The Green Party Must End the Era of Neoliberalism and Campaign for an Interventionist State
By Elliot Crossan
The following is a speech I gave at the Green Party Summer Policy Conference 2018. Sources and recommended readings are at the bottom.
Kia ora koutou, and thank you to the policy committee for allowing me this chance to speak. I am going to argue today that the ability of democratically elected governments to actively intervene in the economy in the interests of people and the planet is perhaps the single most important factor which will determine our ability to honour the Green Party’s founding principles.
I want to start by placing this discussion within the historical context. Between the 1930s and the 1980s, Aotearoa had an economic system which provided a much higher level of equality and dignity to working class people than does what exists today. The economic pillars of this social democratic consensus were:
- well funded public services and a robust welfare system paid for by high taxes on the rich; and
- an interventionist state, with policy targeting full employment as a priority, and with significant sectors of the economy under public ownership or heavy regulation.
This social democratic consensus had its flaws, and existed in a time before the significant advancement of women’s rights, LGBTQIA rights and Māori rights, but it was nonetheless a system which facilitated a far more just distribution of resources than we see in 2018.
This system was deliberately and successfully dismantled from 1984 to 1993 by right-wing free market ideologues. I’m sure many of you know what Roger Douglas and Ruth Richardson did, but to briefly reiterate, their agenda included:
- large cuts to public services and welfare along with the introduction of GST, allowing for huge tax cuts for the rich; and
- an end to the policy of full employment, along with fire sale privatisation and rampant deregulation of industry, commerce and trade, reducing the size and role of government and leading to the dominance of finance, insurance and real estate in the economy, as well as, crucially, to massive environmental destruction, such as the rapid expansion of dairy farming.
We are all acutely familiar with the results of the political project which we know by many names: Rogernomics, trickle-down economics, or most accurately, neoliberalism. We know the big picture effects: a dramatic rise in poverty and inequality, with low wages, the worst housing crisis in the OECD, high personal debt, and environmental destruction all occurring alongside the accumulation of fabulous wealth by the owners of corporations, land, and financial institutions. We know it on a more personal level, in our own lives and in the lives of people we care about. This was what Metiria’s story was about—cuts to welfare directly caused the poverty she and her daughter suffered in the 90s. This shocking inequality crisis is a direct result of the neoliberal economic system we have been living under since 1984, which the Fourth Labour Government and the Fourth National Government never had a mandate to implement—it is a system which should have immediately been overturned.
But the neoliberal project did not end after National were voted out of power in 1999 and Helen Clark entered the Beehive. Jane Kelsey outlines in her 2002 essay The Third Way: A Road To Nowhere that what followed the 1999 change of government was a more deeply embedded form of neoliberalism. Rather than being toppled as voters wanted, the rule of the free market became the new common sense—whether people liked it or not. Clark’s government was an administration which knocked off the very sharpest edges of neoliberalism, but was nonetheless utterly committed to the economic fundamentals put in place by the free market radicals. It was an exercise in careful management, not meaningful reform. Most privatisations were not reversed, net government spending was not increased, full employment was not reintroduced, and both labour law reform and tax increases on the rich were extremely limited. As a result, the bottom 10% of New Zealanders got poorer under Clark, while house prices doubled, and the rich continued to get richer. Emissions continued to rise and fresh water quality continued to fall.
When National replaced Labour in 2008, they continued not the legacy of Roger and Ruth, but the legacy of the Clark Government: careful management of the system, albeit with minor alterations in favour of capital rather than labour. The overall structure of neoliberalism continued unperturbed.
The Budget Responsibility Rules, the fiscal policy we along with Labour contested the 2017 election on, were a commitment to the same exercise in management rather than genuine reform which the Clark government embodied. BRR committed the Greens and Labour to keeping core crown spending to an average of 30% of GDP over a three year cycle, roughly 1% of GDP more than National intended to spend, while running surpluses, and reducing debt to 20% of GDP. This is while international interest rates are the lowest they have been in decades and while New Zealand has a public debt level so low that it is the envy of the developed world—and far more importantly, it is while so many of our people are struggling to make ends meet, and while our environment is facing utter devastation from climate change and other forms of pollution.
There is no economic rationale for BRR whatsoever—on the contrary, this was a political choice. Andrew Little declared at the launch of the policy that Labour and the Greens if elected would be “a smart government, not necessarily a big government.” This was not sound economics—it was neoliberal ideology. It was stating that Labour and, to our shame, the Greens were campaigning to blunt the blade of neoliberalism, but not to fight back against it whatsoever—BRR could not have been a more blatant refusal to champion a new economic order in the interests of the majority of New Zealanders. BRR was political cowardice and an utter neglect of the kaupapa the Green Party exists to fight for.
The lack of commitment in our election priorities to reversing privatisation was worrying. Privatisation is one of the main reasons why our economy is a dictatorship of profit and greed, while inequality and environmental destruction are produced as toxic byproducts of wealth accumulation. Any progressive party which refuses to commit to renationalisation is, implicitly if not necessarily rhetorically, agreeing with the neoliberal dogma that market is best. All this dogma does is entrench an economic system rigged in the interests of profiteers at the expense of everybody else.
So what is an alternative policy, one which breaks with the era of small government and resultant obscene inequality and environmental destruction? The Green Party needs to commit to rebuilding a state which intervenes directly into the economy to redistribute wealth—not just to end poverty, but to dramatically improve the living standards of the working class as a whole; a state which invests in urgently resolving the colossal environmental crises we face, such as climate change and the impending extinction of much of Aotearoa’s biodiversity. This means a policy of fiscal expansion; rather than arbitrarily capping our ability to spend public money, as BRR did, we must declare that we start from the principle of wanting to ensure higher living standards and a healthier environment for the majority of the population, that we will spend as much money as we require to do so, and that we will tax the rich to pay for it. Austerity is a political choice, not an economic necessity.
