Bert Kelly, “The problems of profit prophets,”
The Bulletin, December 7, 1982, p. 122.

Our neighbour, Bill Smith, is a queer bloke. He yells like a maniac in his sheep yards but he cannot stand his sheep dog barking. When it does, Bill throws stones at it and, as Bill was a youth when rabbits were bad, he is unusually accurate. So whenever Bill’s dog starts to bark, it looks fearfully over its shoulder, put its tail between its legs and quickly cuts itself off short.

Eccles is getting like that. He has been explaining to us that the economic laws that he propounds, though unpopular, will be doubtless proved right in the end. I have to reluctantly admit that he has usually been right but that does not make people love him; people only like prophets who tell them what they want to hear. So when Eccles started to tell us the other day that all the experience in the past showed that, until real wages fell, profits would stay down and unemployment would continue to rise, everyone began to snarl at him.

Indeed, when I saw Bill Smith reach for a stone, I am sure that Eccles’ metaphoric tail went right between his legs.

So I took pity on Eccles and took him home so he could tell me what was on his mind. He was pathetically grateful and immediately went back to the theory of constant shares that he made me write about in the early 70s. He says, and the figures confirm, that the shares of the Gross National Product (GNP) going to wages and to profits stay fairly constant over the years as the table shows.

INCOME SHARES OF GNP
Years | Wages % | Profits %
1953-57 | 65.6 | 15.25
1957-61 | 63.3 | 16.4
1961-65 | 62 | 16.75
1965-69 | 62.4 | 16.95
1969-73 | 63 | 17.2
1973-77 | 67 | 13.85
1977-81 | 65.65 | 14.2
1981-82 | 66.3 | 13.9

The variations, though small, are very important. During the Whitlam years the share going to wages rose with the wages explosion and so, of course, profits fell. Eccles says that from now on the wages share will inevitably fall and nothing can stop it. He said sadly:

They can throw stones at me if they like, Bert, but as surely as night follows day the wages share will have to fall back to about 63 percent to let the profit share rise. If that does not happen by wise government and union action, it will happen for another reason for, if profits do not increase, investment money will be attracted to other countries because capital is fluid stuff. If that happens, industry will slow down and the pressure to reduce the wages share will be irresistible.

Every time Eccles heard Bill Smith shouting at his dog outside, he flinched a bit but he kept going. When he is in one of his morbid moods there is no stopping him. He went to his big bulging briefcase and took out the accompanying graph which was prepared by high-powered financial consultants in Melbourne called Syntec Ltd. The graph shows how close is the relationship between falls in profit and falls in employment.
theory of constant shares
Eccles said sadly:

When you put the table alongside the graph, it is as clear as daylight that the wages share must fall to allow profits to rise and so allow employment to rise.

Yet if I go outside and tell them that, they will throw stones at me because there are more wage earners than profit takers.

Just then Bill Smith shouted angrily at his dog, a big stone landed on our roof and Eccles disappeared under the bed like a rabbit down its burrow and he stayed there until Fred came to his rescue and took him home.

I tried to get Fred interested in Eccles’ message but he said that he could not understand the graphs and anyhow he says that everyone knows that what Eccles says is true. Fred explained:

Every farmer knows that when he is having a good season, every passing day brings him a day closer to the next drought; and when he is in the middle of a drought, each day brings him a day closer to the breaking of the drought. I am talking about natural laws and Eccles is talking about economic laws. Both tell us what will inevitably happen whether we talk about them or not.

What I cannot understand is why poor old Eccles gets his knickers in a knot telling people what is going to happen to them anyway. It would be better if he did not upset them. No wonder they throw stones at him!