A Critique of Class, Politics and Ideology
DAVID BEDGGOOD
Auckland
GEORGE ALLEN & UNWIN
Sydney London Boston
.
First published in 1980 by
George Allen & Unwin Australia Pty Ltd
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© David Bedggood 1980
National Library of Australia
Cataloguing-in-Publication entry:
Bedggood, David
Rich & poor in New Zealand.
Bibliography
ISBN 0 86861 377
ISßN 0 8G861 385 1 Paperback
1. Social classes-New Zealand
I. Title
305.5'09931
Library of Congress Catalog Card Number: 80-65140
Set in 10 on 11 point Baskerville by
T. Setters Pty. Limited
Printed in Hong Kong
Contents
2 Origins of a Capitalist Colony
3 Development and Underdevelopment
5 Contemporary Class Structure
6 Labour, Sex and Race Relations
7 Social Democracy and Social Welfare
10 Crisis, Restructuring and the Working-Class
Until recently, New Zealand had the reputation of being one of the most egalitarian countries in the world. It has been deseribed as 'almost classless', free of racial conflict, the 'first' welfare state, and`god's gift to the lower-middle classes'. New Zealanders have seen themselves - men, women, Maori and Pakeha - as 'one people', a `race apart' from the rest of the world. Believing this they have taken great pride in their country and in defending its unique achievement in a world divided by class war, racial genocide, religious bigotry, and political intolerance - as if such things could never happen here. What went wrong?
Since the mid 'sixties these founding myths have come under media attack. In 1967 the IMF gave us the nil wage-order and four-day week heralding the end of the post-war boom; a decade of economic stagnation began. As the veneer of affluence was stripped away the widening gap between rich and poor, the erosion of the social services and the emergence of social classes were exposed. Hard on the heels of the rediscovery of inequality came the awareness of social problems of juvenile crime, drug use, violence, and the break-up of the family unit.
The downturn also brought to the surface the underlying racism of New Zealand society. When half the Maori boys are classified as `delinquent' by the age of seventeen; when `bikie gangs' provoke such mass hysteria in the white middle class; when Polynesian children have a life expectancy lower than that of Spanish children; when Pacific Islanders become 'overstayers' overnight while white Rhodesian migrants are welcomed as 'kith and kin'; what else do these facts signify but a deeply embedded racism in New Zealand society?
An unexpected consequence of the downturn was the recognition of another and much more deeply ingrained inequality - the oppression of women by men. It became clear that the new-found economic freedom of women in the boom period was a form of exploitation based on discrimination in the labour-market and re-inforced by male workers. So too did it become clear that the inferior status of domestic work had little to do with any biological or naturally ordained sex role, but served the social function of exploiting womens' labour. Once the consciousness of sex oppression had taken root among women the founding myth of sex equality began to lose some of its potency.
The challenge to these myths which formed the core of the national culture produced an upsurge of conflict over moral, cultural and social issues in the late 'sixties and 'seventies. The impact of education and the media gave young people a better understanding of world affairs and New Zealand's place in the world. The movements against the war in Indo-China and the siting of US military installations in New Zealand, and the campaign against racism in sport, expressed the new awareness. Inevitably this conflict stirred the growing tensions between sections of the public committed to traditional values and those beginning to question the basis of these values. The conservatives stuck to their values and tried to explain-away the unwelcome evidence of inequality in the categories of the `cold war' - the `red scare'. The radicals began to see that the myth of equality in one small country was not now, if it ever had been, compatible with world reality.
The purpose of this book is to explain, within a Marxist framework, the causes of class inequality in New Zealand society. At the same time I shall be trying to explain why the dominant myth of equality still prevails. The title comes from a pamphlet written in 1942 by W.T. Doig in which he challenges the myths of classlessness, of 'one people' 1. Doig also headed the first social research organisation in 1938 and wrote a report on the living conditions of dairy farmers exposing the exploitation of female domestic labour.2 In his pamphlet, Doig tried to show that the gaps between rich and poor in New Zealand in the 1930s had nothing to do with ability or with the slump. These differences were the necessary features of a capitalist class system. Naturally enough, appearing when it did, Doig's message was lost in the enthusiasm of the War. It certainly met with no response from a Labour Government busy burying its working class and gaoling strikers as part of the war effort.
