Greed Meets Fear: A New York stockbroker attempts to keep pace with the vertiginous slide in the Dow Jones Index following China's "Black Monday" (24/8/15). Capitalism likes to paint itself as a force of nature, before which human-beings are individually and collectively powerless. Only when this economic fatalism is challenged by people's renewed confidence in the efficacy of collective action can capitalism's catastrophes be overcome.
ROUND AND ROUND AND ROUND it goes, and where it stops nobody knows! You might think that ordinary human-beings would have tired of Capitalism’s cyclical catastrophes by now. But our capacity to absorb these entirely man-made calamities appears to be no less impressive than our ability to cope with the genuine disasters nature sends our way. Indeed, Capitalism’s longevity is, almost certainly, attributable to its success in convincing us that it, too, is a force of Nature – something far beyond our feeble strength to influence for good or ill.
It was not always so. Eighty years ago, with the world in the clutches of another capitalist catastrophe, human-beings somewhere found the collective strength to denounce this “force of nature” falsehood. They decided that what humankind could ruin just by “letting things go” (laissez-faire) it could rebuild by replacing the “invisible hand” of the all-powerful capitalist market with their own.
The American President, Franklin Roosevelt, demonstrated the power of those all-too-visible hands in the massive public works of his “New Deal”. And the British Prime Minister, Clement Atlee, likewise demonstrated what focused political will could achieve when, in the midst of post-war austerity, the British people created their National Health Service.
Nor was New Zealand lacking in these triumphs of the people’s will. The First Labour Government’s Social Security Act of 1938 was New Zealand’s answer to the poverty and desperation of the Great Depression. Likewise its state housing programme: a massive construction effort funded by “Reserve Bank Credit”. (A capital source unrecognised by contemporary capitalist economists!)
So spectacular were the achievements of collective endeavour in the years before, during and after the Second World War, that capitalists everywhere felt obliged to pay them a grudging lip-service. This apparent conversion was, however, illusory. Whenever the parties of “private enterprise” managed to supplant the parties of collectivism, the latter’s policies were either subtly, or not so subtly, perverted. Projects designed to serve the interests of the many, always seemed to end up by disproportionately benefitting the few.
Visionary Blueprints: Ministry of Works plans for "The Auckland That Never Was".
The visionary blueprints for the development of post-war Auckland, drawn up in the mid-1940s by Ministry of Works planners, anticipated the goals of Auckland’s contemporary urban planners by 70 years. Tragically, the election of the First National Government, in 1949, put paid to this “Auckland that never was”, leaving Aucklanders with the sprawling, automobile-dependent conurbations that, today, they cannot afford to fix.
An even more comprehensive development plan, this time embracing the whole country, was brought together by William B. Sutch in the 1950s. One of New Zealand’s most creative (and controversial) public servants, Sutch recognised, very early, the urgent need for New Zealand to diversify its agricultural commodity-based economy. He argued for the sort of value-added products that distinguished the export-base of small economies like Switzerland and Denmark. This would require a much stronger national emphasis on skills acquisition and tertiary education. Only with a highly educated workforce could New Zealand produce the innovation necessary to broaden its economy. Sutch also argued for an economy that was much less import dependent. New Zealand, he said, must develop a much stronger industrial base.
In the Second Labour Government (1957-1960) led by Walter Nash, Sutch found a pair of eager listeners. The Finance Minister, Arnold Nordmeyer, and the Industry and Commerce Minister, Philip Holloway, were both convinced that Sutch’s ideas offered the only coherent path to a more prosperous, and less vulnerable, economic future for New Zealand. It is one of the great tragedies of this country’s history that the Second Labour Government did not last long enough for the change it contemplated to be undertaken and become entrenched.
As Sutch would later write: “The National Party could not have made this change because of their dependence for financial and political support on the farmers, importers, merchants and finance houses.” Plus ça change!
It’s been seven years since the Global Financial Crisis of 2008 provided yet another warning of New Zealand’s economic vulnerability. Was it heeded? There’s scant evidence of it. What cannot be missed, however, is seven years of enormous investment in dairying. The export of raw commodities remains this country’s stock-in-trade.
Today, as another capitalist catastrophe looms, is it not time to heed the collective spirit of ‘38 and ‘45 and ’57? Those years when “Yes we can!” was more than a presidential slogan.
