Last week’s ‘resolution’ of the asylum deadlock has been seen by many as enabling Julia Gillard to put the damaging issue aside by accepting a compromise favourable to the opposition. The more realistic conclusion is that it represents the point of no return for her government. It grants Tony Abbott undeserved legitimacy and further undermines Gillard’s ability to govern.

The subcontracting of government policy to an unelected ‘Expert Panel’ signalled the exhaustion of Gillard’s attempts to prosecute her own ‘solution’ involving offshore processing. It was an admission of not being able to run policy through usual democratic channels, needing technocratic cover for deferring to Abbott’s agenda. It’s frankly ridiculous that some now complain the media has given Tony Abbott a ‘free pass’ on this issue; Gillard has given him more legitimacy than the entire press gallery ever could.

The only bright spot within parliament was in the Greens and Andrew Wilkie denying the major parties the illusion of consensus for their barbaric policies. Not a single Labor Left MP voted against the bill, turning their backs on both ALP policy and Labor For Refugees’ calls to preserve onshore processing.

It might seem ironic that the entire crisis was over an issue – small numbers of people arriving by boat – that materially affects so few voters, except in the abstract. Politicians’ apparent helplessness and desperation to craft ever tougher laws in the face of this ‘threat’ led one commentator to note with exasperation, ‘You would think it was the boatpeople who write government policy’. Yet this is precisely why it has been so destructive for the political class, because the obsession with ‘border security’ has been all about trying to win political authority by deploying coercive state power. It has been particularly damaging for the ALP because the more empty its program of improving the lives of its domestic supporters, the more its obsession with keeping refugees out has simply highlighted detachment from its base.

But while Abbott has benefited from Labor’s problems, most voters blame all politicians for the mess, seeing their actions as narrowly cynical. As The Piping Shrike has pointed out, there is little evidence that the asylum issue has been a substantial vote-switcher, even if most voters hold anti-migrant views more generally (although more voters – including Coalition voters – preferred onshore to offshore processing in one of the few polls on the issue; in direct contrast to the major parties’ positions). Peter Brent makes a similar argument. However, the myth of its mobilising power has been effective in creating a crisis for the ALP and feeding the rise of the Greens on its Left.

Understanding the deeper problems of Australia’s political elite helps frame why Gillard is virtually assured of defeat if she survives to the next election – but also why the predictions of Thatcherite apocalypse under Abbott are a misunderstanding of what is really going on.

Simply put, the government’s crisis is one of its ability to govern – exacerbated by its minority status but not reducible to it (recall that Australia has a history of minority governments going on to win landslides). The problem lies in the degeneration of Labor’s social base, its commitment to the primacy of capital accumulation while in office, and the way its aping of the Right has caused it to bleed from its Left flank. Underlying all of these processes and feeding into them is the long-run relative stagnation of Australian capitalism since the mid-1970s. This has provoked not only successive rounds of restructuring and upward wealth redistribution, but a prolonged ‘fiscal crisis of the state’ leading to endless cost-cutting and marketisation. The period since Australia ‘dodged’ the GFC in 2008–9 has, despite the belief in some quarters that neoliberalism was dead, produced no respite from these processes. Although as yet, there has been no return to the more extreme pro-business reforms of the Hawke–Keating years.

Despite all this, some think Gillard can make a historic comeback. Obviously flicking the switch to Vaudeville, Alan Kohler reduces the government’s troubles to ‘the morale of the ALP itself, and Julia Gillard’s lack of public authenticity’ and tells Gillard that to win all she needs now is ‘acting lessons’. In a more serious effort, George Megalogenis argues (from around 3:30 here) that in 1992–3 Paul Keating was able to claw back a big Coalition lead thanks to Jeff Kennett’s attacks on Victorian workers and public services. He sees the Hewson–Kennett combination that helped Keating recover as having a modern-day equivalent in Tony Abbott and Campbell Newman, and that this gives Labor a chance.

This strikes me as a mixture of superficial pattern matching and wishful thinking. First, the structural crisis of Laborism is far more advanced than 20 years ago. Back then union density was still around 40 per cent (cf 18 per cent today) and the unions had a much greater ability to mobilise. The massive Melbourne protests found echoes in rallies around the country – 600 workers even stopped work in Mackay to protest Kennett. Union activists have been reluctant to campaign for Labor in recent state elections and there is little reason to believe that will change for the federal party.

Second, Gillard and those around her don’t have the credibility or nous to run a class-based strategy like Keating’s. The ALP is not the same beast it was in 1993, with its upper echelons today populated by a professionalised elite lacking any ideology other than the technocratic managerialism that has become the norm in the late neoliberal era. Gillard also lacks Kevin Rudd’s ability to stand above the factional shells that continue to animate, zombie-like, the party hierarchy.

Third, while Keating could promise to pull Victorian workers out of Kennett’s clutches into federal awards, there seem to be very few avenues for Gillard to intervene to protect ordinary Queenslanders today. Besides, she and Swan are so committed to deficit reduction that it’s hard to see how they could mount a serious critique of Newman, let alone do anything to challenge him.

Finally, Abbott may be erratic and creepy, but he doesn’t project the same kind of ideologically driven right-wing politics that John Hewson did. He is a much more slippery target than Hewson, who told everyone that yet more economic rationalist medicine was the only way out of the crisis. Perhaps an ALP leadership change could destabilise Abbott enough to see him deposed and tip the balance, but even the return of Rudd at this late stage seems unlikely to be enough to save the government.

This brings us back to what an Abbott government would be like. It seems almost certain that he wants to play a similar game to that of recently elected state Liberal premiers, launching a series of attacks around a theme of deficit reduction. But he will do so in a situation where, no matter how big his parliamentary cushion, he will have little popular base to rely on and no coherent program to win consent for. The result is likely to mean more political chaos, not less. ALP talk of Abbott being able to ‘do a Thatcher’ should therefore be seen for what it is: an attempt to mute criticism of the current government, even while it concedes most of Abbott’s agenda. Such pronouncements of impending Armageddon can only breed passive reliance on getting the ALP re-elected.

The lack of resolution of Australian capitalism’s structural problems and the crisis of the political class open the possibility of loss of authority for wider social institutions, including the state more broadly. There is some evidence that the former has started to happen, but the increasing reliance on ‘experts’ could play a role in temporarily protecting the state from the stench of discredited representative democracy. However, any substantial deterioration in social conditions because of the economic crisis must also find its (mediated) expression through what Marx called ‘the concentration of the whole in the state’. You can see the way a similar process played out in Greece, where austerity simply accelerated a long-run unravelling of the political system. Rocky times ahead.