Key’s government not neo-liberal, admits Unite union leader

Posted: September 16, 2014 by Admin in capitalist crisis, Capitalist ideology, Class Matters, Economics, John Key, Labour Party NZ, Limits of capitalism, Marxism, National Party NZ, New Zealand economy, New Zealand politics, Unions - NZ, Workers' rights
John Key: smarmy, yes; but neoliberal, no

John Key: smarmy manager of a bankrupt economic system, yes; but neoliberal, no

by Philip Ferguson

Much of the left has banged on for the past six years about neo-liberalism being the dominant economic policy in New Zealand.  Before, and for several years after, the 2008 election many on the left also claimed that John Key had a secret agenda to pursue a ruthless neo-liberal policy programme.

Here at Redline, and in our previous political involvement in the Workers Party, we argued that this was, to put it bluntly, nonsense.  The Key government was a middle-of-the-road government that gave a few things and took away a few things.  We also argued that a Marxist analysis, rather than the almost hysterical anti-National Party politics which typifies much of the left, would show that NZ capitalism needs extreme neo-liberalism like it needs a hole in the head.

Neo-liberalism had done what it was needed for in the 1984-1993 period – raise the rate of exploitation, weaken the working class organisationally and politically, cut state spending that didn’t facilitate surplus-value extraction – but had clearly failed to deliver dynamism to the NZ economy, so the ruling class had moved beyond it to a new policy mix.  The government and ruling class have been in a post-neoliberal policy framework for quite some time, while most of the left is stuck in 1984-93 mode.

Interestingly, Mike Treen, the national director of Unite union, and perhaps the most consistently left union leader in the country, has now come out and stated unequivocally that National has not been pursuing a neo-liberal policy framework.  In fact, Mike has gone even further than us, saying that Key and co. have essentially been operating in the framework of Keynesianism.  While we don’t agree that Key’s reign has been marked by a return to Keynesianism, although there are elements of that in the currently dominant policy mix, we welcome this new voice of sanity.

Here’s how Mike put it yesterday on Unite union’s official blog:

“The National Party ran a fairly orthodox Keynesian policy in response to the Great Financial Crisis and the Christchurch earthquake by running large budget deficits that doubled the government debt to GDP ratio from 17% to 35% GDP. The big tax cuts for the very wealthy also contributed its share to the debt growth. The changes to labour laws have been relatively minor and the minimum wage has been kept at around 50% of the average wage. This is not a radical neo-liberal government like we saw in the 1990s.”

The reason this issue is important is that we need to have an analysis of the current state of NZ Capitalism Inc in order to work out which way the capitalist class and its minions in government will move in terms of economic policy.  The existing dominant left practice of crying wolf all the time gets in the way of the political clarity necessary for effective resistance and simply discredits the left, who end up looking like a bunch of cranks.

Whether Mike’s dose of sanity will have any impact on those sections of the left which have kept up the silly charge of neo-liberalism against Key’s government remains to be seen.

Further reading:

The Key-English government in the context of capital accumulation in New Zealand today: https://rdln.wordpress.com/2011/06/20/the-key-english-government-in-the-context-of-capital-accumulation-in-new-zealand-today/

Key’s ‘vision’: managing the malaise of NZ capitalism: https://rdln.wordpress.com/2013/01/31/keys-vision-managing-the-malaise-of-new-zealand-capitalism/

Low pay, longer hours and less social mobility: welcome to NZ capitalism in the 21st century: https://rdln.wordpress.com/2012/02/08/low-pay-longer-hours-and-less-social-mobility/

Coming apart down under: the decay of New Zealand capitalist society, 1970s to 1993: https://rdln.wordpress.com/2011/06/23/coming-apart-down-under-the-decay-of-new-zealand-capitalist-society-from-the-1970s-to-1993/

 

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Comments
  1. Thomas R says:

    There have been good articles recently on Jacobin about understanding the post neo-liberal consensus, which has governments which as you say are ‘centre of the road’, but the view from the bottom is much worse than the post war era with the same centre of the road governments. Rhetorically speaking, market-rationalism seems much more hegemonic than in the period between WW2 and the introduction of Neoliberalism by the Labour Government.

