“Good” Kiwi Capitalism? Only Thanks To Good Kiwi Labour!

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THAT KEITH RANKIN harks back to the days of the Liberal Government (1890-1912) is hardly surprising. His posting entitled “Public Private Capitalism” is entirely consistent with the ideas of economic and social reformers politically active in New Zealand more than 100 years ago.

Much like today, that era was characterised by the rapid spread of capitalism around the world. This second great wave of globalisation (the first coinciding with the so-called “Age of Discovery” during the fifteenth and sixteenth centuries) was given added impetus by the key technological advances of the era: telegraphy, railways, steamships. What distinguishes the global capitalism of the nineteenth and early-twentieth centuries from that of our own era, however, is that the free movement of capital was matched by the free movement of labour.

Prior to the outbreak of the First World War in 1914, it was possible for people living in conditions of economic and social backwardness and/or suffering political oppression (Tsarist Russia, Southern Italy) to simply up stakes and move to nations undergoing rapid modernisation. In the fifty years between by the end of the American Civil War and the outbreak of World War I, for example, more than 15 million people emigrated to the United States. Lesser, though still significant, numbers left the downtrodden “Celtic fringe” of the United Kingdom (Scotland and Ireland) to settle in the new “White” Dominions of Canada, Australia and New Zealand.

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What this meant in the context of colonial New Zealand was that capital and labour generally arrived in the places of settlement together. Where the mystique of aristocratic rule was able to obscure the brute facts of capitalist social relations in the Old World, the mutual dependence of capital and labour in the New was obvious to all. Equally obvious was any attempt by one to secure an unfair advantage over the other. Indeed, it is possible to argue that New Zealand history is largely a record of labour asserting its rights against capital – and capital reasserting its rights over labour.

An essential part of this ongoing struggle for ascendancy was the way in which both sides turned to the state to either preserve an advantage or offset a disadvantage. If the colonial business sector found itself suffering from financial stresses that metropolitan capital was unwilling to relieve, it did not hesitate to raid the public revenues. And if workers found themselves priced out of access to privately owned utilities and services, their political representatives lost little time in establishing publicly owned alternatives.

By the middle of the twentieth century this process had reached a point of rough equilibrium. Most of the country’s critical infrastructure and a fair portion of its financial sector was in the hands of the state, while agriculture and most of its consumer industries remained in private ownership.

In the 1930s, however, the eclipse of the Liberal Party by the Labour Party had led to legislation strengthening the New Zealand trade union movement. The share of national income going to wage and salary earners expanded accordingly. In combination with the growth of the public sector, the redistributive effect of trade union power had, by the 1970s, tipped the scales decisively against capital. Indeed, all across the capitalist world the rate of profit began to fall.

This fall in the capitalists’ rate of profit was matched by a concomitant rise in social-democratic and labour ambition. In Sweden a proposal to allow “wage-earner funds” to purchase shares in private companies signalled the Left’s determination to move beyond the post-war “mixed economy” to full-blown socialisation. In Australia, Gough Whitlam’s Labor government also dreamed of “buying back the farm”, while in New Zealand there were fears that Norman Kirk’s compulsory superannuation scheme would soon amass sufficient funds to “expropriate the expropriators”.

The reaction of capital to labour’s growing economic advantage was to first stop and roll back the Left’s political ambitions, and then to launch the most comprehensive counter-attack against working-class gains in more than a century.

This neoliberal counter-revolution grew out of and was made effective by the third great wave of capitalist globalisation. And this time the free flow of capital was not matched by the free flow of labour. First investment and then production itself was moved offshore to dictatorial, low-wage regimes. Unable to vote with their feet, the working-classes of the West – including New Zealand’s – could only watch in dismay as the economic and social gains of a century were ruthlessly stripped away.

Keith Rankin argues that: “Kiwi capitalism is good capitalism. Kiwi capitalism means getting the public private balance right. It’s neither left capitalism nor right capitalism. It’s capitalism as our grandparents knew it; capitalism that does not require part of the population to be losers.”

But “Kiwi capitalism”, as our grandparents knew it, was not the consequence of some organic thrusting-up of grass-roots entrepreneurialism, it was the product of a quite conscious political effort by New Zealand workers to ensure that they too enjoyed a place in the sun.

