New Zealand is affected by the same crisis that we see in other parts of the world, with sluggish growth, growing unemployment and austerity measures being introduced. This document looks at the particular crisis of New Zealand capitalism and underlines the tasks of the Marxists.
New Zealand Perspectives 2010 should be read in conjunction with previous years’ perspectives documents (New Zealand Perspectives 2008 & 2009) as they are a continuation from them. In addition these perspectives should be read in conjunction with the latest World Perspectives analysis and associated material from the International Marxist Tendency (IMT) and Socialist Appeal NZ.
New Zealand Perspectives 2010 constitutes a continuing analysis of the deepening socio-economic crises facing New Zealand capitalism. It applies the method of Marxism to these processes: seeking the trends and processes within and to serve as a guide to action for all workers and youth who want to struggle for the socialist transformation of society.
Internationally, the world economy is coming out of recession. However, it has to be stated that the underlying problems within capitalism have not been resolved. The stimulus packages that have been pumped into the world economy have been the driving force in keeping the world economy “going” in the last period. Internationally inventories have been run-down and have to be re-stocked which is giving way to a limited revival in the world economy.
The recovery of world capitalism depends on state aid, loans, guarantees to the banks and subsidies to manufacturers etc. In other words, the world capitalist economy is being propped up by world governments' stimuli. The sudden removal of these stimuli will lead to the world economy going into recession again. At the same time through increasing taxes and tightening monetary policy we will see a heightening of the class struggle as workers at some point in the near future have no option but to defend their living standards as they are asked to pay for the capitalist crisis.
In fact the present actions of the bourgeois are preparing the way for an even greater slump in the future. The world economy is in a fragile state and it would not take much in the way of events to break this fragility in the world economy, for example sovereign nation defaults. Even the more far sighted bourgeois understand, along with their lick spittle economists, that the recovery will not have the economic fireworks that the propaganda suggests. They are predicting growth in New Zealand GDP to be between 2.5% and 3% for next year. Even this is a best guess scenario as this will be determined by events in the world economy. The economic recovery will most likely be a historically short lived affair and at the meagre growth rates suggested will generally mean a 'jobless' recovery cannot be ruled out.
Marxism explains that a period of social revolution opens up when the ruling class and their economic system become a drag and a fetter on the development of the productive forces of society. Added to this, a future of constant change from one economic situation to another produces uncertainty, which will have profound political effect on workers and the masses in general. Capitalism is most certainly at an impasse.
After 5 quarters of negative growth (or 15 months), the New Zealand economy emerged from recession in the middle of 2009. During the recession the economy contracted 3.3% with the building, manufacturing and wholesale sectors bearing the brunt of the decline. The economic recovery to date has been a very feeble affair of 0.2% growth in the September 2009 quarter.
At the same time we have seen unemployment increase to an official 7.3% with the youth bearing the brunt of this increase (37% of unemployed beneficiaries). Unemployment is set to continue to rise in the short term and remain persistently high for the foreseeable period ahead. This is mainly due to an increase in under-employment of people who have had their hours of work cut and the reluctance to increase these hours or employ more staff despite rhetoric to the contrary by employers who have generally seen their companies’ indebtedness grow to weather out the recession.
The recession has blown a hole in the government's finances. The government is borrowing $240 million per week to keep the public services going. Finance Minister, Bill English, has explained that there will be 6 years of budget deficits ahead with Crown debts to treble to $65 billion by 2014. The New Zealand bourgeois have only one plan to cut the ballooning deficit, that is a policy of severe cuts, austerity and counter reforms for a whole generation of workers.
Already, we are seeing the beginning of such a process with the freezing of public sector spending and cuts in services. The government has mooted increasing GST to 15% (a regressive tax which hits the poorest in society hardest) and tax cuts for the rich, as well as, reduction in company tax in the desperate hope that the capitalists will invest. [See No to Hikes in GST]
This proposed increase will come at a time when further increases in indirect taxation are being imposed due to the Emissions Trading Scheme: the overall burden of which, due to the National government's amended Act of Parliament, falls on the tax payer. Added to this are the hikes in ACC levies too. [see Socialist Appeal opposes privatisation of ACC].