    So in a post-neoliberal era, or an era where ‘capitalism has got it’s groove back’ (ie. the aberration of post-war keynesianism has largely been ousted as a backdrop – though we can see it in individual policies) I find that liberals who want to rage against ‘neoliberalism’ have missed that boat considerably.

    With movements that aren’t explicitly anti-capitalist, like Occupy, the aversion to being against Capitalism and instead substituting that for being against ‘neoliberalism’ is perhaps symptomatic of there being very little faith in, and very poor articulation from, the anti capitalist left. If the left does not have convincing vision of some description, that speaks to people where they are but also compels them to continue the radicalization process then we’re definitely not going to get anywhere.

    I do have the opinion that many activists who organise against neoliberalism are anti-capitalists, but I can not blame anyone for not being convinced of any anti-capitalist project in NZ in 2014. Part of the challenge, after all. But I wouldn’t shun someone for merely having a tirade against Neoliberalism. Often when pressed, it’s a lack of confidence – the belief that everyone is rather moderate and liberal. I’m more often surprised by how people respond more enthusiastically to openly anti-capitalist radical positions.

    Mike has always seemed very grounded when it comes to his analysis of the state of NZ. Glad to see that trend continuing.

    Regards,
    Thomas

  2. PhilF says:

    Thomas, would it really have hurt you to note that *we* have always been very grounded in *our* analysis of the state of NZ and that *we* have made this point about post-neoliberalism over and over and over (normally to the annoyance of chunks of the left)? You know, credit where credit is due?

    We, of course, didn’t need Mike to vindicate our analysis, but it’s nice that he has come around to our position, especially since in the past he has tended to beat the neoliberal drum somewhat himself, while privately admitting the reality we declared openly.

    Also, he hasn’t really taken this position to its logical practical conclusion which is to be neither for National nor Labour in government. Indeed, a week or two ago he declared that not voting was the same as voting National!

    I notice that Fightback has been committed to the idea that neo-liberalism rules in NZ. So will you now be arguing against that position within Fightback, and in favour of a more nuanced position?

    Phil

    • Thomas R says:

      With regards to Fightback, I think that is simplifying things but yes I brought it up as recently as last week that mobilising against ‘neoliberalism’ is about as accurate as mobilising against the Tsar (hyperbole, but you get what I mean.)

      I didn’t mean to erase any positions of Redline in what I said, and acknowledge that you’ve had this position for a long time – apologies if it seemed like I was ignoring that.

      For beating the Neoliberal drum, is that a tactical question possibly? Obviously without slipping into populism, agitational statements and so on do actually have to resonate with people as well – which is sort of where I was meant to go with the point about people who talk about Neoliberalism perhaps being anti-capitalist but not thinking that that is something we can currently rally around. And I’m not talking about the organise left in that regard ^ more thinking about the loan radical who’s just started getting into anti-capitalist politics.

      At any rate, I think the message that: this is not just a ‘bare-faced capitalism’ (ie neoliberalism) that we live in now, but it’s capitalism functioning in a fairly ordinary way – and it’s still awful.

      Anyway, I have not read the entirety of Redline or even the majority of posts since I became aware of the site. Credit where credit is due, however, and it seems to be an analysis which is gaining traction which probably seems overdue to older comrades.. for those of us born in the middle of it and not politically conscious till about 20 years after it was fully introduced, Neoliberalism as the normal state of affairs of capitalism can have a contradictory effect on consciousness. In the sense that – capitalism has functioned in a fairly unpleasant post-neoliberal way for my entire adult life so I feel that makes me more skeptical of having ‘good capitalism’ vs. ‘bad capitalism’. But at the same time, as I alluded to in the first post, market-rationalism is becoming more and more hegemonic across all spheres of society including many support services (mental health, sexual abuse support etc.) which has probably not always been so sharp. Though I’d defer to older comrades to confirm that as I don’t know how the welfare state was rationalised/talked about/organised post-war… at least not in that first hand experience kind of way.

  3. PhilF says:

    Thanks Thomas.