This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 28 August 2015.
What Such planned for, Douglas promised. Still waiting, and nothing but politicians answers on this from the politicians.
The West is not capitalist, Chris, no more than China has an actual sharemarket. The West is crony capitalist, which is totally crippled markets ruled by government interventionism that has broken market coordination and the quick liquidation of malinvestments. Through centrally banked command economies which print fiat money to fund Huge State politicians whose state spend is close to 50% of the entire economic activity in Western economies it builds asset bubbles, then grows them bigger and bigger by trying to cap the chaos is causes through socialising what should remain private sector losses.
But I say private sector, that denotes property rights, and where it's important, we don't have those anymore.
It's Keynesian socialism and though it doesn't destroy lives, thus liberty and the quality of living as the straight our communist gulag economies did - those paragons of collectivism - it still achieves that in the long run. Indeed economystic JM Keynes has managed what the Soviet Union couldn't: total destruction of classical liberalism, and with that the West itself.
Capitalism likes to paint itself as a force of nature, before which human-beings are individually and collectively powerless.
Anyone who does some basic study of ecology can see the similarities. You have an energy source in an ecosystem and then you have organisms occupying niche. There is a hierachy, so you can only have so many grizzly bears etc. Libertarians react negatively to the notion that the human economy is a subset of the worlds ecosystem. That is a threatening idea, but it is to some on the left also as they have a similar simple solution where you cannot have too many or too little (meaning people and their cultures cannot be the problem)
The collective actions of 80 years ago may not be relevant today as those countries are now developed? Try to develop those countries whose peoples are trying to enter Europe.
Can you or one of your readers tell me a better form of Government than our present one1
Your caption caught my imagination. Capitalism viewed as a force of nature. Vertiginous slide. Vert meaning green, green as in lacking knowledge and wisdom. Old Cockney saying humorously deprecating, 'I'm not as green as I'm cabbage looking'.
When viewing our present situation economically and the financial markets that some have bestowed on all of us, the above thoughts are relevant.
We have slid into an awful mess that is destroying our asset bases, and earning ability so that we can replace our assets to a sustainable level.
We think in the past all the time, nostalgically 'How green was my valley'.
Yet we will allow the destruction of that valley's ecology in the present, if there is money in it for some. It takes dogged sacrificial effort by a group of dedicated and denigrated citizens to avoid the breakdown of our taonga and infrastructure and ethical governance.
And too many people now play Nero's fiddle, and fill their mind with hostile argument against control preventing destructive behavour, against reasonable taxes. There is an image on The Standard from yesterday's Daily Review of a t-shirt wearing man warmly shaking hands with firemen who have provided the benefit of their skilled experience to useful effect for him. The t-shirt blazons Freedom with less government and less taxes. The Nero fiddlers suffer from exceptionalism and the poison of nee liberal creeds such as the Virtue of Selfishness.
To form a balanced creed that is not human-denying it is necessary to read the counter critiques of the neo libs such as in this link referring to Adam Smith and Amartya Sen. Perhaps capitalism can be tamed and restrained by the thoughtful and concerned citizens for whom assets and money are merely tools and resources, not used as measures of worth and enry.
Anon 9.06 There is many forms of capitalism -the form that exists in the US is not the same as Germany's or Japan's. Whatever you want to call China -it is not the same as the others. There are also many forms of democracy, different forms of checks and balances. There is different splits between centralising and decentralising power -most other former anglo colonies became either city states or federal government systems. Denmark and other northern Europe cultures have a strong local government tradition where 30% of taxes go to local government.
The current form of government and capitalism we have in NZ is not the only option.
Only a simpleton would think so.....
"JM Keynes has managed what the Soviet Union couldn't: total destruction of classical liberalism, and with that the West itself."
Okay, that statement is on a par with "Helengrad" and New Zealand's "Cuba like" status in the 1960s and 70s. It's just vague bullshit and I'm calling you on it. How can you say that Keynesian economics has destroyed the West? To the extent that the West is Keynesian it is probably better than it's ever been. There's less poverty, and more prosperity. The main destruction seems to have been done by the inequality caused by "freeing up" the markets. To the extent that they have deregulated these, the country is "destroyed".
