Monday 13 April 2020

The ‘What’ And The ‘How’.

Capitalism Driving The People: Standing in the way of “bold persistent experimentation” are the ideas, organisations and orthodoxies that constitute its deadliest foes. The idea that human-beings are made to serve the economy, rather than the economy being made to serve human-beings. Unregulated capitalism is the organisational expression of this idea, and neoliberalism is its orthodoxy. Post Pandemic, these are the things we can lose.

“EVERYTHING MUST CHANGE so that everything can stay the same.” So says the Rabelaisian hero of Prince Giuseppe Tomasi di Lampedusa’s novel “The Leopard”. Published in 1958, Lampedusa’s unfinished, posthumously-published novel catalogues the efforts of the fictitious Prince of Salina to preserve his aristocratic way of life amidst the tumultuous social, economic and political upheavals attendant upon the nineteenth century unification of Italy.

Like the Prince of Salina, New Zealand also faces a Herculean effort to preserve its way of life in the midst of tumultuous events. As the nation emerges from its Covid-19 Level-4 lockdown and into the economic havoc which the Pandemic has wrought, its citizens will need all the guile and flexibility of Lampedusa’s hero. But, before dealing with the “how” of national recovery, New Zealanders will need to address the “what”.

What, precisely, do we need to preserve? What beliefs, institutions and values must remain non-negotiable? More importantly, what ideas, organisations and orthodoxies should we be ready to let go? Only when we have sorted out the answers to these questions can the practical work of recovery and resurgence begin.

Each of us will present a slightly different set of “must haves” and “no longer requireds”. Here, for what they’re worth, are mine.

The core belief of the archetypal Pakeha New Zealander is that Jack and Jill are as good as their masters. If you are looking for the reason why so many people travelled half way around the world to settle these islands, then you will find it in the settlers’ desire to begin again in a new land where people’s hopes aren’t circumscribed by the circumstances of their birth. Where personal success and fulfilment no longer depend on who your parents are. Where it is possible for ordinary people to make something of themselves on their own terms. Where the future is fashioned by “us” – not “them”.

It is this core belief that undergirds New Zealand’s core institutions: a House of Representatives, democratically elected; independent courts of law; publicly funded health and education providers; a welfare safety-net to support us through times of adversity; an independent news media to keep us informed and hold our leaders to account; trade unions to defend workers’ rights on the job. Take away these core institutions and Jack and Jill’s masters will very soon reign supreme.

The core value animating these institutions is Fairness. For the overwhelming majority of New Zealanders nothing can be good if it is not also fair. A more high-falutin people might have designated Justice as their core value: but for Kiwis the notion that everybody is entitled to “a fair go” says it just fine.

It is interesting to speculate about the extent to which these Pakeha beliefs, institutions and values have been influenced by the Maori concepts of Kotahitanga (Unity), Whanaungatanga (Kinship), Kaitiakitanga (Stewardship) and Wairuatanga (Spirituality). What is not in dispute, however, is that the ultimate sources of well-being in both cultures have complimented and reinforced each other down the years.

This, then, is the “what” that I would be willing to change everything to keep the same. As to the “how”, I can think of no better example to cite than Franklin D. Roosevelt, the American President who guided his people out of the very depths of the Great Depression.

The day he was inaugurated, most of America’s banks had closed their doors. Hundreds-of-thousands of his fellow citizens had lost their life’s savings. Millions more had lost their jobs. The line from Roosevelt’s inaugural address that is most often quoted is: “The only thing we have to fear is fear itself”. But, the FDR quote that captures my imagination, and which is most relevant to our own time, is this.

“The country needs and unless I mistake its temper the country demands bold persistent experimentation. It is common sense to take a method and try it. If it fails admit it frankly and try another. But above all try something.”

Standing in the way of “bold persistent experimentation”, however, are the ideas, organisations and orthodoxies that constitute its deadliest foes. The idea that human-beings are made to serve the economy, rather than the economy being made to serve human-beings. Unregulated capitalism is the organisational expression of this idea, and neoliberalism is its orthodoxy.

These are the things we can lose.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Thursday, 9 April 2020.


B'art Homme said...

Brilliant Chris.

As our law has encompassed the division between essential and fluff, I'd suggest a new, post lockdown list will help filter the neolibersl, market forced chaff from the corn.

Patricia said...

‘The idea that human-beings are made to serve the economy, rather than the economy being made to serve human-beings.’ So so pithy. Now I know what to say to my silly brother...

Tom Hunter said...

