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.