That is, a substantial mass of people at the bottom who have very little. A lack of options as Sen would have put it – poverty. You really should ask yourself what the economy is for. Because at the moment it seems to be for making some people reach and the rest of is worse off.
Anyway, if you go right back in the history of capitalism, it's always been crony capitalism. It seems to me that that is the nature of the beast. The rich have always bought the government, from Elizabethan monopolies to the Koch brothers.
I'm also a little unhappy about the use of the words crony capitalism, it's a little too no true Scotsman, but I'm willing to put up with that, because I'm also guilty of that when it comes to the state fascism of Russia and China. And it's not always a fallacy.
So tell me – or give me an example of any country that has ever been run on pure libertarian lines outside of Ayn Rand's adolescent ravings.. As far as I know there's only one place that ever tried it, somewhere in South America, and I can't be arsed getting the link just at the moment because I'm in a hurry, and it's a train wreck.
I thank Mark Hubbard for giving me a good laugh, his version of Keynes which I hear so often from libertarians is rather ridiculous. For Marks benefit:
* Keynes was a patrician who played the markets, he did not particularly like socialists or workers. Socialists of the Marxist creed understood that he stood not for workers but for saving capital from itself.
* Keynes analysis of capital aggregation and how this resulted in over capacity of production versus under consumption makes a lot of sense in a growing economy. If you produce consumer goods and the consumers (aka employees / workers) cant afford them them who are you going to sell to?
* A cynic might say that Keynes found a way of saving capitalism from itself at the expense of the state who were expected to go into debt (to the private banks in the case of the US -yes US Treasury is a privately owned organisation- ) to kick start consumer demand through employing people on major infrastructure projects. Capitalists and financiers get richer, social discontent goes away, get for private property!!!! Hardly socialist.
No Mark, Keynes was no socialist, and Leftist principles were basically compromised by the post war Keynesian construct because whilst the working class got the welfare state and higher wages they accepted the dominance of property rights / capitalism that denied them a place at the table as true partners.
@anon...how about letting our current model evolve without the manipulation,perversions and opaqueness
Round and round indeed.Always amazing as the market shrinks to the point of collapse the moneid always raise their head of wealths profit exploitation.
"No less impressive than our ability to cope with the genuine disasters nature sends our way." Trotter
Would of had that problem sorted if somebody in power listened instead of the feather weights running the show
Ya see I may talk big but I can back it
On to the subject of making money. Don't you tell me we live in a capitalist country when it's a dam crime in this commie country for a bloke to make $$$
Really grinds my gears
Lost opportunities abound in our history. The NZ Super Scheme was destroyed by Muldoon - NZ could have been a wealthy society today.
I believe it was Honduras GS. May be wrong but.
The economic cycle is no more than the ebb and flow of the human spirit...and no more controllable..
Brendan hare, temper, temper
You are correct Bush Baptist. But I was about to go out, so I really couldn't be bothered sorting out my reference there. Honduras it was. And a right dog's breakfast it became. I hope you got the link to the Dragon website? $140.
Oh Jesus I see you're back Jamie. And your references are as incoherent as ever. You, or rather whoever writes that shit you post links to should remember that the Roman army at its smallest was a bloody site bigger than the New Zealand army. Bit of an oversimplification I know. And roads were a damn sight simpler. The other link just seem to be a series of pictures. Maybe the author of the blog thinks we're all telepathic or something? Maybe I'm just old. I couldn't make any sense of the fucking thing at all.
@ GS; yep got it thanks. No need for it yet, I can still waggle my fingers.
Getting back on topic, I think it is hilarious that the criminal entity that pretends to be the legitimate government of China, the Communist Party, has tried to put back in the box the force of nature it has unleashed, namely capitalism. It is so arrogant that it thinks it can control and reshape not only human nature but the stock market too.
It has of course failed at both and this is just the latest example of why the left fails. Human nature and Nature cannot be altered and 'perfected' by a bunch of corrupt men in shiny suits, or white sheets for that matter. It applies to those god awful Islamic theocracies too. What a laugh.