Unregulated capitalism is the organisational expression of this idea,

There's no queston that Rogernomics ripped away a huge raft of regulations that arose simply from the government having its fingers in so many businesses, particularly the "Commanding Heights of The Economy".

But I suggest you go and have a talk with any person running a small or medium business and find out all the regulations they currently operate under. I think most left-wingers would be stunned at the quantity of them and how prescriptive they are.



John Hurley said...

Neo-liberalism has to go in favour of nationalism.
Kiwiblog (The National Party blog).

Spoiler alert.
Chinese have been buying up hotels, motels etc for many years. They come here, they work hard, don’t spend frivolously, and amass capital and buy businesses. The common thing I hear from these business owners, is that Kiwi employees are lazy. They would rather go on the dole than take a lowly job cleaning motel rooms.
You will find many Chinese who have worked hard to buy motels might actually drive an expensive Mercedes. They did it through hard work, and despite their wealth, many work 15 hour days, and many of whom clean the motel rooms because they cannot get good NZ workers who do a fair days work for a fair day’s pay.

How the *&%#@ did we get a Pol Sci lecturer to lead [hijack] the Labour Party and when was the last time National was a "national" party. John key shouldn't have got a knighthood.

Kat said...

If this govt can put together a programme of planned “bold persistent experimentation” similar to the various Covid 19 levels one, two, three and four, and succinctly articulate that to the electorate then we should be in for a very lively debate leading up to the general election in September. If everything must change to stay the same and for New Zealand to emerge positively from this neo liberal slaying pandemic then Jacinda Ardern may once again have many nodding in approval to such a programme and to a repeat of her “let’s do this”.

Left Thinking said...

The patty bourgeois mentality of the tens of thousands of "self-employed" and owners of SMEs will not want any radical change except more freedom for them to make money (you know, less "regulation").
The FDR/Keynesian solution of the mid-twentieth century decades is not going to be repeated, nor should or could it be, given that it required WWII and its rebuilding aftermath for its temporary success. Post Covid-19 we need a revolutionary Green New Deal to transform our society.

JanM said...

I'm interested to see that your list of 'must haves' include effective unions and an independent news media. We haven't had either of those things for decades !

David Stone said...

@ Tom Hunter
What you say about regulations paralysing business, especially any practical business providing essential goods food and services to the population is certainly true. But that is not the side of the economy that needs the kind of regulation that Chris refers to. It's financial regulation that is lacking; has been deliberately abandoned since Rogernomics.
A geologist friend of mine long ago quoted a mentor of his during his training; "if you want to make money from mining , you must never pick up anything heavier than a ballpoint pen". I'm sure today he would be allowed to uplift a laptop. This maxim applies to the whole economy now, so no one who is doing anything that serves the needs of their fellow man is doing better than break even with most gradually falling beneath a growing mountain of debt. It is the people who issue the debt that make money. Until as now the debt becomes so large and so all encompassing that it is unsustainable . I can't see how this parasitic section of the economy will not suffer as much as the rest of us if/ when Chris's anticipated day of reckoning comes to pass, but what I am sure of is that those in control of the wealth of nations now will be working frantically on how to preserve their access to it through whatever upheavals there might be. They will have a plan.
If a change of wealth and power distribution along Mr Trotter's ideals is to have any hope of emerging from the turmoil there will need to be an alternative plan, carefully thought out and agreed on by folks that want his "what" to be ready to present to the public in terms everyone can understand and most can agree on. Especially those in government.
There needs to be a forum to air thoughts and get some clear ideas agreed on. Not just to say what's wrong with the system but to come up with solutions.
For my penny's worth I believe the essential change is to have a sovereign banking system , where the Government or the reserve bank answering directly to the government , issues money as government requires it for serving the needs of the state and the people. Not as debt as it all is now but as fiat money which can be withdrawn from circulation as needed to manage the money supply by taxation.
It has been long held that a government is not to be trusted with such a critical and important , and perhaps complex and mystified matter as money and banking. That it should be left to the banking specialists that understand the business. But what we are dealing with now is the incontrovertible evidence that these people can't be trusted with that responsibility either. Either they never have understood how works properly in the long term, or they have been unable to resist abusing their understanding and their power to their own pecuniary advantage on a gigantic scale.
MMT rather than PM.


Jens Meder said...

Beside a primitive hand-to-mouth existence there is no economy to speak of without saving and investment - and so this is precisely how we create the economy to serve our needs and dreams.
And yes, an unregulated liberal market economy intensifies socio-economic polarization into haves and have-nots if one section of the population does not participate in the creation and ownership of the economic means to serve them directly under their own management.