Thirty years later events have followed their historical
course, and the need to come to terms with the class basis of inequality
is again urgent. In doing so it is necessary to account for New Zealanders'
attitudes to equality. The answer is to be found in the peculiar experience
of the first hundred years of New Zealand's development. In this formative
period, New Zealand experienced a 'favoured development', as Willis Airey
has put it, which shaped a particularly strong belief in the possibility
of achieving equality for all. It was a period which could not last, and
was just as inevitably fated to turn into a period of 'underdevelopment'.
From this standpoint, the present experience of crisis and restructuring
marks the transition from the first to the second major epoch in New Zealand's
history -a transition which is having a profound effect on the structure
of society. The attitudes formed in the first period towards equality are
now undergoing an intense conflict with those formed in the post-war period
and raise the most fundamental questions about the nature of New Zealand
society and its future development.
Why a Marxist Approach to Class Inequality?3
The starting point of Marxism is the premise that all social life is determined by the production of the means of subsistence to meet the basic needs of food, clothing, shelter and reproduction. This is not a crude determinism which denies to the state, the church or the family any part in history. On the contrary, political power, religious beliefs and family ties are very important in ensuring that production takes place at all. As I shall argue later, these social institutions act to reproduce the individuals required for production and are indispensable to it. It is because they serve this reproductive purpose that the state, the family and the church must appear to be autonornous of economic life and take on `a life of their own'. Marx, however, believed that unless we recognise both the economic determination, and the apparent `autonorny' of these institutions in society, then our thought is ideological. That is, it is thought which sees only the 'surface' of society and not the underlying processes which cause the events on the surface. It is therefore 'inverted', partial and closed in its understanding of society.
Ideological thought is that which is unconscious of its origins in productive life. It `imagines' that thought can originate in some totally independent sphere of culture completely unrelated to economic matters. Ideology occurs at different levels of 'thought'. It occurs as everyday 'common sense', as `knowledge' and as 'science'. Though different ideologies are found in different societies, that which confronts Marxism directly is bourgeois ideology. It is that distorted thought which represents the capitalist mode of production as based on equal exchange relations between individuals. As I shall be discussing at some length later, bourgeois ideology takes the ‘surface' appearance of capitalism - the market - as the only reality. It therefore views the `apparent' autonomy of the state, the law, religion etc. as actually separated from the market, obscuring the ultimate determination of these institutions by capitalist social relations. Marxism therefore, distinguishes itself from ideology at both popular and 'scientific' levels on the grounds that it is not an ideology but a genuine science. This is, of course, a controversial claim which I shall not attempt to defend here. The purpose of the book is to demonstrate its validity in practice as a 'science of society'.
How does one go about applying a Marxist 'science of society'? There is obviously a method of analysis flowing from the `materialist' premise stated above. One starts with the productive life of society and builds up an analysis of all other social institutions from this. The question is: what form of production characterises New Zealand and `explains' the type of society it is? Before jumping into this task we must ask what are we going to look for? How will we recognise what is 'productive life' and explain the connections between this and the state, culture, family etc? Marx in fact wrote Capital as a critique of bourgeois `political ecnomists' who did not understand `productive life' and who were Ieft floundering around in ignorance as the result.4 Since his day this ignorance has stretched to include an ignorance of Marxism itself. As an object lesson in 'how not to jump into the analysis of New Zealand society' take Harvey Franklin's recent book, Trade, Growth and Anxiety.
