can be made to appear part of, an existing newsworthy theme. (Hall, 1978: 53).

Allied to these two sets of factors – bureaucratic organisation and professional news values – is a third essential element in the production of meaningful news reporting: identification and contextualisation in terms that are meaningful to audiences.

If the world is not to be presented as a jumble of random and chaotic events, then they must be identified (i.e. named, defined, related to other events known to the audience), and assigned to a social context (i.e. placed within a frame of meanings familiar to the audience). This process – identification and contextualisation – is one of the most important through which events are ‘made to mean’ by the media. An event only ‘makes sense’ if it can be located within a range of known social and cultural identifications. If newsmen (sic) did not have available – in however routine a way – such cultural ‘maps’ of the social world, they could not ‘make sense’ for their audiences of the unusual, unexpected and unpredicted events which form the basic content of what is newsworthy. .... This bringing of events within the realm of meanings means, in essence, referring

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unusual and unexpected events to the ‘maps of meaning’ which already form the basis of our cultural knowledge, into which the social world is already mapped. (Hall, 1978: 54)

In passing we can note several aspects of Hall’s approach. The ‘maps of meaning’ are a textualised version of Bourdieu’s fields (‘structuring structures’) of social relations (Bourdieu and Wacquant, 1993, 94-115), and Hall sees them as key elements in the reproduction of the consensus underpinning the stability and reproduction of capitalist social relations. He was writing in 1978, shortly before the onset of the Reagan/Thatcher neo-liberal restructuring of the Anglo-American economies, and was drawing on the deeply pessimistic Althusserian appropriation of Gramsci’s conceptualisation of hegemony that had permeated Western Marxism as a would-be successor to the Frankfurt School. Writing almost thirty years later in a post-hoc analysis of neo-liberal globalisation, Harvey deployed Gramsci’s same concept of hegemony to argue that rather than ideology underpinning a stabilising consensus, it is deployed as a necessary precursor to the process of destructive change that capitalism constantly requires (Harvey, 2006:16).

Hall goes on to argue that the requirement for objectivity and fairness in professional journalistic practice leads to a dependence on truth claims that are “grounded in ‘objective’ and ‘authoritative’ statements from ‘accredited’ sources” who are typically accredited because they are representatives (elected or otherwise) of major social institutions, or sometimes acknowledged independent ‘experts’. Combined with the three factors identified above, this allows the “systematically structured over-accessing to the media of those in powerful and privileged institutional positions”, which constitutes them as “the primary definers of topics [whose] interpretation then ‘commands the field’ in all subsequent treatment and sets the terms of reference within which all further coverage or debate takes place” (Hall, 1978: 58, emphasis in original). ‘Counter-definers’ can sometimes gain access to the media to argue their case, but typically they do so on the terms already established for the issue by the primary definers, and therefore they are at a disadvantage.

In this conception, the media professionals do have an active and discretionary role to play in selecting the particular primary definers for reportage, and choosing the textual characteristics of the representation of the primary definers’ contributions, in particular the ‘public idiom’ in which the language of the report is to be cast to suit the ‘social personality of the media outlet, and sometimes the ‘public voice’ which the news outlet adopts to speak on behalf of its audience (Hall, 1978: 61-63). However, this role for the media is subordinate to that of the primary definers: Hall characterises the media as ‘secondary definers’ “in a position of structured subordination to the primary definers” (Hall, 1978: 59).
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Hall’s formulation of the power relations between media producers and the powers-that-be in society – at the coalface, between journalists and their sources – was enormously influential. Reviewing the research record over two decades later, Davis found the fundamental proposition of over-representation of institutional and governmental sources in news texts to be incontrovertible (Davis, 2000: 45). The situation has been exacerbated by the rise of public relations as an industry (Cottle, 2003; Palmer, 2000) allied to a multi-faceted strategic mobilisation by business leaders against their critics (Dreier, 1982) and in support of the neo- liberal policy agenda (Scott, 1997). However, Davis argues that public relations as a professional activity is also available to the opponents of business and neo-liberalism, and that various oppositional movements have used the media to good effect (Davis, 2000: 49 ff); Gitlin, on the other hand, evidenced the relations between the mainstream media and the anti-Vietnam War movement in the US to argue that the mainstream capitalist media will ultimately proscribe the more radical programs and advocates of movements for social or policy change in support of the ultimate authority of the existing powers that be, ie. Hall’s primary definers (Gitlin, 1980).

Although the empirical evidence from large-scale media surveys supported Hall’s argument, there was considerable discussion and criticism of its theoretical basis, and of its applicability to specific case studies. Policing the Crisis was generally acknowledged as an apogee of the culturalist Marxist tradition emerging from the Birmingham Centre for Contemporary Cultural Studies (Turner, 1990: 69). Hall and his colleagues introduced the ideas of European theorists of structuralism including Lévi-Strauss, Barthes and Althusser, together with Gramsci, to the post-war British traditions in cultural studies developed by Richard Hoggart and Raymond Williams, developing the latter’s innovations in Marxism (Hall, 1982, 1996). Though she found this a fertile development in media and cultural studies, Woollacott argued that

[s]ome of the difficulties present in Policing the Crisis undoubtedly stem from the attempted synthesis of this type of Marxist culturalist theory, inflected through Gramsci, with an Althusserian conception of the media as an ideological state apparatus largely concerned with the reproduction of dominant ideologies and with an attempt to recognise the autonomy and specificity of the media. …. In effect, a sophisticated version of ‘false consciousness’ is proposed. (Woollacott, 1982: 110)

James Curran criticised the functionalism of Hall’s approach (Curran, 1996), and Miller queried the analytical power of the theory at the level of specific historical-geographical situations: he pointed out how in the case of Northern Ireland the reporting of the British media shifted over

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time to encompass positions oppositional to the British government’s and British Army’s positions, thus introducing a level of contingency that subverted the ‘structured subordination’ that Hall argued governed the relations between powerful institutional sources and the media (Miller, 1993).

Perhaps the most thoroughgoing critique of Hall’s argument came from Philip Schlesinger in 1990. He identified five crucial inadequacies in the approach:

• it failed to account for contention between powerful sources, such as competing accredited sources from the same institution, eg Cabinet Ministers;

• it failed to account for powerful sources demanding anonymity as confidential sources, thus concealing their authority as accredited sources (though in response it could be argued that this was the ultimate expansion of power without responsibility);

• it failed to account for short-term temporal shifts in equality of access among primary definers, and what might be the factors causing the shift in a source’s status from occasion to occasion;

• it failed to account for long-term shifts in the structure of access of important institutions, eg the media access given to trade union leaders in periods of conservative government;

• and finally, it failed to account for the occasional role of the media in taking the initiative against primary definers, as when campaigning on particular issues or in investigative journalism mode. (Schlesinger, 1990: 66-68).

Schlesinger acknowledges that Hall makes a strong case, supported by the findings of contemporary sociological research, that

the way in which journalistic practice is organised generally promotes the interests of authoritative sources [but] because Hall’s approach to ‘primary definition’ resolves the question of source power on the basis of structuralist assumptions, it closes off any engagement with the dynamic processes of contestation in a given field of discourse. (Schlesinger, 1990: 69, emphasis in original). This is the case even though Hall himself is at pains throughout his writings on the media to stress that it is a ‘site of struggle’ (Hall, 1982: 76-79). Schlesinger himself proposed that the most productive way to approach questions of media power would be to ‘de-centre’ the media as the object of analysis and see it within the context of a larger set of social relations, and that Bourdieu’s conceptualisation of the field, capital and habitus would be a productive way to

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approach the question, which we will explore further below and in the next chapter (Schlesinger, 1990).

There was a clear alternative to Hall’s approach, advanced by Richard Ericson and his colleagues (Ericson et al. 1989). Writing in the tradition of North American sociology of deviance, they acknowledged the role of the media in defining the parameters of social normalcy, but resiled from any consideration of the larger questions of social structure and power relations about why this might be so or who might benefit from such relations. As Hall himself had earlier pointed out, this is a key deficit in deviance sociology (Hall, 1982: 62-65). Nonetheless, there were some valuable contributions to understanding journalist-source relations that flowed from both the approach and the extensive empirical work that Ericson and his colleagues undertook. The approach was relational: News is a product of transactions between journalists and their sources. The primary source of reality for news is not what is displayed or what happens in the real world. The reality of news is embedded in the nature and type of social and cultural relations that develop between journalists and their sources, and in the politics of knowledge that emerges on each specific newsbeat. As such, it is every person’s daily barometer of the ‘knowledge structure of society’. (Ericson, 1989: 377) And again: News is a representation of authority. In the contemporary knowledge society news represents who are the authorised knowers and what are there authoritative versions of reality” and “[a]t the same time that it informs about who are the authorised knowers, it suggests, by relegation to a minor role and by omission, who is excluded from having a say in important matter. (Ericson, 1989: 3, 4. emphasis in original)

Eriscon’s ‘authorised knowers’ are not Hall’s ‘primary definers’ because the relationship between sources and journalists is not ‘structured in dominance’, but more a complex range of power relations depending on the relative strengths and weaknesses of individual sources and their organizations, media outlets and individual journalists. Ericson sees news reports as originating with source organizations rather than the journalists, who are provided with information by sources seeking not only coverage of their affairs, but access to the media to present the information in their own preferred terms (Ericson, 1989: 5). In turn, journalists are seeking access to the organisations, which police their own boundaries. Ericson, working with concepts developed by Goffman (1959) and refined by Giddens (1984: 122-126), mapped the informational regions of an organisation into front and back sections, which were in turn bisected by a disclosure/enclosure barrier, producing a quartered topography of public, confidential, censored and secret domains (Ericson, 1989: 9)
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Front regions

Censorship Publicity

Enclosures Disclosures

Secrecy Confidence

Back regions

Ericson doesn’t theorise how the spatial arrangement of one individual organisation’s boundaries and activities might intersect in complex interactions with those of other organizations, nor does he deploy a temporal dimension to this spatial model, though he does mention in passing the tactical issues of timing (Ericson, 1989: 20. For example, an organisation (such as a government minister’s office) might publish information on a busy news day or during a crisis that is pre-occupying the news media, in order both to claim that the information had been published but at the same time be confident that it would be ignored by a press corps that was otherwise occupied, and therefore disappear as the news cycle moved on. Similarly, a journalist and source might come to a tacit understanding that previously revealed information is no longer relevant because it has been superseded by other events and information, and so effectively can be forgotten.

This process of agreeing (implicitly or explicitly) to rendering certain events/processes/ personalities invisible is very significant, and one that has received remarkably little attention in the academic literature though it is part and parcel of the negotiation in every reporting instance where decisions have to be made about what to include and what to exclude. Typically the assumption is that all publicity is good publicity and that the struggle is over the management or

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terms of visibility, rather than the complicit production of invisibility (eg Thompson, 1995, 2000). There is an informative parallel to be drawn here with Ernest Renan’s well known observation (Renan, 1990: 11) that national identity is built on a tacit agreement in a society about what can be forgotten in its history. Renan identifies an active process of forgetting, especially when the disputed events are current or recent with the protagonists still present and active. The recent ‘history wars’ in Australia (academic and political debates about a so-called ‘black armband’ view of the national history, and particularly about the treatment of Aborigines) exemplify precisely the contemporary political significance of inclusions and exclusions in social history and memory (Manne, 2001a, 2001b, 2003). While Renan is discussing the formation of national identities in historic timeframes, it is very fruitful to think of this imperative also applying at the micro-level of contemporaneous journalistic research and reporting. Every development of a story by a journalist involves a negotiation (explicit and implicit) with sources about what is relevant from the socio-historical context (whether recent or more removed) and what can be safely ignored and quickly/eventually forgotten. In short, the rhythmic and arrhythmic temporalities of the news cycle can structure the visibility or otherwise of information and activities at least as effectively as the spatial characteristics of access.

Ericson explicitly downplays the relevance of larger social power relations in his research (Ericson, 1989: 3), and so unsurprisingly his case studies suggest that there are no larger power relations structuring the relations between journalists and their sources. We can leave that lacuna to one side while we concentrate on the important contributions that Ericson has made. Firstly, he recognises that sources act to promote certain information and keep other information invisible to the public eye, because information and its interpretation is of strategic and tactical value beyond its generalised impact on larger ideological questions. In other words, organisations are players on fields of conflict, and information is a key resource in their contests. This is a significant step beyond the view of news coverage as simply ideological messages, and is compatible with Schlesinger’s call to account for the conflict between primary definers.

Secondly, he documents the materiality of journalist-source relations as a ‘site of struggle’, even if he doesn’t offer an adequate theoretical account of the process and context of the struggles. Thirdly, he conceives of the process as dynamic and relational, and therefore contingent on the social and material characteristics of the terrain on which the process occurs, of the participants in the process and their behaviour. Fourthly, he regards the primary stake of the contest as not the ‘facts’ claimed in the statements themselves, but rather the accreditation by the journalists of the sources’ authority to make credible statements; that is, the symbolic representation of the political order.
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The weakness of Ericson’s analysis is that he avoids discussion of the larger polarities of social power, which provide the context for the negotiations and contests at the micro-level. Hall, on the other hand, has a clear view of the larger social polarities and trajectories, but his weakness, as Schlesinger identified, is that he can’t explain, beyond ‘tendencies’, how the contingencies at specific ‘sites of struggle’ relate to the macro-picture. This dichotomy between the two perspectives resonates with the subjectivism/objectivism dichotomy that Bourdieu set himself to overcome in social theory (Bourdieu and Wacquant, 1992: 7-9), and which some recent interpreters of his work have applied to the field of journalism (Benson, 1999; Benson and Neveu, 2005)

Bourdieu’s contribution

Bourdieu’s work is widely canvassed and critiqued (Calhoun, 1993; Swartz, 1997, 2004, Benson and Neveu, 2005) and we will not generally review that literature here. Both because he achieved star status as a public intellectual, and also intervened regularly in popular political discussion, Bourdieu often gave polemical and discursive presentations of his research methodologies and theoretical framework, which sometimes entailed rhetorical simplifications and inconsistencies with his more considered writings. His work on journalism (Bourdieu, 1998, 2004) is generally agreed (Benson and Neveu, 2005: 1) to be less sophisticated and invokes a one-dimensional view of that field.

Following on from Schlesinger, what we might look to Bourdieu for is a theoretical framework to analyse • the ‘sites of struggle’ among sources, among journalists and between sources and journalists, and • the relationship of these struggles or contests to contests in other social fields, in particular the larger, society-wide fields where power is exercised In what follows we will look first at the contribution Bourdieu can make, and then examine the limitations of his position.

Bourdieu is a relationist: that is to say, he argues that to understand to understand the nature of any given social reality, it is necessary to look at the objective relations linking the constituents (people, institutions, artefacts, natural environment, etc) of that reality. One cannot think of the
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whole as the sum of its parts, nor of the parts as a product of the nature of the whole, but rather the constituent parts being in constantly shifting and reflexive relationships to each other, with the interaction of those relationships determining the dynamic nature of both the parts and the whole (Bourdieu and Wacquant, 1992: 96).

By ‘objective’ Bourdieu means the structure and nature of the social totality as determined by its constituent relations, which has its own dynamic characteristics and identity beyond the individual apprehensions and activities of its participants; he doesn’t mean a structure, fixed or otherwise, generated by some asocial process or force beyond the activities of the participants in that reality. By ‘subjective’ he means the dimension of self-aware attitudes, identities and activities of the human participants in that reality, the “consciousness and determinations of agents” (Bourdieu and Wacquant, 1992: 9). Put another way, Bourdieu through his objective/subjective categorisation is reconstituting the agency/structure debate in a way that is amenable to resolution in non-reductionist ways. Bourdieu deploys three key concepts to pursue this resolution: field, capital and habitus.

In analytical terms, a field may be defined as a network, or a configuration, of objective relations between positions. These positions are objectively defined, in their existence and in the determinations they impose on their occupants, agents or institutions, by their present and potential situation (situs) in the structure of the distribution of species of power (or capital) whose possession commands access to the specific profits that are at stake in the field, as well as by their objective relation to other positions (domination, subordination, homology, etc.). In highly differentiated societies, the social cosmos is made up of a number of such relatively autonomous social microcosms, i.e. spaces of objective relations that are the site of a logic and a necessity that are specific and irreducible to those that regulate other fields ….

We can indeed, with caution, compare a field to a game (jeu), although, unlike the latter, a field is not the product of a deliberate act of creation, and it follows rules or, better, regularities, that are not explicit and codified. Thus we have stakes (enjeux) which are for the most part the product of the competition between players. We have an investment in the game, illusio (from ludus, the game): players are taken in by the game, they oppose one another, sometimes with ferocity, only to the extent that they concur in their belief (doxa) in the game and its stakes; they grant these a recognition that escapes questioning. Players agree, by the mere fact of playing, and not by the way of a “contract”, that the game is worth playing, that it is “worth the candle”, and this

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collusion is the very basis of their competition. (Bourdieu and Wacquant, 1992: 97, 98, emphasis in original)

It follows that the boundaries or parameters of a field are determined by the activities of the players in the field, and are therefore dynamic; indeed, “the question of the limits of the field … is always at stake in the field itself, and therefore admits of no a priori answer” (Bourdieu and Wacquant, 1992: 100, emphasis in original). Any field is a ‘structuring structure’ of the power relations that constitute it, and for Bourdieu there are two fundamental types of positions that a player can take up with respect to the configuration of these power relations: orthodox and heterodox. The orthodox position is occupied by those who dominate the field and exercise the most power in the allocation of its benefits and rewards, which they do by defining the hierarchy of values and stakes that pertain in the field. The heterodox position is occupied by those who want to redefine certain rules and values (but not all – not the doxa or fundamental and accepted rules of the game) in order to advantage their own position and so assume the mantle and rewards of orthodoxy. Minor players in the field align themselves more or less between and with these two opposing positions as they manifest themselves from time to time. According to Bourdieu, these fundamental characteristics of fields are invariant, and so there is a homology to the patterns and structures of power relations in all fields, based on this competition between orthodoxy and heterodoxy. This is a view that I will contest below. Bourdieu does acknowledge, however, that once one graduates from the fundamental and abstract structures of fields, then all field characteristics are contingent on the historical and geographical specificities of their emergence and continued existence (Bourdieu and Wacquant, 1992: 109)

In order to play the game, players require capital. Bourdieu equates capital with power, which is something I will query below. Capital is specific to a field, it must be acquired (ie it is not innate) and it is socially defined and recognised. In the cultural field, it is typically acquired through education, training and experience, and by the investment of cultural and economic resources to generate greater quality and quantity of capital. Again, Bourdieu offers a binary definition of capital, that which is autonomous to its field, and that which is heteronomous. Autonomous capital is that which is generated within its own field and is specific to it, eg musical knowledge and ability in the music field, intellectual knowledge and ability and in the academic field, sporting knowledge and ability in the sporting field. Heteronomous capital is that which is generated in a different field to the one in which it is being deployed, eg the resources that a well-connected political appointment brings to the governing board of a cultural organization, or a corporate appointee to a sporting organization, or the advantages in the form

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of excellent equipment and professional training that an economically advantaged player can bring to an amateur sporting team.

Capital creates capacity, which can be utilised in the playing of the game, and it is the actual playing of the game that both manifests the capital, and so secures either success or failure in the particular encounter in which it is deployed, and also, by the experience and recognition gained in playing the game at this level of skill, can further increase the amount of capital. The institutionalisation of a field facilitates the accumulation, deployment and reproduction of capital in and for that field.

The manifestation of capital by agents active in a field is termed ‘habitus’. Habitus is a system of dispositions based on the capital the player has accumulated which enables him/her to play the game by reacting to the state of play in ways that are more or less efficacious. It is not innate but socially determined, and thus not innate but learned; indeterminate, vague or fuzzy, and therefore hard to define; and generative of new responses in unforeseen situations and therefore apparently intuitive. It is the key element in the ‘logic or political economy of practice’ that links the actions of individuals into the operations of large fields of power relations that both enables the reproduction of those fields and at the same time their development to cope with the changing exigencies of social life.

Habitus involves the capacity to read and interpret the state of play in the field, the power relations that generated the developments up to that point, and the potential developments that may ensue dependent on the player’s interaction with the game. Habitus is thoroughly contingent upon and specific to the field, and cannot be developed or derived outside of the field (though similar fields might generate related forms of habitus, eg in the rugby union and rugby league football codes, in public and private sector corporate management, etc). Capital that is heteronomous to a field can only generate a habitus that derives from its interaction with the field, and the more sympathetic the interaction is with the ‘structuring structure’ of the field, the more efficacious it is likely to be in deployment within the field.

The enormous potential that Bourdieu’s conceptualisation of field, capital and habitus can bring to the analysis of source-journalist interactions in the production of news discourse is readily apparent, and has been noted by others (Benson and Neveu, 2005; Benson, 2004, 2006; Kaplan, 2006; Couldry, 2007; Dickinson, 2007; Zafirau, 2007). It can link together Ericson’s evidence on the dynamics and contingencies of individual encounters between journalists and their sources with the larger social processes and struggles that Hall was concerned with. However, before we embark on that endeavour, there are some weaknesses that are also apparent, and to
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which we will need to seek remedies in order to optimise the potential productiveness of Bourdieu’s approach.

The first weakness relates to Bourdieu’s taxonomy of fields. For him, there are two major fields, the economic and the cultural, which are locked in mutually dependent competition such that the wielders of cultural capital are the ‘dominated fraction of the dominant class’, subordinate to the wielders of economic capital that generates the surplus that funds their activities, but nonetheless providing the cultural capital that enables the dominant class to maintain and reproduce their social position. Allied with but distinct from the economic field is the political field, manifested in the institutions and processes of state and government. Acting in concert for most purposes in the modern capitalist nation state, the economic and political fields together constitute the ‘field of power’. There are two further fields that Bourdieu refers to, though he pays them less attention: the social field, comprising social connections and relations outside the economic, political and cultural spheres (eg friendship and acquaintance, ethnicity, gender, age and sexuality), and the symbolic field, where the link between signifier and signified in public representation is constructed and contested, at the levels of both denotation and connotation (eg advertising, the broadcast and print media, public spectacles, religious iconography). Bourdieu’s own personal research focus was very much on the cultural field.

There is nothing necessary about this taxonomy: by Bourdieu’s own account it is in the nature of fields that their concerns, focus and rewards are a contingent product of the interests and interactions of the participants in the field. Bourdieu might join with Marx and Weber in arguing that the economic field has a certain fundamental importance once human society has moved beyond the most elementary form of subsistence, but the capitalist economy and the modern nation state are specific to identifiable historical and geographic conjunctures, outside of which they may not even be conceivable..

It is a matter of debate how one might categorise the range of existent fields. It is not apparent that Bourdieu’s social field is on a comparable analytical level with the economic and political fields, nor that the coercive field of organized or sanctioned violence is merely an outgrowth the political field, ie war as the continuation of politics by other means; or again, why the cultural could not be subsumed into the ideological or symbolic field. Mann, for example, offers a social power model with the acronym IEMP for Ideological, Economic, Military and Political sources (Mann, 1986: 1-33). These sources of social power are

overlapping networks of social interaction, not dimensions, levels or factors of a single social totality [and] also organizations, institutional means of attaining human goals.

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Their primacy comes not from the strength of human desires for ideological, economic, military or political satisfaction but from the particular organisational means to attain human goals, whatever these may be. (Mann, 1986: 2, emphasis in original.)

In other words, the primacy of these particular fields flows from the contingent fact that the social relations that constitute them have reified into organisations and institutions, which allows them to accrete resources, codify patterns of relations into structures and processes to regulate conflict, manage the succession processes for the selection of important agents in the field, and through this aggregated strength extend their scale in time and space. This emphasis on organised networks draws on Parsons’ distinction between collective and distributive power (Mann, 1986: 6), and while Mann’s conception of social interaction is much more mechanical than Bourdieu’s, it is sympathetic to his understanding of fields. His recognition that relational networks often solidify into organisations and institutionally organised patterns of interaction gives a strategic dimension to Bourdieu’s important conceptualisation of ‘position-taking’: a very effective way of consolidating a powerful position in a field of relations is to institutionalise it, which then also secures the transmission of power to chosen successors. Journalists recognise the importance of institutions, which is one reason why they structure their working activities around them (Tuchman, 1978), and Benson has also discussed the relevance of Bourdieu’s theorisation to the ‘new institutionalism’ (Benson, 2006).

Mann’s taxonomy is constructed with respect to the epochal flow of world history through contestation among different forms of social power, which is a broader brush than we need. We might usefully recast his ‘Military’ category to ‘Coercive’ to include the operations of the civil and criminal law as well as external/internal military/police/criminal operations; in other words, all of the ways in which organised violence of one form or another can be deployed, including the legal/illegal forms of expropriation or dispossession of economic assets including labour power (see Harvey, 2003a; and Arrighi, 2005a and 2005b for a discussion of the continuing importance of ‘accumulation by dispossession’ in contemporary capitalism).

Ideological power for Mann encompasses the attribution of meaning, the development/ maintenance of norms, and aesthetic/ritual practices, configured extensively through organisations like religions that transcend socio-spatial boundaries, or more intensively as morale within pre-existing social formations (Mann, 1986: 22-24). This is both very broad but also confining in that it implies a strong organisational dimension, and is also an account of a function within a field rather than a definition of the field. Bourdieu’s distinction between cultural and symbolic power captures better the distinction between what is immanent within the patterns of vernacular social relations, and what is produced institutionally outside everyday
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life (eg religion, advertising, the media) to achieve a social impact. So we will use the term Symbolic for this form of power.

This last issue leads us to a larger, second problem with a fundamental ambivalence in Bourdieu’s casting of the cultural sphere. Perhaps because of the importance of high art and culture to French national self-appreciation, ‘culture’ for Bourdieu encompasses both the most refined sensibilities of high art, literature and cultural production, as well as the aesthetically inflected milieu of everyday social life. What’s more, Bourdieu’s own definition of the field (which would extend to the political, economic, symbolic and coercive) requires a contingent cultural capital and derived habitus in order to function. So there is a political culture, an economic culture, a coercive (military, police, criminal) culture and indeed a journalistic culture (Allan, 2004) that is required for any field in those respective domains to be able to function. Consequently, culture as a category has a contradictory nature: it is both a specific form of aesthetic practice that in its most refined manifestations is autonomous of influence from political, economic or coercive fields, at the same time as it is necessarily intrinsic to all fields. A parallel point can be made about the distinction between politics as it applies to the internal workings of families, social groupings, workplace networks, etc vis-á-vis the workings of institutions of government, and indeed about economics: transnational and national economic relations as against family budgets, etc. This goes to the point made above about the significance of institutions in the structural terrain of a field, and the size, scale and stability of its operations.

In the ‘small-c’ usage culture is the contingent manifestation (through habitus) of abstract social relations as they are understood and embodied by position-taking participants in any field of activity. For example, it is a commonplace of advice to Anglo-American business people wanting to participate in Chinese or Japanese markets that they have to learn how Asian capitalism functions differently to their own national varieties. Similarly the political culture of Chinese communism is different to the Cuban variety, as Australian liberal democracy is different to that of England or the United States. This is not to say that high art/culture is unrelated to vernacular culture, just as the politics of a Parent and Citizens Association in a school might resonate with political divisions at the parliamentary level. However it is to say that just as the Political field of state-based power relations is different from the forms of power relations that pervade all fields, so to the Cultural field of institutional and social production is distinct from the forms of cultural interaction that pervade all forms of social relations. Verter makes a similar point regarding Bourdieu with respect to the relationship of religion to spirituality (Verter, 2003). Small-p power and small-c culture are intrinsic to all fields.

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To pull this discussion together, we can say, following Verter to theorise with Bourdieu against Bourdieu, that all social relations take place in fields which are necessarily imbued with power and culture; that at the public level (though with private articulations) fields cohere around certain organisational axes which produce and consolidate spatio-temporal extensions to the fields; and that these supra-fields with their attendant organisational forms can usefully be grouped into the following categories: political, economic, coercive and symbolic.

A third problem is Bourdieu’s equation of capital with power. Capital is acquired through a social process of accumulation, in the cultural field through education, training and experience, in the economic field by investment and the extraction of surplus value from labour, or else by financial speculation, etc. Capital can be understood as resources deployed or deployable in a productive process, and cannot be measured in solely quantitative terms, so for example money in the bank doesn’t become capital until it is invested in a productive process with the aim of extracting profits, or again education in the finer points of literature doesn’t become cultural capital till it is deployed in the appreciation of literary works. So capital depends on deployment in a relationship for its status as such, but is not the same thing as the relationship itself. Power, on the other hand, is thoroughly relational, and while it might depend on the deployment of resources for its effectivity, its nature resides in the influence, enabling or constraint over the activities, be they actions, beliefs or understandings, of others. With any given capital resource, power might be exercised in a variety of ways to a variety of effects. Power is an embedded dimension of relationships, while capital is a resource whose utility might be defined by a relationship but has an independent existence.

A fourth major weakness in Bourdieu’s theory is his insistence on the homologies that characterise the operations of all fields. It is one thing to propose field, capital and habitus as a productive way of understanding social interactions by conceptualising them as interacting dimensions or components: the proof of that proposition will lie in its efficacy in facilitating research and understanding. It is much more tendentious to propose that the constitution of all fields is homologous around autonomous and heteronomous poles, with power relations that generate orthodox and heterodox positions. Bourdieu insists that beyond this fundamental invariance, all is contingent, particularly the relations between fields: these are

problems that only empirical analysis can tackle. I believe indeed that there are no transhistoric laws of the relations between fields, that we must investigate each historical case separately (Bourdieu and Wacquant, 1992: 109, emphasis in original).

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Perhaps this is a jibe delivered with a rhetorical flourish in the battle with Althusserian structuralism, but even so it is clearly inadequate. As Bourdieu himself recognises, fields throw up their own abstract conceptualisation and theorisation, which can only be understood in terms of the field that produced them, in its historical and geographic specificity. While the relational conceptualisation of field, capital and habitus is dynamic and flexible, to dismiss all other levels of abstraction constitutes a crude dichotomy between an a-historic level of abstraction and a rampant empiricism. It does not recognise that there are levels of abstraction available for the analysis of specific historical periods and distinct spheres of human activity – for example, capitalist as distinct from feudal or mercantilist economic forms, liberal parliamentary as distinct from party state or militarist dictatorship political forms, gender as distinct from class, symbolic as distinct from physical relations, the nature and meaning of space and time, and so on. Indeed, any specific empirical instance of social relations is going to be over-determined by the intersection of the various social forces bearing on both the structural context and on the subjectivity of the agents involved, such as gender, age class, ethnicity to name some of the major possibilities, and each of these is amenable to theorisation.

This links in to the fourth major problem which is the reduction of difference to binary oppositions such as autonomous versus heteronomous and orthodox versus heterodox. In any actual field of power relations there are likely to be shifting sets of orthodoxies competing amongst themselves as well as with the heterodoxies, and vice versa. Particular combinations will have tactical and/or strategic value at particular points in time, but by their very nature these positions will be unstable and constantly evolving in response to developments elsewhere in the field. Similarly, any individual agent or set of agents is going to be a participant in a range of fields, and would likely to be trying to leverage value and influence from one field to the next. There is a strong implication in Bourdieu’s characterisation of the artistic field that autonomous art has the highest normative value, and by implication this might be extended to all fields. But as the history of art and patronage (economic and political) amply demonstrates, artistic production is thoroughly enmeshed in the social conditions of its production in many complex, layered ways, as well as being caught up in its own discursive conventions and histories. Indeed, Bourdieu himself explored precisely these issues in his dialogue with the artist Hans Haacke (Bourdieu, 1995)

Bourdieu’s conceptualisation of poles within fields of force is a valuable way of thinking about shifting foci or nodes of influence, and the notions of orthodoxy/heterodoxy and autonomy/heteronomy usefully provide a way of calibrating the quality of capital in the field to the state of power relations in the field. But any actual social situation that is the object of research is going to be a complex interplay of shifting values and positions, operating in a range
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of timeframes and over a variety of spaces with a dynamic cast of agents participating in the play. Strategic or tactical positions will be occupied and vouchsafed to be orthodox for as long as they afford value in the contest, and then quickly vacated. Coalitions of agents will assemble and disassemble as it suits their mutual advantage. Battles will be fought in one field to achieve goals in another, for example in the political field to achieve goals in the economic field. Deceit, deception and disingenuity are important qualities of habitus in many contests. Simple binary oppositions do a disservice to the fecundity of Bourdieu’s framework, and need to be reconfigured, firstly in a much more flexible and dynamic set of multiple polarities and secondly in a way that pays serious attention to the spatio-temporality of any actual field of power relations. This requires us to join a growing band of scholars who want to think ‘with and against Bourdieu’ (eg Lovell, 2000; Verter, 2003), and we will turn to this in detail in the next chapter.