Therefore would it not make sense to experiment after the pandemic lock-downs with systematically invigorating and widening our modest beginnings in the direction of at least a certain useful level of economic power (i.e. wealth or capital) by all citizens eventually ?

Socialist and communist economics have been tried and turned people into slaves of the economy.

Would not "peoples capitalism" or the Ownership Society concept make sure that everyone has direct ownership and control of some economic power to serve them ?

David George said...

Patricia: "human-beings are made to serve the economy, rather than the economy being made to serve human-beings"

I guess your brother could, rightly, ask; what is the economy if not the people. People serving people, a complex web of reciprocal interactions. It's not, in that sense, an abstract, separate entity.

I think the whole thing, the way it works, is a bloody miracle. That folk can basically dick around in an office for a few hours a day, produce nothing of tangible value, and be rewarded with previously unimagined comfort and luxury. A warm dry house to live in, shops overflowing with goods, entertainment, light, heat and water at the tap of a switch, a month of paid holidays, health care and welfare if something goes wrong and so on.
All of these things produced by someone; the "economy"

Perhaps, to echo Margaret Thatchers famously (deliberately?) misunderstood quote: There is no such THING as the economy. It is us and we are it.

Odysseus said...

Perhaps then Chris humans are made to serve the "Plan"? "Comrades, we (ie "you") must fulfill the Plan" proclaimed the billboards around Moscow when I arrived there some thirty years ago. To which the "comrades" replied, in private, "you pretend to pay us and we pretend to work". While Party members enjoyed exclusive access to special stores stocking the very best consumer goods from the capitalist West, the comrades dined on rotten potatoes and dog sausage and suppressed their true thoughts and feelings through mass alcoholism. While card carrying Party apparatchiks were granted holidays in Italy or France, the comrades were herded into sanatoriums for their annual "holiday" under the watchful eye of the factory or collective commissar. Some aspects of "neoliberalism" may perhaps resonate with socialism as it has been practised (as opposed to the impossible theory behind it), for example the gross disparity represented by CEO salaries and the blind dogmatism of "TINA" (There is No Alternative). But I am convinced the sense of individual enterprise afforded by capitalism is a fundamental part of what it means to be human.

greywarbler said...

Tom Hunter
has discovered a truth! That neoliberal, free market systems are not better for small businesses that operate on a human level. But they are better for large business, faceless corporations that more and more are run as entities in themselves, not through the creation of a founder-executive like cars from Ford. Or they are private equity entities run by nouveau riche market players whose interest in them is for the money that can be squeezed from them, till the juice runs red.

Government could have too many regulations too. But also they were supposed to keep control of quality and quantity, and ours could be obliged to be responsible and insist on betterment, while business can just go bankrupt and leave, morph into a different form and start again etc.

Neither is the perfect answer to assume hegemony; business needs to be controlled by government; government needs to be pricked by business to do the sensible thing, and this is where the people need to be advised, informed, consulted with and think seriously about the effect of doing or not doing whatever is proposed.

Conclusion: thought is needed, not knee-jerk responses, and not avarice at the base of every action.

Chris Trotter said...

To: Odysseus.

If you were in Moscow "some thirty years ago", you would have been there at the height of Perestroika and Glasnost - just months before the Soviet Union's collapse in 1991.

The bloodthirsty Five Year Plans of Stalin's era were long gone by the 1990s. If the Communist Party had been foolish enough to plaster Moscow with posters urging the people to fulfill "The Plan", then I suspect they would have been covered with spittle and/or torn down within hours of going up.

Frankly, Odysseus, I don't believe you were in Moscow 30 years ago. I strongly suspect that you are the sort of right-winger who equates socialism with Stalinism - an intellectually bankrupt argument which makes as much sense as equating capitalism with slavery.

Trev1 said...

To Chris: yes it's true I was in Moscow at the end of Soviet communism but its artefacts remained everywhere, as did the ingrained habits of thought of its former subjects. The Russian staff at my workplace for example even maintained their own "soviet" or council. As restrictions eased under the Yeltsin government I was able to travel and see more of the country. This included a stay in a "sanitorium" called "Okean" outside Vladivostok as well as visits to newly "opened" cities in Siberia where Soviet-era bureaucrats still held sway and pined for the days when money and directions were regularly received from Moscow . In fact Rutskoi's rebellion in October 1993 was a near run thing as counter-revolutions go, moreso than many people realize.

Ian said...

I just talked to the small business owner in my bubble and she stays that the only regulation that she finds onerous is IRD's requirement to report on salaries paid within 2 days. Not the requirement to report but the 2 day deadline.