We must end the era of privatisation and commit to reintroducing public ownership. Universal basic services is a model which has been proposed by inequality experts in the UK, which would entail the public ownership of housing, healthcare, education, transport, energy, water and communications, all of which would be provided free at the point of use, at a high standard, to everybody. Rather than redistributing money after market forces have taken place, as the welfare system currently does and as a proposal such as universal basic income would, universal basic services means rejecting the dogma that market is best and reducing the cost of living for everybody by ending private control and the profit motive in areas of the economy most crucial to society. Universal basic services would ensure a new era of equality and stability for Aotearoa.
Direct public ownership in energy, transport, housing and water means government would be able to intervene to create better environmental outcomes, far more so than does the system based on short-term private profit taking precedence over the people, the planet, and the future. As British economist Paul Mason argues in his 2015 book Postcapitalism: A Guide To Our Future: “[t]he real absurdists are not the climate-change deniers, but the politicians and economists who believe that the existing market mechanisms can stop climate change, that the market must set the limits of climate action and that the market can be structured to deliver the biggest re-engineering project humanity has ever tried.” Mason is absolutely correct; a Green future must be forcefully and urgently constructed by an interventionist state.
Fiscal expansion and public ownership are absolutely key to realising our Charter principles of Social Responsibility and Ecological Wisdom, and also, I would argue, to creating power structures based on Appropriate Decision-making. It is a complicated subject however, as many in the Green Party rightly have an uneasy relationship with the idea of a centralised and top-heavy state. My view is essentially that under capitalism, democratically accountable governments are far preferable to corporate control for protecting people from the greed of the wealthy, and for empowering people and giving them agency in their lives. In her maiden speech in parliament, Metiria quoted a conversation between Noam Chomsky and a group of Brazilian activists which perfectly sums up my view on this complex relationship between anti-authoritarianism and the state: “We know we’re in a cage. We know we’re trapped. We’re going to expand the floor, meaning we will extend to the limits what the cage will allow. And we intend to destroy the cage. But not by attacking the cage when we’re vulnerable, so they’ll murder us. You have to protect the cage when it’s under attack from even worse predators from outside, like private power. And you have to expand the floor of the cage. These are all preliminaries to dismantling it.”
I also propose we examine closely two reports to better honour Appropriate Decision-making in this policy. One is the recently released report to the UK Labour Party on Alternative Models of Ownership, which goes into detail on how to ensure that the state is more participatory and democratically accountable than ever in its processes even while fiscal expansion and public ownership are taking place, with workers in and users of public services having a say in how they are run rather than succumbing to big state bureaucracy. The other of course is the Matike Mai Report, which is essential for understanding how we might design a state which functions according to Te Tiriti and does not violate the tino rangatiratanga of Tangata Whenua in its actions.
The questions before us come down to the very core of debates within the Green Party at the moment: are we going to be a party which exists to manage the status quo, or are we to be the political force which calls time on inequality, environmental catastrophe, and unaccountable private power, and argues for government intervention in the interests of the many, not the few? I think I know which of these options the inspired activists who founded the Values Party 46 years ago had in mind. I know which option resonates with myself and my peers as we yearn for a future in which ourselves and the generations who come after us can once again live with dignity, safe in the knowledge that across society nobody must suffer for the sake of wealth accumulation.
- Barrlott, C., Brown, M., Cumbers, A., Hope, C., Huckfield, L., Jump, R. C., McInroy, N., Shaw, L., & Anonymous. (2018). Alternative Models of Ownership (Rep.). London, UK.: Labour Party.
- Chomsky, N. (1997, April). Expanding the Floor of the Cage [Interview by D. Barsamian]. Z Magazine.
- Harvey, D. (2005). A Brief History of Neoliberalism. New York, USA.: Oxford University Press.
- Jackson, M., & Mutu, M. (Eds.). (2016). He Whakaaro Here Whakaumu Mo Aotearoa: The Report of Matike Mai Aotearoa (Rep.). Matike Mai Aotearoa – The Independent Working Group on Constitutional Transformation.
- Kelsey, J. (2002). At the Crossroads: Three Essays. Wellington, N.Z.: Bridget Williams Books.
- Klein, N. (2017). No Is Not Enough: Resisting Trump’s Shock Politics and Winning the World We Need. London, UK.: Allen Lane.
- Malva, S. (2017, December). Land, Housing and Capitalism: The Social Consequences of Free Markets in Aotearoa New Zealand. Retrieved March 02, 2018, from http://www.academia.edu/35718593/Land_Housing_and_Capitalism_The_Social_Consequences_of_Free_Markets_in_Aotearoa_New_Zealand
- Mason, P. (2015). Postcapitalism: A Guide to our Future. London, UK.: Allen Lane.
- Mazzucato, M. (2011). The Entrepreneurial State. London, UK.: Demos.
- Percy, A., Portes, J., & Reed, H. (2017). Social prosperity for the future: A proposal for Universal Basic Services (Rep.). London, UK.: Institute for Global Prosperity.
- Rashbrooke, M. (2017, September 22). A Tenuous Grasp on Inequality. Retrieved March 2, 2018, from http://www.radionz.co.nz/news/election-2017/339982/a-tenuous-grasp-on-inequality
Barrlott, C., Brown, M., Cumbers, A., Hope, C., Huckfield, L., Jump, R. C., McInroy, N., Shaw, L., & Anonymous. (2018). Alternative Models of Ownership (Rep.). London, UK.: Labour Party.
Chomsky, N. (1997, April). Expanding the Floor of the Cage [Interview by D. Barsamian]. Z Magazine.
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