‘Neoliberalism’ debate continues

The economic reforms of the 1980s and 1990s in New Zealand rescued the country from the extreme interventions of Robert Muldoon, which were misguided attempts to re-invent New Zealand’s economy after Britain dumped us as one of it’s primary producers and to deal with the oil shocks of the late 80s.

I don’t recall those reforms ever being described as the introduction of a new ideology, nor them being called neoliberalism. (But I didn’t follow politics closely in those days).

I’ve followed politics a lot more over the last decade and even then it seems to be increasingly in more recent years that people from the left have lamented the advent of neoliberalism and expressed a yearning to how things once were (while never saying how that was supposed to have been).

Certainly how we manage our economy and social services and public services has changed markedly over the last half century. Margaret Thatcher changed things in Britain, and Ronald changed things in the USA. But it was hardly a massive shift from capitalism to neo-liberalism as if it was as drastic as a move in the other direct to communism would have been.

Then this week Jim Bolger, New Zealand Prime Minister in much of the 1990s, seemed to denounce neoliberalism in an interview for RNZ: The Negotiator – Jim Bolger: Prime Minister 1990-97

Bolger says neo-liberal economic policies have absolutely failed. It’s not uncommon to hear that now; even the IMF says so. But to hear it from a former National Prime Minister who pursued privatisation, labour market deregulation, welfare cuts and tax reductions – well, that’s pretty interesting.

“They have failed to produce economic growth and what growth there has been has gone to the few at the top,” Bolger says, not of his own policies specifically but of neo-liberalism the world over. He laments the levels of inequality and concludes “that model needs to change.”

That’s kind of remarkable. Certainly there has some problems that have emerged from how the country is managed over the last three decades.

A discussion was sparked on Twitter today.

Bryce Edwards:

Jim Bolger recants neoliberalism, & now on Michelle Boag graciously acknowledges Laila Harre’s good work in industrial relations!

Liam Hehir:

Can you point to an instance of him explicitly praising “neoliberalism” at any point?

Bryce Edwards:

He’s widely accepted to have overseen the implementation of a version of a neoliberal programme, no? He was fairly praiseworthy of that.

Liam Hehir:

Yeah – and he really expressed no regret for that in the podcast. He also didn’t suggest his reforms were neoliberal – that was Guyon’s word

Bryce Edwards:

All true. Yet David Farrar suggests that Bolger is now “to the left of Helen Clark”. I look forward to your column on this.

Rob Hosking:

There’s a huge amount of oversimplification & revisionism going on about this (and related matters) at the moment. It’s very misleading.

Phillip Matthews:

I’d be interested to know if the word “neoliberalism” was used much in NZ in the 1990s. People talked about market forces or Rogernomics.

I’ve only heard “neoliberalism” being used over the last few years. It’s a retrospective label that most people have no understanding or even knowledge of.

Greg Jackson:

I wrote about economics and politics in the 80’s and 90’s. Never heard “neoliberalism” bandied about in popular or private usage.

Liam Hehir:

Whatever you call it, it was never promoted as an ideological agenda. It was sold as a necessary, if bitter, medicine.

(By prime ministers, I should add).

In the interview, Espiner asks Bolger about neoliberalism. Bolger is non-committal about the term. He then goes on to express some dissatisfaction about current economic circumstances. So what happens, “OMG Jim Bolger has denounced neoliberalism you guys!!!!”

Ben Thomas:

Re revisionism: Guyon suggested Douglas’s economic plan happened under cover of “popular social reform” like homosexual law reform.

I mean, we all pretend on Twitter we’ve always been woke, but that’s a helluva way to misremember 1980s NZ (& the courage of the reformers)

Yeah, the BWB crowd’s window into the 1980s is via Kelsey’s books and Alistair Barry’s documentaries. It gives a skewed picture.

I was sorta relieved when Moore pointed out actually there weren’t thousands protesting in the streets each day, or complete social collapse.

I think generally people knew things had to change and quite drastically.

Matthew Hooton:

The craziest is the idea the “unpopular” economic reforms were possible because of the “popular” anti-nuke & homosexual law reform moves.

For many, anti-nukes was tolerated cos of economic reforms & the homosexual law reform bill was extremely controversial at the time.

How things were economically in the early to mid 80s was untenable, and we can’t undo what has happened.

 

 

  1. How the heck do you change the model from neo-liberalism?
  2. Why don’t we address the problems, deal with them and move forward?

From what I’ve seen most people who say “we must reverse neoliberalism” actually mean “we need to change to socialism”. We can’t go back.

Why don’t we just do what we can to fix the problems we have now and not worry about labels and revolutionary changes.