Finally, as Bourdieu himself notes his concept of symbolic violence and its corollary of ‘misrecognition’ implies a very stable, not to say rigid social context or field (such as might exist in a tribal social environment or perhaps the French high culture milieu), and conceptually it’s hard to see how an exercise of symbolic violence could be contested if it necessarily involves misrecognition. It implies continuity and stability rather than change, and yet the attraction of Bourdieu’s approach to field analysis is precisely that it is capable of explaining change as well as continuity. It resonates with the notions of ‘false consciousness’ and base/superstructure in some variants of Marxism as an explanation of acceptance of exploitation. In my opinion, the concept would be more useful if it was understood to involve attempts by practitioners in the symbolic field to impose certain preferred meanings and to disguise or misrecognise the motivations and interests behind those preferences, rather than requiring as a matter of definition that the misrecognition be successfully imposed as a moment of closure on other practitioners. The interpretation of any symbolic text or activity occurs at the point of reception, not production, and we can’t foreclose any possible interpretations by participants occupying other positions in any field. Indeed, the raison d’etre of any field including the symbolic is precisely the contestation of its structure and power relations, so exercises of symbolic power are necessarily open to contestation, but at the same time we can acknowledge that power is often more effectively exercised through being unchallenged.

Drawing this discussion of power in communication contests to a head, I suggest that the weaknesses outlined above do not obviate the great value to be gained from understanding contestation in social relations in terms of field, capital, habitus and symbolic violence. These four interlinked concepts provide a framework for detailed and fertile empirical analyses of actual social relations in situations of contestation.
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Capital, conceived as a deployed resource rather than power as such, makes the link with the social structures that enable inequalities and hierarchies to reproduce their power and status, but at the same time, because the value of capital is not absolute but depends on the ever-changing state of the field, and because its value as a resource depends on the skill and circumstances of the agent who is using it, encompasses the process of social change. Hence we can progress well beyond ‘tendencies’ as an account of how Hall’s primary definers over-access the media to analyse in both macroscopic patterns and microscopic detail the actual resources and power plays that transpired in particular instances of journalistic research and reporting. Bourdieu enables a research agenda that can reconcile the structural patterns that Hall identified and subsequent researchers confirmed, with the cut and thrust of micro-politics around the terms, if any, of visibility in the symbolic sphere of the media. Capital also enables us to explore the interests and context of those who work in the media as journalists, and what their sectoral as well as professional and private interest might be in any particular encounter with sources.

Habitus enables us to escape any risk of determinism by recognising the skill and happenstance that is so critical to any encounter with the contingency of news production. News sense, that great undefinable core of journalism education and sociology, becomes the acquired capacity to intuit the state of power relations in a field of social activity, and intervene in the representation of those relations. As both Hall and Ericson agree, news is not so much about the ‘facts’ as such, but the social authority to bear witness to and interpret those ‘facts’. As Ericson put it, “the reality of news … is embedded in the politics of knowledge that emerges on each specific news beat” (Ericson, 1989: 377). But of course, to acquire the capital to understand what is happening on that news beat, journalists have to become part of the field, at the same time as they seek to preserve a heteronomy from it in order to maintain their professional autonomy and not be subject to ‘source capture’. In the symbolic field of journalistic production, heteronomy is not an aberration but a necessity.

Lastly, the concept of field when applied to the symbolic sphere acknowledges that media workers are the professionals who have control of that field, which Ericson recognised, but that the rules of the field require engagement with ‘authorised knowers’ or ‘primary definers’ whose status is earned and produced in other fields. That is a particular characteristic of the news sub- field of the symbolic field, which automatically throws the symbolic field into a singular set of intersecting relationships with other fields. The concept of heteronomy recognises that fields intersect and overlap, and when dovetailed with the understanding that the very parameters of a field are often what is at stake (tactically at least) in a struggle, allows us to calibrate the impact of different sorts of capital in a struggle. We can explore the ways in which a struggle in one
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field may be largely fought in an adjacent field as long as the two are linked by the behaviour of the players.

Bourdieu uses the concept of field as a spatial metaphor, but of course in any actual social relations there is always a spatial context that has its own multi-faceted reality, not least in connection to temporality. To conduct any research into fields we have to move beyond the metaphorical and have a framework for understanding the multi-dimensionality of space-time, as Harvey calls it (following Lefebvre). This is especially the case in this research into communication struggles about Sydney as a global city: we need a theoretical framework that can encompass the spatio-temporality of all the fields involved: symbolic, economic, political and coercive. It is to this that we turn in the next chapter.

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Chapter 4: Space, Time and Fields

As discussed in the previous chapter, Bourdieu argues that all social human activity takes place within fields, which are socially constructed and contingent on the social relations that construct them and related fields. All social fields are constituted in space and time, and Henri Lefebvre, David Harvey and others have argued convincingly that space and time themselves are socially constructed. Putting these two arguments together means that first of all, the social construction of space and time takes place within fields of social relations and is subject to their dynamics, and conversely, that the activities of agents within any field take place within space and time which are contingent parameters and constituents of those fields. We need to reconcile these complementarities.

‘Field’ for Bourdieu is a spatial metaphor that allows him to elaborate his theoretical framework for understanding practice. However, any deployment of his framework to investigate empirical phenomena, ie to generate research questions capable of empirical interrogation and analysis, which in turn can interrogate the adequacy of the theoretical framework, necessarily requires a move beyond metaphor into a rigorous theorisation of space and its correlate time. This is necessary to locate the empirical phenomena being investigated in cadastral space and chronometric time, so they can be identified by others and re-examined to test the adequacy of the analysis. But even more fundamentally, if the space and time of any phenomenon are socially constructed and therefore part of the constituents and parameters of any field, they can be (and may need to be) examined as elements at play within the structural components of the field, eg the doxa, illusio, poles, capital and habitus. As constituents of the social relations of the field, they may be contested, or not, at any particular conjuncture. So we need theories of space and time that are compatible with Bourdieu’s relational approach to social theory, and that are adequate to the empirical interrogation proposed.

Harvey argued in 1973, and reaffirmed his argument in 2006, that space is not one-dimensional but can be divided into three facets: absolute, relative and relational space (Harvey, 1973: 13-4; 2006: 125 ff). These are conceptual categories and any given spatial phenomenon is likely to involve aspects of all three categories. Absolute space comprises the material world of physically manifest objects and dimensions which can be ascertained empirically by the senses and whose specific characteristics can be named and verified, for example, the address of, dimensions of and objects within a classroom. Relative space comprises space in relation to time; in other words, space that is subject to the impact of movement, whether it be of objects or energy flows. Harvey gives the example of two classrooms that are physically distant from each other but linked by video-conferencing technology so that a lecture that is given in one can
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be watched and heard in the other in real time (ie the sounds and images move electronically between the two locations at the speed of light), and therefore students in the two distinct spaces can both experience at effectively the same time the same activities (Harvey, 2006: 127). Harvey uses Marx’s phrase of ‘the annihilation of space through time’ for the phenomenon of increases in the speed of transport and communication lessening the time required to travel though space and therefore diminishing (and effectively wiping out in the case of electronic communication) the space between points of departure and arrival of objects or messages.

Relational space is the configuration of space according to the social relations that produce and occur within it, but while profoundly meaningful, Harvey argues it is impossible to verify directly, but only through an examination of the effects of the social relations (Harvey 2006: 141). For example, the physical layout (absolute space) of a typical modern classroom includes a lectern or desk at the front and a series of seats and perhaps desks arrayed in front of and facing the lectern. The space is configured to the advantage of a certain set of social relations – one person generally speaks from the lectern, and those in the seats generally listen. The power relations implicit in this physical layout are familiar to someone who has experienced formal education, but at first encounter might appear incomprehensible to someone who hasn’t. Likewise, the material attributes of a shopping mall will convey powerful signals of status and therefore social relations that encompass class and probably other local axes of social distinction including gender, ethnicity, age, etc. to someone who has experienced the social relations produced within it.

Harvey makes the point that relative space encompasses absolute space, but not vice versa, and that relational space encompasses relative and absolute space but not vice versa. Nonetheless, he explicitly desists from identifying a hierarchy of types of space, and prefers “to keep the three categories in dialectical tension” (Harvey, 2006: 131). On the other hand, he does specify that both relative and relational space involve the temporal dimension, and indeed he has been adamant throughout his writings that space and time cannot be conceptualised except in relationship to each other, and that each is meaningless without the other.

Human interaction with space necessarily involves the issue of representation of space. Harvey’s classroom example above makes this clear. Someone who has experienced formal education can enter a classroom and know conceptually and imaginatively at a glance what is the nature of the social activity that takes place within it, and the generic power relations embedded within that activity – they will understand that it is not a restaurant nor a playground (although playful activity, eating and drinking might occasionally take place within it). Even at the level of direct experience through smell or touch of an old wooden desk, for example,
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representation is involved in the interpretation of the data transmitted through the nervous system to the brain.

However, the representation of space within a symbolic field is distinct from the reality of space in its absolute, relative and relational dimensions. In 2006, Harvey put his own tri-dimensional conceptualisation of material space together with Lefebvre’s account of apprehended space to form a matrix. This matrix he more or less proposed as a convenient checklist (though not an exhaustive one) against which any theorisation of how we apprehend and act in space needs to be tested for its sophistication and adequacy (Harvey, 2006: 135).

Lefebvre in the well-known Introduction to his 1974 classic The Production of Space (1991) identified three dimensions to the mode in which material space is socially apprehended and produced: the space of experience, the representation of space and spaces of representation. We might rename these categories perceived space, conceived space and imagined space respectively. The first is the space that we experience and apprehend through the physical senses of touch, sight, etc; the second is space as we conceptualise it using the laws of physics and geometry, mechanics and relativity, etc but also psycho-cultural conceptualisations such as surrealism, cyberspace, virtual space, etc; the third is space as we live and represent it emotionally and imaginatively to ourselves and each other.

As a way of exploring what these multi-dimensional approaches to the materiality and apprehension of space might look like when reconciled to each other, Harvey (2006: 135) juxtaposed them in a matrix (Figure 1). He makes no greater claim for this matrix than that he finds “it helpful to read across or down the matrix of categories and to imagine complex scenarios of combination” (Harvey, 2006: 134). Indeed, it provides a very rich way of approaching the complexities of spatial and social reality while maintaining an overall discipline and order in our thinking, and we can make a number of points about its value.

Firstly, the matrix is not a ‘theory of space’. Rather it is the product of the theoretical approaches that Harvey and Lefebvre have developed in their own attempts to understand spatiality. Both thinkers are relational in their approaches, rigorously and innovatively Marxian in their methodologies (and roundly critical of what they respectively see of the inadequacies in that tradition), and therefore identify the social relations of production as the leading motor force in humankind’s development. The matrix is an attempt to categorise the complexities of the interaction between the physical and social worlds: the materiality of space and its production, apprehension and representation. It is a checklist that aims to delineate the complexity required of analysis in this field.
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Figure 1.

(Harvey 2006: 135)

Secondly, in devising the matrix Harvey rejects the pitfalls of hierarchies among the different dimensions. In discussing value – a key concept for him as a Marxian thinker – Harvey elaborates his reasoning why the three dimensions of space cannot be derived one from the other but have to be kept in non-hierarchical tension as they interact to create social objects such as value:

If my characterisation of the Marxian categories [of value: use value lying in the province of absolute space, exchange value in relative space and value, encompassing the other two, in relational space (author’s addition)] is correct, then this shows no priority can be accorded to any one spatio-temporal frame. The three spatio-temporal frames must be kept in dialectical tension with each other in exactly the same way that use value, exchange value and value intertwine within the Marxian theory. There would, for example, be no value in relational space-time without concrete labours constructed in innumerable places in absolute spaces and times. Nor would value emerge as an immaterial but objective power without the innumerable acts of exchange, the continuous circulation processes, that weld together the global market in relative space-time. Value is, then a social relation that internalises the whole history and geography of concrete labours in the world market. (Harvey, 2006: 142)
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Thirdly, while absolute and relative space are open to precise measurement and calibration, and therefore direct verification, relational space is not measureable, though it can be understood and qualitatively calibrated from its effects. Harvey derives this conclusion from the nature of social relations. Discussing Marx’s concept of value, he argues “Value is, in short, a social relation. As such, it is impossible to measure except by way of its effects (try measuring any social relation directly and you always fail).” And again: “Social relations can only ever be measured by their effects” because social relations are an abstraction – “immaterial but objective” to quote Marx (Harvey, 2006: 142). So, to continue with the classroom spatial analogy, the socio-political relations that cause the construction of the absolute arrangement of seating in a certain configuration, and the arrangement of relative spaces with transport and communication technologies in a certain way, can only be detected by observing the material outcomes in time of those relations, viz the distribution of patterns of speaking and listening among participants, the production of objects (essays, examination papers) by some participants (students) for assessment and grading by other participants (teachers) and the effects contingent upon those grades in the broader social world.

So, in seeking to use this matrix as a checklist for empirical research, we would need to specify how to identify and verify the evidence for the analysis of the structure and activities of the relational spaces. I will return to this point further below in this chapter.

Fourthly, each intersection within the matrix is a fractal dimension, if you like, of a spatial whole, and because each dimension is socially produced in its meaning, each can be contested as a field by the participants, which brings us back to Bourdieu’s analytical framework, but in a way that instantiates the spatial metaphor of the field into the social reality of any given multi- dimensionally spatial reality. This generates a framework of enormous complexity and subtlety that is hopefully amenable to empirical testing. It also presents a vista of the conceptual challenges and richness consequent upon Schlesinger’s 1990 injunction to decentre the media (Schlesinger, 1990).

Before we bring all of these theoretical considerations into focus for the empirical object before us – the role of the media in the communication struggles that were part of Sydney’s production as a global city in the period from 1983 to 2008 – we have one last dimension to consider: the temporal. This is important for several reasons. Firstly, we are looking at a phenomenon – Sydney’s accession to global city status – that is located temporally as well as spatially. Secondly, journalism is a practice that is temporally defined. G. Stuart Adam put it thus:

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If journalism is marked by its public voice, it is marked equally by its relation to the here and now. Michael Oakeshott, a British philosopher, once defined “the world of history [as] the real world as a whole comprehended under the category of the past.” The world of journalism, by contrast, may be the real world as a whole comprehended under the category of the present ….[J]ournalism is avowedly about the present, not the past. (Adam, 2005: 13)

As the catchphrase has it: ‘today’s news is wrapping tomorrow’s fish and chips’. Being up-to- date with events in one’s reporting is a key constituent of professional journalism practice. Further, truth claims about events by journalists need to be locatable in time as well as space for verification purposes. Tuchman captured this in her analysis of the journalistic mode of enquiry as the casting of a web of facticity in space and time (Tuchman, 1978).

Thirdly, as Harvey has repeatedly demonstrated in his writings, it is impossible to conceptualise space except in relation to time. Even the characteristics of absolute space under Newtonian mechanics are subject to the ravages of temporal change – geological, meteorological, etc – while Einsteinian relativity defines all space with respect to the temporal dynamics of the observer. Relative space is defined by the interaction of space and time, ie movement, and relational space is necessarily in temporal flux. So we need a theoretical framework for conceptualising time that can be reconciled with space, that can be used to locate events definitively in a temporal continuum but also encompasses conceptions of the present.

Alfred Gell’s The Anthropology of Time (Gell 2001) is an authoritative recent account of how time is conceptualised, and it addresses precisely these last two requirements of conceptualising the present as well as using time as an event locator.

Gell supports Gale’s (1968) approach to McTaggart’s paradox about the unreality of time (Gell, 2001: 151) and his argument that all conceptions of temporality can be categorised as either A- series or B-series. Gell identifies Gale as “an A-series man” and himself as a moderate B-series supporter (Gell, 2001:153). Further, Gell insists “on a distinction between time and the processes which happen in time … [and has] opposed the trend of thought which distinguishes different species and varieties of time on the basis of different processes happening in time” (Gell, 2001: 315)

B-series time is chronometric time: every particle of time, no matter how small and fleeting, can be given a unique name relative to a standard reference point such as the notional birth of Christ, and that particle of time can be conceived of as a point on a grid or line that is unique
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and not replicable. Particles or segments of time have a unique name and unchanging relationship with each other as they stand in serried ranks, and every unique event or object that exists can be located by its precise temporal referent.

By contrast, the A-series is the phenomenological time of past, present and future codified by Husserl, in which the past and the future are defined by their relationship with a definitively unstable present, characterised as an infinitesimally narrow razor’s edge that can never be stably identified. Any given moment or particle of time moves once between each of the three states of being, from future to present to past, and is constantly shifting its quantifiable relationship to an ephemeral present, moving out of a distant future towards the present, and then receding into the ever dimmer recesses of the past. Figure 2 is Gell’s (2001: 225) graphical representation of Husserl’s depiction of the two contrasting conceptions, and it also can function as a matrix because both the A- and B-series transitions reference themselves against each other.

Figure 2

(Gell 2001: 225)

For Husserl, as the future approaches and becomes proximate to the present (point B in Figure 2 above), it becomes subject to ‘protentions’ (Gell, 2001: 224) of meaning, as actors in an ever- shifting present anticipate future developments and their implications in terms of their

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understandings of the present. Likewise, as events pass from the present to the past they are subject to ‘retentions’ whereby meanings are produced and modified in terms of their relationship to a developing present. Protentions and retentions modify their interpretation of the significance of future and past events according to the perspective of the shifting present.

McTaggart’s paradox is that these two understandings of temporality – A-series and B-series – appear to be reasonable but incompatible, and hence his argument about time’s unreality. We don’t need to reprise Gell’s discussion or resolution of this dilemma, but note his insistence that time “is intrinsically unitary and unifying – allow[ing] for the coordination of diverse processes; biological processes with social ones, psychological or subjective processes with objective, clock-timed ones, and so forth.” (Gell, 2001: 315) The processes that happen in time must be distinguished from time itself, if time is to have any valid referential role as a common denominator across the sciences, both natural and social.

Gell argues in the mode of the analytical philosophers. Following Harvey’s lead on the nature of space, I’d like to suggest that we don’t need to choose between these different conceptions of time but can see them as dialectical and hold them in tension. Indeed, Gell implicitly encourages this approach in his discussion of McTaggart’s paradox when he demonstrates how the two conceptions of time require each other to function (Gell 2001: 149ff). Certainly at a professional level within the media field, that is what journalists do when they are researching and reporting on events and processes. They act constantly in the present (A-series), anticipating (‘protending’) events and the denouement of processes in public life, eg political or industrial conflicts, in order to allocate their scarce attention and resources within space and time (Tuchman’s web of facticity), and re-evaluating the immediate past in hindsight (‘retentions’). At the same time, they need to be able to verify any truth claim by a precise location (B-series) of events in space and time. In my view this is comparable to Harvey’s argument about the interrelationship among the three dimensions of space – absolute, relative and relational – and we would be well-served to follow his lead in not seeking a mutually exclusive resolution of their differences, but hold them in dialectical tension as necessary dimensions of the way in which we operate within and understand temporality.

Can we go further and map the Gell/Gale construction of temporality (A-series/B-series) onto the Harvey-Lefebvre matrix of spatiality and its apprehension? Does B-series time correspond to absolute space, and A-series to its conceptualisation and imagination? No. The present, though fleeting and unstable, is material, definitive and cannot be reduced to the subjectivity of its apprehension and appreciation. Both A-series and B-series temporality are implicated in relative and relational dimensions of space. In relative time-space, movement involves both
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fixed, absolute co-ordinates in time and space as a measurement and location of the process (B- series), and at the same time must exist in the past, present or future relative to some observation point (A-series). Similarly, relational space exists in both chronometric and phenomenological time.

Moreover, it is good to remind ourselves that while time and space are inconceivable without each other, they are not aspects of the same thing. They are different: one can revisit absolute space in time but one cannot revisit absolute time in time, and conversely, one cannot visit two distinct absolute spaces at the same time, but one can visit different times at the same space. Beyond that, for our purposes it is better to leave the metaphysics of their nature to the philosophers, as Harvey recommended when considering space (2006: 120). We shouldn’t try to reduce the Gell’s matrix to something that can fit into Harvey’s matrix, but be content to place them in dialectical tension with each other as we explore their mutual interaction in our empirical analyses.

A final point to note about temporality is the rhythmical nature of its earthly manifestation, and this has been a significant focus of scholarly interest (eg, Lefebvre, 2004). Rhythm is experienced as a process that takes place in both A- and B-series time, and as Gell says, processes that occur within time should not be confused with time itself. However, once we bring time and space into correlation with each other, it is apparent that rhythms are a product of relative and relational time-space. Diurnal and seasonal rhythms, lunar cycles, and the botanical and biological cycles that synchronise with them, are ultimately produced by the movement through relative space with respect to each other of the components of the solar system (sun, planets, moon, etc) and universe more broadly. Economic cycles in capitalist economies, ranging in scale from daily to epochal, are the product of the circulation and accumulation of capital, which occurs in both relative and relational space (Harvey, 2006: 143). Such cycles and rhythms are profoundly important in the way that people experience absolute time and space, conceptualise it and imagine it. But as processes within time they too can be accommodated within the Gell and Harvey-Lefebvre matrices, and we don’t need to add any further dimensions to our already full set for consideration.

To recap, we have elaborated a framework for the conceptualisation of space and time within which we can apply Bourdieu’s version of field theory, in order to analyse dynamic processes of contestation within the fields of an historically and geographically specific situation, viz the role of the media (in the symbolic field) in relation to conflicts and contests in other fields (notably the economic and political fields) in the emergence of Sydney as a global city. I am supporting Harvey’s oft-repeated contention that social analysis requires a theorisation of spatio-
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temporality in order to achieve an adequate level of analytical sophistication. And this is not simply a passing nod to a broad theoretical platform. It is required to achieve an acceptable level of empirical sophistication in the analysis; the alternative is to remain in the realm of spatial metaphor, which would be supremely unsatisfactory in analysing a specific empirical phenomenon of urban reorganisation.

But just as we need a conceptual framework of space-time to bring to bear on Bourdieu’s spatial metaphor of the field, we complementarily need a theory of practice in order to understand how the dynamics of social change within real space-time occur. It is one thing for Harvey and Lefbvre to postulate space and time as socially produced, and as Marxian scholars to theorise the larger geographical and historical processes at work in social change, but how do we relate that in a non-reductionist way to the specific conflicts, decisions and practices of social agents acting according to their own lights in material time and space. As we saw in the previous chapter and with the qualifications elaborated there, that is precisely the challenge that Bourdieu set himself to address. As a relational thinker influenced by Marx, though not so strongly concerned with that approach as Harvey and Lefebvre, Bourdieu gives us a compatible theory of practice that we can deploy to analyse contestation in each of the fractal domains of the spatio- temporal matrices.

So we have the two complementary parts of the theoretical model that we need to proceed to test empirically the value of the model. We are in a theoretical position to deploy an analysis across both media studies and geography that does justice to the disciplinary demands of each. This makes for a much more elaborate examination of the role of the media in urban processes than is usually undertaken in geographical studies, and conversely to locate in detail agents and processes from the field of urban political economy into frame of media and journalism studies. This approach at the asymptotic limit could be criticised for trying to make the map co- terminous with the object being mapped. That is not my intention, but if we are examining a complex, multi-dimensional process to ascertain and understand the strategies and interactions of multiple agents, then the situation is necessarily complex and nuanced. Strategies and tactics are being constantly reviewed and developed to respond to a multiplicity of contingencies, and it is this complexity that players have to be familiar with and competent in addressing. This analysis has to capture that complexity and nuance if it is going to add value.

Introducing the empirical case studies

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To reduce the analysis to manageable proportions, two case studies have been selected to illustrate different sorts of contests. They constitute prime examples of the fundamental processes of the political economy that defined global cities: the generation of credit/debt in a sufficiently large market both to absorb the surplus capital being produced in the global economy and conversely to supply the liquidity that could be used in the purchase of corporate entities coming to market as part of the consolidation of command and control functions that characterised globalisation. They exemplify two differently constituted dimensions of engagement, different types of protagonists, different public constituencies for the protagonists and the media, different genres of media coverage, and requiring different modes of practice by the protagonists in order to achieve their goals and defeat their opponents, who may or may not be identifiable individuals or groups. Both of then required intensive engagement with media representation by the protagonists working in other fields to secure their goals

The first case study relates to a relatively amorphous goal, which is the maintenance of a commercial market – the residential real estate market in Sydney – at a certain level of activity and growth so as to maximise the returns to the main institutional players. There was a large and indeterminate number of potential participants in the market, more or less freely substitutable for each other in time and space, and these participants were mostly acting in competition with each other at the individual level, though in concert at the collective level of the marketplace. Participation in this field is very much in the private economic sector, though influenced by governmental policy decisions and actions such as housing, development and taxation policy, interest rate regulation and financial incentives such as first home buyers’ grants. The goal of the main institutional players in the market is the continuation of the market in growth mode, and while individual vendors/purchasers might conclude their immediate interests with a sale/purchase, they also have longterm interests in the ongoing state of the market as everyone needs to have their shelter needs met in an economically viable way.

The second case study relates to a specific organisation – NRMA Insurance – and a specific process – its demutualisation through a legally monitored and regulated process. It involved specific and known agents playing a range of regulated roles within a specific space and time frame to achieve or thwart the endeavour. The registered members of the NRMA were required to vote at an official ballot to approve (or not) the demutualisation by a 75% majority in favour. This event was a strictly defined activity at law with a unique set of spatial and temporal co-ordinates, and involved a strictly delimited set of participants, notionally all in the economic and legal fields and not the political, though as we shall see that is not entirely the case. To achieve the required outcome the contestants had to structure the field and most importantly the lead-up to the event in such a way as to maximise the support among voters for
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their preferred outcome. The timing of the event was a product of the social relations leading up to it, but once set the endeavour’s outcome could be specifically defined in space and time as a unique event. Once the goal was achieved, then the contest was effectively won or lost, depending on your perspective, and no longer needed to be waged by the victors, though it could be protested by the losers. The goal of the victors would be to conclude the action and confine it to the past as an historical event no longer able to be contested.

Both case studies involved significant media coverage over a sustained period, and were the subject of ongoing contestation in that coverage. We will deploy a field analysis to examine how the agents and their interests active in the economic and political fields were represented, if at all, in the symbolic field controlled by the media. As Ericson and Thompson have both pointed out, the question of visibility/invisibility in the media field is a fundamental strategic concern for agents in other fields, and precedes the issue of the terms of any visibility. We will be examining the media depiction of agency: who were the players, what were their goals in their own fields and in the media field, how were they, their goals and activities depicted (or not), and how did they and the journalists conduct their relations in the symbolic field, to what effect in their primary fields of activity. As Harvey pointed out above, relations themselves can never be directly observed, but their effects can, and we will be looking to the developing media coverage as an indicator of the effects of the relations in place between the symbolic, economic and political fields.

The field analyses will be quite different though complementary for the two case studies. The first one, examining the reporting of the real estate market, is looking for patterns over a prescribed period because there is no significance for the state of the market whether any specific buyer or seller participates in the market at any specific point in time: the important goal for participants is to maintain a buoyant market for the largest proportion of time that is possible. The field analysis in this case is looking for patterns with respect to coverage of issues – prices, taxation benefits, affordability, debt and homelessness – rather than activities of specific agents in specific times and places. This in Bourdieu’s terms should reveal the ‘objective’ level of the ‘structuring structures’ of a field where a stability with respect to ‘illusio’, ‘doxa’ and position is achieved. For this we will deploy a content analysis examining statistical patterns of coverage, engagement and representation of sources.

The second case study is engaging with the ‘subjectivity’ of individual and collective agents operating within their fields of practice, by looking at a very specific activity – demutualisation of a corporation – with specific agents engaged in the conflict and specific events at specific times holding decisive status, and therefore the field analysis here will be examining in very
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specific terms the cut and thrust of the conflict as it is played out. The analysis for this second case study involves a very different research methodology from the first, because it is looking to reveal important dimensions of particular processes that might not be acknowledged or apparent in official statements and documents – indeed might be actively misrepresented, dissembled from or kept secret, as Ericson indicated (Ericson, 1989: 9). It seeks to identify the particular purposes, capital, habitus and actions of the players as they sought to achieve both tactical and strategic goals that were highly specific to their context. It involves retrieval and examination of key documents, some of which are not meant to be publicly available; identification of key participants in events, their goals and mutual relationships, and their modus operandi in navigating institutional processes. It requires interviews with and observation of key players in order to identify and evaluate the several forms of capital – economic, political, coercive and symbolic – that they bring to bear in the process, and to reveal the personal and institutional relationships within and between the intersecting fields that sustain and reproduce this capital. Very importantly, it involves a close reading of the habitus of the key participants as a means of understanding and evaluating the veracity of their public and private truth claims, and their capacities to do and achieve what they assert.

The research methodology resonates with that of forensic historiography in dealing with past events and investigative journalism in dealing with contemporaneous events. Its goal is to unveil the structure, characteristics and key events of the process, against which the media coverage can then be reflexively analysed as both a set of putative material evidence for the activities taking place, as well as a set of contemporaneous contested representations seeking to convince key decision-makers in the relevant fields to act appropriately according to the various purposes of the contestants. It would not be possible to understand the role of the journalists’ reporting of the demutualisation struggle by examining overall statistical patterns of media representation of the NRMA, just as it would not be possible to understand the structures of the real estate market and its media representation by examining only the activities of isolated buyers, sellers and FIRE professionals within the field, .But the two case studies will test whether the converse is true. The two modes of field analysis are necessary and complementary, and illustrate the flexibility and usefulness of Bourdieu’s conceptualisation.

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Chapter 5: Reporting Real Estate: the background

This and the following chapter present a detailed analysis of the media representation of the Sydney residential real estate market during the period of our study: 1983- 2008. Chapter 5 provides an overview of the post-World War II experience to establish Gell’s B-series temporal context as a reference point for the shorter term A-series ‘retentions’ and ‘protentions’ (retrospective interpretations and prospective accounts) of the sources and journalists who were key agents in the production of the media coverage. Chapter 6 outlines the larger media context and then presents a detailed sources and discourse analysis for the two case studies covering the beginning and end of the 1996-2003 housing boom, and then discusses these empirical findings in the light of the theoretical issues raised in the first five chapters of this dissertation. Chapter 7 examines the other side of the financialisation/globalisation process – the bringing to market of financial institutions to consolidate the command and control functions of finance capital in global cities – via a case study of the reporting of the contested demutualisation of NRMA Insurance. Chapter 8 concludes the dissertation with some reflections on the evidence and analysis and their implications for the theoretical issues raised in the previous chapters.

Before embarking on the historical overview we will briefly recapitulate on the reasons for focusing on the journalistic reporting of the residential real estate market. There are three main reasons. Firstly, the global cities phenomenon was a product of the restructuring of the command and control functions of the global economy enabled by the deregulation and internationalisation of financial transactions and capital flows. This financialisation of the industrialised economies was largely produced by a massive expansion in the supply of credit by financial institutions, which created the leveraged capital to pay for the mergers and acquisitions, demutualisations and privatisations that enabled the restructuring of corporate command and control functions. Initially this increase in the money supply was created through the normal multiplier effect of credit creation, and was sufficient to withstand the impact of the 1987 stockmarket crash, the succession of international sovereign defaults in the 1990s and in 2000 the dot.com crash.

Although the massive stock market decline in 2000 seemed to presage a serious economic decline, business losses were cushioned and wider economic disruptions were curtailed by a real estate bubble – leading to only a relatively minor recession in 2001. Financial analyst Stephanie Pomboy at MacroMavens aptly dubbed this in 2002 as “The Great Bubble Transfer”, in which a speculative bubble in the home mortgage market miraculously compensated for the bursting of the stock market bubble. Fed by low interest rates and changes in reserve requirements of [US] banks (which made

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more funds available) capital flowed massively into the housing market, mortgage lending skyrocketed, housing prices soared, and hyperspeculation soon set in. (Foster and Magdoff, 2009: 93)

At first in the USA but then internationally, the invention and rapid uptake of financial derivatives, in particular collateralised debt obligations (CDOs) and credit default swaps (CDSs), exacerbated the massive expansion in credit supply into the mortgage market.

Since 2001 the global credit derivatives market (the global market in credit risk transfer instruments) has grown at a rate of over 100 per cent per year. Of relatively little significance at the beginning of the new millennium, the notional value of credit derivatives traded globally ballooned to US$26 trillion by the first half of 2006. (Foster and Magdoff, 2009: 84)

In Australia, the trade in financial derivatives was much more restrained, as was the rise in stock market values, but the impact of expanding mortgage debt leading to a real estate bubble was similar to the experience in the US, UK and other OECD economies. Figure 5.1 illustrates the comparative rise in household debt in Australia, the USA and the UK over the period. Two points are noteworthy: firstly, although Australian household debt levels sat at a much lower level in 1987 than either the USA or the UK, they rose rapidly after 1990 to exceed the US levels and equal UK levels, and secondly while both UK and US houseprices experienced rapid declines of 30-40% with the onset of the Global Financial Crisis (GFC) in 2008, the Australian housing market at the time of writing had yet to undergo a substantial correction.