    Phil

    • Thomas R says:

      Also apologies if these posts have seemed haphazard – I work nightshifts but don’t sleep during the day when I finish my last one for the week. It’s a good way to make up for some lost time, but often doesn’t correspond well to making very much sense in online discussions

  4. Byron says:

    The idea that just because someone isn’t rolling out extensive new reforms doesn’t make someone fundamentally neoliberal is a little spurious. The current government remains fundamentally committed to all of the key aspects of the neoliberal policy agenda, and has also actively sought to extend it in various ways (regressive taxation policy, opening up the conservation estate of mining, charter schools, welfare reform, industrial relations reform, and “executive” teachers). Just because these are RELATIVELY small measures doesn’t make them any less neoliberal. Indeed, Key himself has just stated that his government is purposely taking a more incremental approach to economic reform (contrasting with the earlier ‘blitzkrieg’). It is also spurious to claim that the Key Government’s response to the GFC was “Keynesian”. Put simply, it was not. Instead, the government’s policy response falls directly in line with what is to be expected under neoliberalism; state action to maintain the position of capital. Despite it’s rhetoric to the contrary, neoliberalism as a political project is NOT about eliminating the state from the economic sphere. Instead, it is about actively co-opting the state in the interests of capital.

  5. PhilF says:

    Byron, you’ll need to take up with Mike Treen the idea that Key’s response to the GFC was Keynesian. Mike’s piece was on the Unite blog, so you can post something there criticising his “spurious” idea/s.

    We’ve never argued Key’s response was Keynesian. We’ve suggested that post neoliberalism involves a policy mix. The neoliberal measures haven’t been reversed, although some have been significantly modified, because neoliberalism failed to reintroduce real dynamism into the NZ economy.

    None of the policy measures you’ve pointed to are neoliberal per se. They’re fairly humdrum and pragmatic responses to the kinds of problems that capitalism throws up.

    One of the problems with your rather dogmatic assertion that neoliberalism still prevails in NZ, is that there is simply no evidence for it, and you haven’t produced any in your post. Another problem is that in order to justify the dogma you have to stretch the definition of neoliberalism so wide as to make it meaningless.

    If you look at the *actual* period of neoliberal policy dominance in NZ under the fourth Labour government and through the first term of the fourth National government, the contrast with the Key regime is very stark indeed.

    Here’s an example of your truly spurious argument: you say of the government’s response to the GFC, “falls directly in line with what is to be expected under neoliberalism; state action to maintain the position of capital.” Actually, the activity of the state is *always* to maintain the position of capital. So your argument makes no sense. There is nothing *specifically* neoliberal about maintaining the position of capital.

    Moreover, it is simply not true that neoliberalism “is NOT about eliminating the state from the economic sphere. Instead, it is about actively co-opting the state in the interests of capital.” This makes it sound like the state wasn’t working fully in the interests of capital before neoliberalism. All capitalist economic policy uses the state to further the interests of capital.

    However, neoliberalism involves letting chunks of capital go to the wall. It doesn’t involve the state protecting all capital. One of the features of the ‘neoliberal’ era in the 80s and 90s was precisely the preparedness to let sections of capital go to the wall.

    If you want to understand capitalist economic policy you need to understand capital accumulation and how different policies and theories come into play depending on the state of capital accumulation. As I said in the intro to Mike’s article, NZ capital today needs neoliberalism like it needs a hole in the head. Unfortunately, you seem to lack an analysis of the current state of capital accumulation in NZ, and what the current stage of accumulation *needs* in terms of policy, so you are left with a superficial impression that somehow Key *must* be neoliberal, presumably because he’s a Tory.

    When people on the left try to make out that neoliberalism is the dominant economic policy in NZ today, it just makes them look flakey. Ordinary people look around at what’s actually happening, sense that this government, like the Clark regime that preceded it, is quite different from the Labour and National regimes of 1984-1993, and draw the conclusion that the left is bullshitting them and is kinda nutty.

    I doubt there is a single credible bourgeois economist in the country today who adheres to and advocates neoliberalism. You’re way, way behind the play.

    I’d suggest less David Harvey and more Karl Marx.

    Phil

    • Thomas R says:

      Byron is quite right with regards to Mike’s assertion about Keynesianism. Keynesian response to GFC would have been what, probably a tax credit rather than a bail out of financial institutions.. and the govt investing in areas where they could employ more people directly? Managed to miss that in my sleep deprived state.

      On a side note, I have no sleep deprivation to excuse my embarrassment for just messaging Byron from Fightback about this post and finding out that this post is actually from a different Byron. Awkward.