 

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60 Comments

  1. David

     /  23rd April 2017

    The fundamental flaw is that many of these people still think an economy can be managed. It simply cannot be. None of these characters have accepted there is a limit to the power of a state.

    I notice that the use of Venezuela as a model of this rejection of ‘neo-liberalism’ seems to have got very very quiet recently.

    Reply
    • Blazer

       /  23rd April 2017

      Venezuela under Chavez was anathema to the U.S.The sanctions imposed and the manipulation of the oil price downwards have severely impacted the economy there.To say that Venezuela was some kind of experiment that hasn’t worked, doesn’t alter the fact that as far as the West became concerned it could never be allowed to…work.Which country does not have an economy that is not….’managed’?

      Reply
      • David

         /  23rd April 2017

        Amazing. America just decided the oil price should be lower, and it was!

        Reply
        • Wake up David. The USA is made up of imperialist, manipulative despots. Everything evil about anybody/tribe/ethnic group in the East/Africa/undeveloped America is down to these Imperialists and their resource raping mates (us) arbitrarily imposing borders and pillaging the lovely ethnic populations. Without colonisation and left to their own devices these peoples would have all been peace-loving souls with rosy outlooks.

          Reply
        • Blazer

           /  23rd April 2017

          waiting for an answer Dave…which country does not have a managed ..economy…too hard for…you?

          Reply
          • David

             /  23rd April 2017

            No country has a manged economy. All attempt it to a lesser, or greater degree. Generally, the more management there is, the poorer the people are.

            This illusion that you can manage an economy is why Venezuela doesn’t have any toilet paper.

            Reply
            • Blazer

               /  23rd April 2017

              what you just wrote does not make sense…David.’The fundamental flaw is that many of these people still think an economy can be managed. ‘/
              ‘No country has a manged economy. ‘

  2. Alan Wilkinson

     /  23rd April 2017

    What debate? Neoliberalism is just a bogey word for the Left. There is no intellectual content in debate around it.

    Reply
  3. “In 1987 Bruce Jesson`s `Behind the Mirror Glass` provided a multi-level analysis of the neo-liberal takeover as it was occurring. The New Zealand stockmarket was transformed by corporate predators and speculators … purely for short term profit. No goods were produced or traded, money was manipulated to make yet more money (until the 1987 stockmarket crash). Meanwhile elite figures within the Reserve Bank and Treasury abandoned Keynesianism for Friedmanite monetarism …

    Globally and nationally, capitalism was being shaped by rentiers and speculators independently of production for use. Jane Kelsey`s `The FIRE Economy` explicitly updates Jesson`s analysis and confirms her place as New Zealand`s foremost defender of economic sovereignty.

    For capitalism in general to reproduce itself, money capital has to be realised through production … Money surpluses accruing to capitalists then become the raw material for money capital to be reinvested in production. This general sequence is based upon the the extraction of surplus value from labour during the production process. Independently of production, merchant capitalists may purchase commodities cheaply and sell them at a profit (M-C-M).

    Alternatively, money lenders and speculators employ money to create monetary profit (M-M), a strategy which may expand to destabilise the capital realisation process.

    Broadly, M-M profit circuits can be generated out of Finance, Insurance and Real Estate, hence the acronym FIRE [with low-wages bolstered by Immigration, hence the acronym FIIRE] …

    The crucial point is that these profit circuits have become endemic to a system which critics term `financialised capitalism’. As the 2008 global financial collapse demonstrated, this kind of capitalism is volatile, prone to crisis and economically polarising … Global capitalism really is run by the 1% and within this tiny grouping a financial oligarchy prevails.

    1. How the heck do you change the model from neo-liberalism?

    ” … the neoliberal policies of National and Labour governments favoured finance over production … currency volatility adversely affected agricultural and manufacturing exporters. Billions of dollars of daily, speculative trading was, and is, driven by hedge funds, mutual funds and insurance companies with no connection to commodity trade transactions … a growing real estate bubble especially in Auckland, is damaging for the whole economy.

    Here, Kelsey`s analysis is especially incisive; domestic and offshore speculators are not the only villians of the piece. The major banks also fuel the bubble and base their business models around it (at the same time as bank economists give `objective` commentary to the media).

    She identifies the fiscal and monetary `pillars` of financialised capitalism in New Zealand, outlines the central features of global finance and suggests international policy alternatives beyond the austerity regimes …

    The Key [National] government and its cheerleaders are, of course, the beneficiaries and representatives of financialised capitalism itself. That they will ignore or dismiss this book attests to its prescience and importance for the people of New Zealand.” – Dr Wayne Hope.