Figure 5.1 Household Debt levels (AFR, 5/6/2010: 23)

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Indeed, in 2002-3 residential mortgage debt overtook business debt as the largest single component in national debt in Australia (Keen, 2007: 13). The collateralised debt obligations (CDOs) derived from Australian mortgages circulated globally in financial markets alongside those of the US and other countries, and in tandem with the leverage raised against them were responsible for a share of the created capital that circulated in global networks. This circulating capital was available to finance the mergers and acquisitions, leveraged buyouts using private equity, privatisations and demutualisations that constituted the consolidation of command and control functions that defined globalisation and the global city networks, and in turn were a key factor in the rapid internationalisation of the US financial crisis that commenced in 2008. But while the introduction of credit derivatives into the equation was ultimately the catalyst for the GFC, the exponential expansion of mortgage debt had commenced in the early 1980s with the onset of the financialisation process that underpinned the emergence of the global city phenonomen.

Viewed from another angle, the US residential market was ultimately the only US asset class big enough to accommodate the massive inflow of external funds, particularly from East Asian and Persian Gulf sources, required to balance the US balance of payments. It was this flow of funds out of East Asia via Tokyo, through the financial markets of London and into the North American economy via New York that defined the top troika of global cities (Sassen, 1989). This was the major reason, alongside the threatened domestic economic and political consequences of wholesale mortgage foreclosures, that Freddie Mac and Fannie Mae, the two large US mortgage guarantors, could not be allowed to fail at the onset of the Global Financial Crisis in late 2008 – it would have fatally damaged the US’s ongoing capacity to balance its financial accounts with the rest of the world (Mukherjee, A 15/7/2008: ‘China will get paid for loving Freddie, Fannie’, Bloomberg, 15/7/2008). A similar logic of ‘too big to fail’ applied in Australia: “when you have something as highly geared and as short funded as a bank, maintaining confidence is a key issue” (‘And the banks are vulnerable on borrowing’, AFR, 15- 16/5/2010).

In passing it should be reiterated that contemporary perceptions of the Australian impact of the Global Financial Crisis commencing in 2008 were that it was largely conditioned by international factors, and didn’t have a significant local genesis. This was the case even though some commentators assessed mean Australian house prices from 2005 till 2010 to be sitting about 30% or more above sustainable long term levels and had been for about a decade (‘The Global Housing Boom’, The Economist 16 June 2005; Keen, S. 2009). Australian banks were affected by both the upturn and downturn in the US financial markets because the low level of Australian savings meant they depended on the international wholesale credit markets to source
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about 25% of their finance for housing (‘Big four prize deposits as long-term funds costs rise’, The Age 15/5/2010, Business Day section: 3). However, a number of important factors distanced them from the vortex of the crisis:

• they were much less exposed than their European and North American banking counterparts to the trade in derivatives,

• mortgages in Australia are typically priced with variable interest rates and the mortgage markets didn’t have a significant sup-prime stratum,

• there is no financial benefit to the mortgagee in foreclosure, unlike the situation in the US, and

• there was a general shortage of housing in the major cities relative to demand, compared to the extreme over-supply in the USA.

Secondly, the provision, maintenance and continuing development of appropriate real estate for commercial and residential purposes is a recognised dimension of successful and aspirant global cities (Sassen, 2001: 190; Fainstein, 1994), and is discussed as such with respect to Sydney (Searle, 1996: 35) in the policy and academic literature and in the media. The highly paid employees and professionals in the producer services industries seek residences appropriate to their incomes and status, and corporations require a pool of appropriate residential property (either owned or leased) to house their senior staff on short to medium term placement. Property development, building construction and maintenance are a significant component of Gross Domestic Production in an advanced industrial economy, with or without global city status or aspirations. In the Australian case the construction industry is one of the five largest industry sectors in the economy and at the time of our first case study in 1996-97, for example, at $30bn accounted for about 6% of GDP, with extensive indirect linkages into the rest of the economy (ABS, 2002).

The residential property market is multi-dimensional, and it is in the middle and upper ends of this market, where the global industry professionals are located, that the most lucrative margins are to be made on construction, renovation and maintenance, expenditure on all of which is influenced by perceptions of the underlying market value of the property. It is a highly diversified and complex market, where a downturn in the middle and lower ends may be counterbalanced by a continuing expansion in the upper end of the market, as occurred in Sydney for at least four years after 2003, and in the United States in the initial stages of the severe housing market downturn commencing in 2007 (‘As Housing in Florida Plummets, the Top Tier of the Market Just Dips’, The New York Times, 27/10/2007). This polarity, of course,

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can be reversed as circumstances shift, as occurred for example in Melbourne in late 2008 (‘Victorian property values plummet $40 billion in six months’, The Herald-Sun, Melbourne, 7/1/2009).

The emphasis on residential property is not to dismiss the significance of the commercial property market in Sydney’s role as a global city. Indeed, the commercial property sector is integral to that role because it provides both the office accommodation for the producer services industry, and like the residential sector was subject to “excessive speculation [that] increased debt leverage to precarious levels” (‘Commercial Property a big hole for Big Four: NAB’, The Age, 21/4/2009). This created significant vulnerability for Australian banks in the 2008 financial crisis, with the Treasury reporting that as of December 2008 all Australian banks were exposed to the Australian commercial property market to a total of more than $190 billion, of which an estimated 14 per cent was held by foreign banks. It was estimated that more than $70 billion of that total would require refinancing over the following two years, of which $50 billion was syndicated debt, of which in turn, over the previous three years, foreign banks had taken on more than 60 per cent in the Australian market. So any pressure on foreign banks to repatriate capital to shore up their domestic balance sheets was expected to contribute strongly to the shortage of wholesale credit available to the Australian financial sector and therefore to the impact of the international financial crisis on Australia’s domestic economy (‘Commercial Property a big hole for Big Four: NAB’, The Age, 21/4/2009).

The big four [Australian] banks, with their hulking balance sheets and insatiable demand for wholesale money, are like a conductor that directs shocks in offshore finance markets straight into Australians’ hip pockets. When markets get tight, this pushes up the cost of borrowing at home. And the pressures on the big four are particularly acute: Westpac Banking Corporation is the fourth-biggest issuer of term debt (bonds that last for more than twelve months) in the world. Commonwealth Bank of Australia is the seventh. As a proportion of total assets Westpac is the world’s biggest issuer of term debt and other major Australian banks are all in the top six. (‘And the banks are vulnerable on borrowing’, AFR, 15-16/5/2010)

Thirdly, the great plurality of consumers and voters are engaged with property, and it is the representation to that constituency of key aspects of the globalisation process that we are interested in. Beyond its use value as shelter and intimate life space, the family home is the major financial asset of most Australian income earners, and so its exchange value is highly significant to them: as collateral security for debt, as accumulated wealth that can be bequeathed, and as an asset that can be traded to achieve geographical and status/lifestyle

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mobility. Conversely, in the event of significant increases in the cost of housing causing problems in home affordability, or rises in interest rates that induce ‘mortgage stress’ (notionally at the point where mortgage/rent payments exceed 30% of disposable income), or worse a decline in the market value of housing to the point where purchasers have negative equity because of the size of their mortgages, then financing the purchase of the family home can become a significant social, economic and political problem, given a distinctly sharper edge by the personal distress involved.

For these reasons, the structure and dynamics of the residential property market is both a key enabling factor internationally in the development of ‘global cities’ generally, nationally in the development of a specific global city, and at the same time a personal barometer for ordinary people about their relationship to this development: put starkly – as it is in the marketplace – are they personally winners or losers in the globalisation stakes? The answer to that question may well influence their attitude to globalisation as such.

The historical context of the Sydney property market

The residential property market in Sydney from 1983 to 2008 has to be seen in the historical context of the long post-World War II economic expansion and upward trend in the property values. Of particular importance was the boom of the late 1960s and early 1970s, followed by the slump of the mid 70s, the recovery and then the recession of the early 1980s.

In 1950 the median price of a block of land in Sydney was $690 and the median price of a house on land was $4670; by 1966 the respective prices had risen to $5,020 and $13,040, and by 1974 to $20,200 and $33,500. Thus in the 16 years to 1966, housing prices multiplied 2.7 times, and then a further 2.5 times to 1974; of greater consequence, the price of land increased 7.3 times between 1950 and 1966, and then a further 4.2 times up to 1974. In 1950 the land component made up 14.7 per cent of the median house-on-land package; in 1966, 30.8 per cent; and in 1974, 60.0 per cent. (Daly, 1982: 2) In other words, starting in the 1950s and accelerating from the mid 1960s there was an exponential increase in the value of residential real estate in Sydney, driven mainly by increases in the value of the land on which houses were being built. This shift in the value of the property market flowed through to other sectors of the economy, not least for our purposes the

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newspaper industry through the classified advertising market. At The Sydney Morning Herald, revenue from classified advertising started to expand rapidly in 1959, breaking all previous records (Souter, 1981: 370). In the early 1970s classified advertising volume fluctuated between 3,900,000 and 5,410,000 column centimetres per year (Souter, 1981: 477).

At the peak of the 1973-74 advertising boom the Herald was carrying more classified advertising from Monday to Saturday than any other paper in the world, and had published the largest broadsheet paper in the world from a single press – 144 pages, first published on Saturday 17 February 1973. Between that date and May 1974 Saturday’s Herald ran to 144 pages on thirty-nine separate occasions. There was enough advertising for 156-page papers, but not enough press capacity. (Souter, 1981: 477)

A range of factors underpinned this upward trend in real estate values, including increased demand fed partly by high immigration intakes, rising incomes in the tight labour market of the 1960s, increasing local liquidity supported by the restructuring and expansion of international capital markets, the entry of foreign financial institutions into the Australian economy and the diversification of domestic retail lending institutions. However,

[t]he outstanding feature of the boom was the way the whole community became involved in its processes. Corporations, large and small, which had previously had had little or no involvement in property suddenly took up interests in various projects. The ease of entry into the markets enticed a multitude of small investors, who had a strong lubricating effect on the system. (Daly, 1982: 3)

In other words, residential property investment, particularly at the more speculative end of land without houses, had become a way for average wage-earners as well as the rich to acquire wealth, particularly those with the cash to put a deposit on a block of land. There was a day of judgment, or more precisely a couple of years of retribution, in the mid-70s when “investors and companies in the building industry lost between $1.5 and $2.0 billion” (Daly, 1982: 36). However, “the period of increasing prices from 1978 to 1981 was to push residential property values in Sydney to extremely high levels: the median price of a house in Sydney in mid-1981 was 85% higher than the median price of a house in Melbourne.” (Daly, 1982: 36)

So, at the point of recovery from the 1981-2 recession, when internationally the differentiation of ‘world cities’ from their national siblings was starting to enter academic and policy discussions, and on the cusp of the liberalisation of the finance sector initiated by incoming Treasurer Paul Keating after 1983, the residents of Sydney had already roughly two decades of experience telling them that
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• a house was not just a home, but also a financial asset

• real estate prices went up and down, but mostly they went up

• one could accumulate significant wealth through real estate investment

• Sydney property was in a different league to the rest of the country.

Put in terms of the Harvey-Lefebvre matrix, the perceived use value of a home as shelter and intimate family space was being tempered by conceptions of its exchange value, which in the Sydney context was imagined to be mainly appreciating, with only occasional brief periods of depreciation. In reality, it is important to note that if one considers the whole Australian market, housing was not the most lucrative form of investment for wealth generation: the ABS comparison between established house price indices and sharemarket indices over the period 1986 to 2001 showed market indices over the period increased in real terms at roughly twice the rate of house price indices (Switzer, P. The Australian 9 April, 2008, Wealth Supplement: 9). And though Sydney’s real estate values increased in both absolute and relative levels at a greater rate than the rest of the country from the late 1970s, after 2003 the real and nominal vale of real estate in western and south western Sydney started to fall more rapidly than in the rest of the country, and with the onset of the Global Financial Crisis from 2008 that fall started to spread to the more affluent eastern and northern suburbs (AFR, 19-20 April, 2008: 19-21).

However, except for a small minority of the very wealthy, the major source of income for Australians is not return on capital invested but wages and salaries. Therefore the comparison between changes in real house prices and real incomes over the period is a more important index, measuring housing affordability as an indicator not only of accessibility to wealth accumulation on the upside, but accessibility to shelter (owner-occupied, privately rented or publicly provided, as against homelessness) on the downside.

Australia-wide, ABS statistics show that from the mid 1970s through to the housing boom of the late 1980s, real house prices, real incomes, real rents and real construction costs remained more of less synchronised at or below mid 70s levels. However, in 1989 there was a quantum leap in house prices that lifted their growth rate to approximately 20% above that of the other three variables, a level of disparity in growth rates that was more or less maintained through till 2000, when it started to widen even further (Richards, 2008: 27). In other words, from 1989 the real cost of housing was increasing at an exponentially greater rate than real incomes, precipitating an Australia-wide crisis in housing affordability.

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As discussed above, the reason for this crisis in affordability was the expansion in the availability of credit and therefore debt, but in a vicious circle the short- to medium-term answer to the crisis was an increase in household debt. In tandem with the exponential rise in house prices that began in the 1960s and outlined above (Daly, 1982: 2), household debt similarly began to increase at an exponential rate from the 1960s (Figure 5.2). Keen has used Reserve Bank of Australia data tables from 1953 to 2007 to analyse the character of this expanding debt (Keen, 2007)

Figure 5.2: Australia’s Debt to GDP ratios (Keen, 2007: 6)

In the earlier globalisation period following the 1983 deregulation of the foreign exchange market, a major share of the increasing debt was due to “the huge business borrowing binge of the 1980s [when] business debt was more than twice the size of household debt” (Keen, 2007: 12). But business got its balance sheets back in order during the recession of 1989-91, and coming out of that recession, the massive increase in household debt began, expanding as a share of household income after 1990 at more than three times the annual rate that it had been from 1976 to 1990, so that by 2007 it was sitting at almost 150% of annual household income (Figure 5.3).

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Debt at these levels was having a significant impact on the economy. By 2007, Australia’s debt to GDP ratio “was equivalent to 156% of GDP, compared to under 25% in 1964”, and at that level “increasing debt accounted for more than 16% of total demand” (Keen, 2007: 5-6). If the bulk of that debt had been incurred by business, then arguably it would be beneficial to the economy because the growth that it financed would enable repayment of the debt and its interest out of increasing profits. However, levels of business debt had stabilised from the early 1990s, while mortgage debt increased, so that by 2001 it had taken over as the largest component of total private debt (Figure 5.4).

Figure 5.3: Mortgage Debt (Keen, 2007: 13)

It is debatable how much the increase in mortgage debt was beneficial for the economy. The major portion of it was driven by the non-productive increase in the exchange value of the land, though there was a trend for new houses to be bigger, and for existing houses to be renovated and expanded, both of which involved production by the construction industry. Keen points out that some of the houses are rented out, and owner-occupiers get a stream of residential services in return for their debt payments, simply by living in their houses. But ultimately the Scheme can only be kept alive by sustained borrowing, and sure enough, debt has risen much faster than house prices, so that our net equity in housing has fallen, even as asset values and prices have risen. (Keen, 2007:31, emphasis in original)

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Figure 5.4: Debt levels (Keen, 2007: 13)

Figure 5.5: Household debt and interest paid (AFR, 6-7/5/2006: 18)

While debt has been increasing and equity has been falling, according to RBA and ABS data the proportion of household income given over to servicing that debt had increased by 2004 to over
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10% (Figure 5.5) and three years later to the historically unprecedented level of 15% (Keen, 2007: 33).

In tandem with this rise in debt and the cost of servicing it through interest payments, the level of savings by Australians started to fall – in a steady decline from levels of almost 15% of disposable household income in the mid 1980s until savings rates became negative in 2001 (Figure 5.6), bottoming out at -3.5% before becoming marginally positive again in 2005 (AFR, 29-30/8/2009: 4)

Figure 5.6: Household savings rate (AFR, 6-7/5/2006: 18)

Households tried to maintain living standards by accessing other forms of credit, notably credit card debt, often paying annual interest rates of up to 20% on their outstanding balances. As the personal credit limits rose rapidly from the mid-1990s, so did the outstanding balances, more than tripling from 2% to 7% of household income (Figure 5.7).

In short, the period was characterised by a rapid inflation of the price of housing in Sydney, enabled by a massive increase in levels of household indebtedness and unprecedented levels of debt service requirements, which precipitated a decline into negative territory of household savings, which was compensated for by a commensurate increase in credit card debt. This was an unsustainable cycle, but at the time of writing the bubble had not yet burst, at least not for

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Figure 5.7: Credit Cards to Household Disposable Income (Keen, 2007: 14)

those who could still make the regular loan repayments. For those who could do that no longer, and who could not afford rent either, homelessness beckoned (Chamberlain and MacKenzie, 1992; Berry, 2003; Minnery and Greenhalgh, 2007).

Media usage of the term ‘homelessness’ refers to what industry professionals define as primary homelessness, ie “people without conventional shelter, such as people living on the streets, sleeping in parks, squatting in derelict buildings, or using cars or railway carriages for temporary shelter”. However, secondary and tertiary homelessness (“people who move frequently from one form of temporary shelter to another” and “people who live in boarding houses for 13 weeks or longer” respectively) are recognised stages on the path to that state of affairs but receive effectively no media coverage (Shelter SA, 2004: 2) They are the people who are not yet in extremis as welfare cases, but are falling out of the private home purchase and rental markets.

The provision of public housing has been the traditional policy response to homelessness, but with the move to deregulatory and neo-liberal policy settings from 1983 onwards, state and federal governments made progressively less provision for public housing, and with the election of the Howard government in 1996, the policy orientation explicitly moved away from the purchase and provision of public housing to subsidies in the private rental market (Yates, 1997). At the same time, the supply of public housing declined, with a corresponding unprecedented

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increase in homelessness, expanding from individuals in the early period to lower income families and ultimately affecting middle-income families (Yates and Wulff, 2000).

Information on these processes was publicly available at the time. During the period housing affordability was investigated by the Australian Parliament through the Committee of Inquiry into Housing Costs (Australia. Committee of Inquiry into Housing Costs, 1978) and the National Housing Strategy (AGPS, 1991). In 1989 Commissioner Brian Burdekin conducted the Human Rights and Equal Opportunity Commission Inquiry into Homelessness – the Burdekin Report (Rose, 1993), and while he commented on the lack of research into the issue, by 2008 the National Youth Commission Inquiry into Youth Homelessness reported that “this deficit ha[d] been significantly addressed” (NYC 2008: Victoria, p III). Similarly, the change in government policy on public housing away from public sector provision was regularly reported and commented upon by advocacy groups. We will deal with the characteristics of this media coverage of this issue in the next chapter.

To summarise, there was a shift in the Sydney real estate market that began slowly in the 1960s and accelerated thereafter. This shift was characterised by an increasing differential between Sydney property values and those of other major cities, and at the same time an increase in the amount of mortgage debt. These trends accelerated after financial deregulation in 1983, but particularly after the recession of 1989-1991. They culminated in the housing boom of 1996- 2003, when Sydney house prices doubled in the space of six years, but household debt also reached record heights, while housing affordability reached record lows. While house owners and mortgagees mostly would have experienced these phenomena as local, they were in fact part of a larger process of accelerating financialisation of the restructuring global economy, and were an intrinsic part of the emergence of Sydney as a global city within that new structure. In the following chapter, we look at how the Sydney media reported on these developments.

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Chapter 6 Media coverage of the 1997–2003 real estate boom

The previous chapter demonstrated that over a period of decades Sydney residential real estate was a heady mix of appreciating values, decreasing affordability and expanding debt burdens, and at the bipolar extremes substantial capital gains versus the increasing threat of homelessness. The trends setting Sydney house prices above those of other major Australian cities had been evident since the 1960s, and gathered pace from the late 1970s. In our period, from 1983 to 2008, Sydney house prices rose steadily during the 1980s before rapidly increasing at the end of the decade, only to fall back during the 1989-1991 recession. They stabilised in the early 1990s before taking off in late 1997 and doubling in price by 2003, then crashed again in the working-class areas of west and southwest Sydney while stagnating in the gentrifying inner-city and middle-class eastern and northern suburbs. How did the media coverage relate to these fluctuations? Did the tenor and content of the coverage vary with changed circumstances? How did the various interested social and economic sectors represent their interests in that coverage?

In what follows, I will firstly give an overview of the larger context of contemporary media coverage of the housing market, then detail the methodology used to aggregate data from newspaper reportage, present the profile of the aggregated data and then subject it to a field and sources analysis using a theoretical framework drawing on Bourdieu, Harvey and Lefebvre.

Media Overview People experience a mediated engagement with issues of shelter, property and real estate in a vastly variegated and complex set of ways, which permeates most forms and genres of media product. In metropolitan newspapers, the state of the market, the availability of properties for sale or rent and mortgage interest rates are regularly covered in the specialist business pages, somewhat less often in the general news pages, and in feature articles as events are perceived to warrant extended analysis.

Real estate is one of the three major sources (along with motor vehicles and jobs) of classified advertising that constitutes the backbone of the traditional newspaper income stream, known colloquially in the case of The Sydney Morning Herald as the ‘rivers of gold’ (Tiffen, 2009: 386; Bonney and Wilson, 1983). Newspapers direct their readers’ interests to the classifieds by

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organising them in specific and predictable sections of the paper, which, for example, in the Herald (with the largest share of Sydney’s classified advertisements) became the Domain property supplement, with real estate news and feature articles about architecture and design leading into extensive property listings.

With the introduction and spread of the internet over the period of our study, the hardcopy versions of the newspapers progressively extended into the online versions with databases of properties for sale that were searchable for attributes such as location, price and size. This development became extremely competitive with new companies entering the field to challenge the oligopolistic state of the market. The newspapers made major investments in either establishing their own internet classified sites (eg, F2 Fairfax Digital for The Sydney Morning Herald and associated Fairfax mastheads) or in purchasing start-up competitors (the preferred News Ltd strategy). By and large, newspaper corporations lost significant amounts of money in these ventures, while all the time the revenue streams from classifieds were shrinking. At a private seminar attended by the author in 2007, senior executives from both the Fairfax and News Limited online divisions stated that a classified advertisement that would have earned income of $3.25 per unit in the newspaper earned only $1 in the online version, a 70% drop in income for an enhanced service. Both executives confirmed that there was ‘no business model’ for newspapers in online media, and analysts were predicting their early demise (eg ‘Quality journalism will bloom online, Crikey 9/4/2009; ‘Kohler: Rupert’s wrong: distribution, not content, is king’ Crikey, 9/4/2010)

The problem was with the business model rather than the technology, viz paper, as was demonstrated by the FPC Courier group of local suburban newspapers in Sydney. The group’s mastheads included The Wentworth Courier covering the affluent harbourside eastern suburbs and The Inner West Courier covering the gentrifying inner western suburbs, both within the boomerang-shaped arc of ‘global Sydney’. From the early 1990s the Courier mastheads led the move into full colour photographic advertisements of homes and properties for sale in the local area. The newspapers could be read in the traditional way from the front starting with a small section of local news, or inverted and read from the back starting with a bulky section of glossy full colour photographs of homes and properties often comprising more than half of an edition numbering eighty pages or more. The production quality of the advertisements was uniform and high, and the only differential was typically the size of the photo-advertisement – full page, half page, or smaller.

The business model for this extravaganza was that the individual vendor paid for the costs of production for the advertisement and page space. If the real estate agencies had been paying
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these costs, there might have been some pressure to rationalise a significant category of marketing expenditure, but since the vast majority of vendors are one-off entrants into the market, they are individually powerless to affect its structure. House prices were rising at an average annual rate of 15% from 1997 till 2003 (‘Housing Boom a big game of musical chairs’, SMH 20/12/2003: 42) and so vendors individually were willing to spend the extra money on advertising if that was advisable to attract purchasers’ attention to their property. Collectively, that created a massive revenue stream for publishers and the associated professionals in photography, design and layout. Eric Beecher’s Text Media quickly adopted the Courier strategy in the lucrative North Shore market, as did News Ltd’s Cumberland Newspapers in the western suburbs. In 2007 News Ltd bought out the FPC Courier newspapers (Stavrinos, 2007)

In the affluent and gentrifying suburbs of Sydney vendors would also pay for full colour leaflets to be distributed to mailboxes in their neighbourhood, and it was not uncommon to receive these in the letterbox several times a week, along with business cards and generic leaflets from real estate agencies. After a successful sale the excess stock of the leaflets could be over-printed with ‘SOLD’ and distributed by real estate agents as an encouragement to locals to consider entering the market. From time to time advertising publications would be distributed to letterboxes that were similar in format and quality to thick glossy fashion magazines but containing often only one short journalistic piece of a few hundred words in length, followed by hundreds of glossy full colour advertisements for real estate. Residents who might be at home during business hours could also expect to receive a knock on the door and personal approach from competing real estate agents, at times on a weekly basis. Profits were obviously sufficiently high to warrant such a labour- and cost-intensive approach to soliciting business.

Over the period of the 1997-2003 boom there was a slate of new so-called ‘reality television’ programs broadcast on commercial television that were constructed around the potential for improvements to homes and gardens to significantly raise the market value of a property. With titles such as Backyard Blitz (Nine Network 2000-2007), The Block, (Nine Network 2003 - 2004), Australia's Best Backyards (Seven Network 2007, Hot Property (Seven Network 1999– present), Renovation Rescue (Nine Network), Domestic Blitz (Nine Network 2008), they gave a specifically market-oriented dimension to the more traditional television programs like Burke's Backyard (Nine Network 1987-2004), and Better Homes and Gardens (Seven Network 1995– present), which focused at least initially on amenity, horticultural advice and aesthetic concerns. The programs typically comprise individuals competing directly or indirectly in highly structured ‘real’ situations where the outcome is improvement (real or perceived) in the marketable characteristics of a piece of property such as a house, garden or combination of the two. The advertising broadcast during the program breaks, as well as product placement within
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program content, typically support associated industries such as home improvement and maintenance, furniture, white goods, etc. As each new program would commence its season, publicity campaigns would work to ensure it attracted comment and discussion on radio talkback programs.

In short, during the rising property market of the 1990s and early 2000s, there was saturation media coverage and references to the rising price of real estate, across all media technologies and a wide variety of program genres. For a resident of a gentrifying suburb in global Sydney during this period, it was commonplace for conversations over a meal with friends and acquaintances for the conversation to turn to the rising value of the host’s and guests’ homes. Indeed, over this period, on meeting new people at a social gathering it became painfully predictable that the topic would arise within a matter of minutes. The premium added to real estate values by a water view of harbour or ocean was lampooned regularly in media commentary, and memorably in the popular play Emerald City by eminent playwright David Williamson (Williamson, 1987).

This broad range and variety of mediated reference to housing and the housing market saturated all dimensions of the Harvey-Lefebvre matrix: the experienced, conceived and imagined apprehension of space and place cross-referenced with its absolute, relative and relational materiality. It provided the rich semiotic context within which journalists and their sources were negotiating the meaning and significance of any new piece of information that might constitute ‘news’. We turn now to an account of the methodology used to identify and describe the results of these negotiations in the pages of the two major Sydney newspapers reporting on (and competing for the advertising income associated with) the Sydney real estate market.

Methodology The Sydney Morning Herald (hereafter SMH) and The Daily Telegraph (hereafter DT) are the broadsheet and tabloid daily metropolitan newspapers respectively that dominate the Sydney market. The SMH targets a more affluent middle-class readership, while the DT targets a more blue-collar and lower middle class audience. The SMH is liberal on social issues and pro- business on economic issues, targeting the affluent residents of ‘global Sydney’; the DT is decidedly conservative on social issues, and populist on economic and political issues, targeting a working class and lower middle class readership in the western and south-western suburbs. They are owned by John Fairfax and Sons and News Ltd respectively, two of the longstanding oligopolistic corporations dominating the Australian newspaper market. Fairfax also owns the
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Melbourne broadsheet The Age and the national business daily The Australian Financial Review (AFR), while News Ltd owns the national daily broadsheet The Australian, which competes with the SMH and Age in Sydney and Melbourne, and also carries a strong business coverage to challenge the AFR. Sydney had a population in June 2009 of 4.5 million (ABS, 2009), and at the same time the SMH had a Monday to Friday circulation of 212,000 (360,000 on Saturdays), while the DT had figures of 360,000 and 333,000 respectively (Fairfax Media, 2010).

Not only do these two mastheads reach the overwhelming bulk of the Sydney newspaper readership, but they also form the major secondary source of information and story ideas for journalists in the radio and television sectors, as well as other media commentators and producers associated with the range of media outputs described in the previous section.

Two sample periods were chosen, each of four months (125 days) duration. The first period of 1 July to 4 December 1996 came towards the end of a long stagnant period and preceded by about six months the take-off of the 1997-2003 boom in Sydney house prices, while the second period of 1 December 2003 to 4 April 2004 covered the period when the boom finished and the correction set in. Over the seven year period between the two samples the average house price in Sydney doubled, as did household debt levels as a proportion of disposable income. In the financial industry, this was the period that saw the invention of and explosive growth in the market for derivative financial products based on securitisation of mortgage debt, which in turn provided the capital for corporate takeovers and buyouts, and ultimately precipitated the onset of the GFC in 2008. These two periods were selected because they were characterised by sharply contrasting market conditions, and therefore on the face of it one would expect to find contrasting characteristics to the coverage reflecting those differences.

The following terms were selected to cover the range of coverage relevant to different dimensions of the real estate market: ‘house prices’, ‘housing affordability’, ‘first home buyers’, ‘household debt’, ‘capital gains tax’, ‘negative gearing’ and ‘homelessness’. Each occasion that one of these terms appeared was counted once, even if more than one of the terms appeared in the same article, and this method generated a total sample across the two periods of 469 articles. The word search did not extend to variations on these terms eg ‘personal debt’, ‘household indebtedness’ as variations on ‘household debt’, because the aim was to generate not a comprehensive total of all relevant articles, but a sufficiently large sample to capture the nuance, ebb and flow of reportage over a period of variation in the market.

Each article was then coded for its date, word length, section of the newspaper and page number, number of sources quoted or paraphrased, sectoral provenance of the source to
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establish their position within the field (Bourdieu), whether the source definition of the facts and interpretation of the information reported in the article was challenged or not in the article, whether or not a specific piece of property was referred to in the article (Harvey’s absolute space), whether or not the market (Harvey’s relative space) was reported to be in a state that a reader might want to enter as a prospective buyer or seller, and in what terms the putative reader was addressed with respect to the state of the market (Harvey’s relational space). Some of these characteristics are clearly quantitative, others are qualitative and a matter for judgement.

The following textual examples will give a sense of the gist and nuance that underpins the qualitative judgements regarding relative space and the state of the market. Articles were coded conservatively and only tagged as positive or negative about the state of the market if the meaning of the article was clear and unambiguous, ie they were coded neutral if there was disagreement between sources or the journalist was expressing ambivalence about the source’s interpretation. So if anything, the trends were more accentuated than this coding reveals. Each of the following extracts has been selected as a key statement indicating the journalist’s ‘preferred reading’ of the article in question.

Positive about market participation: ‘Two years ago, renovated terraces led the market. Now, new developments on former industrial sites are recording significant price gains - and selling within weeks.’ (‘How The (Inner) West Was Won’, SMH 12/9/96: 21)

‘Homebuyers can now breathe a sigh of relief: the seemingly unstoppable real estate boom is over and there are bargains to be had.’ (‘Hammer stays up, house prices fall’, DT 6/12/03: 9)

‘There is little doubt that the property market has lost some of the "heat" experienced after two years of extraordinarily strong performance. However, property is still an attractive and profitable investment and what we are experiencing now is more typical conditions for the Sydney market’ (‘Property still way to go for long term’, DT 17/12/03: B10)

Neutral about market participation ‘A wealth of contradictory house price forecasts has been released by economic and property experts over the past two weeks, reflecting conservative and optimistic views of the future of Sydney's property market.’ (‘Experts Differ Over Future House Prices’, SMH 24/9/96: 5)
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‘It is less straightforward on an issue many, including the Reserve Bank, say has played a major role in rising house prices and therefore falling affordability the tax treatment of residential property investments.’ (‘Buyers Passed Over As Costello Gets To Sidestep The Issue’ SMH 19/12/2003: 8)

”Those people who appear to be talking up the market are really doing the real estate industry a disservice," Mr Clay said. (‘Cooling down boom fervour’ DT 19/12/1996: 39)

‘OK. So how risky is all this? Well, at present there are few signs that households are having difficulty meeting their obligations. Rates of default on residential mortgages are at very low levels.’ (‘What goes up must come down: it’s natural’ SMH 27/3/2004: 48)

Negative about market participation ‘New home owners have been warned they may have to wait for up to a decade for the value of their properties to rise.’ (‘Property Faces Decade In Doldrums’ SMH 23/3/2004: 1)

‘MORE than one in 10 Australian homebuyers are already experiencing "mortgage stress". And that number will rise if the Reserve Bank board lifts rates again on Wednesday following its monthly meeting in Sydney tomorrow.’ (‘`Mortgage stress' to increase if rates do’, DT 1/12/2003: 2)

House Prices 1996 In the five years since the 1990-91 recession, average Australian house prices had stagnated (SMH 18/9/96, Money section: 2), and indeed, in spite of the boom of the late 1980s, had increased by only 47% over the decade from 1986 to 1996 (SMH, 13/7/96, Property section: 2), which was only one or two percentage points ahead of the annual inflation rate for the period, and comparable to returns on fixed-term bank deposits. In July 1996, the Australian housing market was described as being in a “profound slump”, the building industry had been through “a period of job losses and low sales” and new figures released for the previous March quarter showed that “Sydney house prices fell 7 per cent, to an average sale price of $191,000” (SMH, 8/7/96: 2). Even three months later and towards the end of the sample period, the Estate Agents
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Co-operative (EAC) reported a continuation of the stagnation on average, though with marked variation in different areas of the NSW market, and the EAC Chairman predicted that this state of affairs would continue till mid-1997 (DT, 19/10/1996: 39). Nonetheless, the newspaper reports in the sample period were overwhelmingly positive about the state of the present market and encouraging buyers to enter, as we will see.

