Backwards or forwards?
ON 1 May 1989 the NewLabour Party was formed. Few branches of the
"old" New Zealand Labour Party were unaffected. In some areas entire local committees defected to the new party, including most of the NZLP's local and regional officials. The root cause of this split was the defence of traditional social democratic values by the "new" party following the clear
International Viewpoint #249 October 1993 of the unions who were, in turn, henchmen for Moscow.
National had not rejected social democracy. On the contrary, they believed they could solve inflationary problems because abandonment of these values by the "old". A general election is due this KIA KAHA & GEOFF PEARCE* — Christchurch, 30 August 1993
T
HE formation of the New-Labour Party (NLP) in 1989, and its defence of the traditional social democratic project, is no small matter. Social democracy had not only been highly successful but was also widely accepted in New Zealand. A consensus had been established, the origins of which lay with a "social contract" that had been struck as early as the 1930s.
The 1933 Coalition government tried to start public works schemes but was blocked by the six trading banks which refused to make money available. To escape the clutches of private bankers, Minister of Finance Coates created a Reserve Bank and transferred the gold reserves of the commercial banks to it. In 1934, on the advice of leading economists of the day, Coates passed the Agricultural (Emergency Powers) Act; giving government powers to plan and control agriculture and marketing, housing and health and the development of industry.
This split the ruling industrialist/farmer political alliance. Big business formed a separate (Democrat) party. Labour won farmers support by promising guaranteed export prices and, thereby, the 1935 election. The achievement of the first Labour government of 1935-49 was to implement the Coates package. So while much of the ground for reforms had been laid by the Coalition government the Labour Party (NZLP) took the credit. The "contract" involved agreement that the state would manage the national economy to obtain and preserve full employment; that trade unionism was compulsory;' and that the government would establish a minimum standard of living for all New Zealanders.
The long-term achievement was near total acceptance of these reforms as the basis for social progress — for a social contract between the classes. By 1949 the (conservative) National Party too, had formally and publicly committed itself to the "social contract".
Although only Labour was affiliated to the Socialist (second) International, for the entire period from the end of the War until 1980, Labour and National were, in essence, both social democratic parties. There main argument at election time was which party could mix and manage the economy best. In the language of the Stalinists, Labour took the left and National took the right face of social democracy. Once National had accepted the social contract, a large part of the electorate accepted Natio nal as the "natural party of power". Except for one brief term, 1957-59,2 National kept Labour out office from 1949 to 1972.
### Muldoon
From around 1968, and under pressure from the GATT, World Bank and IMF, National's Minister of Finance, Robert Muldoon, began to cut tariff barriers. The economy was slowing and unemployment rose bringing the third Labour government to power in 1972. This government tried to stimulate the economy by increased spending (most notably with the introduction of tertiary student bursaries, benefits for single parents, a scheme making accident compensation available to all accident victims regardless of cause of injury or fault). But additional spending stimulated price increases — not growth. To curb inflation, the government fixed wages, prices, rents, interest and profit and foreign exchange levels.
Orthodoxy then had it that inflation was caused either by wage pull or wage push; that is to say, it was due to the power of organised labour. For its 1975 election campaign National employed an American agency which produced television ads featuring Hanna Barbara-type "red-army Cossack caricatures". The object was to foster the belief that Labour was under the thumb they could take a firm line with the unions where Labour could not. Furthermore, Robert Muldoon, now shadow prime minister, was an economic wizard who would fine-tune the levers to restore the health of the national economy.
Returned to power, National released profits from regulation but squeezed other incomes. Muldoon kept the unions quiet by threatening to end compulsory unionism.
In the wake of defeat, David Lange and other Labour Members of Parliament (MPs) from the "new generation" (in the main, those who rose to prominence in the 1972 swing to Labour) recommended that the NZLP should break from the Labour mould and transform itself into the Social Democratic Party following the lines of the British model.3
However, when unemployment rose over one percent for the first time since the War, National actually reverted to the Coalition-Labour reforms of the 1930s: guaranteed minimum prices to farmers and a massive public works programme (called "Think Big"). But economic wizardry did not work.
In an attempt to control incomes more tightly, Muldoon was drawn ever more into conflict with interest group leaders. When controls failed (growth averaged 0.7 percent during the years 1975-1984), Muldoon and his supporters came to be associated with an abrasive style of work and arbitrary, capricious, use of power. In 1981, National scrapped home - with 38.78 percent of the vote (Labour with 39.01 percent was beaten by the electoral system). But this government was only able to struggle on to 1984 when Muldoon was forced to call an early election, which
* The article has been adapted from extensive materia that was provided by the authors
1. All workers were required to join the union unless they could prove to a panel they had a conscientious objection to unionism (in which case union dues were paid to an approved charity).
2 This was a period of international economic downturn When the situation "normalised" National could again form the government.