      And yes Phil I think the challenge is probably how to show that Labour and National are identical, without people thinking you mean they are identical to what they were in the 80s and early 90s. Because that is the assumption. They are probably more similar to each other now than they are similar to what they themselves were in the 80s (hows that for confusing grammar).

      As for credible economists… what counts as credible? I think in academic institutions you’ll find the dogmatists. Economic professors at UC declaring proudly that they are the most neoliberal department in the Southern Hemisphere. Ironically, they are facing staff cuts. Luckily that’s just a response to market forces so I’m sure the people getting the axe understand.

  6. Phil says:

    1. Thomas wrote, “Byron is quite right with regards to Mike’s assertion about Keynesianism.”

    As I had already pointed out in the article, “In fact, Mike has gone even further than us, saying that Key and co. have essentially been operating in the framework of Keynesianism. While we don’t agree that Key’s reign has been marked by a return to Keynesianism, although there are elements of that in the currently dominant policy mix, we welcome this new voice of sanity.”

    2. In terms of key economics commentators. Where are the neoliberals? Nowhere.

    Even the Business Roundtable had to reinvent itself and merge with another think tank which was clearly *not* neoliberal. But the neo-liberal elements of the merged think tank have no serious influence on policy.

    3. Labour and National are not identical and they never will be. On a political level, the circus wouldn’t be able to operate if the clown acts were *exactly* the same. On an economic level, the problems thrown up spontaneously by the contradictions of capitalism affect different capitalists in different ways and are perceived by them, and the middle class, and the working class, in different ways. So there are different bourgeois theories about how to manage the system. So there will always be *some* differences between the parties that have to manage the system just as there will always be *some* differences between economic theorists.

    But Labour and National are the same *in essence*. They are totally committed to managing capitalism and will do whatever is required to do so. In 1984 National, in practice, stood way to the left of Labour in terms of capitalist economic policy. Today, they stand pretty much on the same ground.

    Key noted recently that National voted for about 75% of the Clark government’s legislative programme and that Labour has voted for about 75% of his government’s legislative programme. But the most important thing is that, regardless of how they vote (because there’s always going to be jostling as well), their commitment to managing the system is the same. Indeed, both times in the 20th century that NZ capitalism was up shit creek with only one paddle, it was Labour that came to the rescue – 1935 and 1984. On the other hand, in the 1950s, 1960s, later 1970s and early 1980s, National was fairly happy to preside over the welfare state.

    4. The thing about Key being a vicious neoliberal, which has had to adjust to reality by now pretending that he is a slowed-down neoliberal (!!!) – so slowed-down that he hasn’t actually implemented an economic programme that bears any resemblance to neoliberalism in practice under the fourth Labour and National governments! – is that it’s largely a sign of the demonisation of Key and National that is utilised *in place of* a clinical analysis of capital accumulation and its requirements at various stages of the accumulation cycle.

    For an example of an attempt to link economic policy with the actual problems of the accumulation cycle today, see: https://rdln.wordpress.com/2011/06/20/the-key-english-government-in-the-context-of-capital-accumulation-in-new-zealand-today/
    More recently, see: https://rdln.wordpress.com/2013/01/31/keys-vision-managing-the-malaise-of-new-zealand-capitalism/

    Which analysis has been borne out in practice: the view that was widespread on the left at the time of the 2008 election and for several years thereafter that Key had a secret agenda to implement a ruthless neoliberal programme or the analysis in the article on the Key-English government in the context of capital accumulation in NZ today?

    Moreover, if Key really wanted to implement a ruthless neoliberal programme, what’s stopping him? The unions and working class are much weaker today than they were in 1984, so they clearly don’t represent a serious obstacle.

    The left hasn’t been able to score any significant hits on Key at all with this demonisation approach. But, even if they did, so what? It would be irrelevant to the accumulation process.

    5. What is needed is a much more politically serious and politically savvy left – one which is able to make a critique of *capitalism* as a perpetually crisis-ridden, outmoded, historically spent, crappy way of utilising the resources at the disposal of global society to create a fantastic world of freedom and abundance for all. And then the task is to make that analysis in a credible way to the working class.