Thank you for your wonderful insights into the human condition Charles. As usual you strike the right balance between outright bullshit and being patronising. You know so much about human nature I'm surprised you haven't collected at least a PhD in psychology. Human nature's plastic Charles – reasonably so anyway. Otherwise, why would we bother having laws – given that it's human nature to roar down the motorway as fast as you can go. I agree about the corrupt men in shiny suits though, the Koch brothers are definitely a danger to democracy.You see the extreme right always fails because it tends towards cronyism, authoritarianism and dictatorship. Just like the extreme left.
@GS: "So tell me – or give me an example of any country that has ever been run on pure libertarian lines outside of Ayn Rand's adolescent ravings.. As far as I know there's only one place that ever tried it, somewhere in South America, and I can't be arsed getting the link just at the moment because I'm in a hurry, and it's a train wreck."
Oh God, another person who confuses the historical lack of a libertarian government anywhere with the desirability of same. Do any readers believe the current big-government statist political parties, public service and other vested interests in NZ (or anywhere else) would allow the election of a libertarian government whose policies would include establishing a constitutional republic, privatising state assets and liquidating the public service?
Honduras was never run under libertarian lines - does a country with a government monopoly on telecommunications, with 85% of its electricity generated by state-owned power company and with minimum wage laws sound "libertarian" to anyone?
Oh God, another person who thinks that the historical lack of a libertarian government simply means that the world is against them, and it would work if only we gave it a try. And that somehow if people voted for a Libertarian party, the state would overturn the democratic election.When at the same time the advocates of charter cities tend to ignore the whole idea of democracy. You see this is why Ayn Rand is red mainly by adolescents, and abandoned once they grow up.
Oh dear Richard what a strange place you dwell in. Perhaps Liberian values could work but you need to find better and brighter representatives than those you have now.
Just take a look at the Republican hopefuls in the US right now: a bunch of religious whackjobs and Donald Trump the Clown Prince. All guided by Sarah Palin the Half-baked Alaskan!
Having idiots like these does your view no favours!
Incidentally you can see the meeting of the minds of Sarah and Donald here:
Yes I believe you're correct on your assessment about the size of the NZ Army G.S
You have to add this link to it too...
With 100, 000 good keen lads (and ladies) I reckon NZ could have a big enough defence force to have an independent foreign policy
The Romans had hand tools, we got heavy diesel machinery - kinda evens the score I reckon
Could start out small by building a national bike path first for practice before moving on to building State Highways, bridges, tunnels, disaster rebuilds
You realise Switzerland spends 4-5 billion on defence right? NZ spends about 1/10 of that. You willing to pay the taxes for a 5 fold increase in defence spending (on a population basis)?
Could of paid for it with this I reckon, haven't done the sums yet
You sure of your figures there G.S
"NZ Defence spending
• Budget will increase by $100m to around $3b in 2014/15 budget."
I did a google search and got some pdf file figures of 1.7 Billion for 2008/9
Funny, we both spend about 1% of GDP, but of course the Swiss GDP is much bigger than ours on a per capita basis anyway. But where I think our figures differ is possibly that whenever New Zealand needs to buy something large, defence spending goes up - a lot. And I think the government is spending quite a bit on new equipment in the next year or so. It might be better just to use an average, but I can't be arsed doing it right now :-).I also think that there are technical variations in the defence budget but I also can't be arsed looking that at the moment. Getting ready to go on holiday. :-)
I'm afraid libertarians are mere utopians who believe in some form of transactional nirvana. Even that is a false idol: there are by definition winners and losers in all economies but libertarians always deny this or if made to accept this refer to Darwin. Really libertarianism boils down to "I'm alright Jack and f**k you". To put it in context I never through the years of apartheid heard a libertarian object to the exploitation of black labour, some deep dark Randian thinking got in the way obviously. And that is the nature of the beast: thank our lucky stars there never has or will be a pure libertarian economy.
I have a number of objections to libertarianism, including fact that the founder later repudiated it, and some of its greatest proponents have sponged off the state in the last few years of their lives. But the main thing is they don't seem to have any coherent ideas about human rights. As Nick said they don't seem to be any in theory apart from the right to own property. And as freely entered into contracts are sacred, it would seem to me to be easy enough to sell yourself into slavery :-). That's not all, but it's a waste of time arguing with them. True believers all. But I'll put my usual question. I know what would change my mind about libertarianism. What would change yours Mark?
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