Anonymous said...

@ David Stone " It is the people who issue the debt that make money."
Correct, because unlike equity it's usually tax deductible, distorting the cost of capital for wealth creation.

Chris Trotter said...

To: Trev1 a.k.a Odysseus:

I stand corrected. Apologies for my skepticism.

Jens Meder said...

According to a prestigious dictionary, the word economy stems from the Greek "oikonomia", meaning house manage(ment).
In other words, if there is no house, there is no economy ?.
How can we have an egalitarian (which does not mean equal!) society as long as we are divided into classes of "Haves" and "Have Nots" ?

The Barron said...

My take from Chris' blog is that society is forged by history, and that the economy should be forged to serve the society.
I would go further with the analysis. Pakeha NZ evolved from those that faced the dislocation of industrialisation i England, but also the Celtic settlers to which the clearances and 1845 famines were still in family memory. The clan structure, where you had a decent relationship with your leadership, found commonality with the whanau / hapu society of Maori.
However, imperialism and capitalism are forces against equity. Our history has been founding ideals eroded by these forces. Our societal shaping has not finished. New migrants came from the sociocentric societies of the Pacific. Recent migration came from East and South Asia where the relationship between the individual, community and government evolved very differently than the western model.
Today, while distribution is a concern, Pakeha are now the largest minority in the Auckland school system - no longer a majority. Indeed,those that come from ethnic backgrounds that are sociocentric outnumber those from an egocentric origin.
It is most likely that our economic rebuild is likely to start with relationships in the Pacific, where the covid19 virus has not reached, and East Asia, where containment seems to have been more successful.
It should be noted that Samoa closed the border to everyone, including residents and citizens. I know of no complaints as the inconvenience of the individual is outweighed by the safety of many is the cultural ontology. In East Asia, the belief that the state's primary role is to serve and protect the people and society saw the people follow Government direction in a way the west struggled.
The best comment I heard of the west's response to the virus was the European critique that it is time to realise it is no comfort being in the first class cabin when the whole ship is sinking.
New Zealand has taken the response that the state has responsibility ensuring all people take a sacrifice to protect the vulnerable. The people have accepted this as the leadership role of government and the nature of our society.
The optimist hopes that this becomes the building block for our post-virus economy. The pessimist remembers those forces that have mitigated New Zealand's potential equity.
The question of what type of society we want will form the answer to the type of economy that follows.

Simon Cohen said...

You said Chris
The five year plans of Stalin's era were long gone by the 1990s.

Really Chris.I suspect you are guilty of tampering with facts.
The start date of the first 5 year plan was 1928 and they continued right through the life of the Soviet Union culminating in:

The Twelfth Plan, 1986–1990

The last, 12th plan started with the slogan of uskoreniye, the acceleration of economic development (quickly forgotten in favor of a more vague motto perestroika) ended in a profound economic crisis in virtually all areas of Soviet economy and a drop in production.

Thirteenth plan, 1991–
This plan, which would have run until 1995, only lasted about one year due to the dissolution of the Soviet Union in 1991.

Geoff Fischer said...

Jens Meder:
If the object is to encourage wage earners to invest in corporate capitalism, well, that has been Labour Party policy since the nineteen seventies. The ACC, New Zealand Superannuation, electricity privatisation via pro-rata distribution of shares to consumers and latterly KiwiSaver have all been designed to entrench income inequality while giving wage earners a small stake in corporate capitalism.
The outcomes for wage earners have not been great. The financial class has taken the cream off all these schemes, and economic exigencies have left passive investors exposed to ruin.
Some, myself included, have taken a different route of never putting money into shares (with the exception of cooperatives) or interest bearing accounts and basically limiting my investments to whanau projects or enterprises.
So what are you actually suggesting?
Something like what successive Labour governments have given the country?
Something like what I and many others are already practising?
Or something different again?

Jens Meder said...

Hi Geoff.

I am suggesting that capitalism continues in whatever legal and honest way seems most promising to the creators (savers) and owners of capital.
But that there is legislation in place to ensure each citizen has a direct personal stake in capital ownership, the initiation of which is achievable through a personal (retirement) wealth ownership creative savings rate built into our taxation system.

On the collective level we have that already through the MZ Super Fund.

On the personal level it could be initiated through an additional and universal KiwiSaver savings component introduced into our taxation system, starting it off with an unconditional $1000.- kick-start to all those who have not received it so far, from new-born babies to seniors still alive by a certain date (at least, helping to cover their funeral costs).
Owners can choose where they prefer their savings to be invested - including 1st home ownership when enough wealth has been accumulated for a reasonably safe deposit.
Then all citizens would become economists - "house managers" - eventually, unless they prefer their personal wealth being managed by professionals, as is and has been widely happening already.