Naturally, the government say it will compensate those who will lose out in such a hike in GST. This will be a token gesture of cutting income tax rates for low to middle earners and minimally compensating beneficiaries to try and appease workers to take the government's snake oil economic medicine – not that such economic medicine offers a cure! However, the sweetness of such a sugar coated pill will not take long to wear off for the bitter taste of the medicine to come through. Already in February's 2010 One News Colmar Brunton Poll 69 % of people polled oppose increases to GST and 63%.do not believe they will be better off with a tax cuts and an increase in GST.
Alongside this is the serious consideration to further the counter reforms against beneficiaries and workers’ rights with the extension of the 90 day hire and fire law, and the extending of the length of time served before you can take your employer to the employment court. Beneficiaries will undoubtedly face new pernicious rules on their continuing entitlement to benefits and a potential turning back of the clock to charitable assistance.
Cutting both state expenditure and real wages will only achieve deflation and cutting the market as workers have less money to buy back goods produced. As we stated in our 2008 perspectives “Marx explained that capitalist production is divided into 'department 1' which is the production of the means of production (capital goods, machinery and buildings etc.), and 'department 2' which is the production of the means of consumption (consumer goods). Therefore, the two sections are inter-dependent.
Holding down of wages means that investment will fall as the market will be cut, and production will decline further. Tax cuts for the rich will mean they will invest their money in low wage economies of the Far East not New Zealand where they cannot maximise their profits.
The 'stabilising' of the economy is a good thing as it allows workers to catch up with events and begin to claw back what they have lost in the last period. Clearly anger is mounting in the workplaces as the initial stunning of the workers by the economic crisis is beginning to dissipate. Workers will have no option but to challenge further pay freezes, cuts in hours and the further erosion of workplace conditions and the austerity measures in general.
What the above illustrates is the impasse in which New Zealand capitalism finds itself in. The social and economic consequences of this will be a heightening of the class struggle in New Zealand. This will provide a fertile ground to build the ideas of Marxism.
The National Government
The National government is in its second year of office. As we said in the 2008 New Zealand perspectives, “The government will have no alternative but to attack the living standards of workers and reduce the social wage (e.g. public spending on health, education, and social welfare) in order for the capitalists to maintain and recover their profitability and place the crisis of capitalism firmly on the backs of the working class”. This has been borne out by events and continues to do so with every day that passes.
The National party and the Prime Minister, John Key, are still well ahead in the polls. This is a reflection not just of the popularity of the government but of the weakness and bankruptcy of the Labour leadership in not putting forward a coherent socialist argument and solutions against the policies of the National government. This is paving the way for a second term National government, which undoubtedly will be more vicious and emboldened than the present government.
As we have previously said, the government's coalition partner, the Māori Party, is the political pet poodle of the Prime Minister after agreeing to a few baubles of office and limited concessions on issues of concern to them. They wish to pursue a right-wing economic and social agenda of what could best be described as Victorian values. They have said they are in favour of Māori administering welfare to (no doubt) the Māori deserving poor and continue to curry favour on this issue with the National Party.
There can be no doubt that the Māori Party leadership represent a “wealthy” elite and ignores the class basis of politics. This is graphically shown with 9 Māori Party branches in Pita Sharples’ constituency opposing hikes in GST, which the leadership will vote for due to their supply and confidence agreement with National. Undoubtedly, this is the beginning of the breaking up of the party.
The Act Party continues to argue for neo-liberal economic policy and the various government lead task-forces on issues such as tax policy and catching up to Australia economically expose all this, along with the privatisation of state education through a voucher scheme etc. Incidentally, it must be noted that the only thing that we have surpassed Australia on economically is our unemployment rate! The Act Party have a very small electoral base and the fact that leader of Act, Rodney Hide’s Epsom seat was won on the basis of National not mounting a serious campaign to win the seat in the first place, is an indication of this. The Act party has internal divisions which are beginning to surface with the abortive attempt to remove Rodney Hide from the leadership.
The perspective for the National-led government remains one of instability lurching from crisis to crisis. This will put enormous strain on the National Party and their coalition partners. It will increase internal division and splits within the National Party as the New Zealand bourgeois have no clear way forward for capitalism and await further instructions from the major imperialist powers. It is highly likely the government will survive its term in office. This is because of the weak reformist leadership of the mass organisations of the working class, in particular the Labour Party and the CTU, who have no socialist perspective or programme and will initially yield to bourgeois ideology, as in the past, and look to the past for solutions. They are incapable of organising or leading a generalised movement of the working class. This does not rule out such a movement coming from below, and certainly one which may start in the more unorganised layers of the working class, in particular the youth. Such a movement will not only frighten the ruling class but also the present leadership of the labour and trade union movement as they will be unable to control it. In the present conditions this is entirely possible and cannot be ruled out once the consciousness of the working class has caught up with events.