    6. As an aside, when was the last time that people in the Canterbury economics dept declared they are the most neoliberal economics department of any university in NZ? I know they said that about 20 years ago, but I’m not aware of them making the same boast in recent years.

    Phil

    • Thomas R says:

      This was a confusing post, I guess it’s a ‘responding to Thomas’ sandwich in which the first and last points refer to my post, the rest is for Byron? Just making that clear cause it’s not entirely.

      The Economics department was a professor earlier this year who also called Jordan a ‘rebellious little girl’ in a round-about way. Seemed like an asshole.

      I do think Mike Treen is right that Key is somewhat tied by Maori radicalism still, ie. his statement about “Hikois from hell”. But that is only one obstacle and isn’t exactly a bulwark against Key implementing other policies, if he desired to.

  7. PhilF says:

    Yes, some of it was a reply to you and some of it more relevant to Byron’s post (but still connected to points you had made).

    I agree with Mike (and you) that Key doesn’t especially want to antagonise Maori. But, of course, if he was hardcore neo-liberal, he wouldn’t be too bothered about that. Indeed, I’d go further and say that Key wants to build a base among Maori for National.

    One of the problems about the left’s demonisation of National is that they don’t pay any serious attention to the evolution of the National Party. For instance, National has been quite assiduously courting Maori. In fact, I wouldn’t be surprised if they don’t have more Maori candidates than Labour these days. They even had a Maori lesbian MP a while back, something once entirely unthinkable.

    The smart elements who actually have some power in National – as opposed to the redneck element who might vote for them but have no real power within the party – have pursued the conscious policy of making National more diverse in terms of ethnicity, gender and sexual orientation. They know the general population is changing and National has to reflect that if it wants to be the ‘natural’ party of government.

    Moreover, National has always had a mass orientation, possibly more so than Labour which traditionally relied on the union bureaucracy to affiliate and provide large numbers of paper members via those affiliations.

    There’s really nothing neoliberal about National these days, apart from a tiny and powerless handful of members and supporters who pine for the days of ‘Rogernomics’ and ‘Ruthanasia’. And the great party of neoliberalism, ACT, a party which had to be formed to express that ideology because Labour and National had moved away from it, languishes in the polls within the margin of error. There’s how relevant neoliberalism is in NZ today.

    Phil

    • Thomas R says:

      I think ideologically though, you are describing what a lot of people call neoliberalism these days. For example, a communist blogger on tumblr recently posted a joke:

      “Neoliberalism: more like ‘capitalism, it’s not just for boys'”

      Perhaps this is a misuse of the term, and we need to just talk about the social liberalisation of the National party rather than neoliberalism which can just be assigned to specific economic policies only. But I think keeping that in mind, ie. that people are talking about more than just economics when they say Neoliberalism often, makes more sense of some statements by left-liberals etc. which would seem really absurd if we’re only talking about economics.

      Neoliberalism is, of course, relevant to New Zealand in the sense that history weighs on the present. The ‘status quo’ of today is very much post-neoliberal, not a return to post-war sort of politics. No doubt as being from Christchurch you find the term ‘new normal’ about as cringeworthy as I do Phil, but I think in some ways it applies here. Neoliberalism basically did what it needed to do, and that equilibrium reached through brutal attacks on the working class has not yet shifted.

  8. PhilF says:

    Yes, as I’ve said many times, neoliberalism did what it was intended to do in the sense of lowering working class living standards, letting inefficient sections of capital go to the wall, privatising and commodifying state assets that could be profit-producing rather than being a drain on surplus-value, and introducing a degree of user-pays for services that were unlikely to ever be run profitably either by the private sector or the state.

    *But*, as we’ve also noted many times, the result was not the intended result, in the sense that the result was supposed to be a much more dynamic economy. Instead, while removing the perceived obstacles to a dynamic new round of accumulation, neoliberalism to no small degree munted the accumulation process.

    For instance, it actually had quite a negative impact on capital investment in the productive sector. Capitalists here relied to a large extent on simply making workers work harder, faster, longer. But you can only squeeze a limited amount of additional surplus-value out of workers that way. You really need to invest in PME (plant, machinery.equipment) and R&D (research & development) in order to dramatically expand surplus-value production. And they massively invested in the artificial economy, creating a whole new set of problems and drains on surplus-value (the paper values created in the artificial economy may have been artificial indeed, but the resulting debts were real).

