Revolution And Bureaucracy.

Going Forward: "Every revolution evaporates and leaves behind only the slime of a new bureaucracy." - Franz Kafka. Painting by Bosc d'Anjou

EVERY REVOLUTION is both rescued and undone by the bureaucrats required to keep it alive. Sweeping away the old order is the easy part. The hard part is establishing a new order that will not fall apart at the first hint of political, economic and/or social trouble. A revolutionary bureaucracy must be more than resilient, however. It also needs to create the organisational architecture favourable to its long-term survival and growth. Unfortunately, these bureaucratic structures have a tendency to ossify. Imperceptibly, the new order becomes the old order and a new generation of revolutionaries begins to stir.

The dramatic economic reforms introduced by the Fourth Labour Government and its Finance Minister, Roger Douglas, were described by the political journalist, Colin James, as  “The Quiet Revolution”. In quick succession, New Zealand floated its currency, opened its borders and eliminated the subsidies which kept so much of its economy afloat. The Labour Government then proceeded to “corporatize” New Zealand’s publicly-owned industries: a process which saw tens-of-thousands of New Zealanders lose their jobs.

In the space of just a few months, the old economic and social order which National’s Rob Muldoon had struggled so hard to preserve was swept away. Not the least remarkable aspect of the “Rogernomics Revolution” was that it was accomplished without recourse to state-initiated violence.

Realising that what was being attempted in New Zealand was a carbon-copy of the economic programme imposed upon 1970s Chile by General Pinochet, one senior trade unionist warned the Labour Government that to carry through such radical reforms it would have to put troops on the streets. He was wrong. And the reason he was wrong was the breakneck speed with which the bureaucratic structures required to make the “free-market” revolution work were erected.

The explanation for the revolution’s rapid implementation lay in the fact that it was conceived by a tightly-knit group of senior bureaucrats located principally in the Reserve Bank and Treasury. Detailed blueprints for the new economic order they were seeking had already been drawn up. All these revolutionary bureaucrats lacked were the politicians needed to build it. In David Lange, Roger Douglas, Richard Prebble, Michael Bassett and Mike Moore they realised they had found them.

Only one significant obstacle to the revolution’s success remained in place – the public service ethos of the old bureaucracy that was being dismantled. A full and successful transition to the revolutionaries’ new economic system, driven by the imperatives of the free-market, would not be possible until the ingrained values of the old state-interventionist system it was replacing had been destroyed.

The State Sector Act 1988 was designed to do just that. Modelled on the administrative principles of the private sector, the new, free-market bureaucracy was led by Chief Executives on lucrative five-year contracts. Working on the assumption that the production of policy advice was no different from the production of baked beans, these new state-sector bosses could be recruited without risk from the private as well as the public sector. That being the case, it was considered prudent to source the new public sector mandarinate from those countries in which the free-market revolution had already triumphed.

Unofficially, it was also considered vital that these new free-market bureaucrats be strong enough to forestall the one eventuality that could undermine the new regime – the election of a left-wing government determined to roll back the free-market revolution of 1984-1993.

In the past, the “politicisation” of the public service had been about politicians “persuading” their bureaucratic advisors to do the government’s bidding. Under the new regime, this was turned on its head. The trick, now, was to “persuade” any cabinet ministers still foolishly clinging-on to left-wing ideas that their careers couldn’t possibly flourish until they finally accepted that the free-market revolution was irreversible.

If history teaches us anything, however, it is that nothing is irreversible. Mounting evidence of free-market capitalism’s failure has stimulated new economic thinking both here in New Zealand and around the world. The successors of those bureaucrats who facilitated the free-market revolution of the 1980s and 90s are now being asked to oversee its dramatic deconstruction. The eventuality they most feared, the election of a left-wing government determined to return the market to its proper place, has come to pass.

State Services Minister, Chris Hipkins, is demanding wholesale “transformation” of the public sector.

Vive la revolution

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 22 June 2018.