The Sydney Morning Herald In SMH there were twenty articles (comprising 17,233 words) that included the term ‘house prices’ over the 125 day period commencing on 1 July 1996, an average of one every six days. Thirteen (two thirds of the total) appeared in either the specialist Property, Money or Domain sections of the paper, while the remaining seven appeared in the general news and features pages. Six articles exceeded 1000 words in length (three at 1100-1200 words, two between 2- 2,500 words and one in the Saturday Spectrum section at 3556 words (‘A city divided’, SMH, 5/10/1996, Spectrum:1). These longer features used a multiplicity of sources (at least four and in three cases more than ten). The remaining fourteen stories were short news pieces with an average length of 406 words, and they used between one and five sources each. In six of the twenty articles, there was some debate reported about the interpretation of the information provided, but in the other fourteen stories (that is, two thirds of the total number of news and feature articles) there was either a single source or the sources were in agreement, and their points of view were reported without query or disagreement.

Seven of the twenty articles included references to specific properties (ie absolute space in Harvey’s terminology) and all of these were effectively promotional of entering the market as a buyer. Specifying the absolute (physical) characteristics of a house (address, features, expected price, etc) or naming a suburb effectively invokes the relative characteristics of the property, and may invite a relational response from the reader as a potential buyer. For example, even the one article that provided the grimmest overview of the state of the market (‘Summer Hill’s House Prices Fall, SMH, 6/7/96: 19) provided detailed information on the attractive attributes of the house for sale and the prices and addresses of twenty local houses sold over the previous two years. It indicated an expected selling price for the house in question and gave the name and contact details of the real estate agent handling the sale. Though it appeared as a journalistic piece in the Property section of the newspaper, it was effectively an advertisement for the sale of the property as a bargain in a poor market.

Two of the longer features were about social conflicts in which the price of housing was not the main thrust of the story, and in all of the other articles the house price was a main focus of the story. Sixteen of the twenty articles (80%) addressed the reader as if he/she were a potential
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house buyer (ie, without discriminating whether they would be either an owner-occupier or an investor), one as a seller, one as an investor, and as neither in the two social conflict features. This is not to suggest that the articles would not be of interest to a general reader, but to note that the combination of factual details and interpretation were consistent with the needs and viewpoint of a market participant rather than, for example, a critic of housing policy or a general citizen concerned about housing affordability. Eleven (55%) of the articles were positive about the state of the market (that is, supportive of the proposition that now was a good time to enter the market), four (20%) were neutral, and five (25%) were negative. All of the articles in the general news and features pages of the newspaper were negative or neutral about the state of the market, whereas all but two of the articles in the specialist sections of the paper were positive about the state of the market and encouraging of entry. This was at a point in time when the latest official figures showed an average price drop of 7% across Sydney in the preceding quarter (SMH, 8/7/96:2).

Positive news was achieved partly by isolating particular localities (absolute space): over the period four SMH articles identified suburbs by name, and three of those four were positive about house prices rising (‘House prices up in Beverley Park’, SMH 27/7/96: 22; ‘House prices on way in Bexley’, SMH 5/10, 96: 23; ‘Newcastle leads in housing recovery, SMH 28/10/96: 5) and even the one negative headline (‘Summer Hill’s House Prices Fall, SMH, 6/7/96: 19) introduced a house for sale and proposed it as a good buy, as discussed below.

These examples illustrate a common set of alternative storylines when reporting the good news about real estate. Either prices are rising, so now is a good time for both buyers and sellers to enter the market – buyers so they get what they want before prices rise further, and sellers because they might get a higher price than they would have recently, eg ‘House prices up in Beverley Park’ (SMH 27/7/96: 22), or prices are stagnant or falling, so affordability is improving to make it easier for prospective buyers to make a purchase eg ‘Greater hope for homebuyers’ (SMH 8/7/96: 2). The switch in perspective and emphasis enables the reporting to maintain an encouraging tone.

Of the eighteen articles focused on the state of the market, all but three of the sources (two economists and some members of the public) had a direct economic interest in buyers and sellers entering the housing market. In twelve articles (60% of the total), the sources were real estate agents or their peak industry body the Real Estate Institute of Australia (REIA). Other sources were the big developers’ peak body the Housing Industry Association (HIA), financial advisors, mortgage lenders and a municipal council. Real estate agents make a commission on the sale price, the developers want buyers for the homes they build, financial advisors and
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mortgage lenders earn fee and interest income from borrowers. Collectively, such sources belong to the FIRE (Finance, Insurance and Real Estate) producer services identified as the key labour force in the global cities literature. Municipal councils have a range of direct and indirect interests in the prosperity of their residential and commercial constituencies.

The Daily Telegraph Over the same 125 day period from 1 July 1996, the DT ran twelve stories (totalling 4872 words) that included the words ‘house prices’, an average of one every ten days. That amounted to 60% of the story rate of the SMH, with 28% of the number of words and no feature articles. They were all short news stories, with an average length of 406 words (coincidentally the same average length as news stories in the SMH). There were between one and three sources quoted in each story, and in all of them there was no debate about the meaning of the information provided, ie they were single source stories or the sources were in agreement. This 100% agreement compared with a rate of 70% of SMH stories having no disagreement. The stories read as if they could have been written directly or largely from press releases issued by the sources. In only one story was a specific property referred to (with a local real estate agent as source).

In two stories a politician was a source, in one it was members of the public, and in another it was a government department. In the other eight stories (two thirds of the total) the sources had a direct economic interest in buyers entering the market: the REIA, the HIA, banks, real estate agents and the Estate Agents Co-operative. Two of the articles were neutral about the state of the market, while the other ten (84%) were positive. Eight of the articles assumed a potential buyer’s perspective on the part of the reader, three assumed either a buyer’s or seller’s perspective, and one assumed a specifically investor’s perspective. That is, all of the articles addressed the reader as a potential market participant. The tone of the headlines was much more encouraging, even boosterish than in the SMH, for example ‘Home buyers win as market hots up’ (DT 8/7/96: 19), ‘Home prices up 5 per cent’ (DT 12/8/96: 2) and ‘NSW leads housing recovery’ (DT 23/9/96: 9), but the paper did also run a story using the Estate Agents Cooperative as the sole source for its longest article in the sample (742 words) that thoroughly debunked claims that a new boom was getting underway (‘Cooling down boom fervour’, DT 19/10/96: 39).

In short, in mid- to late-1996 towards the end of an extended period of flat prices and reduced numbers of properties being sold in the Sydney real estate market, The Daily Telegraph and The Sydney Morning Herald overwhelmingly reported that now was a good time to enter the market
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as a buyer, overwhelmingly using sources with a vested economic interest in promoting market participation among readers. There was some limited ambivalence about this stance in the Herald, but none in the Telegraph.

House Prices 2003-2004 Because the real estate market is cyclical, eventually house prices and market participation must start to rise, and so after a stagnant period of some eight years from 1989, a boom in property prices did commence in mid-1997, and ran for almost seven years till late 2003, during which time Sydney house prices doubled and housing affordability plummeted to record lows. The coverage of real estate in the newspapers also boomed. Over the 125 days from 1 December 2003 till 4 April 2004, the SMH ran 68 stories that included the term ‘house prices’ and the DT ran 39, in both cases more than tripling the amount of coverage compared to the 1996 sample period.

The Sydney Morning Herald The second sampling period of 125 days commenced on 1 December 2003, as the evidence was emerging that the boom that began in 1997 had come to an end, and a period of severe price falls was commencing, of up to 40% over the next three years in some parts of Sydney, particularly the working class areas of the west and south-west. There were 69 stories in the SMH over the period that included the words ‘house prices’, of which one third appeared in the news and features pages, and the other two thirds in the specialist pages. One third (23) of the stories were features of over 1000 words in length, the rest were news items and short features.

One of the stories addressed the audience as concerned citizens, one would have been of interest to renters, five addressed the reader as a seller (though three of these also addressed the audience as potential buyers), seven addressed the audience as owners and nine (with two overlaps) as investors, and 46 (two thirds) addressed the reader as a potential buyer. In other words, 97% of the stories addressed the audience as a potential market participant, up from 90% in 1996, and an indicator of the extent to which the exchange value of property had come to exclude other conceptions.

Fully 60% of the stories were positive about the prospects of entering the market, while only twelve (17%) were negative, with sixteen (23%) neutral. These proportions were similar to the 1996 figures. Most intriguingly, more than half of the negative (seven out of twelve) and neutral (twelve out of sixteen) stories were published in the December-January Christmas and
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holiday period (a traditionally slow time in the market), while from February onwards 80% of all stories were positive about entering the market, at precisely the point when the data were confirming that prices were starting to fall! That is to say, the tone and content of the overwhelming bulk of the real estate coverage, while it may have reflected accurately the data and comments being proposed by the sources, was antithetical to the actual state of the market and it was in buyers’ interest to wait till the market had bottomed to get the best price.

There were 23 stories (one third of the total) in the news and features sections of the paper, and two-thirds in the specialised sections. Six of the negative stories (50%) and eight of the neutral stories (50%) appeared in the news and features coverage (which accounted for one third of all coverage), and half of these appeared in the run-up to Christmas. The coverage in the specialised sections was overwhelmingly positive at 80%, which was consistent with the situation in 1996 and suggests that the reporting in the specialised sections of the paper is less reliable than that in the general news pages. While this might appear counter-intuitive from a perspective that assumes that specialised readers would demand more informed and accurate analysis, it is consistent with a view that specialised sections are supported by specialised advertising (both corporate and classified) and that advertising is more likely to be placed both if the market is perceived to be buoyant and the reader has a specialised interest in market participation. In other words, the newspaper has a direct commercial interest in promoting a view of the real estate market that will encourage advertising by sellers in that market, and in assembling through the organisation of its reporting a group of readers who identify as having a specialised and continuing interest in market participation.

There was a remarkable polarity in the coverage. In 62 of the 69 articles there was either a single source or a set of consensual multiple sources and no debate about the meaning of the information being provided. Put another way, in only 10% of the stories was there any debate about the issue, so the overwhelming majority of the stories was monolithically either positive or negative about the prospects of entering the market. This constituted a sharp departure from the pattern of SMH coverage in our first sample period at the beginning of the boom, when 30% of the stories included some debate among sources. In absolute terms, there were six articles that included debate among sources in 1996, and seven comparable articles in 2003-4, despite the fact that the number of articles on house prices had almost tripled.

Put together with the data above that 80% or more of specialist reporting in both 1996 and 2003-4 was positive about entering of the market, this suggests firstly that specialist reporting takes a perspective that doesn’t relate strongly to the trends in events being reported, no matter that the external conditions might be shifting strongly, while general news reporters (notably
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Matt Wade and Lisa Pryor at the SMH in 2003-4) felt a need to balance that view with equally strong perspectives from the negative side.

The sources used by the journalists were similar to those used in the earlier sample period. The specialist sections tended to use private sector sources more, leavened with a good sprinkling of vox populi – aspiring or satisfied buyers. Articles in the news and features section used a broader range of sources, incorporating more information and analysis from statutory and government sources that had an interest in a buoyant economy but not so much in an overheated market, which was the state of affairs in late 2003 when the tide turned (‘Market cool-off hammers auctions’, SMH 1/12/03: 7)

Four months later, at the end of our sampling period, the news pages of the Herald were reporting a very grim outlook indeed: Could the housing slowdown turn into a rout? Some significant overseas observers think so. The Economist magazine said this week that Australia's housing boom looks suspiciously like America's tech bubble just before it burst, pushing the US economy into recession in 2001. It described Australia as "America's ugly sister" with soaring house prices, rising household debt, consumer spending outpacing incomes and a glut of apartments all telltale signs of an impending economic disaster. The International Monetary Fund last year also singled out Australia as a potential candidate for a damaging housing bust. A Hong Kong-based investment bank, CLSA Asia-Pacific Markets, has predicted the Australian housing bubble will burst this year, "bringing economic misery" in its wake. It said the inevitable housing crash would trigger a technical recession and send the Australian dollar plunging back to 55 US cents. (‘When the roof falls in’, SMH 3/4/04: 35)

However, in the same week, three features of over 1000 words each in the Domain residential real estate section were quoting real estate agents, Macquarie Bank and vox populi to the effect that it was a good time to buy and invest. (‘Shake it all about’, ‘Just give me the countryside’ and ‘Beachcombing’, SMH Domain: 2, 6, 22 respectively)

The negative stories in the sample emphasized the decline in prices (eg ‘Investors recoil as unit prices plummet’ SMH 9/12/03: 7), the high levels of personal debt incurred by house-buyers during the boom (eg ‘Debt trap’, SMH 10/12/03 Money section: 7) and record low levels of house affordability (eg ‘Home Sweet Home For $36,000 A Year’ SMH, 12/3/04: 1)

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The Daily Telegraph The DT increased the number of stories on house prices from twelve in the previous period (one every ten days) to 39 (one almost every three days), which was comparable to the SMH’s increase multiple of 3.5. All but two of the articles were under 1000 words in length, with an average of 446 words. 24 (62%) were positive, seven (18%) were neutral, and eight (20%) were negative about the prospects for success in the market. These were approximately the same proportions for the SMH over the same period, though the temporal spread of articles was more even than in the SMH where the negative stories were concentrated in the December-January holiday period.

Two of the stories in the specialist finance and property sections of the DT were neutral about the state of the market, and the other twelve (86%, even higher than the SMH’s 80%) were positive. Of the 25 stories in the general news section, 40% were positive, 32% were negative and 28% were neutral.

Even when the news was negative, the DT reported the sources’ positive spin, again often by shifting either the spatial or temporal parameters of the data. So, for example in a story headlined ‘Reality bites for sellers’ (DT, 14/2/04: B10) that was authored by the President of the Real Estate Institute of NSW (REINSW) Rowan Kelly, the story shifts from dampened expectations in the current market to claiming 30% per annum price rises two years earlier and a ten year average of 10% price rises, leading him to observe that “[t]his makes property, even at the lowest point of the market cycle, one of the safest and best performing investments”, before concluding with the injunction: “but remember, the more realistic your sale price, the quicker your sale.” (DT, 14/2/04: B10). In a period of falling house prices, sellers may be tempted to sit tight and wait for a better price in the future, a prospect that the real estate industry would regard with dismay.

Thirteen (one third) of the stories named a specific property, all but one in encouraging terms; the exception was neutral about the market, though the story was headlined ‘Doing it tough’ (DT 2/12/03: 31). In 90% of the stories (all but four) there was no debate and the perspective of either a single source or a consensual group of sources was accepted by the reporter without question. All but two (ie 95%) of the stories were referenced to sources that had a direct financial or institutionalised interest in the buoyancy of the market and therefore encouraging buyers to enter it. The exceptions were a welfare story and a satirical piece.

So to an even greater extent than the SMH, the DT was reporting what was to be a very sharp end to the housing bubble, especially in the more working class suburbs where its main
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readership is located, in terms that encouraged buyers and sellers to think that it would be a good thing to enter the market. As with the SMH, this distortion was more strongly present in the specialist sections of the paper than the general news section. The consequences of this advice, especially to highly indebted buyers who bought into a falling market, were spelt out in a story reporting a Reserve Bank analysis of the increased risk of default, but even this was softened in the headline ‘We’re all doomed by debt – maybe’ (DT, 26/3/04: 5).

Table 7.1 the main summarises main data. It demonstrates that the amount of coverage tripled over the two sample periods; that there is a remarkable degree of uncontested representation of source perspectives, more so in the DT than in the SMH; that at least two thirds of the quoted sources used have a vested interest in the reader becoming a market participant, mostly as a buyer but sometimes as a seller; that in at least 80% of reports (100% in the DT) the reader is addressed as a prospective market participant; and that while there was variation between the two mastheads and the two sample periods, in all instances the reports were more likely to be either positive or neutral about the prospects for successful market participation, with never more than 25% of reports negative about the prospects, no matter what the external conditions. This last trend towards encouraging market participation was always more accentuated in the specialist pages than in the general news pages.

Table 7.1 House Prices coverage DT 96 DT 03-04 SMH 96 SMH 03-04 Number of articles 12 39 20 69 Sources uncontested 100% 90% 67% 90% Interested sources 67% 95% 84% 80% reader addressed as market participant 100% 100% 80% 97% Represented state of the market positive 84% 62% 55% 60% neutral 16% 18% 20% 23% negative 0% 20% 25% 17%

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Housing Affordability and First Home Buyers The trends in house prices are a particularly pressing concern for those who are wanting to buy a house to live in and so move out of the rental market (or increasingly, their parents’ home).
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There were two search terms used to gauge the way in which this aspect of the housing market was reported: ‘housing affordability’ and ‘first home buyers’.

Housing affordability There were only four articles in the SMH that used this term in the 125 days from 1 July 1996. Two of them were in the general news pages, and two were in specialist sections. All were under one thousand words in length, all addressed the reader as an owner or buyer, and three of the four were positive about the state of the market. One source was an academic commentator, and the story quoting him was the negative one about the market and the social consequences of low home affordability (‘Howard’s myopia threatens the family’, SMH Spectrum section, 27/7/96: 2). The sources for the other three stories (all positive) were the Real Estate Institute of NSW and finance industry commentators, who managed to turn even negative situations into positive accounts, eg

According to Access [Economics], it now takes 10 years of annual income to buy a house, compared with eight years' in the 1980s. Also, Australian house prices in Sydney, Brisbane and Melbourne are more expensive than in Britain or the United States. …. But housing activity may be starting to pick up. At the very least, it seems to have reached the bottom of the cycle. (‘Building confidence’ SMH Money section, 18/8/96: 2)

In all stories, the reporter accepted the views of the sources without debate, crafting divergent sources into a consensual narrative in the last-mentioned example.

Over the same period, the DT published only two short news stories using the term housing affordability. Both were effectively opinion pieces written by the President of the Real Estate Institute of Australia, quoting no other sources, and both strongly positive about the prospects for entering the market. Clearly housing affordability was not perceived as a newsworthy issue in 1996, despite the fact as mentioned above that affordability levels on the eastern seaboard were worse than in the UK or USA (‘Building confidence’ SMH Money section, 18/8/96: 2). None of the stories in either paper referred to specific properties.

Seven years later, at the end of the housing boom that saw affordability reach its lowest levels on record and become a significant political issue at the federal level, both mastheads had increased their coverage sixfold, though still to relatively low absolute levels of fourteen stories for the DT (one every nine days) and 23 in the SMH (one every five days). In the DT, all stories

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except one sourced to the Australian Council of Social Services (ACOSS), a peak welfare sector body (‘Home grant ‘a big waste’’, DT, 3/2/04: 5) were sourced to authorities with a direct financial interest in a buoyant real estate market. All of the stories except four adopted the source definition of the issue. Revealingly, the four contested articles reported on the interim findings of the Productivity Commission Inquiry into First Home Ownership (Productivity Commission, 2004), and vested interest sources from the real estate industry were quoted to contest the findings of the Commission’s interim report. Three of these four stories were neutral overall in their assessment of the state of the market, whereas one was negative, so the journalists had used contestant sources to neutralise the thrust of the Commission’s report that constituted the news ‘peg’ for the story. Interestingly, the ACOSS interpretation wasn’t contested, perhaps because it proffered a welfare perspective on the issue, whereas the Productivity Commission was contested, perhaps because, as an economic source, it would carry more weight amongst readers with potential to enter the market.

Overall, three of the thirteen DT stories were neutral, only three were positive, and seven were negative. For stories addressing the issue of affordability, it was hard to put a positive spin on the prospects for entering the market at the end of a bubble that saw affordability settle at record lows (‘Cool market – buy into it – Prices ‘won’t get any better’’, DT, 17/3/04: 33).

Of the 23 SMH stories over the period, five were features of over one thousand words, and in eight stories there was debate and analysis of the situation, while in another twelve the source definitions were accepted by the journalist (two articles were editorial leaders, and one was a letter). Five of the articles were analyses of one form or another (letters, editorials and opinion pieces) that didn’t use sources; of the other eighteen, all but one used sources from the FIRE sector – real estate agents, banks, financiers. Five articles addressed the reader as a house owner, one was addressed to the general reader, and all the others (seventeen) addressed the reader as a potential buyer. Ten were neutral on the prognosis for entering the market, five were positive and eight were negative, so even at the point where affordability was at record lows and prices were starting to fall precipitately, only a third of the articles were negative, and almost half the articles were neutral –perhaps the least damaging position against the interests of its advertisers that the paper could adopt in a dire situation. Only one of the articles mentioned a specific property, in an analysis of a particular suburb, and it encouraged the reader as a buyer to enter the market (‘Cost blowout’ SMH Domain section, 7/2/04: 8)

Politically, the sharp end of the housing affordability issue is the effect on first home buyers, popularly conceptualised as heterosexual couples in their twenties or early thirties wanting to establish a home in order to start a family. Affordability for such people in the mid-1990s was at
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low levels historically and first home buyer participation in the market had fallen from 29% to 17% since 1991 (‘Costello cautious as banks cut rates’ SMH, 19/10/96: 3), and although levels of personal debt (driven by housing loans) had doubled in the previous five years (‘‘Easier’ for first home buyers’, SMH 11/7/96: 27) it was not a pressing issue for politicians. Over the four month period from July 1, 1996, there were fifteen articles in the SMH that included the term ‘first home buyers’. Five of them exceeded 1000 words in length, and two thirds (ten stories) appeared in the specialist sections, with one third (five) in the general news and features pages. All of the articles (except one that appeared in the weekly TV Guide section) used sources from the FIRE sector, all addressed the readers as buyers, all but three adopted the sources’ definition of the issue and 60% (nine stories) were positive about entering the market, four were negative and two were neutral. In the general news section, three were negative and two were positive, while of the stories in the specialist sections, the proportions were reversed, and six were positive, two were neutral and two were negative. Two stories mentioned specific properties, one of them positive and the other negative about the market.

In the DT over the same period there were eleven stories, or one every eleven days, of which one was feature length and the rest short news stories. One story used satisfied buyers and sources and another quoted the Australian Bureau of Statistics. The other nine articles used sources from the FIRE industries: all embraced their sources’ definitions, all addressed the readers as potential buyers, and all were positive about entering the market. Seven of the eleven articles mentioned specific properties. Three of the articles were blatant public relations exercises on behalf of the sources, and two were outright boosterish about entering the market; this in spite of the fact that the most recent quarterly figures had shown a 7% decline in Sydney house prices, personal indebtedness had doubled in the previous five years and first home buyers were at near historic lows as a proportion of the market. Arguably at this point the DT had forsaken any ambition for credibility in its reporting on this issue, and was seeking simply to boost the interests of its advertisers.

Seven years later at the end of the boom, first home buyers had hit record lows for participation in the NSW market at 11.6% (‘Doing it tough’, DT 2/12/03: 31), and although the plight of first home buyers was now a prominent political issue, the perspective of DT coverage hadn’t changed much since 1996. DT coverage almost doubled to 21 stories, or one every six days, with three features and the rest news stories of an average 479 words. Politicians and government sources appeared in four stories, and ACOSS in another, but the rest of the sources were from the FIRE industries. In only three of the stories was there any debate about interpretation, with the remainder (86%) accepting the source definitions. Three articles addressed the reader as home occupiers, and eighteen as potential buyers (and four of the latter
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as specifically investors): eleven (just over 50%) were positive about the state of the market, six were neutral and four were negative. Four articles named specific properties, two of them positive and two negative about the state of the market.

The SMH, on the other hand, had almost doubled its reporting on first home buyers since 1996, to 57 articles or almost one every second day. 26 stories appeared in the general news and features section of the paper, indicating to what extent their plight had become a general news story. Fourteen (25%) of the stories were of feature length, and the same proportion reported debate among the sources about the state of affairs on this issue. Two stories addressed the reader as property owners, two as sellers and one as a renter; the rest addressed the reader as a potential buyer. 26 stories were positive about entering the market, twenty were neutral and eleven were negative. All but one of the negative stories and none of the positive stories appeared in the general news and features pages, indicating to what extent this had become a negative issue for governments, while the reporting in the specialist pages with that one exception was either neutral or positive, indeed 80% positive.

The sources in the SMH’s coverage were still overwhelmingly drawn from the FIRE industries, but they were leavened in the general news and features section with an increased number of politicians, government sources and some academics, again reflecting the extent to which the state of the housing affordability and first time access to the market had become a general political issue.

To summarise, in 1996 when housing affordability was at historic lows, even after a period of stagnation in the housing market, both the SMH and the DT gave the issue minimal coverage. Although the most recent quarterly figures revealed that house prices were falling, both the SMH and DT overwhelmingly referenced FIRE industry sources to the effect that now was a good time to enter the market. When affordability specifically for first home buyers was reported, the encouragement to enter the market in the SMH was not quite as marked but still the majority position at 60% of articles, while the DT coverage was still without exception positively recommending entering the market. SMH articles in the specialist sections were more encouraging than those in the general news pages.

Seven years later at the end of the boom, housing affordability especially for first home buyers was at record low levels and had become a major political issue, prompting the Federal Government to initiate an inquiry into the issue by the Productivity Commission. The coverage had increased significantly (sixfold for general affordability, and double for first home buyers), and in both the SMH and DT the referenced sources were still overwhelmingly from FIRE
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industries (94% and 93% respectively). There was more debate in the SMH than the DT, but unchallenged source definition of the article’s meaning was the majority mode in both newspapers (52% and 72% respectively). In the DT about half the articles were either neutral or positive about entering the market, while in the SMH about two thirds were either positive or neutral. However, in the SMH, when it came to the plight of first home buyers, the situation shifted in 2003-4.

Table 7.2 Affordability DT 96 DT 03-04 SMH 96 SMH 03-04 Number of articles 2 14 4 23 Sources uncontested 100% 72% 100% 52% Interested sources 100% 93% 75% 94% reader addressed as market participant 100% 94% 100% 94% Represented state of the market positive 100% 21% 75% 22% neutral 0% 21% 0% 43% negative 0% 58% 25% 35%

Table 7.3 First Home Buyers DT 96 DT 03-04 SMH 96 SMH 03-04 Number of articles 11 21 15 57 Sources uncontested 100% 86% 80% 72% Interested sources 81% 76% 93% 75% reader addressed as market participant 100% 100% 100% 95% Represented state of the market positive 100% 52% 60% 46% neutral 0% 29% 13% 35% negative 0% 19% 27% 19% In the general news section of the paper, reporting referenced non-FIRE as well as FIRE sources, and was strongly negative about the state of the market and the advisability of entering it, while in the specialist pages the coverage, referencing FIRE sources, was still 80% positive about market entry.

Tables 7.2 and 7.3 show the key data for coverage of Affordability and First Home Buyers. On both topics there was more debate in the reporting in 2003-04 at the end of the boom when
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affordability had moved to record lows (from merely ‘near historic’ at the beginning of the boom), but intriguingly the market was presented in more positive terms to first home buyers than to general buyers, despite the former being more in need of shelter and typically younger, less affluent and more vulnerable to the effects of the sharp drop in house prices that was setting in. Perhaps because of unease about this perspective, the divisions between the reportage in the general news pages and the specialist pages was much sharper, in both mastheads being more negative in the general pages and more positive about the market in the specialist pages.

Taxation: Capital gains and Negative gearing Under Australian taxation law, the family home as an asset class has enjoyed favoured taxation status with respect to both capital gains and negative gearing, and according to many commentators this has distorted both the housing market and also business investment patterns. When the Labor Treasurer Paul Keating introduced a capital gains tax in 1985 (Edwards, 1996: 275 ff.), the family home was exempted, and therefore any increase in value flowing from expenditure on improving the capital value of the property by renovations and extensions was tax-free. Effectively this made the family home a tax-effective and popular vehicle for wealth creation (‘High cost of raising the roof, DT 11/2/2004: 1).

Negative gearing, a tax minimisation strategy available only in Australia, Canada and New Zealand, involves the purchase of an asset with borrowed funds so that the costs in maintaining the asset, usually interest on the loan and maintenance costs, are larger than the income stream from the asset, and the resulting loss can be claimed as a taxation deduction against other income. Wealth creation is achieved by a rise in the capital value of the asset that is realised upon its sale, and therefore it depends on an increase and not a decrease in asset values. Negative gearing can be applied to any asset, but is most usually applied to real estate. Acquiring a so-called ‘investment property’ is very popular with Australian taxpayers as a means of wealth generation, and approximately one in eight taxpayers claim deductions on investment property (‘When the roof falls in’, SMH 3/4/04: 35).

As part of the taxation reforms of 1985 Treasurer Keating limited the claimable loss on real estate assets to the total rental income from those assets, but this was politically unpopular and the statusquo ante was reinstated on 1 July, 1987 – ten days before the election which the Labor government won (Edwards, 1996: 311-12). The constraints on negative gearing hadn’t survived a single election campaign, and have been considered politically out-of-bounds since that time.
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Capital Gains Tax In the first sample period (1 July – 4 December 1996) there were just two articles in the DT on real estate that included the term capital gains tax. Headlined ‘Budget lifts hopes’ (DT 34/8/1996: 41) and ‘Comforting home truths’ (DT 5/10/1996: 44) they used the Real Estate Institutes of NSW and Australia, along with the Housing Industry Association as their sources. Indeed the second article was authored by the REIA President but was written as if he was a journalist reporting on an issue. There was no debate about the issues, no mention of specific properties, both the articles were positive about the state of the market and addressed the reader as an investor in the first instance and a home-owner wanting to increase their savings in the second.

Seven years later, little had changed at the DT: there were three articles in the sample period mentioning real estate and capital gains tax, headlined ‘Big question’ (DT 3/12/2003: 2), ‘Dodging taxes on real estate’ (DT 3/2/2004, Finance section: 1) and ‘Turning a little into a lot’ (DT 16/3/2004, Finance section: 1). The first was a set of four opinion pieces by two right-wing columnists (Piers Akerman and Terry McCrann) a right-wing and a left-wing politician (Tony Abbott and Laurie Ferguson respectively) evaluating the newly chosen Leader of the Opposition Mark Latham (Australian Labor Party) on various issues including negative gearing and capital gains tax on property. The other two articles (8% of the total) were question and answer columns from finance professionals responding to queries from the public in which specific properties (absolute space) were discussed and advice dispensed. One columnist was positive about the state of the market, one was neutral, and they both addressed the readers as investors.

The coverage in the SMH over the two sample periods was little different, though there was more of it as one might expect of a newspaper targeting a readership more likely to be able to afford to invest in property. In 1996 there were five SMH articles on property and capital gains tax, three of them advice columns discussing specific properties. All of them were in the specialist business and finance sections of the paper, all used FIRE professionals as sources or advisers, all addressed the readers as investors and all were positive about the state of the market. One article did point out, however, that shares were a better longterm investment than property – after tax was paid (Shares give best return – after tax’, SMH 23/7/1996: 40)

Seven years later, the SMH had increased the amount of its coverage, but not changed its perspective. There were 24 articles on the topic, all but five of them in the specialist business section, and ten of them advice columns for readers’ queries. Thirteen of the articles, slightly more than half, discussed specific properties, and in all but three the sources were FIRE
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professionals, and in only two was their any debate or difference of opinion. Despite the fact that journalists were reporting that the market had peaked and house prices were set to fall, only one was negative, four were neutral and nineteen were positive about entering the market to make a capital gain!

Two of the articles that were neutral about the market and contained debate discussed a report from the Productivity Commission into housing affordability. This had become a strong political issue and the new Labor Leader of the Opposition Mark Latham was thought to be making headway among the voters in the so-called ‘mortgage belt’. The conservative Coalition government of Prime Minister John Howard and Treasurer Peter Costello had set up the Commission’s inquiry in earlier in 2003, but when it delivered its interim report in December that year, they ignored its criticisms of the taxation issues relating to property, and blamed the state governments for their stamp tax regimes and for failing to open up more land on the outskirts of the major cities, especially Sydney, for housing development (‘Buyers passed over as Costello gets to sidestep the issue’, SMH 19/12/2003: 8).

Negative Gearing Compared to capital gains tax, negative gearing was an issue much more popular with the DT’s editors, and it posed an interesting departure from coverage of the former topic. While the media reports as recounted below were overwhelmingly positive about the desirability of entering the market (disregarding what actual state it was in) there was no great endorsement of negative gearing as an investment strategy from journalists nor from commentators other than real estate agents and housing developers. As many commentators pointed out, negative gearing depends on losing money in order to gain a taxation concession on recurrent expenditure while hoping to make a profit on capital investment when the property is sold. It is much preferable as an investor to make a profit on both the recurrent and capital dimensions of an investment (eg, ‘Negative gearing on property a no-no’ DT 18/8/996: 133; ‘Memo minimisers: it’s revenue stupid’ SMH 27/8/1996: 27).

