Monday 30 March 2015

The Common Affairs Of The Whole: Why The National Party Is So Bad For New Zealand Capitalism.

Capitalist Cronies: Prime Minister, John Key, and his Finance Minister, Bill English. There’s an enormous difference between managing the affairs of the employing class as a whole, and arranging sweet deals for your mates.
[T]he bourgeoisie has at last, since the establishment of Modern Industry and of the world market, conquered for itself, in the modern representative State, exclusive political sway. The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.
Karl Marx & Friedrich EngelsThe Communist Manifesto (1848)

IF JOHN KEY’S GOVERNMENT is a committee, tasked with “managing the common affairs” of the whole employing class”, how’s it doing? Would it earn a pass mark from Charlie Marx and Fred Engels? Or, would they condemn Key for his failure to comprehend the whole meaning of the word “common”?
There’s an enormous difference between managing the affairs of the employing class as a whole, and arranging sweet deals for your mates. Indeed, it’s possible to argue that the difference between a “modern” state, and a state which merely aspires to that condition, is how successfully its political leaders have extricated themselves from the webs of personal, familial, and tribal obligations that characterise pre-modern societies.
The late Bruce Jesson shrewdly observed of New Zealand’s two major political parties that, although the National Party knew how to govern for capitalists, only the Labour Party had mastered the art of governing for capitalism.
Just think of the Sky City Casino deal. Or, the irrigator-driven dismissal of the Canterbury Regional Council. Consider the exclusion of the agricultural sector from the Emissions Trading Scheme. Or, the Government’s plans to make the Resource Management Act more developer-friendly. Think about Bill English’s plans to privatise social housing.
All of these policies are designed to serve the interests of either individual businesses, or favoured sectors of the economy. But none of them meet the Manifesto’s test for “managing the common affairs” of the employing class as a whole.
Bill English’s disastrous intrusion into the social housing scene is a telling instance of this government’s failure to comprehend the general good.
The provision of social housing in New Zealand will forever be associated with the First Labour Government’s massive state house construction programmes of the 1930s and 40s. State houses are, however, a little older than Mickey Savage and Jack Lee. It was the Reform Party leader, Gordon Coates who first authorised the building of “state” houses for the employees of the publicly-owned railway network. As a way of giving these workers’ a powerful “stake” in their employment it was a highly successful project.
Labour’s programme expanded the scope of worker housing tremendously. Moreover, by laying a floor of high-quality and affordable accommodation beneath the feet of the working-class, Labour’s “socialists” also conferred a huge benefit on the whole of the employing class.
Thanks to Labour’s state housing scheme, the health of workers and their families improved dramatically – lifting their productivity and reducing the economic burden of disease and chronic illness. Fixing the share of workers’ income expended on accommodation at around 25 percent similarly assisted the employers. By curbing property speculation and rack-renting, Labour’s state housing scheme kept prices stable across the entire housing market. Affordable housing meant that the incidence of workers attempting to offset rapidly rising accommodation costs by ratchetting-up the price of their labour, was reduced. Money not spent on accommodation could be spent on other things. In all these respects, state housing acted as a significant wage subsidy.
Which was just as well, because workers now needed to spend as much money as possible. Mass consumption was fast becoming the indispensable corollary to mass production. And, for mass consumption to continue, wages not only needed to rise – they had to keep on rising.
As the American inventor of modern mass-production techniques, Henry Ford, put it: “if you don’t pay your own employees enough that they can afford to buy your products, sooner or later, you’re going to go broke.”
Ford’s vision was clear – but narrow. He could see the advantage of paying his workers enough to purchase the Model-Ts they were putting together on his production lines, but he never made the next conceptual step: the one that would have allowed him to conceive of a society in which the working-class was paid enough, collectively, to consume its own production.
This was capitalism’s equivalent of a perpetual motion machine (assuming, of course, that capitalism had somehow discovered a way to exempt itself from the laws of planetary thermodynamics). The only downside (from the capitalists’ point of view) was that the full-employment and steadily rising living standards generated by the machine were bound to precipitate a concomitant decline in the political, social and economic power of the employing class.
The fatal paradox of capitalism’s perpetual motion machine (which actually operated throughout the West from 1950-1980) was that the more efficient it became at the equitable distribution of mass-produced goods and services, the more precarious the position of the capitalist system’s owners became.
With the efficient generation of surpluses ceasing to be an occasion for the obscene enrichment of a privileged few; and becoming, instead, the chief mechanism for ensuring better lives for everybody; those we now call “The One Percent” very quickly apprehended that economic inefficiency – even crises – were infinitely preferable to social equality. Even at the price of driving a large proportion of the employing class to the wall, the One Percent’s urgent mission became the election of “executive committees” dedicated to protecting the interests of only the most powerful capitalists – i.e. themselves. The rest of the bourgeoisie could go and join the proletariat in Hell.
The funny thing about Bill English is that 15 years ago he gave every appearance of understanding the crucial distinction between governing for capitalism as a whole, and governing for a handful of National Party cronies and Federated Farmers. His famous speech to the Balclutha Branch of the National Party in 2000 marked him out as a good, Disraelian, “One Nation” conservative. Even today, under Pope Francis, English, as a good Catholic, is obligated to take “the preferential option for the poor”. Why, then, has he allowed himself to become tangled up in a social housing policy that has been widely condemned as a “property developers charter”?
Could it be that Mr English, in his heart-of-hearts, knows that, in new Zealand, any Finance Minister who is serious about making capitalism work effectively and efficiently is much more likely to belong to the Labour Party than the National Party? That “One Nation” conservatism and moderate Social Democracy are, in practical political terms, indistinguishable. Could all the floundering around and making it up as he goes along be evidence of Mr English coming to terms with the fact that he has more in common with Winston Peters than John Key? Or, even more heretically, that in working out what “managing the common affairs of the whole bourgeoisie” truly entails, Mr English has come to realise just how far National’s “executive committee” has fallen short of Marx and Engel’s prescription?
This essay was originally posted on The Daily Blog of Saturday, 28 March 2015.