Franklin states that: "class analysis along Marxist lines . . . appears to be singularly unsuited to the particular circumstances of the country." His reasons are that New Zealand society is `evolving'; that 'socially mobile' individuals do not belong to `static' classes; and that the 'ambiguities' of New Zealand society do not fit into a Marxist schema.5 What this means is that Franklin's idea of 'class analysis' bears no relation to Marx's. He wilfully distorts Marxism representing it as a form of analysis irrelevant to New Zealand. His reasons for doing so betray the ideological nature of a `science' which takes superficial features of a society - its `evolution', its `socially mobile' population, and its `ambiguities', all of which can only be explained in relation to production - and turns these into an 'explanation of social structure'. To understand New Zealand's social structure we have to start with its 'productive life', not its geography, its population, its occupational structure, politics and culture.
The question remains: what form of production characterises New Zealand? Marx identified certain historical 'modes' of production with distinct characteristics.6 Mode or form of production refers to the way human beings use tools and techniques to transform the forces of nature and the way they organise themselves for production. The organisation is based on a division of labour which begins very simply with a division of labour between men and women, commoners and elders, slaves and masters. This division of labour soon becomes more than a matter of efficient production, however, as certain groups come to dominate other groups; men, elders and masters begin to organise production in such a way as to expropriate some of the surplus product of subordinate women, commoners or slaves. Thus out of a mode of production which is characterised by equality emerge modes of production characterised in terms of the distinctive relations of production, or class relations between exploiter and exploited.
Although historically modes of production do not follow any exact sequence, generally speaking they reflect certain stages in the development of the forces of production. That is to say, what Marx called `primitive communism', entailed a very simple form of production in which relations of production were based on the first form of class exploitation - of women by men.7 At later stages he identified a slave mode in which masters extracted the surplus labour of slaves; an ancient mode in which male family heads extracted surplus labour from family labour (and slaves and women); a feudal mode in which landlords extracted rent from peasants (i.e. incorporating family and female labour); a capitalist mode in which capitalists extracted surplus value (still surplus labour) from wage-workers (and as we shall see from every other mode of production that falls within its world system).
So far the discussion has been limited to the definition of modes of production according to the level of forces of production (all the techniques and knowledge which determine productivity) and the characteristic relations of production or class relations. We should remember that class is used in no other sense than to mean relations of production. This is the economic base or infrastructure within a mode of production. It is the base because it is production which creates the material means of subsistence and therefore determines all other forms of social life. It is the base because class relations organise and develop the forces of production and therefore the whole `progress' of human social evolution. In other words, human labour alone is capable of producing use values, and the control of the labour process is the basis of the distribution of wealth, power and status. He who controls labour-power controls the use values of surplus labour and can expropriate the value produced.8
At the level of the economic base therefore, one class - women, commoners, slaves, peasants, wage-workers - produce a surplus product (more than they need to live on) which takes the form of unpaid domestic labour, surplus labour, rent, and surplus value which are expropriated by men, elders, masters, landlords and capitalists. However, at the economic level, the control of the means of production and the labour process by one class does not guarantee the submission of the producing class to exploitation. Whether this takes the form of domestic, slave, feudal, or capitalist relations of production, the rule of the dominant class, and the submission of the exploited class must be reproduced.
The process of reproduction is very important because it explains why history is nothing more than a succession of modes of production. Reproduction is the same as class struggle, the motor of history. It takes place at all levels and in all social institutions including the economy as a struggle over the surplus labour produced. According to Marx, exploitation necessarily creates `contradictions' which intensify and make the exploited class 'aware' of its exploited position. Under these circumstances it struggles against the ruling class to take control of the means of production.
The ruling class however, has the advantage of using the state and ideology to 'cover up' the exploitation, or justify it as necessary for common survival. And when these ideological appeals fail it can physically repress class uprising. In other words, all social institutions such as the family, kinship, religion and politics, are part of a superstructure and are engaged in the class struggle over the reproduction of class relations at the level of the infrastructure. I shall illustrate this relation between infrastructure and superstructure in the case first of the domestic mode and then of the capitalist mode of production.