Negative gearing largely appeals to small-time investors who don’t have sufficient funds for a large deposit on a property and thereby seek to minimise the cost of borrowing. It lessens the cost of borrowing by discounting the tax concession against the interest payments, but it means that any profit on capital investment will depend on the vicissitudes of the market at the time of sale. Nonetheless, it is a broadly popular investment strategy for the ‘mums and dads’: real estate agents pander to it and politicians question it at their peril.

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In the 1996 sample period for the DT, there were eleven articles on the topic, three of them features of more than 1000 words. Five of them were advice columns responding to readers and in six there were specific properties being discussed. In all but three of the articles (27%) the perspective was favourable to entering the market, and interestingly, those three were in advice columns dealing with specific property situations. In only two articles (18%) were the sources other than FIRE professionals, and it was only those two with academics and various organisational spokespeople at the National Tax Summit (‘How the taxman takes his slice’ DT 5/10/1996: 6) that contained any debate about the situation. All of the articles addressed the reader as an actual or potential investor.

Seven years later, and negative gearing was a slightly less significant issue at the DT. There were only eight stories, all but two of them (25%) with FIRE professionals as sources, all of them encouraging about the state of the market and all of them addressing the reader as an investor. The only two articles with diverse sources were discussing the political consequences of Latham’s early comments after assuming the Labor Party leadership that he might review the negative gearing tax concessions, a statement from which he very quickly backed away (‘The Big Question’, DT 3/12/2003: 31; ‘Can Latham give ALP the ideal gift’, DT 23/12/2003: 23).

The SMH gave significantly more coverage to the topic. In the 1996 sample there were 23 articles that included the term, sixteen or 70% in the specialist sections and the balance in the news section. Eight of the articles were long features, and in 91% (all but two) of the articles there was neither debate nor disagreement about the sources’ interpretation of the issue. Three of the articles were question and answer columns, five of them contained references to specific properties, and all of them addressed the reader as an investor or owner except for one article on tax avoidance which addressed the general taxpaying public (Target tax avoiders, says ACOSS, SMH 24/7/1996: 27). Except for this last example, all of the sources were FIRE professionals, and in 20 out of 23 articles they were positive about the prospects for entering the market (two were negative and one neutral).

By the end of the boom seven years later the SMH’s coverage had shifted more than the DT’s. In our sample there were a similar number of articles (27) but there was significantly less enthusiasm for entering the market, and much criticism levelled at negative gearing as a satisfactory investment strategy. This is entirely appropriate advice at a point where falling house prices are about to subtract from the capital value of a housing investment. In fact, on two occasions in the sample period the SMH went so far as to editorialise against the wisdom of negative gearing (‘The case against negative gearing’ SMH 1/12/2003: 12; ‘Negative gearing slips a cog’, SMH 25/3/12004: 12). Except for one academic and one satirist, the sources were
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the usual FIRE professionals, in 89% (all but three) of the stories their definitions of the situation were accepted unchallenged, and in 17 cases or 63% of the total they were positive about entering the market, in four cases (15%) they were negative and in six (22%) they were neutral. Nine out of the 27 stories were in the news and features pages, and of them three were positive about the market while the other two thirds were negative or neutral. The proportions were neatly reversed in the specialist business sections, where twelve out of eighteen were positive about the market, three were neutral and three were negative.

In summary, while there was a significant proportion of SMH analysis that was critical of the wisdom of negative gearing as a wealth creation strategy, and while the trends were less marked in the SMH than the DT, articles about the taxation aspects of real estate investment were overwhelmingly sourced to FIRE professionals who were strongly positive about the prospects of entering the market, no matter what the external circumstances in the two sample periods. The only exception to that tendency was in the general news section of the SMH in 2003-4, at which point the capital value of the real estate market was already falling and therefore taxation strategies based on capital gain were becoming dangerous to wealth maintenance, let alone accumulation. The specialist sections of the SMH, however, continued to promote market participation.

Household Debt The corollary of decreasing affordability is increasing household debt and a decline in household savings. At around the time the globalisation of the Australian economy began in the mid-1980s, Australian households were saving about 15% of their income. From that time the savings rate declined until the early 2000s when it became negative (that is, households on average were saving nothing and indeed spending more than they earned) to the tune of -3.5% by 2003 (AFR, 6-7/5/2006: 18). Thereafter it recovered somewhat but didn’t move back into positive territory till late 2008, in an anxious response to the Global Financial Crisis. All through the 1990s, as the savings rate steadily approached zero, the levels of household debt increased.

In July 1996, levels of household debt had doubled in twenty years from 35% to 70% of average annual household after-tax income, and more than half of that increase had been in the six years since 1990. Further, a contemporary poll found that “the main cause of personal stress for 30 per cent of Australians is personal finances” (‘Not waving, but drowning’, SMH Money section, 31/7/96: 1). Moreover, seven years later at the end of the housing boom, household debt had doubled yet again to a record 143% of average annual disposable income, having risen by an
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average 15% per year (‘Gypsy workers’ SMH Money section, 17/3/2004: 8). 85% of the debt was for housing loans, and although interest rates were relatively low by historical standards, the debt servicing ratio for households (that is, the ratio of interest payments to disposable income) had been rising as well: Because the effect of the fall in interest rates has been more than offset by the rise in principal outstanding, the ratio is now just over 9 per cent. This is higher than its previous peak in the late '80s, when the mortgage rate was 17 per cent. (‘What goes up must come down’ SMH 27/3/2004: 48)

One in ten households was experiencing mortgage stress, a notional point where the cost of servicing a mortgage exceeds 30% of disposable household income. To make matters worse for those households, the Reserve Bank was raising interest rates in an attempt to take the heat out of the housing market, in the belief that the inevitable bust that would follow the boom would have a negative impact on general consumption.

Last week the Reserve Bank warned that if the economy's future performance turns out to be disappointingly weak, there is "considerable uncertainty" about how households will behave, given record debt levels. "If the household sector were to decide that the level of borrowing had become too high, a period of quite weak consumption might be expected, as households attempt to reduce their debt levels. The Reserve said that, after borrowing heavily for a number of years, families might decide to "consolidate [their] balance sheet”. If that were prompted by a deterioration in economic conditions, it could amplify what might otherwise have been a relatively mild downturn," the report says. The Reserve also points out that middle-income earners hold the bulk of investment housing debt and would be vulnerable if interest rates or unemployment rise. "Middle-income investors are relatively more exposed than the higher-income investors to higher interest rates, rental vacancy or unemployment. In addition, they are likely to have fewer other assets to draw down in the event of hard times. (‘When the roof falls in’, SMH, 3/4/04: 35)

Back in 1996, before the housing boom took off but when household debt was already at record levels because of the cost of housing loans, the situation merited almost no news coverage. Over the four month period from 1 July 1996, the DT ran only two short stories that included the words ‘household debt’, both of which quoted politicians acknowledging that debt was rising at a very rapid rate, but focused on the use of credit cards in Christmas shopping, with no reference to the role of housing loans. The SMH wasn’t much better. It ran five stories, all of them in the Business or Money sections of the paper and in four of which there was no mention

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of housing loans. The one story in which the role of housing was discussed and where it was noted that “[m]ortgage interest payments now take up a higher proportion of household income (after-tax) than ever before” the story had the Federal Minister for Small Business talking up the affordability of housing in a low interest rate environment, while it was left to a bank economist to point out that “the legacy of low inflation was high household debt.” (‘Easier for first home buyers’, SMH, 11/7/1996: 27). This was also the only one of the five stories where there was debate between sources, and it was used to soften the negative interpretation of the lead source’s view. Banks, the RBA, a politician, a supermarket chain and financial advisers were the sources; real estate agents were nowhere to be seen in the stories.

Seven years later at the end of the boom, the DT’s coverage had shifted, but not much. There were seven stories over the four month sample period from 1 December 2003, in four of which the record debt levels were front page stories (‘Interest rise hits family budgets’, DT 4/12/2003; ‘High cost of raising the roof’, DT 11/2/2004; ‘We're all doomed by debt – maybe’, DT 26/3/2004; and ‘We're more in debt than ever before’, DT 27/3/2004), but in one of those and two of the other stories on debt the role of housing wasn’t mentioned. Of the four stories where the impact of the high cost of housing was discussed, in two of them the Prime Minister and Treasurer were quoted as sources softening the negative view of the situation (‘We're more in debt than ever before’, DT, 27/3/2004: 1; ‘Interest rise hits family budgets’, DT 4/12/2003: 1). The Housing Industry Association was quoted as a source in one story, but otherwise all the sources were statutory bodies or politicians, and there were no other FIRE sources.

On the other hand, by December 2003 the SMH was fully engaging with the role of housing in the rapidly rising indebtedness, but differentially in the general and specialist sections of the paper. There were 22 stories on household debt, one every six days on average, evenly distributed between the general news pages and the Business and Money sections. The sources were mainly statutory bodies (the Reserve Bank, Australian Bureau of Statistics and the Australian Prudential and Regulatory Authority), banks and financial institutions, with the HIA again quoted once as a source. In three (14%) of the stories housing loans weren’t mentioned, and in the remaining nineteen only eight (36%) were negative about housing market prospects, while the other eleven, half of the total, were neutral. In the general news pages half of the stories were neutral and half were negative, while in the Business/Money sections, two thirds (eight) of the stories were neutral and one third negative, so once again the specialist pages were more positive about market participation then were the general news pages. Real estate agents were nowhere to be seen as sources.

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The articles by journalist Matt Wade in the SMH were particularly clear in charting the dimensions of the debt problem and its potential impact on the broader economy as well as indebted households. He wrote eleven of the twenty-two stories over the sample period (two with Lisa Pryor), and all but one of the stories that appeared in the general news pages. Four of his stories were classified as negative about the market, and seven were neutral, while none were positive.

The Reserve Bank was quoted commenting on the indebtedness related to non-owner-occupied investment in housing, which comprised at this time about 30% of all housing loans (‘What goes up must come down’ SMH 27/3/2004: 48). Investors in residential property constituted about twelve per cent of taxpayers, largely congregated in the middle-income bracket, often middle-aged or older, and wanting to use property investment as a form of superannuation (the Australian term for self-funded retirement pensions) or tax-effective savings towards their retirement. As the Reserve Bank observed, they were therefore lacking in large financial reserves to meet increased interest payments. The bank and economists were concerned about the potential impact this might have on the general rate of consumption in the economy (‘When the roof falls in’, SMH, 3/4/04: 35).

I will deal further below with this taxation element, but this concern about consumption levels had another dimension with respect to both owner-occupiers and investors: mortgage equity withdrawal. This term refers to a process associated with the so-called ‘wealth effect’, and which is an extension of the drawdown on savings: as mortgagees perceive the market value of their property to be rising and their share or equity in the value of the home increases, they feel wealthier. Some 60 per cent of households with a primary mortgage are ahead in their repayments (‘What goes up must come down’ SMH 27/3/2004: 48), and from late 2000, a significant trend began where mortgagees began withdrawing part of their repaid surplus to fund consumption, to the tune of adding about 4.5% per annum to disposable household income, a not insignificant amount. The Reserve Bank’s fear was that any reversal of this ‘wealth effect’ due to a fall in property values would precipitate an exaggerated fall in consumer spending and a deterioration in economic growth, if not a recession (When the roof falls in’, SMH, 3/4/04: 35).

To summarise, the FIRE industry was notably absent in the coverage of household debt, even though the greater part of it was incurred through property purchase. The DT largely ignored the role of real estate in increasing indebtedness, and used politicians as sources to soften reports about the dangers of debt. However, by 2003 the general news pages of the SMH were
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explicitly reporting on the broader economic dangers of household indebtness and the wealth effect flowing from the boom in house prices, but even in a falling housing market the majority of stories was still neutral about the advisability of market participation. The specialist pages continued to be more positive about market participation than the general news pages.

Homelessness In both the 1996 and 2003-04 sample periods the DT published seven articles that included the term ‘homelessness’. All of them were short news items, and only one of the seven in each sample included any debate between sources – all of the others accepted the source definition of the issue. In each sample four out of the seven mentioned homelessness in passing, usually in a list of social ills that the source was concerned about, along with mental illness, drug addiction, and the like. The sources quoted by the journalists were politicians, charities, reports by government or non-government agencies, celebrities and occasionally homeless people themselves; FIRE sources were completely absent. In only one of the fourteen stories was a specific place referred to, in only one story was the housing market mentioned in encouraging terms, and readers were addressed as citizens concerned with welfare and charity issues except for one story that concerned housing policy

The coverage in the SMH was similar, though with the interesting statistic that coverage decreased between 1996 and 2003-04 from eighteen to ten stories per sample. In 1996, four of the eighteen stories were long features, all stories were in the general news pages of the paper and seven of the mentions were only passing; no stories mentioned specific properties, in just 22% of articles was there debate between sources and in only two articles (11%) was there a concern with policy issues – the rest treated homelessness as a welfare issue.

The SMH coverage had deteriorated by 2003-04: there were only ten stories, all of them short news items with a charity/welfare orientation and no mentions of specific properties. In three of the stories there was debate about the definition of the issue, and in three there was a positive perspective on the housing market. FIRE sources were nowhere to be seen.

In other words, despite the fact that academic and policy experts were linking unprecedented increases in the rates of homelessness over the period to the state of the real estate market (Yates and Wulff, 2000), the coverage of the issue did not reflect that linkage, and the story was overwhelmingly reported as a social pathology linked to mental or physical illness, poverty, age (youth or agedness), geography (inner city, suburbs or rural regions) or unemployment, and to be dealt with by welfare policy and charity activity.
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Discussion There is a remarkable consistency to the structure of the media reportage of real estate over time, vindicating Bourdieu’s argument that fields are ‘structuring structures’ and agents take ‘objectively’ determined positions in any field, including the symbolic field of the media. This occurs in spite of the spatial and temporal variability in the actual events being represented in the field. Paradoxically it is variability that necessitates the constant updating of news coverage, but in spite of that variability there are patterns and consistencies that are quite stark. So even though the sources achieve coverage of their information and analysis on the basis of their knowledge of change and instability in the market, their perspective and interpretation of that instability amount to the occupation of stable positions in the symbolic representation of the market.

The information being supplied by the sources was usually of a periodic or cyclical nature, and so there was a temporal rhythm to the appearance of sources in the coverage of real estate. To establish and routinise their status as accredited news sources, companies and organisations supply a regular flow of periodic data (monthly, quarterly, annual, etc) that provides the raw material for stories with potentially minimal effort expended by the journalists. The Commonwealth Bank of Australia (CBA) with the Housing Industry Association (HIA), the Real Estate Institutes of Australia and New South Wales (REIA and RENSW respectively), Commsec (the retail securities arm of the CBA), the other major banks and lending institutions, franchised chain and individual real estate agencies as well as government and semi- government agencies such as national and state Treasuries, Government ministers, the Reserve Bank (RBA) and the Productivity Commission (PC) all released regular periodic reports and statements over the sample periods, and were duly quoted as authoritative sources by the journalists.

These different institutions all share a common interest (or illusio in Bourdieu’s terminology) in the state of the market, but they are often competing for customers and clients within that market. So they need a way of both contributing to the news coverage in terms that serve their common interest in constructing a field and maintaining it in good health, while doing it in a way that serves their competing interests within the field as well. The reports and assertions vary in their analyses and conclusions, to a confusing and occasionally contradictory extent, which is achieved by variations in the parameters of the research they conduct and report. The
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data sets from which these institutionalised sources derive their analyses may vary in their research questions, time periods, sampling methods, sample size, etc. However, the parameters are normally not reported in the stories, so there is often a generalised, sometimes even absolutist, tenor to the sources’ statements that belies the fragmentary or partial nature of the data on which they may be based.

Needless to say, this variety serves the interests of the competing institutions trying to get publicity and brand recognition for themselves through editorial coverage: if the reports from the various competing sources were reiterating the same data and interpretations, they would have less news value to journalists. At the same time, if the articles in which the data are reported do not contain debate or analysis, then the various claims are unqualified and unchallenged, so they imply a generalised application to the state of the market in contradiction to the unacknowledged specificities of the research on which they are based. In our samples, only with the SMH discussing house prices in 2003 was there debate in a proportion of the articles approaching half of the coverage (in that case 48% of articles). At other times in both SMH and DT, and typically in 90-100% of the DT’s coverage, there was no debate or challenge to the sources’ assertions. So sources could be quite confident that if they generated information and it was reported by the journalists, it would mostly be reported uncritically.

One common technique detected in the study was to extend the time period for comparison to include periods of growth, so for example when the most recent quarterly figures showed a fall of 7% in the price of Sydney houses, the CBA released figures showing rises in prices and rents over a ten year period from 1986 of 40% and 42% respectively, and promoted a positive interpretation of rental income trends (‘Why more of us are banking on bricks and mortar’, SMH, 13/7/96, Property section: 2).

In general, the government and statutory sources (notably the Australian Bureau of Statistics [ABS]) were the most cautious or negative about the state of the market, and their analyses were produced and distributed using relatively stable data sets (B-series time) sometime after the period being studied. The most contemporaneous (A-series) analyses were proffered by private sector institutions with a stake in the market (the banks, real estate agents and mortgage lenders) and as detailed above they were overwhelmingly optimistic about the near future, if not the current state of the market. So bad news is published retrospectively using B-series data, while the contemporary and near future prognoses (A-series protentions) are generally more favourable. The temporality of statistics is a dimension of the field that is easily contested precisely because its parameters are so flexible, especially when looking forward to the future return on contemporary investments.
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The patterns in the coverage are consistent across the two sample periods seven years apart, even though the first sample covered a period at the end of a prolonged stagnation in the market from which there was to be no relief for another six months, while the second covered the end of a sustained boom accompanied by a doubling in both house prices and household indebtedness. If there were a direct relationship between the symbolic field and the economic field of the real estate market, there would have been substantial variation in the coverage between the two samples. In fact there was some increased ambivalence about the advisability of market participation in the latter sample period, especially for the SMH. But otherwise, variations were a matter of minor degree rather than substance: more or less coverage, more or less difference in selection of sources, more or less emphasis on particular issues like affordability. So the two fields, symbolic and economic, are connected because the image needs to bear some relationship to the object if it is credibly to claim journalistic veracity, but they are relatively independent of each other and each field operates according to its own ‘rules’. This supports Ericson’s and Bourdieu’s views that while it is neutral ‘facts’ that are ostensibly being reported, what is really being reproduced is the authority to exercise symbolic power of the sources in the field.

In the journalistic media field, there were distinct patterns in the structure of the coverage. Table 7.4 and Chart 7.1 depict the patterns in the number of articles dealing with different dimensions of the real estate issue. The SMH had more coverage on all topics in each period than the DT. There was more coverage on all topics across the board in 2003-04 than there was in 1996, except for DT coverage of negative gearing and SMH coverage of homelessness.

Table 7.4 Numbers of articles per topic Subject DT 96 DT 03-04 SMH 96 SMH 03-04 Total House Prices 12 39 20 69 140 Housing Affordability 2 13 4 23 42 First Home Buyers 11 21 15 57 104 Household Debt 2 7 5 22 36 Capital Gains Tax 2 3 5 26 36 Negative Gearing 10 8 23 28 69 Homelessness 7 7 18 10 42 Total 469

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Chart 7.1 Numbers of articles per topic

Although debt and affordability were corollaries of the doubling of house prices, those topics didn’t get quite as much coverage in the SMH as the taxation advantages of leveraged investment through negative gearing and capital gains. The plight of first home buyers became a major issue for coverage in 2003-04, especially for the SMH.

Table 7.5 and Chart 7.2 depict the extent to which the sources defined the meaning of the information being reported, as against the extent to which the meaning was debated by

Table 7.5 Percentage of source definition of reported issue Subject DT 96 DT 03-04 SMH 96 SMH 03-04 House Prices 100 90 70 90 Housing Affordability 100 71 100 65 First Home Buyers 100 86 80 75 Household Debt 50 50 80 41 Capital Gains Tax 100 100 100 92 Negative Gearing 80 75 100 91 Homelessness 86 86 78 70

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Chart 7.2 Percentage of source definition of reported issue

competing sources or challenged by the journalist. Selection of sources is clearly a fundamental and defining characteristic of any reportage. However, the patterns are not consistent across the different dimensions, and the highest level of contestation is on the topic of household indebtedness followed by housing affordability, while the least contestation is with respect to capital gains tax. Except on house prices for the SMH, there was the same or more contestation in 2003-04 than there was in 1996, indicating that the journalists/editors and possibly sources thought that by 2003 developments in the economic field required contestation in the symbolic field.

FIRE industry sources were overwhelmingly predominant in stories related to house prices, capital gains tax and negative gearing, and to a lesser extent on housing affordability and first home buyers. They were absent in stories related to indebtedness and homelessness. As Table 7.5 and Chart 7.2 reveal, the issues on which FIRE industry sources predominated were the issues on which source definition of the information was least contested, while in contrast, the issues on which FIRE industry sources were least present were the ones where there was most contestation; the only exception to this pattern was homelessness, which was treated as a welfare issue with no relationship to the state of the housing market.

In other words, there was a structural imbalance in the selection and use of sources that operated to the advantage of FIRE industry sources, giving them high visibility to promote their

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definitions on topics to their commercial advantage and without challenge, and keeping them and their interests invisible on issues where they might be disadvantaged.

This structural bias in the selection and usage of sources was exacerbated by the terms in which the readership was addressed. Table 7.6 and Chart 7.3 depict the extent to which readers of the two newspapers are addressed as non-market participants, eg as members of the general citizenry or as having a professional or policy interest in a particular issue. Homelessness is discussed as an issue with almost complete indifference to the housing market, and debt and negative gearing both have a significant minority orientation to perspectives other than market participation. Otherwise, the coverage is almost completely directed to potential or actual market participants.

Table 7.6 The readership addressed as non-market participants Subject percentage House Prices 2% Housing Affordability 7% First Home Buyers 3% Household Debt 29% Capital Gains Tax 0% Negative Gearing 13% Homelessness 98%

Chart 7.3 The readership addressed as non-market participants

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Chart 7.4 Encouragement of market participation

Chart 7.4 extends the impact of this orientation by depicting the extent to which articles encouraged market participation. The DT in 1996 was strongly encouraging of market participation on all dimensions except homelessness, but by 2003-4 had softened that stance to spread into the neutral and negative attitudes, though again except on household debt, affordability and homelessness, the overall balance was positive. The SMH across both periods had more of a spread across positive/neutral/negative attitudes to market participation, but similar to the DT the balance was positive except for debt, affordability and homelessness. So
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overall, the balance in coverage may shift according to the reality being reported, but nonetheless the preferred perspective is to be encouraging of market participation. As noted earlier, this was very strongly the case in the specialist sections of the newspaper, and it was in the general news pages that this bias was contested, particularly in the SMH.

Journalists and their editors may well be able to justify any individual story as being truthful and accurate in its relationship to specific quotations by interviewed sources or in the recounting of statistics, data and assertions provided by sources, but quite clearly there are patterns in the perspectives and attitudes on the meaning of those truth claims that are inconsistent with the patterns occurring in the field itself.

It is evident from these patterns that sources and journalists work together to enable sources to occupy (or not) particular positions within the symbolic field of representation of the housing market. The sources provide information and interpretation to the journalists, on the basis of which the journalists select their preferred sources, and then mostly accept their story definition. Therefore the symbolic field does not amount to an accurate overall depiction of the market itself, but does amount to a representation of the preferred perspectives of the various sources on the market. These represented perspectives amount to structured positions in the symbolic field that are consistent over time between the two sample periods and consistent in the way they address the readership. The definitions they offer of the state of the field are consistent with the economic interests of the sources in the economic field, ie they encourage participation when the market is stagnant, and to a large extent they still encourage participation when the market is falling, though some sources trim their perspective to neutral (and a minority to negative) so they can still retain some credibility as sources in the face of the data they are presenting. The field is composed of different sources and according to the aspect of the field being presented, for example capital gains or indebtedness.

So Bourdieu is correct on the evidence to suggest that fields are ‘structuring structures’ where participants take up positions according to their ‘objective’ interests but modify the way they deploy their habitus (play the game) to suit the shifting terrain of the field. Their relative success in the latter activity can impact on both the overall depiction of the state of the field, as well as their competitive economic advantage vis-á-vis other competing sources in their industry. This amounts to symbolic violence in Bourdieu’s terms, allowing for a pattern of misrecognition by the journalists and perhaps their readers of the underlying relationships in the market and their impact on both the broader economy and the financial well-being of households.

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Journalists and sources could both argue that sources appear or not in articles about the different dimensions of the market according to the relevance of their expertise (cultural capital). But the definition of, for example, the homelessness sub-field as excluding the cultural capital of the FIRE industries is a definition that is eminently contestable, and that suits the interests of some participants and not others in the housing market. The media’s normal usage of the term ‘homelessness’ aligns with what professionals term ‘tertiary homelessness’ which is the most extreme manifestation requiring welfare support, and ignores the primary and secondary stages of the condition which can be more readily aligned with the condition of the housing market, as discussed in the previous chapter.

Sources are able to modify their positions and deploy their habitus to advantage because the materiality of space in each of its three dimensions (absolute, relative and relational) is constantly shifting in time. FIRE industry sources, particularly real estate agents and their peak bodies, could identify specific locations and properties in the articles, and almost always used this to demonstrate that market participation would be an advantageous move by potential buyers. Sometimes this proposition was couched in terms of particular attributes (absolute space) identified by the address or architectural features of the property, which are thoroughly saturated in connotations relating to the cultural capital of the property (‘position, position, position’ as the real estate slogan has it) calling forth an identifiable habitus on the part of the prospective buyer. Sometimes the proposition was couched in terms of the rising value of the market (relative space in Harvey’s terms) in a particular location compared to others (encouraging readers to buy before it gets even more expensive, or as a long term investment ‘because you can never lose on real estate investment in Sydney’). Except when discussing homelessness, the relationship the reader was assumed to have with the topic of the article was almost always as a market participant, mostly a buyer but sometimes a seller.

As Harvey argued, those three dimensions of material space (absolute, relative and relational) are inevitably interwoven, and relative space necessarily includes the absolute dimension, and relational space necessarily includes both the relative and the absolute. Absolute characteristics such as expected price and the address necessarily invite consideration of relativities because they are characteristics determined relative to the same characteristics of other properties (price and location), while more constructed characteristics (“leadlight entrance, ornate ceilings, decorative friezes, picture rails, fireplaces and polished floors” in one case) both establish relativities to other properties that may or may not have these attributes, and also imply a habitus on the part of people who might find these attributes enticing and therefore consider themselves as a potential buyer of the property. In other words, to the reader who understands the general physical and cultural terrain of Sydney’s suburbs, specifying the absolute
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characteristics and price of a property immediately invokes its relative and relational spatial characteristics, demonstrating Harvey’s point that the three dimensions can’t be separated out into mutually exclusive domains, but together go to constitute the intangible value (both use and exchange value) of the item. (Harvey, 2006: 131). The variations in reference to absolute space and in market relativities allow the FIRE sources constantly to address the reader as a potentially successful participant in the market (relational space).

As well as exploiting the variegation of absolute and relative space, FIRE sources also deployed the temporal dimension of market change to their advantage. The sources routinised the provision of new information on a cyclical basis (monthly, quarterly, annually) in order to take advantage of the rhythms of journalistic demand for new information. It is this regular rhythmic requirement of journalists for content that constantly reproduces and renews the field of real estate reporting, and invites the various organised interest groups and institutions to position themselves within the field as regular providers of reliable up-to-date information capturing the vicissitudes of the situation that need to be reported. As discussed above the REIA, the REINSW, the HIA, and various banks all produce regular accounts of the state of the market and supply these to journalists in the form of press releases, often with accompanying charts and graphics. This enabled different FIRE sources to compete with each other for visibility in the news reports, and also to try to achieve a positive perspective on the state of the market by varying the temporal parameters of the information. There were several examples given above where real estate agents softened the impact of stagnant or falling prices by referring to a longer time frame to assert an increase in values. That is to say in Gell’s terminology, varying B-series sets of data were deployed in competing A-series retentions to justify a positive protention or anticipation in the results of market participation.

It is precisely because of this extensive variability in the spatial and temporal materiality of the housing market that sources are enabled by journalists to deploy their habitus to maintain positions in the symbolic field, which in turn can redound to their advantage in the economic field. Paradoxically, the structural stability of the symbolic field depends on the spatio- temporal variability in the economic field. The symbolic field of journalistic reporting does not provide an accurate overall depiction of the economic field itself, but does provide a representation of the relationships and vested interests of the various sources in the market.

Sources are active in the symbolic field to secure their advantage in other fields, and journalists are complicit in that activity, and their reporting at an unacknowledged level amounts to a depiction of that interested activity. Journalists become complicit because they require authoritative sources to provide or attest to the information they are reporting. This raises the
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issue of the relative power relations between fields, or between sources and journalists, as canvassed in the discussion of Hall, Ericson and Schlesinger in Chapter Three. On the one hand Hall is correct to argue that primary definers (in this case the FIRE industries) tend to dominate in terms of access to the media and in terms of their definition of the situation being accepted by the journalists. But ‘tend to’ does not adequately explain the process underpinning the results, nor as Schlesinger pointed out can it explain competition between primary definers (in this case competing FIRE industry sources, politicians and statutory authorities).

On the other hand, Ericson’s argument that journalists have the power to choose the sources and the terms of their representation doesn’t adequately explain the consistent patterns or representation, especially when they seem to run consistently counter to a reasonable interpretation of the available evidence. That journalists are aware of the implications of the available evidence and can choose to report accordingly is clear from the contrary stories that are sometimes published, in particular in our samples the EAC ‘s debunking of the boosterism in December 1996 in the DT ((‘Cooling down boom fervour’, DT 19/10/96: 39), and the conflict in 2003-04 in the SMH’s reporting of the state of the market between the reports in the specialist sections and those in the general news and features section. So as we discussed in Chapter Four above, there are accurate elements in both the Hall and Ericson accounts of journalist-source power relations, and a Bourdieuian analysis can help resolve the inconsistencies, as Schlesinger suggested.

While a Bourdieuian field analysis does give a more satisfactory explanation of the dynamics of the media coverage, this depends on reference to the multi-dimensional materialities of time and space in the events and processes being reported. The FIRE industries exist in the economic field of the real estate market and have a commercial interest in accessing the symbolic field of the media to promote market participation by potential buyers and sellers of real estate. However, in line with Ericson’s division of organisational activities into zones of publicity, confidentiality, censorship and secrecy (Ericson et al. 198: 9) they address different aspects of the market differentially. They tend to promote the view that the market is worth entering, particularly in terms of taxation advantages to be achieved through negative gearing and capital gains, but they do not address issues of household indebtedness or homelessness, and they take a mildly ambivalent attitude to affordability issues.

FIRE professionals manage the processes of the real estate field, and they compete with each other in the symbolic field to secure the business of buyers and sellers who enter the market. Their parallel professionals in the symbolic field are the journalists, working for publishers who depend on a buoyant real estate market to generate classified advertising income, and so each of
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the fields has a heteronomous stake in the operations of the other field. That stake in each case has both a symbolic and an economic dimension, but these are not co-terminous. Journalists have to be able to justify their reports as ‘objective’, ‘fair’ or ‘balanced’, even if that brings them into conflict with the economic interests of their publishers, and FIRE industry professionals need to make money in the real estate market no matter what the nature of the media coverage is.

The disjunction between reporting in the specialist and general sections of the newspapers is an indicator of the heteronomous economic pressure on journalists. On the basis of the evidence presented from the two samples, the specialist sections serve to attract readers who have an interest in and assumed propensity for market participation, and the coverage in those sections is noticeably more favourable to market participation than that in the general sections. Indeed, in the SMH in 2003-04 at the end of the boom there were strongly competing narratives on the advisability of market participation emerging from the two sections, though it should be noted that even then there was still encouragement to enter the market in the general section.

But quite clearly this competition between journalists over the thrust of the coverage demonstrates that journalists are able to exercise professional discretion to some extent over the content and perspective of their reporting. It is precisely the fact that journalists clearly retain discretion as agents in their own field, but mostly exercise that discretion in ways that reinforce the structures of power in their own and other fields, that illustrates Bourdieu’s argument about the mutually dependent processes of agency and structure.

The real estate market in Australia, the USA, Britain and some European countries was a major location for the massive production of the debt/credit that provided the liquidity in economic capital used in the mergers and acquisitions, privatisations and demutualisations that transacted the globalisation processes of the late twentieth century. The reporting of the state of the market by the media was oriented very much to supporting the buoyancy of the market and hence the continuing production of this liquidity through debt. Those processes resulted in a further concentration of the command and control functions of the global economy in the leading global cities, but at the same time produced the fragility that precipitated the Global Financial Crisis in the early twenty-first century. This may be part of a transition in global economic power away from the west and towards east Asia, as suggested by world system theorists such as Arrighi and Wallerstein. Alternatively, it may also be a punctuation point in a cycle of ever-increasing crises in capitalism, as argued by Foster, Magdoff and their associates. Or it may be a part of a recurring cycle of deregulation, financial instability and re-regulation as suggested by Minsky. We do not have to adjudicate on those competing arguments, but can
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recognise that the real estate markets performed an enabling function by generating a major proportion of the liquidity. We turn now to the complementary face of the globalisation process: the use of this liquidity to underwrite the consolidation of command and control functions through mergers and acquisitions, privatisations, or in our case study, demutualisation of the largest Australian general insurer – NRMA Insurance.

