Friday 29 June 2018

The Strike That Labour Fears Most.

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.


pat said...

Since you reference the seer Kalecki it may be worthwhile watching the below presentation by Mark Blyth....and then consider that all the analysis presented by both is predicated on growth.....and we have reached the limits of growth

Where to in that world?

Patricia said...

I can never understand this fear of the rich. If they all went off to Tuavalu it wouldn’t matter. NZ is a sovereign Country. It can create its own money so if the rich stopped contributing the State just steps in. It spends and creates the jobs for the rest of us and everything continues to run as before. The country can buy anything in its own currency.. And for heavens sake there is so much that needs to be done. It is the rich who should be frightened because the State is so much more powerful. The rich are rich because there is an unspoken agreement that they can be not because they have a divine right to be rich. Unfortunately we have a group of politicians in both the right and the so called left who are frightened and do not seem to realise that they have the power to create a better and better environment for the people. The government is supposed to be there FOR the people for gods sake.

Mark Hubbard said...

What on Earth has happened in state education that Patricia can write that comment? She really does think money just grows on the tree of state. (The same tree many gallows would have to be made from in her society).

Bloody hell.

Or is it satire. I can never tell on the Internet anymore.

Kat said...

Jacinda and Winston should eventually sort it, that's what the Nat opposition fear happening the most as their raison d'être will be greatly diminished.

Polly. said...

A strike is the only weapon a worker has got;
unless you are a Public servant;
then you use sick leave.
Public service sick leave, entitlement and usage in NZ, is rampant at all levels.
A national disgrace.
A independent inquiry, with powers of cut-off/ curtailment, needs to be set up and the repeat offenders, high and low level, sacked.

Jays said...

I'm sorry but that is the most delusional statement I've ever heard.
If the Government prints money without a commensurate level of lift in aggregate output of tradeable goods and services, the only result is inflation and a corresponding drop in currency.
The Spanish found this out in the way backs when they focussed on mining for gold and largely ignoring the other sectors of the economy .
Drive the top 1% or so out of the economy and hey presto you are speaking Spanish.

adam said...

I think if business pulled this stunt, then the ensuring economic crisis would be the catalyst that Winston needs to destroy the neo-liberal revolution. Just the ticket really, it could be argued we now have a crisis that the the current economics can not fix, and the only solution is a round of reforms away from the free market. Oh I do hope they do it. I'd laugh, and laugh and laugh at their silyness.

David Stone said...

Has anyone noticed how Assad in Syria keeps repeating that no foreign money will be accepted in the form of IMF loans etc. to rebuild his country once the war is over? He is going to demonstrate to the world the farcical BS we have all been sold for years that money can only be created by banks, and governments have to go to them cap in hand to beg for it.
He has brains; He can see how it works now , and how it should work. That's why the US has been so determined that he must go.
They don't seem to want to risk a war with Russia to overtly overthrow him militarily. They are left now with the only option of an assassination. I bet they try within the next 12 months.

Pinger said...

For an investor, investment results in a dividend.

No investment results in no dividend.

If Clarke and Cullen had balls and nous they could have thrown cold water over the veiled threats and just said: 'So, what will you tell your shareholders when you reap a nil return?'

That they didn't engage in this kind of bluff game renders Clarke and Cullen impotent.

Nick J said...

Interestingly people like Roger Kerr, the ideologues of laissez faire rarely have started in business as an owner, somebody who invests their own cash. Kerr was very much the paid functionary, like so many others...Mouter at Telecom, Spiering at Fonterra, the list is endless.

Modern corporate capitalism is failing because it has allowed itself to be run by a parasitic class of managers with no initial skin in the game.

What leaches like Kerr forget is that in a capitalist economy if an employer doesn't invest in their sector their competitors eats dog. The government needs to bravely face them off, tell them to lose "confidence", let's open up your market to real competitors. Watch the buggers run. And tell functionaries like Kerr that they can pay for unemployment by high top end tax. Face them down.

Gerald said...

Many years ago I had (attempted) a discussion with Sonia Davies. Her union represented the workforce in a manufacturing company in the Wairarapa that had just gone into liquidation. The business had been closed and the liquidator was selling the assets to meet some of the debts that were outstanding. I suggested to Sonia that if her union was to purchase these assets at their "fire sale" price, the industry could continue to produce. All her union members could keep their jobs and the business could be run with union people in charge. Such an enterprise could set a benchmark for how workers could benefit from profit sharing with no greedy employers to take advantage of their honest toiling. It could have been a shining example of how worker participation in management could succeed where existing workplaces could not. The discussion very quickly petered out. It seemed that the worker/boss model, however unpalatable for the workforce, was still the only viable option in the 20th century.

sumsuch said...

Social-democracy is two parties, the strong and the others. Where the others are divided, it goes awry. Where they are united it is, well, Scandinavia. Each party needs the other. But it needs a Savage for the others. The Rich need their heads to be butted so-ly.

The 'much awarded' 'Secrets of the Magna Carta' on Sky gives an insight into how the modern rich may view their place in the 'partnership'. FDR viewed as an obstruction to the individual's wealth creation. A clenched fist needed on the people's side I can't imagine modern Labour forming. From their own individual easy entrances to the elite.

At the end of resources the people need to take the senior role in the partnership. The problem is the cleft between the people and the (now mixed meritocratically) strong will come as a cliff. I'd like your vision of the next 10,20, 30 years. I'm scared of the next 15 since all the climate change predictions are running ahead. The only strength of Right blogs are their wild theories about the future. How would it roll out? How would the rich look after themselves to our detriment?

Patricia said...

May I suggest that your readers listen or watch Bill Michell, or Randall Wray or Stephanie Kelton on YouTube on how our fiat monetary system works. Bill Mitchell’s book “Reclaiming the State’ is a good read too

sumsuch said...

You seem to be emigrating south, newspaper-wise, Chris. There is a chap columnating in Hawke's Bay Today along your (and my) line but otherwise we increasingly get the powerful's idea of who represents the people in the main media. Soon we'll be at that shining light of where the rich rule all -- don't need to name the exemplary and commonly despised country. Big ups to Otago University's Bryce Edwards(?) though.

greywarbler said...

Those speakers seem good especially Bill Mitchell. But I believe them and find it alarming that they can tell us the facts, yet so many people have swallowed the current blarney from gummint, big business, Fed Farmers and Treasury, the Four Musketeers, that they can get away with finagling and
oppressing welfare recipients in the Bleak House approach we are hearing.
Also swopping our jobs for a plateful of magic beans and a stall in the market.

I think Brian Easton is probably going to appeal to you. He seems to have worthy understandings. And of course you read Gordon Campbell (Werewolf) at Scoop.