The earliest form of exploitation took place within the family. The key to the control of the labour process is the control of the reproduction of labour-power. Men asserted their control over women's biological reproduction in order to control the labour-power of their progeny. This gave men access to surplus labour which they could at their discretion expropriate or distribute to women. Men were able to reproduce this relationship of exploitation by means of both ideology and physical force. Male elders developed magical and religious justifications for their control of women as natural and in the collective interest. If women did not accept these justifications they could be forced into submission. Thus developed the relationship between an ideology of `sexism' and the male 'right' to the use of force which remains the basis for the reproduction of domestic labour in all historical societies.9
The most highly evolved mode of production is characterised by the expropriation of surplus labour in the form of surplus value embodied in commodities produced by wage labourers. Historically the state was used to dispossess the peasantry and force them to offer their labour-power to the capitalist class which now owned the means of production. Though the family was no longer producing for itself, the capitalist came to assume control of the reproduction of labour-power and exploit womens' unpaid domestic labour. And as I shall shortly explain, capitalists can extract the surplus from other modes of production as well. Thus capitalism is able to make use of the superstructures already existing in pre-capitalist modes to its own advantage. In particular, the family and the state, which have a long history, are directly involved in reproducing wage labour for the capitalist class. Both, along with all other social institutions - the church, schools, mass media, literature – are engaged as parts of the superstructure in the class struggle over the reproduction of capitalist social relations.
So long as the ruling class in any mode of production can impose its will by means of the superstructure then hegemony prevails and reproduction continues. If, however, the contradictions within the mode of production become such as to intensify exploitation - increase the amount of unpaid domestic labour, the length or intensity of the work of slaves, peasants, wage-workers - then the class struggle may cease to be limited to the distribution of the product and lead to the overthrow of the ruling class and the transition to another mode of production.
Thus we see that Marxism reveals the dynamic laws
which underly the transitions from one mode to another by showing the 'dialectical'
relationship between production and reproduction, infrastructure and super-structure.
But we still have to make an immense leap from this highly abstract level
of analysis to an actual society like New Zealand. Though modes of production
define types of society, they do not correspond to actual historical societies.
Actual societies are usually a combination of several modes of production
incorporated into a dominant mode in a process of development. So, finally,
I can begin to give an answer to the question what form of production characterises
New Zealand?
Summary of Argument
New Zealand had its origins as a capitalist colony at a time when the capitalist mode of production had developed into a world system spanning almost all continents and incorporating other modes of production. It began with the fusion of a fragment of an already highly evolved British capitalism and the Maori form of production. Chapter 1 seeks the explanation of the origins of white-settler colonisation in the `crisis' of mid-nineteenth-century British capitalism. The outcome was the dissolution of Maori society and the implantation of a petty commodity mode of production within the framework of world capitalism. At this stage the colony incorporated four modes of production - domestic, Maori, petty commodity and capitalist.
In the chapter ‘Development and Underdevelopment' I trace the course of ‘development' of this 'colonial' form of production. Here we can see how British capitalism benefited from the surplus labour produced in all four modes in the colony, at the same time reproducing a colonial class-structure of considerable complexity under the domination of a Iocal capitalist merchant-banker class. The local class was able to retain a portion of the surplus produced in the colony and formed the basis of a national bourgeoisie. In the following chapter, `Class, State and Ideology', I look at this developing colonial class structure together with the form of state and ideology which emerged to reproduce colonial class-relations. We find that the demands of establishing production for the capitalist market necessitated the growth of a strongly interventionist state, and an ideology of 'state socialism' justifying the role of the State.
Yet ever in such a favoured semi-colony, once the means of production has been appropriated by petty producers and capitalist farmers, the development of capitalist manufacturing was established by means of the intense exploitation of domestic and wage workers. The threat of violent class struggle as the labour movement developed forced the national bourgeoisie to use the state to control class struggle. In the chapter on `Labour, Race and Sex Relations' I examine the consequences of `state socialism' as a form of Political and ideological domination of the working class which divides the working class along national, racial and sex lines, limiting its ability to organise politically as a class.