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Chapter 7 The demutualisation of NRMA Insurance Group Ltd

As discussed in Chapters 2 and 3, one of the core activities that defined the global city phenomenon over the period from 1983 was the bringing to market of corporations, either through the corporatisation and privatisation of public sector entities or in the private sector through demutualisations, mergers or acquisitions. The purchase of these corporations in the market required large-scale capital-raising, enabled in part by leveraging the massive amounts of private sector liquidity created by the rapid expansion in credit, particularly in the residential and commercial property markets and the financial markets for their derivatives. It also requires the engagement of producer services firms to bring the corporations to market, and so the main point of this case study is to look in detail at what the producer services firms actually did to bring this particular entity to market, and the media’s relationship to their activities. From the systemic perspective of the structure and function of world cities, this consolidation activity is crucial to the international concentration of command and control of capital accumulation that characterises globalisation (Sassen, 2001: 155). From the point of view of the scattered cities competing for global city status beneath the primary level of New York, London and Tokyo, the ease of integration of local capital into transborder financial flows is a key benchmark of global city capacity (Knox, 1995). From early on, Australian commentators identified this as one of the issues for Sydney in achieving and maintaining global city status (Searle, 1996).

The insurance industry had a key role to play in this process, both in experiencing the same consolidation forces as other industrial sectors and in generating the liquidity for investment. Along with pension and superannuation funds, insurance corporations are a prime non-bank source of capital for investment. Indeed, it was recognised that the underwriting activities of an insurer could easily become secondary to the imperative of getting access to policyholders’ premiums for the purpose of stock-market activity.

It has been common knowledge for years that the 140-odd general insurance underwriters in Australia have regarded underwriting results as a small part of the profit with operational losses an acceptable price for obtaining the use of large investment funds. The investment returns on these funds have been the industry’s salvation. Indeed, FAI’s former chairman, the late Larry Adler, said in his 1987 annual report to shareholders: “Important to the company’s success has been the use of the funds generated from the insurance activities in pursuit of other entrepreneurial investment opportunities” …. Playing the stockmarket, until recently, produced healthy trading profits that more than made up for the gaping holes in underwriting results.

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Indeed, so strong did FAI become as players that, along with AMP and National Mutual, they often determined the outcome of major corporate plays. (‘Slow-moving insurers headed for a shake-out’, SMH, 20/3/1989: 33)

NRMA Insurance Group Limited (henceforth NIGL) was the largest general insurer in Australia with 10% of market share in 1985 rising to 14% in 1995 (SMH, 7/5/1986, p. 31) and further to 19% in 2000 (DT, 19/4/2001 p. 1) as the industry consolidated through mergers and acquisitions (‘Slow-moving insurers headed for a shake-out’, SMH 20/3/1989: 33). Its investments had a market value of $981 million in 1989 (SMH, 21/9/1989, p. 26); at the time of demutualisation, the firm’s value was estimated to sit within the range of $3.2 – 4 billion (‘NRMA priced at $4b before float’, SMH 15/11/1999: 3). As such, it was in a powerful position to influence the economies of the insurance market and also be a significant player more broadly on the Australian stock and financial markets. The scale of NIGL’s financial activity, and the resources it had available to employ armies of accountants, lawyers, and sundry other consultants in the normal run of its business affairs, let alone in the complex arrangements for its demutualisation as we shall see, meant that it was a significant employer of the producer services firms that gave Sydney its global city status.

As a mutual fund, NIGL’s fiduciary accountability was to its members. It had traditionally interpreted this accountability in terms of maintaining a relatively low price for insurance premiums, and indeed it wasn’t until after the company was successfully privatised in 2000 that NIGL didn’t make a loss on its underwriting activities. This approach had an impact on the profit margins of other insurers, who were forced to compete with NIGL for market share. At the same time, as a significant institutional investor on the Australian Stock Exchange (ASX), NIGL was able to influence control of corporations and share price movements by its trading activity. This capability, and disputes over how it was exercised, became contested within the Board during 1998, in a flanking action when the final struggle to demutualise was getting underway, as we will see below.

For these reasons, NIGL was a prime target to be brought to market for demutualisation and sale. The very process of attempting to bring it to market, even if unsuccessful, would entail large-scale and lucrative work for the producer services involved in the process. Indeed, as with a war of attrition in any field, as long as the resources were available to support a campaign, it was in both the short- and long-term interests of the challengers to continue their attempts to gain control. Successful securitisation and privatisation would have substantial benefits for its new owners, for the profit margins of the insurance and financial services sectors as a whole, and for the producer services sector along the way (and for as long as that process might take).
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Fruition would also affirm the capacity of the producer services sector in Sydney to perform successfully in comparison with competing urban concentrations of producer services, and therefore affirm the validity of Sydney’s status as a global city.

For the purposes of this analysis, apart from NIGL’s size and economic significance the fact that it was governed by a member-elected Board, that its demutualisation was hotly contested and drawn out over almost a decade, that it required the active consent of a range of stakeholders including up to two million members in an extended series of decisions that were intensively reported by journalists, all go to make it an ideal case study from both empirical and theoretical points of view. I will focus on the period of Nicholas Whitlam’s membership and leadership of the NRMA Board, from late 1995 to 2002, because that was the period when the battle for control was fought on the broadest range of fronts (involving the media, politicians, business and civil litigation) and most intensively as a result of the failed demutualisation attempt of 1994. It was the very breadth and depth of the campaign that reveals the interaction of the fields and the character of the contest, and therefore makes it such an ideal case study to test the theoretical framework of this thesis.

I will firstly describe the empirical methodology, then give an account of the background of the organisation and the first attempts to demutualise in the early 1990s, followed by an account of the manoeuvres of the key players from 1996 to 2002 and the media reporting of their activities as they were known to journalists at the time. This will be followed by a field analysis and discussion of the theoretical implications of the analysis.

Methodology

Theoretically, we will be pursuing a field analysis of the process in order to identify the interaction among the various fields, and particularly the symbolic/media field. Empirically this case study is very different from the previous one of the Sydney residential real estate market. That was a large and diffuse phenomenon in which the aim of the FIRE industries and property owners in the economic field, along with their allies in the political field, was to maintain buoyant market conditions and appreciating house values. It was not strategically important whether any specific buyer or seller entered the market at any particular point in time, as long as there were sufficient buyers and sellers participating over any given period to maintain favourable market conditions. The media coverage largely related to generalised phenomena
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such as house prices, taxation regimes, debt and affordability, and therefore what we were examining were the broad patterns of coverage to determine the ‘objective’ structure of the field of coverage.

This NRMA case study is quite different: the pro-demutualisation forces knew from the 82% majority of those who voted at the disallowed 1994 plebiscite that the required levels of member support were present if the proposal could be satisfactorily presented to them. The issues were the terms and timing of what a ‘satisfactory presentation’ might be. So we need to examine the co-ordinated attempts by stakeholders in a varied set of fields over an extended period of time to secure specific actions and decisions from specific participants at very precise times and places. Again we will deploy a field and sources analysis of the media coverage. However, it will not be the overall pattern of coverage that is the crucial factor but rather the ‘subjective’ actions of journalists and specific sources, the fact (or not) and terms of representation of specific pieces of information at specific times and places, and how that representation impacted on activity in other fields.

The media coverage we are examining has ambivalent status and must be understood reflexively as indicative of both journalists’ and sources’ activities in the symbolic field, and of contested truth claims and evidence about activities in other fields, eg the Courts, Board meetings, secret documents. By similar token, reports and representations in the symbolic field could precipitate responses in other fields, such as legal proceedings, parliamentary statements, debate and interventions in Board activities. This reflexivity is consonant with the impact of real estate reporting on the houseing market in the previous case study, and a manifestation of the radical reflexivity of Bourdieu’s conceptual approach.

All of Mann’s IEMP fields (as modified in Chapter 4 above) were involved: the ideological/symbolic (media) field, the economic field, the military/coercive (legal) field and the political field. In our study we need to establish who were the major players involved from which fields and what were their relevant activities at different times and places in the bringing to market of NIGL, what the relevant ‘capital’ was that each of the players brought to the contest, and how they manifested that capital through their habitus as they operated in their own fields, how they operated in the media field to achieve their goals in their primary fields, and how the journalists acted to reveal and represent the various players and their activities.

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A thorough document search was undertaken of published and unpublished material, including documents confidential to the NRMA Board of Directors. The methods of investigative journalism4 were used in forensic interviews on- and off-the-record (ie according to the Code of Ethics of the Australian Journalists Association (AJA, 2010), off-the-record interviews are those whose content could be published only on condition that confidentiality is preserved by either ensuring that statements were not attributed to the interviewee or that the interviewee was not able to be identified from the information published) with six of the main protagonists among the NRMA Board of Directors. The interviewees were informed that within the parameters of confidentiality the information could be published as journalism, and could also subsequently be published in scholarly texts. This interview mode was used to establish the significance and usage of key documents in Board deliberations, and to cross-check the veracity and significance of media reports of Board activities. The interviews were off-the-record for two reasons: firstly because much of the material being discussed was confidential to the Board and breaches of that confidentiality were legally actionable (as was demonstrated on several occasions during this conflict), and secondly, because much of the commentary and assertions by interviewees about fellow Board members were actionable under defamation law (again as was demonstrated on several occasions during this conflict). The narrative of events in the conflict that follows has been constructed from cross-checking the various accounts against each other for verification and credibility; where there is significant divergence from the published reports or among sources, that has been noted. Where confidential documents have been examined but are not available for public examination, the term ‘sighted’ has been attached.

With respect to the media reporting of the conflict, a comprehensive review of all reports in the two main Sydney daily newspapers – The Daily Telegraph (DT) and The Sydney Morning Herald (SMH) – was conducted for the period 1 July 1996 to 31 December 2002. Key reports in The Australian (AU) and The Australian Financial Review (AFR) were also reviewed. This revealed the overall trends in coverage. Specific reports were selected on the basis of their significance for the conflict and for the ways in which sources were deployed to represent the conflict and the positions and activities of the protagonists, and how activities in other fields were affected by the reports.

The reporting of one SMH journalist, Anne Lampe, assumed a particular importance. Lampe was the recipient of a steady stream of leaks of both confidential documents and verbal reports from dissident members of the NRMA Board, and this flow of information conditioned the

4 The author is a member of the Australian Journalists’ Association and has worked extensively as a journalist in the political and economic fields.
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broader reporting of the conflict by other journalists. Lampe came to prominence in 1991 for her reporting of the so-called Westpac Letters Affair, revealing how leading Australian banks had mismanaged the marketing and selling of foreign exchange loans for investment purposes, causing many retail investors to experience significant financial hardship including bankruptcy, loss of family homes and farms, etc when unhedged exchange rate shifts occurred. Her reports were triggered by the leaking of two letters to the Westpac Bank from its advisers, leading corporate lawyers Allen Allen and Hemsley, in which they advised the bank about how it could prevent customers using legal action to recoup their money. After Lampe published the letters, the bank vigorously attempted to suppress the story using court orders, but eventually the letters were tabled in the Federal Parliament and so the suppression orders lapsed (Dempster, 1997). In 1991 Lampe won a Walkley Award (the Australian equivalent of the Pulitzer Prize in the USA) for her reporting of the Westpac Letters Affair, and from that time was widely recognised as one of Australia’s leading business journalists. She developed close relations with sources inside the NRMA who were opposed to the demutualisation and/or the actions of the Chairman of the Board Nicholas Whitlam. Lampe was interviewed at length about her reporting for this research, on and off the record.

There were also strong supporters of the demutualisation among the journalists at SMH, notably Business Editor and columnist Stephen Bartholomeuz (eg ‘NRMA float getting back on the road’, SMH 2/11/1999: 25). However, there was a critical mass of journalists and columnists at The Sydney Morning Herald and its stablemate publication The Australian Financial Review who gave ready access to sources opposed to the demutualisation and who amplified the discussion of leaked documents, so that the pages of the newspapers gave ample coverage to the conflict from a range of perspectives.

Background

The NRMA was established (as the National Roads Association) in 1920 as a lobby group and by 1924 had developed into a mutual road service organisation for motorists in New South Wales under its present name (NRMA, 2000: 29). A key figure in its establishment and subsequent first President (1920-1941) was J.C. Watson, the first Labor Prime Minister of Australia (‘Boardroom Breakdown’ SMH 3/4/1999: 71). This may have some bearing on why it did not seek the appellation ‘Royal’ in its title, in the way of similar organisations at the time such as the Royal Automobile Clubs of Victoria (RACV) and Queensland (RACQ), and was a
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harbinger of the significance of partisan alignments on the Board at the time of its demutualisation. The insurance arm of the organisation was first established in 1925, initially as a company and then as a mutual in 1926 with its own Board, albeit appointed by the NRMA Board (NRMA, 2000: 29).

By the 1970s, the NRMA had assumed pre-eminence as both a community organisation and a financial institution, but then commenced a period of challenge and conflict (‘Board Breakdown’ SMH 3/4/1999: 71). Membership of its board (and indirectly of the NIGL Board) was prestigious in business circles and formally achieved through elections that in numerical terms, with almost two million members, were the third largest in NSW after the federal and state elections. Control of the NIGL Board gave access to investment and expenditure decisions regarding the accumulated capital of the largest general insurer in the country. Decisions to acquire or divest shareholdings could have a significant effect on the perceived and actual fortunes of corporate entities listed on the Australian Stock Exchange (ASX) (Spigelman, 1971: 25-26). For example, for several decades up until 1998, the NRMA held significant shareholdings in Washington H. Soul Pattinson and Brickworks Limited, two companies listed on the ASX. Control of those companies resided with the Chairman of their Boards, James Millner, and was exercised through the aggregated voting rights of his family’s shares and those held by the NRMA, of which he was a Director from 1969 and President from 1984 till 1992 (Who’s who, 2007: 1444). Indeed, Millner’s personal portfolio of corporate Directorships and Chairmanships would provide for a revealing field analysis of corporate networks and the exercise of corporate control in Australia at this period, but that research is incidental to our project here.

Membership of the NRMA Board was effectively in the gift of the existing Board, despite the requirement for annual or biennial elections for half of the Board’s twelve person membership (the size of the Board and the frequency of elections varied over time, but the half-Board retirement principle was constant). Control was maintained by the technique of getting retiring members to resign several months before an election was due. This gave the Board the right to co-opt new members who could then stand at the subsequent election as sitting Directors seeking re-election, with the advantages of incumbency. No incumbent Director ever failed to be re-elected until the 1990s, and in this way control of the Board was held by members of Sydney’s conservative business establishment, with links to the conservative political parties (Spigelman, 1971: 21).

Starting in the early 1970s there were a number of unsuccessful attempts by ‘reform’ groups to wrest control of the board from the conservatives, notably two with Labor Party links in 1970
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and 1971 led by Jim Spigelman, a lawyer who held senior positions with the Whitlam Labor government (1972-75) and subsequently was appointed Chief Justice of New South Wales. Spigelman’s group criticised the existing Board as the “traffic safety establishment” (referencing US consumer advocate Ralph Nader’s critique) and campaigned vigorously on a broad platform for “social responsibilities” in “consumer protection, car safety, air pollution and urban development” (Spigelman, 1971: 22; Matthews, 1999).

Informal consideration among Board members of the advisability of demutualising the NRMA reportedly began at this time, but didn’t progress. Then at the 1990 election Richard Talbot, a Labor Party member but not a major figure in the party, was part of a successful campaign by the Motorists Action Group (MAG) to win three of the available six positions. At the 1992 elections for the other half of the Board, MAG won two more positions. These MAG directors would have the advantage of incumbency when seeking re-election, and both MAG and their conservative opponents perceived a strong possibility that control of the NRMA and consequently NIGL Boards would move to MAG.

This threat was somewhat attenuated by the tendency of some of the directors elected on the MAG ticket, notably former Labor Mayor Maree Callaghan and former Test cricketer Geoff Lawson, subsequently to break ranks and vote with the conservatives and against MAG directors on key issues. MAG directors other than Talbot would be elected to paid positions on the boards of the insurance company and other subsidiaries of the Association with the support of the conservatives. While membership of the NRMA Board was honorary, membership of other subsidiary Boards was paid. These positions could be lucrative, especially when aggregated - $10-35,000 per annum was a typical director’s fee for a subsidiary company board in the 1990s (‘Cash through or crash’, SMH 21/8/1999: 39). Richard Talbot, on the other hand, was not appointed to a subsidiary Board till 1996.

But even with defections from the MAG camp, loss of control by the ruling conservatives was seen as a significant threat. The anti-MAG forces, up until then aligned with the Sydney business establishment and indirectly with the conservative political parties, broadened their political base after 1992 by inviting onto the Board two senior figures associated with the NSW Labor Council and the Australian Labor Party: John Ducker and Michael Easson. At the same time, discussion intensified over the merits of demutualisation and listing on the stock exchange as a way to prevent a takeover by hostile forces and to maintain control in hands that were sympathetic to the conservative business interests of the city. A sharemarket listing of a privatised entity would mean that effective control would lie with the institutionalised investors that dominate the share registries.
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There was only one NRMA Board election in the 1990s in which candidates openly espoused a policy of demutualisation and listing on the stockmarket for either the NRMA and/or NIGL: that was the 1999 election that immediately preceded demutualisation when the issue was out in the open and hotly contested. That Board election was the only time the membership had a chance to vote on whether they supported candidates espousing such a policy. However, over the 1990s there were seven separate reports commissioned by the management or Board from merchant banks or management consultants that were effectively attempts to promote or lead the demutualisation process. There were also a number of other reports commenting on these attempts [for a full listing, history and summary of these reports, see Section 13.2 of the 2000 Information Memorandum, (NRMA, 2000: 134)].

The first attempt was initiated by then Chief Executive John Lambie, with the assistance of Macquarie Corporate Finance Limited, a member of the Macquarie Bank group of companies. While aspects of that report submitted in February 1992 were presented to the Board, it was never formally considered at Board level: demutualisation would have meant that even the conservative directors would have lost security of tenure once voting rights shifted from the membership to the institutionalised owners of a privatised entity.

The second attempt was mounted in 1993, and this time the conservative directors along with defectors from the MAG camp voted to support it. In October 1993 BT Corporate Finance presented a report to the Board recommending demutualisation of both the NRMA and NIGL, and that both entities become subsidiaries of another company whose shares would be listed on the ASX (NRMA, 2000: 134). The campaign to seek member’s support at the plebiscite was based on the pitch that members were getting something for nothing: indeed, the title of the prospectus was ‘Members Free Offer’ (NRMA, 1994). The prospectus forwarded to all members made multiple references to ‘free shares’ for members – twice on the first page – if the proposal were to be successful, while at the same time explicitly guaranteeing that “NRMA services would continue as they have in the past” (NRMA, 1994: 7) and that

[t]he NRMA’s commitment to promoting motorists’ interests, providing efficient road service, other member services and insurance at reasonable prices will continue …. [o]nly the legal framework of the NRMA will change, not its culture. (NRMA, 1994: 10).

This proposal was supported by 82% of the members who voted in 1994. However, two of the dissident MAG directors, Richard Talbot and Dawn Fraser, contested the legality of the

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proposal in an action in the Federal Court. The basis of their argument was that the prospectus misrepresented the demutualisation in so far as the term ‘free shares’ implied that members would not have to pay any price or suffer any loss if demutualisation was successful. The court ruled in favour of the plaintiffs, finding that the prospectus was “misleading and deceptive” because members were being asked to give up their membership of the mutual organisation in return for the share issue, and that therefore the shares were not ‘free’ (NRMA, 2000, p. 134).

A new report was then commissioned from merchant bank Grant Samuel, to evaluate the 1994 demutualisation attempt and recommend further action. This report endorsed both demutualisation and the particular structure attempted in the BT report. Interestingly, both BT and Grant Samuel specifically considered the demutualisation structure eventually adopted in 1999-2000, and rejected it. However, despite receiving that vindication in the report, in May 1995 the Board decided not to make further attempts at demutualisation following the decision of the High Court in Gambotto v WCP Limited (NRMA, 2000: 135).

The cost of the failed bid to the organization was $30 million, the bulk of which had gone to the lawyers and financial consultants who had advised on the bid. There were eleven different firms listed as advisers on the proposal, all but two of whom had been paid a minimum of $200,000 dollars for their contribution; as well, the bid leader BT Corporate Finance was due to receive a success fee of $3 million upon listing of the demutualised entity on the ASX (NRMA, 1994: 92-93). When the bid was overturned by the Federal Court, the NRMA successfully sued two of its legal advisors, Abbot Tout and Allen Allen and Hemsley, and recovered $30 million in fees, costs and interest (‘$30m rocks NRMA boat’, SMH 14/5/1999: 1).

The failure of the 1994 demutualisation was a devastating blow to those involved. Senior management were reportedly stunned, and for some it was a damaging personal blow that affected their health and well-being. They and the Board members who had ineffectually pushed for demutualisation had been humiliated before their peers in the business world by the actions of community activists. Collectively the Board, senior management and their advisers from the producers services sector had demonstrated precisely the opposite of a competence and capacity to participate in the globalisation process. CEO Ray Willing was succeeded as Managing Director in an acting capacity for two years by Peter Corrigan, until Malcolm Jones was appointed in early 1997. Chairman Don McKay and his team began planning to move on, but before doing so moved to shore up the succession and prevent MAG from taking control of the board.

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Nicholas Whitlam and Anne Keating from the Labor side of the politics had been approached in 1994 to become external directors of the NRMA Insurance board. According to confidential sources, the approach was made knowing that they supported demutualisation, though there were no public statements made to this effect. Whitlam and Keating didn’t know each other personally before this time, though both came from prominent Labor Party families, being the son and sister respectively of former Labor Prime Ministers. Whitlam had been Managing Director of the State Bank of NSW, and Keating at the time was Managing Director of the Australian office of United Airlines. Accession to the NIGL Board didn’t eventuate. However Whitlam with McKay’s support put together a team to run for election to the Association board in 1995. This team, running under the name Members First, was primarily made up of figures associated with Labor Party circles, though it also included Dominique Collins, wife of the then leader of the NSW Liberal Party. Members First ran on a platform of declared “agnosticism” with respect to demutualisation in the 1995 Board elections (‘We’re not from the big end of town: Whitlam’ SMH 14/9/1995: 10). According to insiders, this was not because they opposed demutualisation, but because they felt the dust needed to settle after the 1994 experience. The campaign director for the Members First team was Rob Dempsey, a former academic and ministerial staff-member in the Whitlam Labor government, and subsequently Chief of Staff for Don Dunstan in the latter period of his reign as Labor Premier of South Australia (1970-79). Dempsey was to direct the 1995 and 1997 Board campaigns for the Whitlam team, and according to insiders was the backroom architect and key strategist in the successful demutualisation attempt of the late 1990s.

At the conclusion of the 1995 half Board election, membership was evenly split five-five-five between the Member’s First team led by Nicholas Whitlam, MAG led by Richard Talbot, and the remainder of previous pro-demutualisation directors led by outgoing chairman Don Mackay, with one former MAG member Geoff Lawson now non-aligned (‘NRMA Veteran Shifts Service From Road To Board,’ SMH 2/11/1995: 8). The political alignment of the Board had shifted from the conservative Liberal and National Parties to the Labor Party (‘Women winners in NRMA election’ SMH 1/11/1995: 9).

Shortly after being elected to the Board, Whitlam made an attempt to be appointed chief executive (‘Whitlam claims it’s time at NRMA’, SMH 21/2/1996: 27) but his candidature was roundly defeated in a secret ballot at the Board (‘New man at wheel of NRMA,’ SMH 23/2/1996: 21). The MAG group continued its attacks on the Mackay group of directors who had supported the failed demutualisation. Amid acrimonious Board meetings sometimes attended by legal advisers for the different factions, in late 1996 Mackay stepped down as

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Chairman. The anti-demutualisation camp split over personal rivalry between Talbot and Singleton, and Whitlam was elected as Mackay’s successor, saying that

Despite the success of the NRMA as "arguably the most successful motorists' organisation in the world", reform was needed to revitalise its business performance. "It has become clear that the structure of the NRMA is too complex, and works against it being run in an effective fashion," he said. "The board processes need to be simplified, made more transparent and readily understood, and directors need to be more accountable to members." (‘Whitlam promises reforms at NRMA’, SMH 6/12/1996: 2)

The scene was set for a further bruising round of conflict over demutualisation, which would provide further work for the leading Australian producer services firms, the leaders and key advisers of the NSW branch of the Australian Labor Party, the NSW Supreme Court and leading legal firms, and which was intensively reported in the major newspapers of the city. It provides an ideal case study for a field analysis of the media’s relationship to nuts-and-bolts activities of the producer services involved in the production of a ‘global city’.

Demutualisation: 1996 – 2001

On average over the period 1996 to 2002, there was daily mention of the NRMA in both The Sydney Morning Herald (SMH) and The Daily Telegraph (DT). The great majority of these mentions related to the NRMA’s core business of motoring and insurance, and it was routinely quoted as an unchallenged voice of authority on a broadly associated range of issues. However, the politics at the Board level also received extensive coverage, in 1996 accounting for 11% of DT mentions and 17% of SMH mentions, rising to 31% and 33% respectively in the crucial years of 1999 and 2000 when the key Board election and demutualisation plebiscite were held.

In 1996-97 the general tenor of perspective and opinion in both newspapers was that the demutualisation attempt had ended as a debacle, and this attitude transcended traditional left/right boundaries. For example, Piers Akerman, a notoriously truculent and conservative columnist with the DT, was scathing in his references to the Mackay group of directors (‘Autograph hunt a bad sign for Board’, DT 1/8/1996: 11). Even as demutualisation re-emerged as an active issue in the 1999 NRMA Board election and the member plebiscite the following year, the DT mainly categorised the choice as between tradition and ‘a fistful of dollars’ (‘Nick

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sees off the zealots’, DT 20/4/2000: 8), with both preferences viewed as having merit. At the SMH, Anne Lampe’s coverage was increasingly but carefully anti-demutualisation in its tone, and that had a strong influence on the related reporting by other SMH and AFR journalists, although as the newspaper of the share-owning middle-class the SMH was not in principle opposed to the demutualisation in its editorials (‘Second try for NRMA’ SMH 1/3/1999: 16).

Increasingly the focus at both mastheads became the internecine conflicts at the NRMA Board, and perspectives on demutualisation came to be coded through the choice of sources in reporting the latest alleged skulduggery. Whitlam and Talbot respectively came to be characterised as the champions/demons of the pro- and anti-demutualisation forces respectively, and as they drew upon their political, economic and cultural capital, deploying their habitus in manoeuvres in other fields and mobilising allies to assist their cause, they themselves as protagonists became the object of the news reporting, as we shall see below. As the infighting became more savage, a view emerged in media commentary that whatever the rights and wrongs of the partisan positions, the governance of an important financial institution had become impossible, and demutualisation increasingly was characterised as the sword to cut the Gordian knot (‘Boardroom Breakdown’ SMH 3/4/1999: 71).

The key battle throughout the conflict was for control of the NRMA Board. Not only was it the body with sole authority to initiate the demutualisation process by calling a plebiscite of members on the issue, it also controlled the finances of the organisation. The invoiced costs for the second, successful demutualisation attempt eventually totalled $107 million (‘NRMA float: why it’ll pay to belong’, SMH 17/2/2000:1)), not to mention the bills for ancillary legal actions associated with Board conflict. It was routinely described around the Sydney producer services sector as ‘one of the biggest earners in the big end of town’ (‘Haven’t we been down this road before’, SMH 17/2/2000: 11). Without regular Board approval for the disbursement of funds to finance the demutualisation process, it would not have happened.

Between 1995 and 1997, control of the Board resided with the combined Whitlam and Mackay forces, but while there was a rearguard action in defence of the attempted demutualisation, there was no impetus at that level for a further attempt at that time. However, this was not the end of the matter. There was continuing conflict as the MAG directors tried to get the Mackay forces removed from the Board via attacks at the Board meetings and resolutions at general meetings of the membership (‘Rebel in bid to sack NRMA directors’, SMH 15/8/1996: 5). In response, the majority forces at the Board voted to commission a new report from Sir Laurence Street, former Chief Justice of the NSW Supreme Court, on corporate governance. Delivered in May 1997, this report was mainly concerned with relations among directors and between directors
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and NRMA management, but did comment in passing that “the present corporate structure does not meet the needs of a major commercial undertaking” (NRMA, 2000: 135).

In late 1997 there was a half-election for the NRMA Board, the result of which was an evenly split membership comprising eight directors in the Whitlam camp, three MAG directors aligned with Talbot and five ‘Members Mutual’ directors led by Jane Singleton, with the two latter teams proclaiming opposition to demutualisation and Whitlam’s team assumed to be in favour, though that had not been affirmed during the campaign. This was the strongest election result to date for the community-based anti-demutualisation camp: they had come within one board seat of achieving control of the largest general insurer in the country with $1.3 billion in funds under management, no doubt a prospect to stir panic elsewhere in the insurance and finance sectors. Rob Dempsey was again the campaign director for the Whitlam team.

Internecine rivalries between the anti-demutualisation teams caused Talbot’s team to vote to support Whitlam’s nomination for President against Singleton, which Whitlam won by a margin of 12-4 (‘Triumphant Whitlam hails NRMA stability’, SMH 12/12/1996: 9). As Chair, Whitlam would have a casting vote in the event of an evenly split vote at the Board. It was a very close call for the demutualisation forces, and victory was ensured by the disunity of the anti- demutualisation camp.

Meanwhile, the cash flow to producer service firms continued unabated. Following the Board election, in December 1997 another report on structure and membership was commissioned, “for the NRMA Group to comprise one mutual, namely NRMA Limited” (Malcom Jones, NRMA CEO, letter to Board, 5 December, 1997). This report came to be known as the McKinsey report, but also involved the law firms Minter Ellison and Mallesons Stephen Jaques. The 2000 Prospectus states that “McKinsey and Company was expressly requested to assume that a mutual structure would continue and was not asked to examine demutualisation as an alternative structure” (NRMA 2000: 135). However, the structure that McKinsey recommended, the so-called ‘One Mutual’ proposal, was seen as demutualisation by stealth by the dissident directors and they opposed it strongly (‘NRMA float bobs up in all-options study’, SMH 30/5/1998: 95). Under the proposal, while NRMA Limited would remain a mutual, the Insurance arm (NIGL) would be demutualised to become a wholly owned subsidiary of the NRMA, and up to fifty per cent of shares in NIGL could then be sold without further approval by NRMA members at a plebiscite.

The dissident directors believed that once NIGL had been half-privatised, it would have been possible to argue that it was unstable in half-mutual/half private ownership, and so should
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proceed to full privatisation. It was a parallel strategy to the two-step corporatisation and then privatisation that had been deployed in Australia in the sale from public ownership of the national airline Qantas and the Commonwealth Bank of Australia, and indeed it was being used at this time by the Howard government in the part-privatisation of Telstra. The metaphor that it was untenable to be “half-pregnant” was regularly used by the advocates of full privatisation of Telstra, and probably a similar argument would have been advanced with respect to NIGL (Howard, 2002).

The month of May 1998 was a critical period in the demutualisation conflict. NRMA sources of the time say that the One Mutual scheme advanced by the McKinsey Report ‘was Whitlam’s baby’. It was heavily promoted by Whitlam as an answer to alleged inefficiencies and overlaps in the ‘two mutuals’ structure. As late as 15 May, 1998, Whitlam wrote to Andrew Stevenson, partner in Corrs Chambers Westgarth, requesting his written advice on aspects of the One Mutual proposal. It was a detailed, five page letter (sighted), listing the steps that had been undertaken to date and those planned to achieve the One Mutual structure, listing the producer services firms involved (Ernst and Young Corporate Finance, Credit Suisse First Boston, Minter Ellison, Mallesons Stephen Jaques, two senior counsel, and two communication consultants (Rob Dempsey and Graham Canning) and itemising the matters on which advice was sought.

On 22 May 1998 the Board papers (sighted) for the meeting of 28 May were distributed. They included two reports both dated that same day. One was a report from Eric Dodd, then Chief Financial Officer, on the progress of the One Mutual strategy, but referring to ‘new issues’ that had arisen the previous week. The report recommended “that the proposal, as currently framed, be placed on hold whilst these new and additional issues are fully considered” and a committee was established for that purpose. The report acknowledged that this meant the current timetable for One Mutual “would now be unachievable”. In effect, the One Mutual strategy was being shelved, and the background to this turn of events illustrates the competition among different agents on the Board and separately among the corporate advisers and producer services firms.