What doubts or faults can you find in that, Geoff ?

My and my parents' investment careers have been similar to yours, Geoff - as a result of which I - like my parents - am happy in the ability to help my children and even grandchildren through loans, grants and bequest towards first home ownership (potential).

David Stone said...

Hi Goeff and Jens
I think Kiwisaver is ridiculous . While the government goes to the financial market constantly to borrow for our social programmes, it is mandating a payment we must make to those same financial market players to invest. To take a risk against a massive downturn like what is happening now, and always has happened in the past at some time during the sort of timescale that a kiwisaver scheme is expected to cover. You can watch your investment grow while everything is booming, but by the time you get to collect , a bust along the way is certain to have happened which will have reduced you effective savings to less than you would have got from the bank, and far less than if you had invested it in something real like a house in your own name.
And all the while the government is borrowing in the same market. Why don't they gust do the honest thing and make you pay that money directly to the govt. to do the social work and cut out the middlemen. It's a rourt serving only the finance industry.
Cheers D J S

Geoff Fischer said...

Kia ora Jens
As I understand it you are proposing compulsory "KiwiSaver" with perhaps a little more freedom for the citizen to choose a particular kind of investment. But restrictions would need to be in place, or else there would be no point in making the scheme compulsory. So the devil is in the detail.
Some like myself chose not to join KiwiSaver for ethical reasons, namely that I do not wish to become one of those who exploit labour through the ownership of capital. In other words I can still choose not to be a capitalist.
Would you wish to take that right away from me?
There are others who could not afford a meaningful stake in KiwiSaver funds.
Are you happy to allow the great social inequity that results from schemes like KiwiSaver?
Everyone needs a home and bodily sustenance, but there is no good reason to suppose that compulsory capitalism can deliver that. In fact over the past forty years the capacity of capitalism to deliver a home and a quality of life to the entire population has been sliding backwards at an ever increasing rate.
If we were to say to the homeless "become capitalists and all your problems will be over" they would spurn us and be right to do so. It is better for us to adopt the maxim that no one truly in need will be turned away from our door.
We don't need to argue endlessly about what the state can or should do.
Just think about what we ourselves can and should do - and then do it.

Jens Meder said...

Oh dear !!!
At least I am pleased to see that David (Stone) appreciates (his?) investment in a house - the purpose of which we all NEED and desire - and does not that alone already justify the Ownership Society concept and universal (Kiwi)saving so everyone participates in the effort towards home ownership potential by all ?
And a house cannot be built without capitalism - or saving the capital to be invested in it - which David would prefer to have done by the state (i.e. through Socialism).

Unfortunately an ideologically guided state capitalistic Socialist govt. and even a democratic welfare govt.can be pressured to run anything (e.g. housing) unprofitably on the economic level, which can lead to the unprofitable becoming materially unsustainable, regardless of its "emotional profitability", like our liberal welfare democracy system of 70 years ago.

Would not he social inequity of current KiwiSaving be cured by universal participation in it ?

The systematic accumulation of welfare wealth through the NZSF and KiwiSaving would enable even better care for the really needy and disabled, because e.g of the generally diminishing need for subsidized housing through the accelerated and proportionally widening ownership of houses.

While the homeless may oppose formal participation in capitalism even only at a token level everyone knows will not deliver them house ownership potential, would it not be still in their interest to at least formally support the effort and thereby strengthen an enthusiastic unity for the effort that in time will still deliver them what they could not have achieved totally on their own ?

In other words - can not more of profitable capitalism keep more of welfare sustainable ?

manfred said...

Yes there were 5 year plans at that time but they very different from the ones during Stalin's time. There were about 20 or 30 gradations of pay (admittedly that had been around for a while) and there were also joint ventures with foreign companies and importantly, financial and material incentives.

The solution was not to destroy the beneficial aspects of the Soviet system and whore the entire country out to their geopolitical rivals, but to put in place extensive market reforms.

David Stone said...

You read volumes into my philosophy that is neither present nor implied. Take a moment to look back at NZ total money supply 20 years ago and compare it with today. Not just go back 10 years to about when Kiwisaver started. Work out what $10 000 would have become by now, and then see how that compares with total money now. I haven't done this but I'm bloody certain that your kiwisaver has gone backwards by orders of magnitude in comparison. Your $10 000 was worth a far bigger slice of NZwealth then than whatever it may have grown to today.

Cheers D J S