    2. Why don’t we address the problems, deal with them and move forward?

    Yes let’s do that … The main problem is that neoliberalism is an ideology … “neoliberal policies at the expense of social democracy” [not completely but enough to matter] … and it generates numerous other problems, as outlined above and constantly refered to in the media … growing inequality, poverty, the development of an underclass, personal stress and societal stress on infrastructure and social services, loss of hope for home ownership and often for any future worth having … and all the rest …

    http://thedailyblog.co.nz/2015/07/27/new-zealand-in-denial-a-review-of-jane-kelseys-the-fire-economy/

    Reply
    • Alan Wilkinson

       /  23rd April 2017

      Except the world has suffered growing equality rather than inequality with billions lifted out of extreme poverty as a consequence of the freedoms you and Kelsey deplore.

      Reply
      • Gezza

         /  23rd April 2017

        That’s not what Trumpy was telling the hayseeds Al.

        Reply
        • Alan Wilkinson

           /  23rd April 2017

          See below. Not hayseeds but factory workers were impacted.

          Reply
      • Its not a realistic appraisal of the situation either Gezza …

        The growing ‘spread’ of inequality globally is unquestionable – no need to contest that any longer – but the “billions lifted out of extreme poverty” is highly relative and very debatable indeed …

        ‘Billions’ … probably actually only millions … lifted from relatively healthy subsistence or small-business, family or ‘village’ agricultural economies into very unhealthy urban wage slavery – so they register for the first time on statistics as earning less than $2 a day – in order to export the labour issues of developed nations – actually the inherent inflation dialectic of capitalism – and produce cheap consumer goods for them, does not “growing equality” make …

        It makes for neo-colonialism, Third World worker and resource exploitation … so the rich nations get richer quick, especially the richer in the rich nations … and the poor nations get richer very slowly indeed if at all …

        I’ve said so many times I’ve long ago lost count … I do not deplore the individual freedoms Alan … only the lack of social responsibility …

        Reply
      • Corky

         /  23rd April 2017

        Exactly, Alan. One article I read said for the first time in the worlds history inequality had dipped below 10%,on a global index used to measure these factors. Pete has it right…people like Parti just want a return to some form of socialism. But they forget socialism lost the battle in the 90s.

        Reply
        • Blazer

           /  23rd April 2017

          since the 90’s the powerhouse economy has been….communist China…think before you regurgitate your propaganda you fool.

          Reply
          • Corky

             /  23rd April 2017

            Fool….lol? You are losing it, son. Yep, them Commies used Communism to get themselves out of the dead end economic alley they found themselves in….idiot,

            Reply
            • Blazer

               /  23rd April 2017

              Idiot lol,,,,answer this is China a communist country?

            • Corky

               /  23rd April 2017

              I’ll let some else explain.. I tap out.

            • Conspiratoor

               /  23rd April 2017

              I’ll take this one brother corks. While China has adopted some aspects of capitalism it remains textbook communist. And that is why it is so dangerous. Cheers, c

            • Blazer

               /  23rd April 2017

              @Con….how do you think it is dangerous?

            • Conspiratoor

               /  23rd April 2017

              Aristotle blazer. In essence the whole is greater than the sum of its parts.
              There are elements of communism the western world could learn from. When they meet certain elements of capitalism be very afraid

            • Conspiratoor

               /  23rd April 2017

              and riddle me this blazer. Would you not agree that millions of Chinese have escaoed poverty as a consequence of their pursuit of the capitalist ideal?

            • I know millions have been forcibly displaced by government works programs …

            • Blazer

               /  24th April 2017

              @Con….you make the common mistake of contradicting yourself….its either ‘textbook communism’ or …it …isn’t.

        • Yeah well “one article I read” says that global, financial, income and wealth inequality has never been greater in human history …

          Care to cite yours … I can’t find mine right now …

          I think I left it wherever I hung up my wings …

          Reply
        • Gezza

           /  23rd April 2017

          You might be thinking about poor countries whose economies have grown as measured by GDP. That’s not a measure of how much inequality there is within countries.

          Reply
      • Alan Wilkinson

         /  23rd April 2017

        It’s hardly rocket science to note that the relief of extreme poverty in many countries through foreign investment and industrialisation has along with automation affected manufacturing jobs in developed countries. No doubt the Left would prefer that hadn’t happened.

        Reply
        • Gezza

           /  23rd April 2017

          I think it’s more a case of those in the affected manufacturing jobs wishing it hadn’t happened, & Trumpy’s being cunning enough to their votes by promising them their jobs back.