Brendon Harre said...

This article critiquing Piketty seems to indicate there is a difference between housing/land capital and proprietor capital of plant, machine, computer, software.....

That recent trends of increasing inequality in wealth and division of income between labour and capital is actually all about the first type of capital for housing and land.

It would seem to me that the Labour party could like the First Labour government save capitalism by joining in common cause workers and proprietor capital against the vested interests that artificially ensure income and capital gains from land/housing capital are unequally divided in society.

Brendon Harre said...

What the world wide capitalism system needs is hope.

Obama campaigned on this but he didn't quite have the policies to back it up. Although the US is doing the best of a poor bunch.

Europe is a disaster zone of a failed political unification process and demographic decline.

Japan is a dichotomy of powerful exporting success combined with domestic demand failure due to population decline.

China could easily follow with the added complication of an unstable authoritarian political system desperate for growth to distract the populace from the democratic deficit.

This lack of hope is being exported around the world in the form of deflation.

Hope is the answer, who will stand up and provide it for New Zealand?

Guerilla Surgeon said...

It was interesting to hear a business owner on the news today saying that centralisation of wins small loan schemes and Northland had cost him $100,000 a year. I guess that's an example of governing in the interests of the larger capitalists :-). But the implication is that he gets a damn sight more than that. Many people will never see that level of salary anyway. So perhaps labour could start governing on behalf of the workers instead of capitalism? That loans scheme was so that people on a benefit can buy appliances. So basically he was making money off them. People he probably castigates as lazy or bad decision makers. Certain amount of hypocrisy in the air in politics, not that it's ever been free of it, but it seems worse – or is it just me getting old.

pat said...

or could it simply be that Bill English's grasp of economics is not particularly strong?

Nick J said...

Brendon, your "hope" metaphor for capitalism no doubt grows out of Roosevelt's' line during the depression about the only thing to fear being fear itself. Unfortunately for us we are not Depression America where the issue was lack of money in the midst of overwhelming abundance. Chris' oblique reference to the laws of thermodynamics points us in another direction. We are faced with the opposite of that facing the Great Depression. We are faced by scarcity: we have reached the limits of resource exploitation and consumption.

The new paradigm is how we who are too great in numbers can operate on an abused planet whose ecosystem will not support our economy and its' associated practices. The need for "hope" comes in a radically different framework.

Brendon Harre said...

Nick J if you follow my link I expand on that point. Basically I do not think NZ is about to fall off the resource cliff, some places in the world maybe, the world in general probably not. NZ definitely not.

Even in a steady state economic paradigm which our birth rate figures indicate NZ is heading to means there has to be 'hope and opportunity' for the next generation. Comparing humanity to a steady state forest, we need some clear space in the canopy for the next generation to grow into.

It is foolish Green thinking to believe they can make the next generation do all the 'hard yards' of environmental adaption by making their basic cost of living unaffordable while other sectors of the society get wealthy from the resulting transfer of income.