If there is any “good” at all in Kiwi capitalism it is only because a century of working-class struggle put it there. And it will only stay “good” if Kiwi workers are successful in doing again what they have done before: deploying the resources of the many, to offset the unfair advantages of the few.

13 COMMENTS

  1. As usual , an erudite and surgically precise dissection of our smoke and mirrors economy .

    ” … while agriculture and most of its consumer industries remained in private ownership. ”

    By that I assume you mean in ownership of the Banks and the naughty , sneaky little entrepreneurs in their fancy suits and Oh ! Ah ! Offices ?
    Do they shout ” Ooooo Baby ! Spank me harder ! I feel a deposit from a share dividend off what was once a state asset coming on ! ”
    You know ? The ones there to this day , feeding off the endevours of the ‘ working class ‘ ( As opposed to the lazy , greedy , worthless bastard , Banker/Lawyer/Accountant class who’ve shoved our economy over onto it’s face for their profit . )
    It’s in the interests of capitalism to destabilize the voter to get what it wants ( A Profit ) and I reckon 800,000 NZ non voters would agree with that .
    A work colleague told me a fable about the Mexican villager and the American tourist and entrepreneur talking together on the beach one day .
    The Mexican told the American that he had a nice life . He did a little fishing and only caught what he needed for the evening meal because he didn’t have electricity so he had no way of storing the excess fish he could catch . ” But that doesn’t matter because there were plenty more fish in the sea so why catch more than I need ? ” . ” I sit here and spend time with my woman and my children who spend all day playing along the beach and swimming in the ocean . We have no ‘ boss ‘ , we have no time tables , we have no debt , no stress and we are very , very happy .

    The American said ” So , there are many fishes in that sea just there huh ? More than you could eat yourselves huh ? Hmmmm . That gives me an idea . Find off shore markets where there is a demand for fish then borrow some capital . Invest it in boats and crew , start an export company , build a factory right there in the beach and make yourself a millionaire ! ”

    The Mexican asked ” But why ? Why would I want to be a millionaire ?

    The American entrepreneur replied .
    ” Why , so you can afford to be able to spend all day down here on the beach with your woman , your kids and never have to worry about money of course . ”

    Capitalism is a mental illness that we must all now live with . It’s become an unfortunate though hopefully temporary component in human evolution . From the insanity of those few who think that having far more than they need is still not enough , there rises new technologies and infrastructures that benefits as all . ( Having said that . What company built our rail , roading , hospitals , phone , electricity , education , townships , bridges , public works infrastructures etc … and what -ism has stolen that stuff away from us Mexicans ? And costs us even more to use now that foreign investors own it ? ) So thanks very much you mad bastards . Now fuck off .

    It’s deeply worrying , that those few whom we most ‘ admire ‘ for their wealth and privilege are in fact as mad as wet hens . Wet a hen today and see how mad it gets . That’s how mad they are ! ( Please dry your hen gently after the experiment . I don’t want any trouble . The last thing I need to worry about is a damp hit hen stalking me of an evening . )

    • Just want to say that I love coming to your articles. The thoughtful content and comments of other readers give me hope that just maybe there are enough good people in this world for hope for the human race.

      Welcome to the 11th century.

      Its not just Islamic fundamentalists that want to return to the dark ages. In my view there is nothing “new” or “liberal” about neo-liberalism. Ultimately it is about a few select people who own all the property (capital / means of production / resources) and everyone else will be merely serfs to the local lords of the land.

      “Neo-liberalism” is actually “Paleo-feudalism”.

  2. Various people were going to Canada from Europe for centuries before the 1800s: the cod fishing and fur trade, for starters. I have a friend whose people have been in Quebec for four hundred years.

    And a fair number left Scotland for Canada after the ’45 to escape religious persecution, among other indignities. Which was well before Macdonald started to join Canada together in the nineteenth century.

    It seems that a lot of that ‘socialist stuff’, to which you refer, came to this country after the First World War, particularly. The legacy of John McLean and the Red Clydesiders, perhaps.