          Reply
        • You’ve really blown it now Alan …

          You can’t seriously be suggesting the reason foreign investment and industry has entered “many countries” – meaning Third World and emerging economies – is for the express purpose of “the relief of extreme poverty”?

          How extraordinarily altruistic, nay philanthropic almost, of these wonderful, caring Western manufacturers!

          Of course, they wanted to reduce their costs and increase profits – we understand that – without reducing their prices, all for the relief of extreme poverty in developing nations … from the goodness of their hearts … and, what’s more, they were even prepared to sacrifice manufacturing jobs in their home countries to do so … !!!

          And the Right are GLAD it happened …

          Oh my goodness … I’ve never been so overjoyed …

          Reply
          • Alan Wilkinson

             /  23rd April 2017

            The invisible hand doing good by pursuing self interest – otherwise known as the magic of the market, PZ. You’ll grasp it yet.

            Reply
            • Gezza

               /  23rd April 2017

              Well it doesn’t really do good by pursuing self interest Al. It just exploits opportunities to make profits. For a time that generates low paid jobs in low paying countries & creates an entrepreneurial wealthy segment.

            • HA!!!! Oh my Lord … It goes from bad to worse for you tonight …

              ” … economic theorists investigating the matter finally concluded in the 1970s that there is no reason to believe markets are led, as if by an invisible hand, to an optimal equilibrium — or any equilibrium at all.”

              But wait, there’s more …

              “He [Adam Smith] mentioned it only once in the book, while he repeatedly noted situations where “natural liberty” does not work.

              Let banks charge much more than 5% interest, and they will lend to “prodigals and projectors,” precipitating bubbles and crashes.

              Let “people of the same trade” meet, and their conversation turns to “some contrivance to raise prices.”

              Let market competition continue to drive the division of labor, and it produces workers as “stupid and ignorant as it is possible for a human creature to become.”

              https://hbr.org/2012/04/there-is-no-invisible-hand

              Oh, sorry, that’s Harvard Business Review … by the way …

            • Alan Wilkinson

               /  23rd April 2017

              Not up to you usual standard of analysis, G. To profit you have to do good work for others. Creating low paying jobs where before there were none is good.

            • patupaiarehe

               /  23rd April 2017

              I had a very interesting talk with someone this evening Alan, on a very similar theme. ‘Feathering one’s own nest’, can often help others, who are slightly less capable…

            • Gezza

               /  23rd April 2017

              Not when they’re sweatshops & it means job losses in the company’s host countries Al. That’s when governments have to rep in to reulate the market and do the good the companies don’t. It’s complicated. The market alone can’t be relied to be altuistic.

            • Alan Wilkinson

               /  23rd April 2017

              @PZ, you cite a Lefty political scientist who appears even to fail to understand the invisible hand reference at all:

              (in the economics of Adam Smith) an unseen force or mechanism that guides individuals to unwittingly benefit society through the pursuit of their private interests.

              http://www.dictionary.com/browse/invisible-hand

            • Gezza

               /  23rd April 2017

              Think I might sit up. Lying down with the iPad down near my knees when I type isn’t producing great results.

            • Alan Wilkinson

               /  23rd April 2017

              The many millions who migrated to work in these “sweat shops” say you are wrong, G. So do the tens of thousands of Asian tourists now visiting NZ.

            • Gezza

               /  23rd April 2017

              They’re just looking for housing investments I gather Al.

            • Gezza

               /  23rd April 2017

              Might be. I’m in a whimsical mood. This link better be worth it.

            • Yeah yeah … Never mind the enclosures … and contemporary equivalents … Chinese public works …

              https://en.wikipedia.org/wiki/Inclosure_Acts

              “This was at least partially responsible for peasants leaving the countryside to work in the city in industrial factories.

              In 1801, the Inclosure (Consolidation) Act was passed to tidy up previous acts. In 1845, another General Inclosure Act allowed for the appointment of Inclosure Commissioners who could enclose land without submitting a request to Parliament.”

              The cities needed the peasants more, to operate factory machinery … while fewer peasants were required to operate the farm machinery which was taking the peasants’ rural jobs …

            • Gezza

               /  23rd April 2017

              I hope they know which side of the road to drive on or use tour buses Al. I don’t dispute that foreign investment & trade can generate jobs which then stimulates education & economic growth across the board in other countries – what I am saying is that neoliberalism allows corporations to acquire companies & then close them down to shift their operations to massively enrich their owners & executives at the expense of their former employees at home – accelerating inequality. That & robotics are the big challenges coming up for democratic countries.