Early in 1998, Rob Dempsey, who had been employed to work as a communications consultant by the NRMA on the One Mutual process, formed the opinion that ‘it wasn’t going to work’, his reason being that there was no outstanding argument in favour of the proposal that would persuade the members to support it. The argument of the proponents was that it would streamline administrative procedures, and of the opponents that it was demutualisation by stealth. Dempsey took it upon himself to carry the argument against the One Mutual strategy, and by implication potentially to place himself at odds with Whitlam. As part of this, he approached Dodd, the Chief Financial Officer soon to replace Jones as CEO, and suggested that
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another attempt be made to demutualise the insurance arm. Dodd responded with the conventional wisdom of the NRMA leadership at that stage, that it would be politically impossible, to which Dempsey responded that he would handle the politics. Dempsey’s view was that the strategy to follow involved an exploration and presentation of all the structural options available to the organisation.

Dempsey is said to have approached ‘some of his mates at CSFB (Credit Suisse First Boston)’ over a coffee at a cafe in front of the MLC Centre in the Sydney CBD, and asked them how long it would take to put together a presentation. They told him about a week. The result was a boardroom lunch and Powerpoint presentation at CSFB’s Sydney offices. It was hosted for Whitlam, Keating and Dempsey by senior CSFB director Alan Highet, who travelled from Melbourne, together with a CSFB colleague. The essence of the presentation was that the NRMA had an obligation on behalf of its members to consider all available developmental and structural options that might improve the organisation. In conversations after the presentation, Whitlam is reported to have said that “he didn’t want to become another McKay”, that is, to suffer the ignominy of leading a failed demutualisation bid. On the other hand, some fellow Board members at the time were of the opinion that Whitlam was attracted by the possibility of “doing a Trumbull” ie getting access as Chief Executive to the lucrative salary, share options and bonuses that George Trumbull was earning as CEO of the demutualised AMP.

The Board Committee created on May 22 to address the ‘new issues’ reported that a presentation (sighted) had been received from Credit Suisse First Boston (with input from Minter Ellison) to the effect that the NRMA Board had an obligation to consider all options regarding structure in the interests of its members. The presentation was replete with circular logic and ironies. It suggested that “The risk of a takeover offer prejudicial to Members’ interests can be reduced [and] a well-developed position regarding demutualisation is important to ensure that the Board can respond in a pro-active, controlled manner”. The great majority of precedents cited in the report involved companies that were subject to take-over bids during demutualisation, that is to say, the demutualisation that was to be evaluated as a defence to the threat of takeover seemed to be a component of the takeover process it was meant to thwart!

The presentation claimed that NRMA insurance would be an attractive takeover target because of its “strong balance sheet with a large capital surplus (which could assist offer financing)”, ‘Offer financing’ refers to the takeover tactic of using an organisation’s own assets to fund its purchase, which was precisely the strategy that the internal pro-demutualisation forces were deploying, and of which their opponents had accused them. This was the very reason why control of the NRMA Board was the key object of struggle throughout the demutualisation
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process. In contradiction to this argument about the vulnerability associated with the accumulated capital reserves, CSFB also argued that NRMA’s high capital requirements were a reason to jettison the mutual structure so that capital could be raised via share offers on the stock exchange.

At the following NRMA Board meeting on 28 May, 1998, CSFB made its presentation to the full Board in which it outlined the responsibility of the Board to canvass all structural options, and proposed a consultancy project to do so. The original name proposed for this research consultancy was reportedly ‘Project Hammer’ but Dempsey was horrified and recommended ‘Project Outlook’ instead.

In the view of informed insiders, this May meeting of the Board was the crucial battle in the struggle for demutualisation. There was no tender process set up to select the advisers who would have the carriage of this crucial part of the demutualisation strategy, which was confidentially reported to have been because any such process would have played into the hands of the opponents to demutualisation on the Board, and led to delays while they marshalled their opposition to derail the strategy. In the end, there was no opposition on the day to the CSFB proposal to undertake Project Outlook, and it was approved without dissent. Talbot and the other anti-demutualisation Board members saw it as a face-saving move to cover the defeat of the ‘one mutual’ proposal, and described it as such to journalists (‘NRMA float bobs up in all- options study SMH 30/5/1998: 95). This was a major strategic miscalculation on their part, and though they might not have had the numbers on the Board on the day to prevent the approval of the Project Outlook consultancy, they certainly failed to recognise the new demutualisation attempt at its outset.

At this same meeting, there was another major controversy besetting the board. Ian Yates had been elected as part of the MAG team in 1997, and was the most commercially experienced Board member in the anti-demutualisation camp, and therefore the strongest threat to the pro- demutualisation forces. He was a qualified accountant and CEO of his own diversified business with security and property interests, and had a history of being a combative and litigious corporate maverick (‘Ian Yates, The Businessman Forever Courting Trouble’, SMH 8/3/1999: 37). He had subsequently been appointed to the board of the NRMA’s subsidiary investment company, and prior to the March 1998 meeting had noticed that a parcel of shares that had been approved for sale in February 1997 at a then available price of $145-155 million had remained unsold twelve months later, and was finally divested “at a notional loss of $70 million” on the price available at the time divestment was decided upon. The shares were in two companies, Washington Soul H. Pattinson and Brickworks, which were themselves linked by cross-
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ownership of shares and under the control of Jim Millner, former Director (1969-1992) and President (1984-1992) of the NRMA. Millner had exercised control over the family companies through the aggregation of shares held by his family, friends and the NRMA. It was subsequently alleged in the NSW Parliament that

A decision was made that shares worth $155 million be sold in early 1997. Because of pressure from Milner and also from Don Mackay, who succeeded Millner as Chairman of the NRMA and was therefore before Nick Whitlam, the sale was delayed for some 16 months, which is quite a while in which to undertake a board resolution. New director, Ian Yates, came in. He acquainted himself with the operations of the NRMA and began to pursue this issue. Shortly after, the shares were sold. However, the market value was not $155 million but $85 million. (NSW Legislative Assembly Hansard, 13/04/2000: 4767)

At the time he brought the matter to Whitlam’s attention (the day before the March 1998 meeting of the NRMA Board) Yates reportedly was concerned about management competence. Whitlam interpreted his queries as concerns about malfeasance and probity, and discussed them in those terms. In Yates’ view, this was a misrepresentation, and effectively established a ‘straw target’ to be easily demolished in the inquiry that Whitlam established. The March Board meeting agreed to the establishment of an inquiry comprising Whitlam, Dodd and John Buttle, senior partner at KPMG (accountants for the NRMA at the time). Buttle was later named adversely for conducting an inadequate audit in the Royal Commission into the collapse of the large insurance company HIH (ASIC, 2008). The inquiry proceeded on the basis that it was looking for malfeasance and lack of probity, rather than simple incompetence or management oversight. After a period of argument and contestation between Yates and the inquiry members, at the following Board meeting Yates reportedly had the minutes corrected to reflect his view of the Board’s March decision. However, this was to no avail and the inquiry reported that it found no evidence of malfeasance or lack of probity, and didn’t mention the issue of competence.

Yates presented a document (sighted) to the Board outlining in detail the results of his own research on the matter, which included legal opinions and interviews with two stockbroking firms that normally researched and traded in the Pattinson and Brickworks stocks. There was vehement and personal criticism of Yates by other Board members, notably the women, about some elements of his report, particularly to do with alleged references to a female NRMA staff member. The arguments at the Board over this alleged attack on the staff member and the delayed share sale occupied the board and senior management throughout the remainder of

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1998, and led to court actions for defamation and an attempt to dismiss Yates from the board. (‘Yates takes NRMA attack to court’, SMH 10/6/1999: 23)

The alleged significance of the delayed share sale was that it had the potential to discredit the competence of the directors of the NRMA Investment Board, including Whitlam and Keating, and by implication the soundness of the commercial arguments for demutualisation. On the other hand, for the pro-demutualisation forces it served as a distraction from Project Outlook, and also had the potential to distract and weaken Yates as a key protagonist in the conflict. The controversy was waged very publicly, including mentions in parliament (NSW Legislative Assembly Hansard, 13/04/2000: 4767) and the media (Yates takes NRMA attack to court SMH 10/6/1999: 23; ‘Gag On NRMA Dissident Should Be Lifted, Court Told’ SMH 21/6/1999: 38), and at the very least conveyed the image of conflict within the NRMA Board, if not broader doubts about competence or indeed malfeasance as suggested in Parliament.

Yates pursued the matter of the delayed share sale by commissioning at his own expense reports and opinions from various outside experts. The Board appointed a mediation committee to review the arguments and evidence on both sides, which included Simon Longstaff, Director of the St James Ethics Centre. This review (sighted) concluded that there was merit in a further investigation of the events raised by Yates. At the same time, Yates was coming under strong attack for allegedly breaching the protocols of corporate governance over the allegations he was alleged to have made against the NRMA staff member. He was also being sued in the courts over this matter, and was facing dismissal by means of a resolution sponsored by the pro- demutualisation forces for the following annual general meeting. Yates was ultimately successful in the legal action, when the NRMA was forced by the NSW Supreme Court to run corrective advertisements following a set of ads it had run concerning the Pattinson/Brickworks share sales. The earlier ads had claimed that the group made a profit of $37 million on the share sale, refuting ads by dissident director Yates claiming a $50 million loss. The corrective ads issued by the NRMA acknowledged a $14 million loss (AFR 31/8/99: 26)

Yates in the meantime felt that he had convinced enough board members by the end of the year that the delay in the share sale warranted a new investigation, but the issue was swamped by the delivery for the December meeting of the Project Outlook report. Shortly after, Yates was granted leave from attending Board meetings because of illness (he was diagnosed with throat cancer) and his various motions were not proceeded with, although the NRMA proceeded with its own legal action to expel him from the Board (‘NRMA refuses Yates cancer plea’, SMH 18/10/1999: 3). Yates, probably the most effective member of the anti-demutualisation team, had been effectively neutralised on the demutualisation issue by his focus on the conflict over
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the share divestment and his illness. In terms of a field analysis, it is an example of battles being waged on an issue in one field to achieve goals on other issues in other fields, which I will discuss further below.

In the meantime, cracks had appeared in the pro-demutualisation camp. Malcolm Jones had resigned as CEO in June 1998 after a long period of difficulty in relations between him and Whitlam over demarcation of their respective roles as CEO and Chairman of the Board (‘Whitlam faces questioning on NRMA chief’s resignation’, SMH, 25/6/1998: 6). Whitlam made an attempt to succeed him as CEO, but was blocked by Keating’s failure to support him. Dodd was then promoted from CFO to CEO. This was the beginning of the conflict between Keating and Whitlam in the pro-demutualisation camp.

The Project Outlook Report presented by CSFB in December to the NRMA Board considered seven possible restructuring options. The report had been described by Whitlam as canvassing the full range of options without prejudice, and not as a stalking horse for demutualisation. However, all but two of the options considered involved demutualisation in some form or other, and the recommended option, Option Six, was for re-mutualisation of the Association and demutualisation and listing of the insurance arm under the title ‘Remutualisation and Listing’ (‘NRMA's Choice Of The Road Ahead To Test Its Attitude To Members’ SMH 5/12/1998: 63). CSFB was of the opinion that an appeal to the personal financial interests of members through the issue of shares would persuade the required majority to endorse the proposal .

The Board meeting to consider the report had been scheduled for January, but was delayed after protests from the dissident directors. At a Board meeting on 25 February, 1998 it was decided (on Whitlam’s casting vote) to develop a detailed version of the Option Six, the Remutualisation and Listing Proposal (‘$4bn NRMA on road to top 30’, SMH 26/2/1999: 21). Between 25 February and 9 December, 1999, $31 million was spent developing the proposal, of which about 40% was estimated to cover member communications and logistics, and the printing and postage of materials to members (NRMA Information Memorandum, 2000: 146). Where the lion’s share of the other $18 million went can be gathered from the fee structures (document sighted) negotiated with the advisory firms, which were: • Credit Suisse First Boston (Corporate Adviser) • KPMG (Investigating Accountants) • PricewaterhouseCoopers (consulting actuary) • Mallesons Stephen Jaques (legal advisers to the Proposal) • Cannings (communications adviser) • Corrs Chambers Westgarth (separate legal advisers to Association)
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• Freehill Hollingdale & Page (separate legal adviser to Insurance) • Deloitte Corporate Finance (review of Proposal on behalf of Association members) • Ernst & Young Corporate Finance (review of proposal on behalf of Insurance Members and Association) The fees were negotiated, and in some instances discounts of 10%, and occasionally up to 16%, were agreed on the amounts that follow: CSFB charged $245,000 per month (backdated to 1 January 1999 and net of expenses and fees and expenses of adviser); KPMG charged between $380 and $500 per hour for various partners to give an estimated total fee of $1.1 - $1.4 million; Mallesons Stephen Jaques charged up to $425 per hour for partners and lower amounts for other staff, estimating total costs in the order of $2.5 million; Cannings charged $275 per hour for Graham Canning and lower amounts for other staff.

The total costs of implementation for the Remutualisation and Listing Proposal were estimated to be $107 million in the Information Memorandum, but reports suggest they blew out to about $130 million (NSW Legislative Assembly Hansard, 24/10/2001: 17867)

As a gesture to the anti-demutualisation camp, at the same meeting (25 February, 1999) that Option Six was approved for detailed development, a Two Mutuals Committee was established to “work with consultants and provide a written report focusing on and developing a full case for retaining and strengthening the NRMA Group’s Two Mutuals structure” (NRMA 2000 Information Memorandum: 137). Members of this Committee were largely the anti- demutualisation directors. Marsden Jacob Associates and Copernican Securities were retained as consultants, but were denied access by CSFB to their models and data, which they claimed to have destroyed (‘NRMA directors to challenge gag order on restructure’ SMH 29/7/1999: 23).

At the June 1999 Board meeting, Maree Callaghan changed her position to become a supporter of the demutualisation proposal, and from that time on the conduct of a plebiscite of members to approve the proposal was assured (‘NRMA Board now 9 to 7 in favour of demutualisation’ SMH 25/6/2009: 26). Callaghan had been first elected to the NRMA Board on the Talbot ticket in 1992. However, according to Talbot, she changed sides before she had a chance to take her seat, which if so is an indictment of Talbot’s capacity for character judgment. Prior to the June 1998 meeting, Callaghan had been an opponent of demutualisation. As a result of her switch, not only was the proposal assured of going to plebiscite, but the Whitlam faction had the numbers on the Board to prohibit public discussion by the directors of the Project Outlook demutualisation proposal, which they did, authorising only the Chairman Whitlam and the CEO Eric Dodd to make any comments on the restructure proposal (‘NRMA directors to challenge
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gag order on restructure’ SMH 29/7/1999: 23). At the time the Board had two reports before it canvassing the demutualisation proposal: one in favour from CSFB, and one against prepared by Marsden Jacob Associates and Copernican Securities (sighted), neither of which could now be publicly discussed by Directors other then Whitlam and Dodd.

This protocol against public comment was contested by the minority anti-demutualisation directors at the following meeting in July, unsuccessfully. According to one of the dissident Board directors, the Chairman Whitlam at that meeting also had declined to allow the Marsden report to be distributed to Directors with the Board papers (‘NRMA directors to challenge gag order on restructure’ SMH 29/7/1999: 23).

The pro-demutualisation campaign had to clear two electoral hurdles if it were to succeed: it needed to retain control of the Board at the 1999 half Board elections, and the proposal had to be approved at the general plebiscite of members. As flagged in the early briefings by CSFB, the ‘hip pocket’ nerve was to be a key element in their campaign.

The potential listing price of the demutualised insurance arm was canvassed in the press in the lead-up to the two plebiscites, for the Board in October and the demutualisation proposal the following year. In the lead-up to the October Board elections, media reports canvassed a possible valuation of $6 billion being considered by sources inside the NRMA, though this compared to valuations of between $4.5 and $5.5 billion using standard industry multipliers (AFR, 31/8/99: 26, DT, 8/7/99: 15). This discussion of the potential value emerged during the skirmishing about what information on the proposed demutualisation was to be made available to the members who might vote in the October elections. The Australian Securities and Investments Commission (ASIC) had ruled that edited versions of the pro and anti demutualisation reports (by CSFB and Marsden Jacob and Copernican respectively) could not be issued because they might compromise any information memorandum that would accompany a demutualisation proposal (AFR, 31/8/99: 26).

At this point in the conflict, with the pro- and anti-demutualisation camps on the Board publicly declared and locked in conflict, the supporters and opponents of the two camps in the political, business and media fields also became publicly active. The Director of Whitlam’s two previous Board campaigns in 1995 and 1997, Rob Dempsey, was now fully occupied with the demutualisation, and was employed by the NRMA, and for a period also by KPMG. Belinda Neal, a Labor Senator from NSW, became the campaign director for the Whitlam team at the October 1999 half-Board election (‘Pumping the NRMA float: Whitlam under fire’ SMH

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20/7/2000: 1). Those elections were crucial to the success of this attempt at demutualisation: five out of the nine pro-demutualisation directors were standing for re-election (AU, 8/7/99: 21).

In supporting his team and their pro-demutualisation stance, Whitlam argued that demutualisation would provide funds to “recapitalise” the operation of the road service organization (‘NRMA's Choice Of The Road Ahead To Test Its Attitude To Members’ SMH 5/12/1998: 63). Ironically, his argument rested on the claim that the road service arm had lost money in the previous year, and was likely to do so again in the absence of any increase in membership rates. The road service arm was being subsidised by the insurance profits (which it always had been), and yet the pro-demutualisation directors were arguing that membership fees would not need to rise if demutualisation proceeded.

Candidates on both sides for the 1999 Board election were largely high-profile media commentators and community activists. For Whitlam’s team, the candidates were Whitlam, Keating and Collins (existing directors) plus Tim Shaw, a commercial radio host and Mark Coyne, captain of the St George/Illawarra rugby league team. The anti-demutualisation team included existing Directors Talbot and Rankin, plus North Sydney Mayor Genia McCaffery, academic and social commentator Eva Cox, President of the NSW Australian Medical Association Kerryn Phelps, high profile criminologist Paul Wilson and the President of Whistleblowers Australia Jean Lennane. Clearly, a high media profile was a priority in the selection of candidates, as indeed it had been in campaigns since 1990 (AFR, 8/7/99: 31).

The management of the Members First campaign drew on the best electoral expertise available to the Australian Labor Party. The Campaign Director was Belinda Neal, former Labor Senator, wife of John Della Bosca (former Secretary of the NSW Labor Party and Minister in the NSW Carr Government) and close associate of then Premier Bob Carr (SMH, 29/3/99: 1). Media management consultants Hawker Britton were managing the campaign. Bruce Hawker and David Britton had previously worked in the office of the NSW Labor Premier Bob Carr, and their firm worked closely with Labor Party teams in state and federal campaigns from 1997. They claimed they were not being paid for this NRMA work being done for Whitlam’s team, and were their “help and advice” was being “done for nothing” (‘Keep ‘em honest’, SMH, 21/7/99: 8). Nonetheless, Hawker Britton were active in their NRMA work, organising press conferences for candidates, alerting journalists to interview possibilities and the emergence of new reports supporting demutualisation (‘Keep ‘em honest’, SMH, 21/7/99: 8).

This work for Whitlam’s Members First Team was additional to the official pro-demutualisation communications campaign being run for the NRMA by Cannings, who had previous worked for
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the Westpac Bank. The anti-demutualisation forces, on the other hand, were silenced from discussing the CSFB and Marsden/Copernican reports on demutualisation, and besides could not afford public relations consultants. Their communications campaign was reduced to news coverage by sympathetic journalists, and their website at www.mag.org.au (‘CBD’, SMH, 14/7/99: 23, ‘Keep ‘em honest’ SMH 21/7/99: 8)

Whitlam claimed the Members First campaign would be run “on the smell of an oily rag” (DT, 8/7/99: 15). However, producer services firms played a major role in what was a thoroughly professional election campaign for Whitlam’s team, and controversy soon flared over the economic support provided. The Whitlam campaign was alleged to have cost $430,000 (NSW Legislative Assembly Hansard, 4/4/2000: 4061). It included extensive media advertising using billboards, radio and newspapers. Speaking under parliamentary privilege in the NSW Legislative Assembly, Labor MP Richard Jones alleged that Members First “was given fifty [billboard] sites, worth $75,000, for nothing”. Jones continued: “The portraits and the artwork - the skins for the posters - were the work of Saatchi and Saatchi, NRMA’s main advertising agency and the same advertising team that in March won a lucrative $3.7 million contract from NRMA to sell the vote for the demutualisation campaign” (SMH 23/6/2000: 23)

Whitlam’s team was alleged to have received contributions in money and/or services from Saatchi and Saatchi (and a subsidiary company), political strategy consultants Hawker Britton, Salmat [NSW Legislative Assembly Hansard 7/6/02, 5.43pm] lawyers Corrs Chambers Westgarth (who also contributed to Whitlam’s 1995 and 1997 campaigns) – Corrs received “tens of millions of dollars of legal work” from both the NRMA and Whitlam in the demutualisation process and court actions arising from controversy on the Board (NSW Legislative Assembly Hansard 20/9/01: 5.37 pm), the Motor Traders Association ($120,000 – MTA members subsequently benefited from the cessation of the NRMA Quality Repair System and the sale of the NRMA’s six repair workshops (NSW Legislative Assembly Hansard 11/4/02, 6.01 pm), Dunhill Madden Butler and BT Australia.

The financial dimensions of demutualisation were a key element of the election campaign by both sides. Whitlam released a report by Macquarie Equities which put a valuation of more that $5 billion on the insurance business, and on this basis speculating that members could receive between $680 and $6,000 with an average of $3,000 in share entitlements (‘Cash through or cash’ SMH 21/8/1999: 39). The upper figure turned out to be wildly optimistic at about 150% of the final maximum share entitlement. On the other hand, the anti-demutualisation directors contested the economic model and capital needs assumptions (that the NRMA as a mutual needed to retain 20% more capital than a listed entity) that formed the basis of the CSFB Project
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Outlook recommendations, using actuarial research based on ratings agency studies. CSFB refused to make available to the Marsden/Copernican researchers the models data and records that they’d used in their research, claiming that they had been destroyed as part of normal practice at the end of the research period (AFR 10/9/99: 12) CSFB claimed this destruction was executed in line with its normal document retention policy, though other investment banks expressed considerable surprise at this (AFR 12/7/99: 41). The inability to test the soundness of the CSFB research effectively closed down the debate on the economic validity of the pro- demutualisation case, since critics and opponents were reduced to expressing scepticism or disbelief in general terms, and hence liable to be characterised as negative ideologues or spoilers.

This strategy by the pro-demutualisation forces depended on a general disposition by the public and media reporters/commentators to believe that privately owned or listed corporations generally were more successful commercially than mutual or public sector corporations (so that a case to this effect did not need to be scrutinised closely or even made) and in the case of the NRMA, this needed to be complemented by an assurance that the individual experience of service levels or insurance premiums would not deteriorate. If this set of premises could be kept intact, the issue effectively boiled down to money for nothing, ie free shares, vs old- fashioned and expensive ideology in supporting the mutual. The Sunday Telegraph noted that the optimistic Macquarie share entitlement estimates “should help drive voter turn-out for the pro-demutualisation forces” (ST, 11/7/99, 145). Regarding the standing of the financial arguments, the AFR reported the Marsden/Copernican argument that the choice was mainly philosophical, pointing to overseas examples of thriving financial services companies; Whitlam responded on cue by reducing the philosophical case to money terms, arguing that support for the mutual was comparable “with support for higher taxation: an option available which delivered more services" (AFR 12/7/99: 41).

The NRMA demutualization campaign occurred in a media, polical and economic context where privatisation and demutualisation were being heavily promoted by politicians of both major parties and business leaders, as outlined at the very beginning of this thesis. For example, at the same time as the NRMA demutualisation plebiscite was in full swing, the Federal Government was establishing its International Financial Centre Taskforce, to promote Sydney as a global financial centre. The Minister for Financial Service and Regulation, Mr Joe Hockey, was reported to have “indicated privately that, if necessary, the biggest remuneration package anywhere in the Australian public sector would be offered to secure the right candidate” to be chief executive of the taskforce. (SMH, 7/8/99: 61). On the record, Hockey was touting the continuing privatisation of government assets to attract long-term capital
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investment to Australia: in July 1999 he was predicting that there was “at least $150 billion of privatisations still to come over the next three years” (Asiamoney, July/August 1999:7). The establishment of the Taskforce was enthusiastically supported in the NSW Parliament by Michael Egan, Treasurer in the NSW Labor government, (NSW Legislative Assembly Hansard, 6/4/2000).

The results of the October Board election strongly favoured Whitlam’s Members First ticket, which was elected in its entirety and so secured full control of the Board to pursue demutualisation. Media reports quoted sources to the effect that over 80% of the 470,000 members who voted (out of an eligible electorate of 1.9 million) supported the pro- demutualisation directors (AU, 23/10/99: 9).

Two dissident directors were subsequently forced off the Board of the NRMA. Ian Yates resigned prematurely because of illness, but if not he would have faced a Board recommendation that he be removed by members voting at the 1999 annual general meeting. Talbot resigned in 2000 (but was re-elected in the 2001 elections) as part of a deal to avert bankruptcy by securing funds from the NRMA to pay legal bills that arose in his campaign to prevent demutualisation.. He received only partial payment of the bills of over $800,000, but it enabled him to keep the family home (‘Talbot family stands by its man’ SMH: 29/6/2000: 3). In the meantime, Whitlam had the full support of the NRMA’s budget and legal services in his campaign to thwart the anti-demutualisation campaign.

Whitlam was assiduous in using the legal process and the threat of court action to expend the financial resources of his opponents if not secure a court verdict in his favour (NSW Legisative Assembly Hansard 20/11/2000, 4.32 pm). In effect he was using the mutual NRMA’s resources to defeat the opponents of demutualisation, and in the process providing lucrative employment for the law firm that had supported his election campaigns: Corrs Chambers Westgarth. He could argue that since the demutualisation was supported at the 1994 and 2000 plebiscites by more than the required 75% of voting members, he was not doing anything improper in pursuing this strategy. His opponents argued that the process was a highly compromised one in which the full and transparent debate on the merits or otherwise of demutualisation by the members was thwarted by the tactics employed by the pro-demutualisation camp.

Once the Board elections had been resolved in favour of the pro-demutualisation camp, the process of organising and conducting the required plebiscite of members continued. The campaign to ensure its success moved ahead on fronts in all fields. The 1994 attempt had been defeated not at the plebiscite but in the courts, and to forestall the possibility of a recurrence the
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proposed Information Memorandum was forwarded to the NSW Supreme Court for review prior to distribution. The final version of the memorandum ran to 157 closely typed A3 pages of comprehensive and formal legal advice rendered to every interested category of the membership and provided at great expense by the host of producer services firms listed earlier. Justice Kim Santow said it was the most complex Information Memorandum he had seen (‘NRMA memo complex: judge’ SMH 12/2/2000: 103), and while specifying that he was not endorsing it as a proposal nor pre-empting review of the document at a subsequent legal challenge, he did approve it for distribution to the membership (‘NRMA float plan can be sent to members’ SMH 15/2/2000: 31)). The very density of the information in the document, the type of language deployed and the careful phrasing of advice would undoubtedly have ensured its unreadable and unread status among the broad voting membership, while at the same time bulwarking it against legal challenge.

Elsewhere in the legal field, as indicated above only Whitlam and Dodd among the Board members were authorised to discuss the CSFB and Marsden/Copernican documents, so the gag was effectively in place. Multiple writs were issued in both directions between the dissident Board members and the NRMA, in the case of the dissidents at their personal expense. As mentioned above, Talbot lost one key case, and had costs awarded against him, threatening him with the loss of his family home to cover a debt to the NRMA of some $800,000. As part of the negotiations to reduce the debt (partially but not completely), Talbot agreed to resign from the Board. This demand by the NRMA effectively confirmed that the driving purpose of the NRMA’s activity in the legal field was to remove the leader of the dissidents from the field of battle at the Board. It was only temporarily successful, because Talbot successfully stood for re-election at the 2001 Board elections.

Meanwhile, in the parliamentary sphere of the political field, the Labor Party split on the demutualisation issue. The government officially endorsed demutualisation when the Labor Treasurer made the following statement in the Parliament on 12 April 2000, the eve of the plebiscite:

Certainly, the proposed demutualisation would have a very significant and positive impact on the New South Wales economy. On the basis of an assessment by Ernst and Young, something between $3.4 billion and $4 billion worth of shares will be allocated to NRMA members. I am told that there are approximately 1.8 million members of the NRMA, nearly all of whom reside in New South Wales or the Australian Capital Territory. The importance of a demutualisation would be a boost to consumer spending, partly from the cashing out on share allocations and partly from a wealth effect on

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consumption spending by members who keep their allocations.

I am advised by New South Wales Treasury that since NRMA membership is concentrated in New South Wales it would be reasonable to expect that the impact on private consumption in New South Wales would be an increase of about 0.75 per cent. I am also advised that the estimated increase in the State's economic output in 2000 and 2001 would be approximately $675 million. That equates to a boost to the State's economic output of about 0.35 per cent. As honourable members will be aware, a 1 per cent economic growth, all other things being equal, would add about 30,000 jobs to New South Wales. So an economic growth boost of 0.35 per cent should add about 10,000 jobs to New South Wales alone. That is a very significant economic impact. Certainly, it would add to spending power and to the wealth effect that New South Wales residents experience.” (NSW Legislative Assembly Hansard, 12/4/2000)

When queried by journalists about the research basis for these figures, Egan told reporters that no special research had been done, and just the normal Treasury formula for money supply growth had been utilised (‘Egan forecasts an NRMA bonanza’ SMH 14/4/2000: 8).

Meanwhile the former Minister for Local Government and member of the Left faction in the Parliamentary Labor Party, Ernie Page, savagely attacked the Whitlam-led demutualisation in speeches to parliament using information clearly leaked to him from dissident Board members. The effect of making these statements under parliamentary privilege was that they could be quoted and referenced in the press without fear of legal action for defamation, an example of action in one field to extend the parameters of another field. Page revealed that the Saatchi bid to lead the demutualisation publicity campaign for the NRMA had been approved by the Board at a cost of $3.7 million against the advice and preference from the NRMA organization for the lower bid of $2.1 million from the Singleton organization. He asserted that the Whitlam-led team had effectively wasted $1.4 million of the NRMA’s funds and alleged that the reason for this was to compensate Saatchi and Saatchi for the free support they had given Whitlam’s team in the 1999 Board elections. (NSW Legislative Assembly Hansard 4/4/2000: 4061). Whitlam vigorously denied this. However, Keating, his Deputy Chair on the NRMA Board was also on the Board of the Singleton Agency which had put in the less costly bid recommended for acceptance by the NRMA officers. Keating was furious and attacked Whitlam at Board meetings, and resigned from his Member’s First faction. Whitlam attempted to have Keating removed from the Board for reasons of corporate malfeasance related to briefing journalists (‘Whitlam vs Keating as NRMA politics turns poisonous’ SMH 25/3/2000: 1).
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Meanwhile, at an annual general meeting Whitlam as Chair failed to exercise a large number of proxy votes entrusted to him. These votes were opposed to a motion supported by Whitlam that would have substantially increased the remuneration for the Chairman and Directors of various NRMA related Boards. This failure was intensively and negatively reported in the media, and subsequently the Australian Securities and Exchange Commission brought a civil suit against Whitlam to prevent him being able to hold directorships (‘Whitlam Junior’s turn to cry dirty tricks’ SMH 7/11/2001: 1). ASIC was successful in the lower court but Whitlam had the verdict reversed on appeal.

The plebiscite was held and the result declared on 19 April 2000. No scrutineers were allowed to observe the count. The official result was revealed to be 82% in favour of demutualisation, which The Daily Telegraph noted was “eerily” similar to the 1994 result (‘NRMA to list: - members vote for insurance giant float’, DT 19/4/2000: 1).

There was a succession of rearguard actions by opponents to the demutualisation in the courts and through general meetings of the members, but they did not reverse the decision. NRMA Insurance was listed on the ASX in 2001, and immediately changed its name to the Insurance Australian Group, although it still traded under the name of NRMA Insurance. Eric Dodd continued as the CEO and Nick Whitlam as Chairman of the Board for only a matter of months, before both resigned after losing the support of the Board. Whitlam continued in his position as Chairman of the NRMA Road service organisation, but stood aside after being charged by ASIC with respect to his handling of proxy votes at a general meeting. At the NRMA Board elections in late 2001, none of the Members First directors who had driven through the demutualisation stood for re-election. Talbot stood and was re-elected: ultimately, of all the protagonists, he was the only one left standing.