  3. There’s no such thing as “Good Capitalism”. This article has a good description of capitalism:

    If one defines capitalism as a system designed by and for the interests of those who hold capital (what it is), capitalism is what the United States has today. It is a system based not on principles of freedom and liberty and justice for all, but the accumulation of wealth for people called “capitalists.” It entails structuring an economy in such a way that natural resources are exploited for private gain and land is parceled off into mortgage-backed securities. It means rich people using their money to buy power and shape economic relations to their advantage, which makes them more money.

    That is capitalism. A system designed to benefit a few at everyone else’s expense.

  4. Had a drink after work last night in Britomart Auckland pub with a share-broker and a banker. Have known them both since they were kids but have not seen them much lately. They are both now very rich, I could tell this as they name dropped trips to villas in Italy, a bache up north, a UK share portfolio that had to move to avoid tax. They moved on to the living wage and why should their rates ($5000 for one and over $8000 for the other) be used to pay ‘this living wage rubbish’. I realised then the real separation that extreme differences in income results in. These two people had no regard for, no interest in anything but themselves and have dumbed themselves down to the point that if someone else gets anything at all then they must be missing missing out. It was actually sickening and I had to ask them to stop braying.

    • PLAN B: They have not “dumbed down”, they are just like King Louis of France (the 16th), before the French Revolution, and they would be the ones telling the poor to bloody well eat cake, if they cannot afford any bread. They use their privileged roles and incomes to further their interests, and they know full well that they are exploiting others. Yet they have no scruples and love only themselves.

      These are the upper middle class and upper class people that I see every week in Queen Street and some other streets in Central Auckland, they think they are something better and deserve what they enjoy, because they “worked so hard for it”.

      I get angry every time I hear ratepayers moan about the rate increases, which are now rather moderate. So paying a few thousand a year is something to moan about, while most of them own their properties and have in many cases only little in mortgage or other obligations left.

      What about renters, who pay exorbitant rents in Auckland and Christchurch, and who pay manifold that what such property owners pay in rates per year? Renters are also used to pay off properties, and we have some people own some rather large property portfolios now.

      The situation is favourable for those who already are well off, as they can buy and own yet more, over the years. The rich get richer and the poor get poorer, while also much of the middle class is struggling to get by.

      And those that have, they control also so much in the media, as most is privately owned, and some are shareholders or more. So they continue to feed the populace with consumerist advertising, to tell them that nothing else but shopping and consuming matters. Work more hours, earn your money and spend it, that is the purpose of life, the public are told.

      Little real news are reported and nothing that could challenge the status quo is encouraged or allowed. So it goes on, and nothing much changes, due to endless brainwashing and dumbing down.

    • So glad you didn’t stand by and just absorb it, I hope you actually made them attempt to think, but, in my experience, I have never met anyone in the world who considers they have enough money, especially the uber-rich.

  5. It is a myth that NZ capitalism is better than other capitalisms.
    White settler states brought money and workers, but they first had to steal the land to make sure workers couldnt survive unless working for a wage.

    Marx’s parable of Mr Peel in the Swan River WA, showed that when workers could ‘shoot thru’ onto their own land, wage labour dried up and capitalist production failed.

    Another myth is that workers reforms somehow tamed capitalism. State intervention by the Liberals after 1891 created a more productive agriculture, but again at the expense of more alienated Maori land.

    Labour from 1935 continued the state intervention in the 1930s to create the conditions for the development of capitalism in NZ and with it expanding the labour market. But the war and the boom that followed did a hell of a lot more. Ten the crisis tendency kicked in again.

    In other words the warfare state created the the conditions for labour exploitation and capital accumulation, the unequal effects of which are today blindingly obvious in the global crisis.

    The only thing good about capitalism is that it creates the conditions for its own demise and for a new society based on social ownership and sustainable production.

    But this will have to happen on a global scale, not in separate nation states who are stacked on some hifive scale of good or gooder capitalism. Global capitalism is now terminal and with it human survival. That is all bad.

  6. “First investment and then production itself was moved offshore to dictatorial, low-wage regimes. Unable to vote with their feet, the working-classes of the West – including New Zealand’s – could only watch in dismay as the economic and social gains of a century were ruthlessly stripped away.”