            • Gezza

               /  23rd April 2017

              Yep. Sitting up definitely seems to have improved the typing situation chez moi.

            • Gezza

               /  23rd April 2017

              And the other thing I find interesting these days about China is how it has become a direct threat to America. Having obtained the capital necessary to advance its own economic interests & begun to tidy up the quality issues that made its products unreliable, it has the advantage of long lasting leadership & tight control of its business sector & population, and can continue to outbid & underprice the US as time goes by. Plus, it is, overall, less inclined to squander its resources on maintaining hundreds of military bases around the world & fleets of task forces that cost a lot of money, and go around invading other countries with no fucking idea what to do next.

            • Gezza

               /  24th April 2017

              They’re not slow, the Chinese. Aljaz tv showed Xi trotting around the world most of last year glad-handing governments in Africa, Middle East & elsewhere. They’re big on joint ventures, but they often bring their own workforce.
              http://www.chinadaily.com.cn/business/2016-02/14/content_23478586.htm

            • Alan Wilkinson

               /  24th April 2017

              That is not neoliberalism, merely free trade, G. Owners will only be massively enriched as long as their companies provide a better service to their customers, staff and suppliers than anyone else does. Terrible, isn’t it?

              The opening up of trade and in China’s case relatively free enterprise is hugely disruptive but overalll it is vastly for the better for humanity. Strange how I need to state the blindingly obvious.

            • Gezza

               /  24th April 2017

              Trumpy’s voter base includes many unemployed or underemployed factory workers who lost their jobs because their companies provided a better service to their owners, executives, shareholders, & customers than the service they provided to their staff, Al – which was a redundancy letter. Strange how Trumpy needed to state the blindingly obvious.

            • Gezza

               /  24th April 2017

              Plus, the other thing is, rapacious owners & executives offshoring jobs didn’t so much provide a better service to their customers as a cheaper one, although I’ll grant you they provided better service in terms of financial returns to themselves & their shareholders, sharebrokers, and the people skimming pension funds etc.

              What China did was successfully exploit the funds made available by these avaricious beneficiaries of neoliberalism in the US to kick start their own economy at cost to many workers in the US. In the process they created a midfle class of their own who have the money to travel & buy up businesses & houses here & elsewhere, and they have the potential, because it’s such a huge population base, to eclipse the US economy.

              Xi has positioned himself as a leading proponent of globalisation. China’s population & goverment benefitted at the expense of America, so why not?

              Maybe we’re going to see a return to trading blocs – Trump’s made a big deal out of getting better Trade deals than neoliberalism led to for the US.

            • Alan Wilkinson

               /  24th April 2017

              Value for money is service, G. As for service to staff the company has to compete with all other employers. If there are none, it should invite serious questions as to why not? Simplistic answers are not acceptable though they are usually good politics.

          • … their home countries … their principal market countries …

            (Not to be confused with ‘principle’ or principled markets)

            They were prepared to sacrifice the jobs of their own consumers … their own customers …

            Oh Happy Days!!!!

            Reply
            • Incredible … and …

            • Alan Wilkinson

               /  23rd April 2017

              You’ll have to decide if the Left are keen on foreign aid, PZ, or just on keeping foreigners poor.

            • The invisible hand will apparently decide for me Alan …

              And it too, in its infinite goodness, wisdom and generosity, will decide that the Black man or Brown woman in whatever Third World country, who today has been “raised up” from extreme poverty of less than $1 per day to $1 per day urban slum squalor, will look forward to his/her childrens’ childrens’ children possibly earning $10 per day … living in the same slum squalor …

              But the West will have all the baubles and trinkets it wants … all the useless gadgets and throw-away garbage junk crap that makes us believe we are ‘happy’ …

            • I don’t have to decide anything Alan … and the choice isn’t only between foreign aid and keeping foreigners poor …

              You think because the Right are keen on ‘foreign investment’ and keeping foriegners next-to-poor, to obscenely enrich themselves, that you have the moral high ground!?

              Its incredible … Honestly!? … Can you still see any light above you from inside that hole you’ve dug …?

  4. patupaiarehe

     /  23rd April 2017

    Quoting David here;

    The fundamental flaw is that many of these people still think an economy can be managed. It simply cannot be. None of these characters have accepted there is a limit to the power of a state.

    I’m inclined to agree. The government doesn’t create jobs, businesses do that. Government makes the rules, & successful businesses work within them, or around them.

    Reply
    • Blazer

       /  24th April 2017

      you missed out….and lobby govt for legislation,subsidies and grants.Big business.As for Al…the ‘invisible hand’ is the one that hands out….pay rises!

      Reply

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