3. In 1981 a significant section of the rightwing of the British Labour Party split to form the Social Democratic Party. This was at the height of the left upsurge in the party
23
----- pull-quotes on this page -----
International Viewpoint #249 October 1993
LART
Labour set about crafting a legitimacy for the notion that self-interest, profit and greed are the only proper and practical motivating and organising forces for a successful nation. Of course, all this was antithetical to many long serving Labour Party members and many quit; membership declined from over seventy-thousand in the mid 1970s to around six-thousand in 1988. Others consoled themselves with the idea that a change in direction was needed to keep National out of power. The MPs promoted the idea that Labour should replace National as "the natural party of power".
This fourth Labour government was an icon of, and rose and tell with, the "yuppies". It was the October 1987 stockmarket crash that burst the bubble. Everything had rested on the stockmarket boom. In New Zealand the boom coincided with, on the one hand, the deliberate iconisation of business and entrepreneurs and, on the other, deregulation of business practices. Almost every better than average suburb or community established a share club — to participate in the enrichment process. These and other small investors pushed up marginal prices and the appearance was given that instant fortunes were being created daily. Deregulated bankers rushed to advance credit to the share owners.
Stocks and shares soared higher in New Zealand than they did in any other OECD country. They also tell lower (the index "rebounding" to half the 1987 high point on 23 August 1993). Fortunes disappeared more quickly than they arose. Labour spent over 1 billion dollars to bail out the Bank of New Zealand, the Rural Bank and the Development Finance Corporation for credit advanced on inflated share and property prices. No one worried about business practices during the boom — it was enough to show a paper profit on annual accounts. In the collapse it turned out not only profits were paper — the entire asset base of many investment companies disappeared. Yesterday's heroes be24 came todays villains — and quite a number of them are able to dwell on the justice of that in their prison cells.
By the time of the 1990 election, Labour was the most unpopular government in the history of polling. Twenty-five percent of eligible voters were so thoroughly alienated by the political process that they never bothered to vote at all (traditionally New Zealand has a high voter turn out — the previous low was eightynine percent in 1987). Labour is so thoroughly linked to the turn from social democracy that free market economics is known in New Zealand as "Rogernomics"; after Roger Douglas — Labour's Minister
National's 1990 campaign manifesto was a promise to create the "decent" society and to learn from Labour's mistakes. Muldoon had been replaced as leader and National fielded a lot of new candidates, including many women. Some of the candidates said that they became involved in politics because they were worried about what was happening to workers under Labour — one stood as a workers' candidate against Labour; "party of the big
An American professor, who visited New Zealand recently, portrayed the buildup to this years election in the following
• One yoice says press on urgently with the (so-called) reform programme;
• another says lets stop for a breather and a cup of tea; and
• the other says lets turn around and go back to where we came from.
Both National and Labour believe that the social democratic doctrine that politics can "over-determine" economics was shattered by "the failure of Keynesianism". National will press on quickly to remove all market regulation, Labour will slow things down. The Alliance and New Zealand First (see below) will go back (they say forward) to social democracy.
However, the professor missed out the increasing number of people who have given up on politics. "If all politicians are corrupt", they reason "then what is the point in choosing between them?" The arrogant disregard for promises made to the electorate in the 1980s confirmed to many the duplicity of all politicians. The proportion of eligible voters who did not cast a vote swelled from five percent in the 1960s to twenty-five percent in 1990 under these pressures. All evidence suggests that the
Whilst people may see social democracy as a failure it is clear they do not think that the free market has lived up to its promises either. Most commentators accept that as much as twenty percent of the New Zealand workforce has gone to Australia and yet 420 thousand New Zealanders are unemployed (twenty-six percent of the workforce in New Zealand). After ten years of austerity, state debt quadrupled and thirty percent of state income goes to pay interest. Advocates of unregulated capitalism worry that New Zealanders are on the verge of deciding it too has failed the "crucial experiment".
Polls reveal that between twenty-five and thirty-three percent of New Zealanders are disaffected by the economic and social policies since 1984. Disaffection combines with widespread disillusionment about alternatives: either as credible possibilities or because the people who sponsor them are marginal in the political process. Furthermore, governments and lobby groups have for the last ten years assailed New Zealanders with the "TINA" message -
However, not everyone in either the National or the Labour party gave up on social democracy easily. There have been significant splits from both parties (in this article we are concerned primarily in the emergence of the NLP).
"Captured"
Labour activists put the betrayal of social democracy down to capture by the MPs. There is some truth in this. Without exception the parliamentarians who "captured" the NZLP were formed by the pressures of the 1960s, and the loss of office in 1975 was a formative experience. But there are other factors involved, such as the role of leadership, passage of generations and self-interest.
The dialectic between social movements and the optimistic feeling of the 1960s that things could and should be different is well known. Today however, most New Zealanders are caught up in the cold facts of economic survival. Even those who
International Viewpoint #249 October 1993 gain materially from "reforms" suffer under the stress. Their jobs are insecure and, thereby, their prosperity may be tran-
The dialectic between Labour and the social movements was that the Party incorporated many of the radical ideas, which were then given legitimacy when the Party defended and took them into its programme. Some popular leaders were drawn from the movements into the Party. But by the time Labour turned its back on social democracy and of course the movements too) these former leaders had become "comfortable" and life on the political margins was no longer attractive.