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Discussion

In what follows I want to make a series of large points about the use of Bourdieu’s approach to field analysis in light of the evidence of the NRMA conflicts, to do with capital and habitus, the orthodox/heterodox structure of fields, autonomy/heteronomy of fields, and the deployment of symbolic violence. Following that discussion, I will consider the demutualisation in light of the debates in the global cities literature.
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The most striking aspect of this bitterly contested drive to achieve demutualisation is the contrast between the structural power and impetus of the forces supporting the bid and the utter contingency and reflexivity of the processes as they unfolded. This is not to say that the processes were random or serendipitous, but rather that the outcomes of those conflicted processes very much depended on the pre-dispositions (habitus) and actions of key players with interests in a range of different but interconnected fields. Those actions didn’t always serve the person’s own definition of their best interests, but were often consistent with past manifestations of habitus when they may have been successful and had subsequently failed to recognise when the terrain of the field had shifted to make it no longer efficacious. We could say that the habitus which successfully propels an agent to enter and occupy a certain position in the field may well become dysfunctional at certain points, and indeed the strategy of opponents may be directed to creating events in which that dysfunctionality is more likely to occur. At such a point the depth and breadth of the capital underpinning the habitus becomes a significant factor.

The most outstanding example of this contingency is perhaps the decision by Richard Talbot after the 1997 half-Board election to vote for Whitlam against Jane Singleton for the position of President and Chair of the Board, which position had a casting vote in the event of a hung vote on any issue. The Board was evenly divided eight-eight for and against demutualisation, and in the event that two candidates for the position of President received equal numbers of votes, then the winner was to be chosen by drawing the name out of a hat. That would have given the anti- demutualisation forces a fifty per cent chance of occupying the Presidency, thwarting any demutualisation attempts for the period of that Presidency, and using the prestige and power of the office to consolidate an anti-demutualisation policy. It was the closest that community- based forces had come to control of the organisation in its entire history, and yet Talbot threw it away because of personal rivalry with Singleton. Talbot says privately that he secured Whitlam’s promise not to attempt demutualisation before pledging his vote; if that is true, then he would have immediately seen what such assurances were worth when Whitlam’s team failed to support him against Keating, one of their own, in the vote for Deputy President.

This mistake by Talbot was further evidence of a fickle judgement of character, revealed when two of his MAG team members, Geoff Lawson and Maree Callaghan, failed from early on in their directorships to support their fellow MAG directors on various issues that came up for a vote, and ultimately on demutualisation. It could be said that Talbot had a predisposition that displayed gullibility and a flawed capacity to judge character and learn from experience in assessing people’s likely paths of action, and that was something that his fellow directors on both sides of the conflict would have assessed and used in their dealings with him.
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Similarly, Whitlam showed a consistent set of character traits and mode of playing the game that ultimately led to his undoing. These included a tendency to compete with his CEO for power and influence and to try to obtain the CEO’s position when it became available, repeated efforts to expand the amounts of remuneration flowing to him from his various NRMA directorships, and to face down through threats and intimidation any dissent at the Board to his preferred decision outcomes. This had the effect of splitting his team when Keating objected to the selection of Saatchi’s bid for the communications campaign to support demutualisation in the 2000 plebiscite against the less expensive bid from Singletons that was recommended by the NRMA officers, which when it was publicised through the parliament was very damaging to his reputation. These questions over his modus operandi or habitus were exacerbated through the extensive media coverage and court case over the deployment of proxy votes at general meetings of the membership.

The prior experiential and learned capital that both Whitlam and Talbot brought to their campaigns at the Board over demutualisation was in each case a reason for their initial success in achieving and retaining positions of power on the Board, but that ultimately caused them serious but avoidable damage when each failed to read the state of the field and the habitus of their fellow team members. In both their actions and attitudes there was a failure to read reflexively the changing terrain of the field of conflict and to act appropriately. So understanding the habitus and capital of the key players is essential to understanding the process of the conflict and particularly of the watershed contests in its development.

In terms of the journalists’ relationship to the conflict, it was the very contingency of the ever- changing terrain of the conflict and the details of the different protagonists’ tactics and activities that maintained its news interest for them and enabled the extensive coverage of the conflict, varying on average between a story every ten days and one every three days over the period 1996 to 2002.

The second point to make is about the adequacy of Bourdieu’s orthodoxy/heterodoxy binary. At a high level of generalisation it could be argued that from 1993 the orthodox position on the Board was in favour of demutualisation while the heterodox position was of support for retaining mutual status. But such a generalisation falls apart very quickly as an analytical tool. Firstly, the longstanding constitution of the NRMA defined its mutual status, and Directors are both elected under its provisions and so legally and ethically obliged to uphold and conform to the requirements of the constitution, Through demutualisation the Directors would lose their successful mode of entry onto the Board in favour of the appointees of the new large
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shareholders, so by supporting demutualisation the directors were effectively undermining their positions of power within the field. This is in fact what came to pass following demutualisation, when all of the pro-demutualisation directors failed to stand for election to the NRMA Board in 2001, and Whitlam and Dodd didn’t survive on the new demutualised Insurance Board after 2000. So from 1992 the pro-demutualisation forces were effectively heterodox to the constitutional and self-preserving interests of their positions as the dominant Board faction. This runs counter to Bourdieu’s assertion that the orthodox forces in a field act to preserve and aggrandise their own positions within the field.

Secondly, there was substantial conflict and division within both the pro- and anti- demutualisation camps on questions of strategy and even goals, and these divisions led key players to align themselves with their orthodox/heterodox opponents at crucial points in the conflict eg when Talbot supported Whitlam for President in 1997, and when Keating aligned with Talbot (and Lampe at The Sydney Morning Herald) after the conflict over Saatchi in 2000. The orthodox/heterodox distinction rapidly loses any analytical force in the face of such inconsistencies. I would submit that is valuable as a tool only in fields that are almost rigidly stable, and even then is of only short term value because the great explanatory strength of Bourdieu’s approach is that it can account for conflict and change.

The third major point relates to Bourdieu’s identification of autonomous and heteronomous poles of power within fields, with the strong endorsement of autonomy as the preferred pole, at least where artistic and intellectual fields are involved. On the basis of the evidence presented in this NRMA example, it is apparent that autonomy in any one field is largely in the gift of the related fields, and that all fields are by definition heteronomous at a structural level. When they appear otherwise, as for example in the field of high art and culture, it is only because it is in the interest of associated fields to support that status. In fields where there is substantial conflict or inadequate outside interest in supporting autonomy, then heteronomous power relations will dominate. Both sides in the demutualisation conflict made heavy use of agents in the coercive legal field to achieve tactical and strategic ends. Indeed both sides – the anti-demutualisation forces successfully in 1994 and the pro-demutualisation forces successfully in 2000 – appealed to the Federal and Supreme Courts to make binding rulings on the legal status of the demutualisation proposals endorsed at the plebiscite of the members. Both sides made effective use of different agents within the political field of the Labor Party – the party organisation, the NSW executive government and the NSW parliamentary party – to achieve tactical and strategic advantage: the pro-demutualisation forces in securing complete victory in the crucial 1999 Board elections, and the anti-demutualisation forces in using the dissident MP Ernie Page speaking under parliamentary privilege to publicise the questionable allocation of the
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communications contract to Saatchi in 2000 and subsequently the handling of proxy votes at general meetings of the members, which severely damaged Whitlams’s standing and longterm prospects of achieving his career goals.

The fourth point to make is about the nature of symbolic violence, particularly in the media field. The bedrock condition on which was founded the likelihood of success at plebiscite was the decreasing savings and increasing indebtedness among households and therefore among voting NRMA members, discussed in Chapter 5. The offer of either share ownership as a form of savings, or cash from a share buyout to pay down personal debts, constituted a very attractive offer to households with record and increasing levels of debt. But this basic condition in the state of the field for the plebiscite was and could never be effectively argued against by the anti- demutualisation forces because to do so would be to question the intelligence and wisdom of the membership they were trying to convince to vote against the gift of ‘free shares’. The argument had to be made in terms of tradition and by attacking assertions that the NRMA would be financially enhanced by removing the subsidies from the insurance arm of the operation. This was a fundamental characteristic of the field in terms of visibility of arguments, motives and interests in the contest.

A large part of the campaign to win over public support was fought over attempted control of the information flow about Board activities to the membership via the media, which were battles about visibility as conceived by Ericson and discussed in Chapter 3 (Ericson, 1989: 9) . Securing the assistance of a member of Parliament to release information and make allegations under parliamentary privilege was a major victory for the anti-Whitlam forces. Even though the bulk of the information flowed too late to affect the outcome of the plebiscite, it arguably made a major contribution to the demise of the Members First team at the boards of the NRMA and the demutualised NIGL, subsequently IAG. Conversely, the ability of the Whitlam majority from early 1999 to gag discussion of the demutualisation documents prepared by CSFB and Marsden Jaques/Copernican gave them significant advantages, though this was to some extent undermined by the leaking of the documents to Lampe at the SMH. The subsequent publication of key extracts from the reports enabled wide-ranging media discussion and commentary about the merits of the demutualisation argument.

In terms of the global cities literature, the demutualisation of the NRMA is of interest for a number of reasons. Firstly, as an exercise involving the bringing to market of a major financial institution, it sits at the foundation level of activities that characterise globalisation. Secondly, it illustrates how producer services firms worked together in spatial proximity, each bringing their specific skills to bear (accountancy, law, communications, etc) in multiple layers representing
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the interests of the various parties involved. These interests included the opponents of the demutualisation: Yates in particular made extensive use of lawyers and stockbrokers to elaborate his arguments, while Talbot ran up costs of almost $1 million in contesting the demutualisation process in 1999-2000. The failure of the 1994 attempt (at $30 million) was used as a justification for the much more complex 12-step process used for the successful 1999 attempt (at somewhere between $104 and $130 million). Indeed the latter attempt generated a huge revenue stream into the Sydney producer services sector in the late 1990’s. Even the litigation between the NRMA and its lawyers (including Abbot Tout) over the reasons for the failure of the 1994 attempt was a source of further income for lawyers, and it is worth noting that Abbot Tout continued to receive work from the NRMA despite the litigation over the 1994 debacle.

An area of contention in the theorisation of global cities is whether the presence of regional or global headquarters of transnational corporations is necessary to hold that status (eg, see Knox, 1995) or, as Sassen (2001) argues, the key indicator is the presence of a critical mass of producer services firms. Sydney figures on lists compiled using either criterion. From the foregoing analysis, it is clear that Sassen’s position holds more validity, because the key factor is the revenue involved in accomplishing the sale at market of the corporate entities. The corporations might originate the revenue flows, but the producer services sector receives them, and then disburses them through salaries, investment and consumption in the cities where they are located.

This case study also affords an opportunity to examine Harvey’s thesis that what is important in understanding the social construction of space is the relationship between the forces at play and their historically and geographically specific manifestations. Both Harvey and Garnham emphasise that the causative relationships are abstract, and the historically and geographically material relationships among the agents of any particular conjuncture are a manifestation of those abstract causative relationships, rather than being the fundamental causative relationships themselves. The relationships drive the nature and development of the social framework for their operation, and the role and relationships of the participants.

Another way of putting this is to say that while the abstract forces and relations might be the driving causes of a process, at the historically and geographically specific level their manifestations are contingent upon a whole array of factors in interplay. Looked at in hindsight, the outcomes of any particular contests or strategies by particular agents might appear to have a teleological imperative to them, but that is the mirage of wisdom in hindsight. Indeed, the NRMA demutualisation provides an excellent example of the way outcomes of any contest,
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witting or unwitting, is contingent on a range of factors. The potential new owners of a demutualised NRMA Insurance were waiting, with large cash reserves in a bullish share market, to purchase the entity once it could be brought to market. During the 1990s five different brokers/merchant banks competed to lead the demutualisation process, with Credit Suisse First Boston (CSFB) the ultimate winner. They and the associated producer services firms were seeking to spend the assets of the entity in bringing it to market (an ultimate irony, since the threat of this eventuality in any potential attempt at a hostile takeover was a spectre raised in earlier arguments for demutualisation). Therefore, as long as they could convince the current owners to keep attempting to bring it to market, there was no reason for the pro- demutualisation forces not to keep pressing their case. The more complicated and arcane it became, the more work and income there was for the producer services. The key recognition is the double-sided reality of the underlying abstract imperative of capital to maximise the outcomes of accumulation, which is to be achieved through a material process which is contingent upon the way the contest is played out among the specific agents in the specific forum as they occur at that place and time.

For Harvey, the relationships are of competition and collaboration, depending on the nature of the field and its participants. Opponents in one field can be collaborators in another. There were four fields for the struggle: the Board and senior management, the voting membership, the media and the courts. These were intersecting fields: the results of struggles fought in one field could have major impacts in other fields, eg court battles over the legitimacy of the information memorandum could impact on its perceived merits with members, the gagging of Board members from discussing particular documents could impact on their capacity to campaign against demutualisation, and so on.

Of the four fields of struggle, the struggle in the courts could be won by presenting a sufficiently elaborated and legally convincing argument. Regarding the voting membership, demutualisation had received the necessary level of support (at least 75% of members voting) in the 1994 attempt and so the proponents could be confident that a sufficiently persuasive campaign would achieve the same results. As Dempsey recognised, the failure of the 1994 attempt and its subsequent bad press was not an impassable obstacle: it meant only that the pro- demutualisation board members and management needed to be persuaded that demutualisation could still be successful with the support of an appropriately skilled electioneering team. Given that the bulk of NRMA members are in the middle to lower socio-economic strata, and congregated in largely Labor-held electorates, a Labor electioneering team was likely to have some measure of success, which in fact it did.

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In this analysis, the key struggle was to install and maintain a board that was sympathetic to demutualisation. Such a board could command the use of NRMA resources to mount the campaign in each of the fields of contestation. This is why the Motorists Action Group, led by Richard Talbot presented such a threat, as did the Singleton offshoot Members Mutual. The removal of this threat has been identified by all of the key players as an important reason for the demutualisation: to get control of the organisation away from the members’ elected representatives, and into the hands of shareholders, and in particular the financial institutions that dominate the major share registries. It was also why Yates had to be neutralised, because he was elevating the struggle within the board to a new level of aggression and managerial competence. The struggle within the board was complicated by the polarisation around Whitlam’s personality, leadership style and ambitions, but it was always a process to consolidate command and control in the Australian financial sector.

Regarding the communication elements of the struggles, they are central, because the arguments and processes are largely discursive – in the courts, the media, the Board. Argument and analysis are used to carry the day in these fields, though economic and political power, even coercive measures (eg security guards, meeting rooms that were too small to accommodate the attendants, etc) were crucial. In similar mode, the communication struggles have to be seen as intimately linked with and driven by the political and economic struggles to gain power and control over the NRMA Insurance assets, including brand name and member loyalty as well as fiscal assets.

It took almost a decade to demutualise and bring NRMA Insurance to market, and over that period five separate merchant banks or management consultancy firms attempted to lead that process, bringing with them a cohort of legal, accounting and other producer services. CSFB was ultimately successful, but along the way, each of them made substantial earnings from their attempts. Indeed, the very attempts were highly lucrative, directly in terms of high fees for consultancy activities, and indirectly through the prestige involved in such a high-profile activity.

The demutualisation of NRMA Insurance proved much more difficult and complex than the demutualisation of AMP and National Mutual (the other large insurance and financial services organisations based in Sydney). It provoked strong opposition from different quarters, and was contested in a range of fields over the years where consent had to be given for the process to proceed. Opponents had to be persuaded to change their minds and give consent, or to attenuate their opposition, or they had to be sidelined into irrelevancy. Each field had its own procedural conventions and rules, and in each case the matter of the demutualisation could be caught up in
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factors such as the competence and personalities of the participants in the struggle, the motivations and vested interests of proponents and opponents, the morality and legality of the procedures and practices governing the specific fields, and contests over other issues in other fields which came to be associated with participants in various aspects of the struggles. All of these dimensions to the communication struggle were intrinsically political, in that they bore upon the power struggles to achieve or thwart the goal of demutualisation and were caught up in other power struggles to control the NRMA organisation and its relationship to the political economy of Sydney, New South Wales and Australia.

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Chapter 8 Conclusion

The onset of the Global Financial Crisis in 2007-08 fatally undermined the new epoch position advanced by Bell along with his interpreters and vulgarisers. It wasn’t just the experience of confronting economic mortality posed by the unknown scale of the losses in the transatlantic banking sector; it was, as Federal Reserve Chairman Greenspan himself admitted, a fundamental intellectual failure in not understanding the role of human agency in the operations of the system (New York Times, 24/10/2008: 1). It marked the end of support in the ‘new economy’ heartland for Bell’s assertion that “the scientific estate – its ethos and its organization – is the monad that contains within itself the imago of the future society” (Bell, 1973: 378). Bell and his apologists could possibly have argued that it wasn’t the systemic logic that had failed, but rather the political and cultural problems “of managing the disruptions created by change [initiated by] the techno-economic realm” (Bell, 1999: xix), but the profundity of the crisis would have rendered such protestations specious.

In the months and years that followed the onset of the GFC, the same social agents and forces that had driven the development of the crisis debated the best policy responses to escape its consequences: fiscal stimulus through expanded public debt to avoid deflation vs financial austerity to purge the bad debts and safeguard the integrity of sovereign economies. These debates aligned broadly with interests that were geographical (North American vs European) and party political (liberal vs conservative).

The alternative theorisations of the processes leading into the crisis were proposed by various schools of neo-Marxian and neo-Keynesian political economy, as we have outlined in Chapter 2. At the time of writing, in the week that US President Barack Obama signed into law a compromised regulatory framework for Wall Street (‘Obama signs overhaul of financial system’, New York Times, 21/7/2010), it was looking at least as likely that the predictions by Harvey (passim), Foster and Magdoff (2009) and Arrighi (1999) of a worsening cycle of crisis combining stagnation with financialisation in western economies would occur, though over an unpredictable timeframe. We don’t have to adjudicate on those competing claims, except to note that they are based in relational approaches to social theory that seek the causes of social phenomena in social structure and agency, and not in external agencies such as ‘science’.

For the time being at least, the national-regional economies that hosted the top troika of global cities – New York, London and Tokyo/Beijing – remained committed to continuing the flows of capital from East Asia into North America at substantially the same level of $2 billion per day that had characterised the previous decade or so and defined the global city phenomenon. But
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commentators and pundits were acutely conscious of the fragile contingency in that hierarchical status and the transitional character of the period. In particular, the pivotal role of domestic growth within China rather than the US as the engine sustaining the international economy through the early stages of the GFC, and the emergence of a Beijing Consensus to rival the Washington Consensus in macro-economic policy (Ramo, 2004; Dirlik, 2006), underscored the contingency of geographic relations in the global cities phenomenon. Contra Castells, the ‘space of places’ remains crucially important in providing the material and social conditions for the production of goods, services and policy, including in the financial sector, and has not been transcended by a ‘space of flows’ in socio-economic relations, trading as ‘the network society’ (Castells, 1989: 348; 1996: 410-420 and 423-428).

My concern has been with the relationship of media representation to these social processes and following Schlesinger (1990) we have sought to understand this relationship by decentring the media to make it just one of a number of interacting fields of social praxis. In order to do this, it was necessary to have a set of compatible theorisations of the different realms or fields of social activity – in urban and global studies on the one hand, and in media and journalism studies on the other – and a mode of theorising the relationship between the structures and characteristics of those different fields and the praxis of human agents in the form of journalists and their sources. The relational approach theorised by Harvey in urban studies, compatible in its neo- Marxism with the world systems approaches of Arrighi, Abu-Lughod, Sweezy, Foster, Magdoff and their colleagues, was compatible with the relational approaches of Hall and Ericson in media/journalism studies (albeit from neo-Marxist and liberal perspectives respectively), and Bourdieu’s theory of practice provided a compatible relational conceptualisation of the interface between agency and structure. With these tools we had a theoretical framework to test a multi- disciplinary analysis of the object in question: the relationship of the media coverage to some key processes in Sydney’s construction as a global city from the onset of deregulation and integration with the changing global economy in1983 till the onset of the Global Financial Crisis in 2007-08. This framework generated the methodologies for the complementary modes of field analysis of the media coverage: a broad content and source analysis to establish the ‘objective’ structure of the field in the case of the real estate reporting, and a detailed protagonists’ activity analysis for the sources and journalists in the NRMA demutualization contest.

The first conclusion of this analysis is that Schlesinger (1990) was correct, and that in order to understand the role and power of the media in our two case studies one must consider the interests and positions of the journalists’ sources in their own fields of practice, be it economic, political or coercive/legal. Such consideration is at the heart of journalistic reporting processes:
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what is at stake in any particular event or process, how the game is being played by the protagonists, what are the likely outcomes and who will benefit are precisely the intuitive assessments, manifesting their habitus, that journalists make in determining the news value and angle to produce their reports. It can be put even more strongly and assert that both in the reporting of the Sydney real estate market and its relationship to the broader economy, and in revealing and interpreting the labyrinthine conflicts in the demutualisation process of NRMA Insurance Ltd, it would simply not be possible to understand the character, significance and impact of the journalists’ reports without reference to the interests and activities of the sources as agents in their own fields of practice. This recognition immediately makes fundamental the question of the power relations between the media and the fields they are representing, as recognised in their opposing positions by Hall (1978) and Ericson (1989) and the schools of thought they represent. But as Schlesinger also pointed out, a broader theorisation was needed, and in my view he rightly perceived that Bourdieu’s field theory would be helpul.

The second conclusion is that there was a contingency to the unfolding development of both the socio-economic processes in our case studies and of their reportage. At the same time, the protagonists in all the fields including the media occupied more or less stable positions in the structure of the fields with which they were engaged. The apparent paradox of contingency hand-in-glove with stability requires explanation beyond Hall’s ‘tendency’ to “structured subordination” of the media to other fields (Hall, 1978: 59) on the one hand, and Ericson’s acknowledged but unexplained reproduction by the media of the “knowledge structure of society” (Ericson, 1989: 377). Certainly the protagonists in other fields could never take for granted the orientation of the media reportage of their activities. The Daily Telegraph was shamelessly boosterish of the prospects for profitable participation in the Sydney real estate market, but also published what was probably the most debunking of all property reports in quoting the EAC’s survey of the market in late 1996 (‘Cooling down boom fervour’, DT 19/10/96: 39). Journalists Matt Wade and Lisa Pryor in the general news pages of The Sydney Morning Herald in late 2003 offered a perspective consistently, cogently and starkly opposed to the perspective being offered in the same masthead’s specialist sections on the state of the property market. Anne Lampe at The Sydney Morning Herald, and Piers Akerman at The Daily Telegraph and various of their colleagues from opposing ideological perspectives were both strongly damning of the demutualisation campaign led by Whitlam at the NRMA, and Fairfax journalists played a pivotal role in breaching the confidentiality of Board proceedings at the NRMA and thereby amplifying the conflict into the public arena where it needed to be resolved by plebiscite of the membership. And while both mastheads benignly reported the self-serving interventions by government ministers in debates about the health of the real estate market and

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the benefits of NRMA demutualisation, they and other leading newspapers were savage in their analysis of public disaffection with the globalisation process in 2001, as detailed in Chapter 1.

The explanation of this variability and contingency lies partly in the fact that journalists and their media organisations control the production of their newspapers, or in other words, they are a dominant force within the symbolic field of news production. However to do their job they have to engage with authoritative sources of information in the relevant fields of social activity, and it is precisely the variability and contingency of material events in time and space that require journalist to seek out sources for new information and interpretation, and thereby allow the sources to adopt consistent positions in providing this information and interpretation, positions that serve their own interests in their own fields of practice. As discussed in Chapters 6 and 7, this generates the paradox that the abstract relational structure of any field depends on the contingency of material events and processes occurring within the field, because it is in responding to that contingency by manifesting the habitus they derive from their capital, itself produced by their position and activity in the field, that protagonists are enabled to reproduce their position in the field.

To put this at a more abstract theoretical level, Bourdieu’s field theory requires the materiality of time and space to become more than a spatial model or metaphor for social engagement, which is a proposition with which Bourdieu himself would have agreed. That requirement in turn necessitates theorisation of time and space as both abstractions and material manifestations, a requirement we have addressed through the work of Harvey, Lefebvre and Gell. However, this throws into question Bourdieu’s assertion that there is a homology to the abstract structure and operation of fields, beyond which all theory is contingent on the historical and geographical conditions of its production (Bourdieu and Wacquant, 1992: 109). This assertion is not particularly helpful unless the concepts of field, capital, habitus and symbolic violence are to be reduced to schemata. To take an example at the heart of the Marxist approaches to political economy referenced in this study, capital is a concept very specific to the epochal conditions of its production and accumulation; or again, habitus as a personal set of dispositions and mode of being in the world that is produced through experience of social relations must be understood in the epochal context of those social relations, and through a variety of disciplines including personal and social psychology; or again, precisely what constitutes symbolic violence, visibility and invisibility in discourse is very specific to the language, aesthetics and culture of the social relations of its production.

None of the foregoing is to belittle Bourdieu’s theoretical contribution. On the contrary, it suggests that the great value in his contribution lies in the radical reflexivity of his theory of
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practice, embodied in the interlinked concepts of field, capital, habitus and symbolic violence. It is this reflexivity that enables the interface of his approach with other relational approaches to social theory in various disciplines, and therefore allows for the materiality of the social relations with which those disciplines deal to manifest itself through his theory of practice. To be more than a model his approach must be able to engage with the material terrain of any field in its historical and geographical specificity, and therefore it requires theorisation of temporality, spatiality and the material social relations specific to relevant disciplines. To concur with Verter and Lovell, we are deploying Bourdieu against Bourdieu (Lovell, 2000; Verter, 2003) in a reflexive exercise to insist that it is within his radical reflexivity that the power of his theory lies.

Seen in this light, homology is far too mechanical a concept, as indeed are the binaries of orthodoxy/heterodoxy and autonomy/heteronomy, because they do not allow for the contingencies of the set of social relations constituting any given field. As we saw with the reporting of real estate, there are competing sources of authority within the field, ranging from the FIRE industry sources with a clearly defined set of interests and fiduciary accountabilities in the economic field, through the statutory bodies such as the Reserve Bank of Australia, the Australian Bureau of Statistics and the Productivity Commission, all of which were quoted as authoritative sources at different points in our case study, and each of which had its own distinct legislated responsibilities and accountabilities. Beyond those statutory bodies there were the government ministers, NGO welfare organizations and community lobby groups who were referenced by journalists at different points of the coverage in our samples. All of these sources could claim to hold an orthodox status with respect to their own capital, accountabilities and positions within the structure of the field, yet they were in conflict at different points, and indeed manifested their habitus by asserting variable parameters to the field. FIRE industry sources and politicians tended to operate in Gell’s A-series temporality, constructing competing retentions and protentions of the state of the market to advance their direct individual and collective economic or electoral interests, while the statutory bodies tended to reference B-series temporality, with only indirect protentions on the implications for the future of policy settings. So the orthodoxy and heterodoxy of any given position depended on the positional perspective of any observer in the field, which is what one would expect from a reflexive theorisation, and the contest in the field is partly to enhance the broader orthodoxy of specific positions through the exercise of symbolic violence against competitors.

In the case of the NRMA demutualisation, the status of orthodoxy vs heterodoxy was much more openly and aggressively contested and the attempts at symbolic violence more brutal, as discussed in Chapter 7. It was fluid over time, and for any given agent was likely to be
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contested in a number of fields. There was constant recourse to the courts for adjudication on the rights and wrongs of specific activities, the party political alignments shifted from conservative to Labor Party midway through the demutualisation campaign in the mid-1990s and subsequently fractured within Labor Party ranks, and the journalists were divided and competitive in their representations of the conflict. One could agree with Bourdieu that it is advantageous and desirable for the occupants of any given position within the field to have their position broadly recognised as orthodox, but for that to occur requires a relative stability in the structure of the field, and that stability is precisely the object of contestation by challengers who have a structured interest in reconfiguring the consensus.

Similarly, it is apparent both theoretically and from the evidence of the case studies that autonomy is not the natural state of any given field beyond the basic level required to constitute the field with its own illusio and contestable parameters. If a field doesn’t have those two basic characteristics then it is not a field but a mis-recognised instance of some other field. But beyond that basic level, agents will act in a variety of related fields, deploying resources and attempting to damage or disable contestants in whatever ways are most efficacious to achieve their aims in the primary field of contestation. Again, this is what one would expect from a reflexive theorisation and indeed what is revealed in the case studies. The NRMA demutualisation was particularly revealing on this point because it was so bitterly contested, it involved such enormous stakes in the financial field as the leading general insurance company, and the contest was extended over a decade. Ian Yates was effectively disabled as a formidable opponent of demutualisation through Board conflicts related to corporate governance and investment portfolio management prior to his resignation because of illness. Both pro- and anti- demutualisation camps recruited candidates for election to the Board based on their capital in the media field as publicly recognised personalities rather than because of their cultural capital in corporate governance. Both sides made frequent and expensive recourse to the coercive sphere of litigation to achieve their goals. Both sides compromised the integrity of the corporate boardroom by selectively leaking confidential documents and reports to journalists, and both sides used the services of allies in the Labor Party, government and parliament to denigrate their opponents positions. All of these activities involved complesx interactions among distinct fields of practice: the economic, political, coercive and symbolic.

Conversely, various producer services firms actively supported in cash and kind the Whitlam faction in their election campaigns for the Board order to keep the disbursement of NRMA funds flowing in both the Board conflict and the campaign to achieve demutualisation, to a total of between $107 and $130 million in the final demutualisation process, plus tens of millions more in earlier attempts. It was precisely this employment of producer services firms in the
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bringing to market of corporate entities for sale that constituted the globalisation process. Similarly the different factions in the NSW Labor Party saw the contest over demutualisation as a vehicle for them to achieve their factional goals within the government and the party. For journalists, particularly Anne Lampe, the NRMA conflict provided them with an ongoing story that was guaranteed prominent coverage in their newspaper and hence professional satisfaction and status among their peers.

In the case of the real estate market, the FIRE industry sources clearly have an economic interest in influencing the promotion of a buoyant view of the market, an objective that they largely achieved with only partial regard to the actual state of the market. Conversely, the commercial media have an economic interest in the buoyancy of the property market because that promotes advertisements in their classified pages, one of the major sources of revenue since the 1950s. The force of that economic imperative upon the reporting was clearly demonstrated in the comparison of coverage in the general and specialist pages of the papers. The specialist pages, which through their content aggregated readers who were more likely to be interested and potential participants in the market, consistently had much more promotional coverage of the state of the market than the general news pages, running at between 50% and 100% of coverage depending on the particular aspect of the market being reported even as the market was deflating in late 2003.

As with orthodoxy/heterodoxy and autonomy/heteronomy, Bourdieu’s usage of the concept of symbolic violence is mechanical and assumes the success of closure in conflict over representation. This leads to his related concept of ‘mis-recognition’ being too close to the functionalist notion of ‘false consciousness’, as discussed above in Chapter 3. Hall (1982: 77ff) referenced Volosinov (1973[1929]) to insist on the contested polsemy of any symbolic text at the point of reception, and therefore the lack of closure at the point of production. Symbolic violence is much better understood in tandem with the concepts of orthodoxy/heterodoxy as an attempt to inflect a text or message with a certain preferred reading (Hall, 1982) to the advantage of certain positions in the field and the disadvantage of others. This might be achieved by quoting a counter-source to soften or diffuse the impact of a primary source, as we saw in reporting of negative market conditions in real estate, or by vacating a particular field to render invisible one’s relationship to it, as in the absence of FIRE industry sources in the reporting of homelessness.

Symbolic violence might also be wielded through imposing conditions of censorship on particular information, as for example in the suppression of public discussion by the NRMA Board of the two conflicting reports about the benefits of demutualisation produced for the
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board by CSFB and Jaques Marsden and Copernican respectively. That attempt at symbolic violence was effectively contested by the prompt leaking of those documents to journalists, and the off-the-record discussion of their ramifications, thus validating the significance of both documents to the contest. The cut and thrust of conflict in the symbolic field is just as contingent as conflict in any other field, and closure in the interpretation of a text or symbol can never be permanent or exclusive. That said, closure in meaning doesn’t need to be permanent for goals to be achieved through conflict: it is success at the key spatio-temporal points of decision-making that determines the process and outcomes of conflict. Debate and attempted roll-backs of demutualisation continued well past the decisive conjunctures in the process, unsuccessfully with respect to the demutualisation itself, but more or less successfully in terms of the damage to the careers of key protagonists.

Symbolic violence is best understood in terms of the activities of agents in the symbolic field, parallel to economic violence in the economic field, military violence in the coercive field, and so on; it is best defined as the attempt to influence the fact and terms of visibility or invisibility of certain positions in the symbolic field to the detriment of contested positions. This conceptualisation of symbolic violence again confirms that the durability of structures in the field is achieved by the constant contestation that allows protagonists through habitus to manifest the capital they derive from their structured position within the field, thus reproducing while at the same time developing those structures in the light of the contestation.

To conclude, our two case studies presented a detailed examination of how the media reports (or not) what producer services professionals actually do in the marketplace. What they do is characterised by spatio-temporal specificity, contestation and contingency in all fields, and it is those characteristics that enable both continuity and change in the structure of any field. The media reporting (or not) of those processes was perceived as crucial to the interests of the producer services and their clients in executing their tasks and achieving their goals, and so was a matter for continuous contestation and contingency. In both our case studies the larger structural goals of the protagonists for globalisation were successful, and Sydney was indeed recognised as a successful global city.

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