    Well, according to John Key and his buddies, we have it better than ever before now here in New Zealand?!

    As for the general public and most of society, little has changed, let alone improved. But many seem to think that things are not all that bad, as there is no sign of much protesting, hardly any industrial action and not even a scream of injustice by the worst off beneficiaries, dealt to with draconian welfare reforms.

    The reason may in part be, that division is the rule now, that few have any sense of a collective effort and spirit, that people have only learned to mistrust and compete with each other. Individual employment contracts are the norm, and only few have proper union representation. Many jobs are contracted term-employment, part time or casual, so that many struggle to get the hours and wages they need to cover expenses.

    Others do fairly well, and those are the ones with degrees, with careers in either private enterprises, or in the public service. They are predominantly white or from certain migrant communities, belonging to the “middle class”.

    They have little solidarity with the ones worse off, and no scruples being served in restaurants, fast food outlets, supermarkets, hairdressing and beauty salons, gyms, service stations and whatever other business, where the workers get little more than the minimum wage.

    As for society as a whole, yes, production and some services have been shifted off-shore, and more of this is happening while you read this. The actual “blue collar” work is now mostly done in low wage and lower standards economies in South- and East Asia, perhaps in some Latin American or other countries, where clothing, electronic and various other household consumer products are made at low costs.

    Most New Zealanders have no sense of “solidarity” with the workers there, who make stuff they use and consume daily, and some accounting, internet- and phone services are also offered from bases in India and the likes, making the use of these comparatively cheap.

    Yet many products and services from there are sold here only marginally cheaper than if they had been made here, as the importers, wholesalers and retailers ensure they can get a nice cut out of the whole trade, while they have an oligopoly or monopoly claim on the local market.

    So where is this “good Kiwi capitalism”, as most is not even “Kiwi capitalism”, and happens off-shore? But of course, those running the larger NZ companies, controlling the banks, insurance and other investment businesses, they will continue to claim they are doing it all with a “social conscience”, as they are so “fair” and also pay taxes here.

    Welcome to the “brighter future”, I suppose, it surely is “bright” for some in Auckland’s Eastern Suburbs, on the North Shore and so, same as in the more flash suburbs in Wellington, Christchurch and Dunedin.

    Now, where does Kiwi Labour fit in again? Perhaps the neo-liberal “counter revolution” needs to be put to a stop and reversed again? There you go, David Cunliffe and Labour, you have a job to do, and we will see what will be delivered from next year on!

    • Did anyone notice that in this country the right-wing revolution came from a Party allegedly of the Left? Observe too, that an allegedly similarly ‘Left wing’ political party carried on the so-called Neo-liberal programme in Great Britain. The political ‘Left’ in power kept up what the ‘Right’ set in train.

      It has been said of the United States political system that it is a one party state with two right wings. MMP has achieved little enough to prevent the same discription being applicable to New Zealand.

      Note also that the people who might have been expected to be the guardians of the workers who had bought and paid for the rights, working conditions and incomes they had won, those ‘guardians’ abandoned the walls and left the gates open. The Unions and Service Orgaizations – their hands still held out for their annual subscriptions, be it noted – simply abandoned their constituency to the ravening wolves.

      The Labour Party still has a lot of atonement to do before I will forgive them, and as for the Unions – I spurn them, as the father-in-law said, as I would a rabid dog. ‘Aiming to preserve jobs,’ they bleated piteously when their members called for a bit of backbone, guts, and something to fill their scrotal sacks. They couldn’t even achieve that footling aim. How many jobs this country has exported over the last couple of decades? Compared with the few imported?

      And – here’s the kicker – John Key justifies his privatization of State assets telling us he wants somewhere in Kiwiland to invest Kiwisaver monies. ‘Too little product in this country,’ says he,’ for Kiwisaver to be invested here.’ For Pity’s sake.

      Shame it hasn’t occurred to him and his colleagues (or any other Honourable goddam Member) that maybe there is too little product to absorb the skyrocketing unemployment and under-employment, neither.

      Since 1975, governance in this country has been utterly, utterly, utterly, utterly, utterly, utterly useless. Utterly.

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