What If The Bosses Went On Strike? “Under a laisser-faire system the level of employment depends to a great extent on the so-called state of confidence [...] This gives to the capitalists a powerful indirect control over Government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.” - Michal Kalecki 1943
WHILE SIMON BRIDGES and his backroom number-crunchers are concocting bogus industrial relations statistics, a much more dangerous strike is looming. If you’re waiting to hear Bridges condemn this particular strike, however, you will wait in vain. This isn’t the sort of strike the National Party condemns; it’s the sort of strike it does everything in its power to provoke. What sort of strike are we talking about? An Investment Strike.
It was at the funeral of Jock Barnes, leader of the Waterside Workers Union in 1951, that I first encountered the term. The person who introduced me to it was Ross Wilson, President of the NZ Council of Trade Unions, who told me about a recent conversation he’d had with the Prime Minister, Helen Clark. She’d told him, bluntly, that the employers were threatening to put away their cheque-books. If her government refused to back away from its more radical policies – especially the proposed changes to the Employment Contracts Act – it would face an investment strike.
This was early-June 2000: the so-called “Winter of Discontent”.
There is much about the present situation that calls to mind those months back in 2000. Then – as now – the focus was on a series of surveys (most of them conducted on behalf of the banks) purporting to show a “loss of business confidence”. Just as they have been doing for the past nine months, the business-friendly commentators of eighteen years ago attributed this loss of confidence to the policies of the incoming Labour-led coalition government.
“Loss of business confidence” is an expression freighted with economic significance. One of the first to make the consequences of its loss explicit was the Polish economist Michal Kalecki. In “Political Aspects of Full Employment”, an article published in the Political Quarterly in 1943, he wrote:
“Under a laisser-faire system the level of employment depends to a great extent on the so-called state of confidence. If this deteriorates, private investment declines, which results in a fall of output and employment (both directly and through the secondary effect of the fall in incomes upon consumption and investment). This gives to the capitalists a powerful indirect control over Government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.”
The kicker lies in those last seven words: “because it would cause an economic crisis”. If the four pillars upholding the economic order set in place by Roger Douglas and Ruth Richardson: non-inflationary monetary policy; fiscal discipline; openness of markets; labour market flexibility; were ever to be threatened with serious erosion, then, in the words of the neoliberal ideologue, Roger Kerr: “doubts about New Zealand’s outlook will mount”.
Falling business confidence is, of course, the winking warning-light on the capitalists’ dashboard. Not only does it indicate rising doubt about the reliability of the new regime, but it also signals that the politicians responsible need a sharp reminder about who it is that really runs the country.
Back in 2000 that took the form of some of the country’s leading business executives issuing thinly-veiled threats to the Prime Minister and her Finance Minister. That Helen Clark and Michael Cullen felt it necessary to publicly allay the fears of those whose cheque-books were about to be locked away in the top-drawer of their desks, showed how very seriously those threats were taken. Under no circumstances could investors be allowed to go on strike “because it would cause an economic crisis”.
In the moments following Ross Wilson’s revelations I remember wondering what Jock Barnes would have done. He knew that, ultimately, all strikes are a matter of bluff. The trick lies in persuading the other side that you are willing to do whatever it takes to win. In 1951 the National Party called Barnes’ bluff: wagering that the unions would blink before the state did.
The only question that really matters in 2018, therefore, is: “Are Jacinda Ardern and Winston Peters willing to call the business community’s bluff?” Note that I have not included the Finance Minister in that question. Grant “Budget Responsibility Rules” Robertson has already made it clear where he stands.
While Jacinda thinks of the future and Winston remembers the past, the workers of New Zealand can only wait and hope that, as in 1951 (but not 2000!) the state blinks last.
This essay was originally published by The Otago Daily Times and The Greymouth Star of Friday, 29 June 2018.