    So one of the major results of neoliberalism was that NZ fell behind most of the OECD in PME and R&D investment. Several times over the past 15 or so years we have used an interesting graph showing the rate of growth of productivity in Australia and NZ. Before 1990, it was pretty even but from the early 1990s productivity growth in Australia outstripped NZ quite markedly. What happened at the start of the 1990s? Well, the Employment Contracts Act happened. That piece of legislation, while beloved of a range of individual employers, helped depress productivity growth in NZ, thereby doing harm to *capital in general*.

    NZ was marked by a long period of very sluggish growth following the ‘neoliberal’ reforms – which are better explained as necessary *capitalist* reforms. That’s why neo-liberalism was abandoned. After all, what capitalist class in their right mind would continue with a set of policy prescriptions that produced what neo-liberal ones did in NZ?

    The political side of neo-liberalism has involved the removal of non-market mechanisms of discrimination. So the old conservative types of discrimination, which had legal forms, have largely been removed. Social liberalism and neo-liberalism, logically, go together quite well. (The US is a bit of an exception, where people who favoured neo-liberal economics included lots of social conservatives, but that was their contradiction.)

    Did the left in NZ understand this side of neo-liberalism? I’d say some did, but more didn’t. Bruce Jesson had an understanding of this, for instance, and I’d say we did too. Meanwhile a lot of the left kept talking as if stuff like anti-gay bigotry was as entrenched as during the Muldoon years.

    Marxism doesn’t provide ready-made answers to anything, but it does provide a set of tools, including giving us the kind of questions we need to ask and the means of analysis to answer those questions. We *should* be able to keep up to date with the evolution of the accumulation process and how the problems thrown up at different points in that process are experienced and perceived by the capitalist class, and the wider ruling class, how their outlook changes in response to broad socio-economic changes – an example of this is that in the Muldoon era the dominant form of capitalist ideology in relation to women with young children was that they belonged in the home, whereas now the dominant capitalist ideology (and pressure from the state) is that women with small children get back in the workforce quick-smart.

    As I said before, we need a much more savvy left, one which keeps up with these developments rather than repeating ideas and slogans which may (or in some cases, may not) have held a few decades ago but have long been overtaken by economic, social and political developments across capitalist society.

    Without this approach, the left will always be a step (or quite a few steps) behind. We’ll never get the jump on the ruling class, we’ll never have the initiative.

    Phil

  9. PhilF says:

    Thomas wrote: “that equilibrium reached through brutal attacks on the working class has not yet shifted.”

    Agreed.

    Phil

  10. […] Key’s government not neo-liberal, admits Unite union leader […]

  11. PhilF says:

    The ISO national committee, in their assessment of the election, has done something of a turnaround in their assessment of Key’s politics. Their new analysis is very similar to what we have been saying the whole time. Here’s the relevant part of their statement:

    “Key brought National towards the centre, keeping popular Labour policies. What he has done from there is to redefine the ‘centre’ ground – National, over the last six years, has normalised its own position in society more generally. They have worked hard at promoting a socially liberal, ‘diverse’ image of themselves. And it is no lie: this isn’t a party of whisky-soaked old homophobes and racists. There are more right-wing Maori MPs than ever before; Key voted for equal marriage rights; the coalition with the Maori Party sought to draw more social layers in to this new ‘common sense.’

    “Who National rules for are the rich, in all their diversity. And that has been one secret to their success. They are not attempting structural transformations of New Zealand capitalism, as Ruth Richardson attempted in the 1990s or Roger Douglas before her. Instead, they are ruling for New Zealand capitalists; trundling along without much in the way of strategy, avoiding full-frontal confrontations with the organised working class, making do with a mixture of cronyism, the lift of exports to China’s growing economy, rebuilds and dairy. This gives Key the economic and political base to promote his sort of anti-politics. He campaigns as a dull, decent figure, a kind of competent, likeable and popular manager. That, by and large, has succeeded.”

    Maybe, at some point, they will get around to acknowledging that we have been saying this all along – and taking all kinds of flack for saying it as well. However, it shows that the election result has prompted some positive rethinking in ISO.

    Phil