### State violence
The last major social explosion, against the 1981 South African Springbok rugby tour, occurred twelve years ago. The struggle certainly produced results — on the one hand, a similar tour would have been inconceivable after the protests; and on the other, it exposed in a naked way the degree to which the state will use violence to stifle opposi-
But 1981 was the last nation-wide victory won through militant opposition. There have of course been rallies and marches since then, most notably over education, public health and industrial relations laws. Some workers have courageously defended jobs and conditions. But in the best of cases, when they were not pushed back, the government was still able to strengthen the hand of the bosses taking the shine from any small victories.
The rich and powerful have rolled right over us for a decade. We cannot point to one single clear victory. This is taking its toll. Most New Zealanders have decided that they can either live with the model of development or they are too dispirited to even think about an alternative, let alone
And yet, as if in the same breath, many people cannot recall a time when there has been a greater need for an alternative to the current model of social and economic development. Unfortunately they cannot recall a time when so few people were prepared to oppose injustice, oppression and exploitation either.
Against this background, the formation of the NewLabour Party (NLP) must have appeared foolhardy. Nonetheless, the party has established a political space for itself in a comparatively short period of time, growing to equal the NZLP in size. Moreover, it clearly shows that there still exists a significant political constituency for traditional social democratic values.
The central driving force behind the new party was Member of Parliament (MP) Jim Anderton, who had became disillusioned with Labour's policies and practices. Anderton met with the Labour Economic Network, a group which had been propounding alternative economic policies to those of the Labour government. Together they put out feelers for a "true Labour Socialist Party" with the aim of representing the people at the bottom of
Anderton's moves intersected with those of a small but important layer of union activists. Matt McCarten, a prominent Maori activist and former secretary of the Trades Council of the Labour Party, is now President of the NLP. But union involvement has remained largely at the level of individual activity. The response of the trade unions as a whole (and of the social movements too), has been disap-
This is despite the fact that over the last five years a number of unions have dropped their affiliation to the NZLP. There have continued to be material pressures to retain preferential links with the "old" party rather than to begin to build afresh with the "new". Matt McCarten himself came under enormous pressure in his job with the Hotel Workers' Union in Auckland. Other prominent unionists have often been bluntly told that they must either resign from their job or from the NLP. In cases where membership of the NLP is retained it is made very clear that it must remain low-profile.
However, some unions have entered into discussions with the NLP and have asked for help on various issues. This "working relationship" will surely develop but a further obstacle to the direct involvement of the unions actually lies in the NLP's structures. It is not possible for a union to affiliate, although it is argued that if the members of a union, group or society were to all agree on joining the NLP the problem of attiliation would not exist since they would, in effect, create their own branch within the party.
While, as we have noted, the NLP has a political constituency its poor base in organised movements had to be addressed. The formation of the Alliance was, largely, the answer.
The NLP quickly built links with the Maori movement, Mana Motuhake. Towards the end of 1991 the Alliance was broadened to include the Greens and two smaller parties, the Liberals and the Democrats. While the Alliance is structureed to allow for equal representation of all member parties, regardless of size, on decision making committees, it is clear that the NLP is politically and organisationally dominant. Anderton is President and McCarten is Chair of the Alliance. The election programme clearly has the NLP stamp across it.
The Alliance began to capture the imagination of those who were opposed or concerned to the turn to market-led policies. As recently as this summer the Alliance was ahead of both National and the NZLP in opinion polls. The prospect, and the threat,4 of an Alliance government, led by the NLP, appeared a real one. The party had, it seemed, created a new mass movement on which to base itself, and thereby circumventing its initial weaknesses.
But the political situation, and the loyalties of voters, in the lead-up to this year's election are volatile and fluid.
The National party has undergone a split, led by Winston Peters. This new party, called New Zealand First, represents those who want to defend the National interpretation of the traditional social democratic project.
### Support falls
Inevitably, New Zealand First has taken a lot of its support from National but its emergence has also had a detrimental effect on the level of support for the Alliance. New Zealand First currently enjoys thirteen percent in polls, while the Alliance has fallen back to twelve percent and the NZLP and National each have a hard-core following of twenty to twenty-five percent Polls have indicated though that a combination of New Zealand First and the Alliance would have absolute majority support. While attempts were made, this further broadening of the "alliance" has so far failed
And herein lies the NLP's conundrum. The defence (and they would add "renewal") of the traditional social democratic project, even in a moderate form, can today appear quite radical. But how does the NLP differentiate itself when another new party claims the same ideological ground It remains to be seen if they can actually use the wide consensus for important and progressive social values as a base from which to map a genuine alternative to not only the madness of the "free market" but also the abundant failures of traditional social democracy. *
4. Mc Carten, in a speech published this summer by the American socialist journal Independent Politics, indicates that an Alliance government would come under enormous international pressure, and particularly from the United States.
25