The Labour Party leadership is starting to move to the left under pressure from the rank and file. Phil Goff's speech to Labour Party conference on moving back to core values, campaigning against ACC increases, and the recent “axe the tax” campaign regarding the proposed increases in GST are all examples of this. Additionally, the campaign by the Māori caucus to win back Māori workers and the Māori electoral seats held by the Māori Party back to Labour is another important example of this. This has been followed by lifts in Labour's performance in the opinion polls, picking up votes mainly from the minority parties such as the Greens. This shows the beginnings of a polarisation taking place in society between capital and labour.
However, the message is somewhat muddled and unclear. It is one thing to say what is wrong; it is another to come out with a clear socialist programme and perspective. There are illusions that long lasting meaningful reforms can be won within capitalism. There is no longer a middle ground for the right wing to hide in. It either sides with the interests of the working class or those of the bourgeois. The reformists are left with no long lasting reforms to give on the basis of capitalism in its protracted death agony.
In the period that is unfolding workers will start to look towards the Labour Party and begin to transform it and shift it to the left, opening up good prospects for the ideas of Marxism. However, we expect for this to take time as workers will initially look toward the trade unions in the first instance to solve their problems.
The trade unions are a key area of work in the building of Marxist ideas. Under the conditions already outlined we can expect growing militancy on the part of the workers. To date, this point has been subdued due to the initial stunning of workers by the recession. However, workers are beginning to take a militant path to defend their interests.
Such a process will lead to a further strengthening of the unions. As a new layer comes into the unions there will inevitably be conflict between the rank and file and the bureaucracy that sits at the top.
Already we are seeing the CTU leadership move to the left under pressure from below. The CTU leadership have responded with The Alternative Economic Strategy (AES). Whilst this is a welcome development it advocates state capitalism based on the Swedish model of social democracy. This is a utopian aspiration as the New Zealand capitalists have abandoned any pretence of this as the last 30 years have shown. However, the AES does show clearly the decline of New Zealand capitalism over the past period, even if the solution put forward is weak to say the least. Undoubtedly, workers who read such a document in the period we are entering may reach altogether more revolutionary conclusion!
In these conditions a Marxist tendency working patiently in the mass organisations of the working class can make important gains winning the best militant trade unionists. This will prepare the ground at a later stage for the building of a serious left opposition within the unions.
Workers will instinctively turn to their traditional mass organisations, starting with the trade unions, to begin addressing the problems they face. The present leadership of the CTU will be found wanting and workers will quickly conclude the need to elect representatives that will reflect their views and aspirations and begin to transform the union movement into a militant one to defend their interests. In such a process that is beginning to unfold the ideas of Marxism will gain a tremendous echo and we can win the best militant workers to the banner of Marxism through patient work in the movement.
The winning of the youth to Marxism is crucial as they are the key to the future. Today young people in New Zealand have grown up in the conditions of a "deregulated" economy and, like the youth of many other countries, face huge student debts, low paid jobs, unemployment and a future with no hope.
With the National government being in power, along with growing mass youth unemployment, it will further radicalise a whole section of youth as they look for answers to the problems they face. This is where a genuine Marxist tendency can play a crucial role. We must win the most radical youth to the ideas of Marxism. We must educate them in the perspectives, methods and ideas of Marxism. The youth is the starting point of our work. They are the most radical and open layer of society. By systematic work on the university campuses and within the new young layer entering the trade unions, we can win the best over to the ideas of Marxism and build the tendency.
New Zealand capitalism has entered a new period, a period of extreme turbulence and struggles between the classes characterised by economic instability of booms and slumps and an economic system that is an absolute fetter on the development of the productive forces. Under such conditions the ideas of Marxism in New Zealand will gain ground and the building of the revolutionary party is the key to the socialist transformation of society here in New Zealand and the world. Forward to international socialism!
Source: Socialist Appeal (New Zealand)