If 'state socialism' as a form of class domination was sufficient to reproduce class relations in the years up to the Great Depression, its further extension as 'social democracy' with the advent of the First Labour Government would seem to mean the end of `class conflict'. After all, not only was this Government elected to `reform' capitalism, its period of office happily coincided with the onset of a period of boom that saw a huge increase in working-class living standards. 'The `Welfare State' marked the end of capitalism and the beginning of the 'mixed economy' in which all classes would share the benefits of growth. ln 'Social Democracy and Social Welfare' I examine the substance to this belief and show that the Welfare State is an illusion; that instead of equalising incomes, equalising opportunity through health, education and housing, and producing social security, it has perpetuated the basic inequalities in New Zealand society.
The reasons for this are in the nature of the capitalist state itself. In the Chapter on `State capitalism' I show that the `Welfare State' is merely one aspect of the modern capitalist state which has intervened in the economy by numerous means to facilitate the reproduction of capitalist social relations. The 'Welfare State' did not represent any victory for the working class over the capitalist class, rather the other way around. The capitalist class was able to persuade the labour movement and the Labour Party to administer its own exploitation, redistributing taxation (or gross wages) to the capitalist class by cheapening the cost of labour and of other 'inputs'. In this way the working class was deluded into paying for its own and the capitalists 'welfare' out of its own wage-slavery.
Yet even this subterfuge by the State failed to prevent the re-emergence of the basic contradictions in capitalist production -expressed as stagflation and falling profits - and the state has been forced to divert expenditure from social spending towards direct subsidy of capital. We see how this distribution becomes apparent irh the erosion of the Welfare State, breakdowns in social services, health and education and in the rise in poverty. The consequences of a growing inequality became apparent in the numerous 'social problems' among the working class.
While the intensification of exploitation and its consequences are expressed as `social unrest' and `social problems', they do not become threats to bourgeois class rule unless there is a major change in the consciousness of the working class. Bourgeois ideology functions best when the economy is booming but it can still prevent the working class from organising any resistance by limiting and containing forms of working-class protest.
In the chapter on 'Ideology and Social Order' I analyse the ways in which the State is able to defuse protest by steering discontent and aggression into 'social problems' where they can be treated as 'individual' disorders (drug dependence, `mental illness') or as crimes against the State. In this way the basic commitment of individuals to individualism and nationalism is used to divide the working class and prevent the rise of an anti-capitalist consciousness among the working class, women and the Maori people.
The ability of the State to contain working-class
protest in a period of prolonged crisis today becomes more difficult without
'blowing its cover' as the Welfare State. This is because the crisis is
very serious and requires a massive cut in the living standards of at least
seventy per cent of the population. Because of its direct involvement in
solving the crisis for the international capitalist class by means of `restructuring'
production to export surplus value into the world economy, the State may
be forced to adopt more repressive measures to control the working class
and move towards a form of `national socialism'. It is premature to speculate
at this point how serious this crisis is for the capitalist class, but
it is certainly serious for the working class in New Zealand.
2
Origins of a Capitalist Colony
The Modern World System
The approach adopted in this book treats New Zealand society as part of world society – ‘the modern world system'. Such an approach differs radically from the more orthodox view of New Zealand's `national development' beginning with its origins as a colony and its development from colony to nation between 1840 and 1940. Here the concept of the nation has both economic and cultural meanings. For example Morrell thought that national maturity was reached on the 'bloody slopes of Gallipoli'. And Sinclair writes: "…after the war there was general agreement among New Zealanders that they were a new nation". But real `nationhood' came, in his opinion, only after the Depression and the Second World War with new policies for economic self-reliance and the ‘new discovery' of their country by a post-war generation of writers.10
The conception of `nationhood' underlying this view of national development is, I shall argue, based on the assumption that the world economy consists of independent nation states participating as equals on the international market. According to the law of 'comparative advantage', each country produces some commodity more cheaply than any other and trades it on the market for those commodities it cannot produce cheaply. In theory this law is supposed to operate for the benefit of all nations. But in practice it does not, not because some nations are stronger than others, but because economic resources (or the means of production) are not owned (except incidentally) by `nations' but by firms. In reality the control of resources in 'weak' states by firms -supranational corporations - based in `strong' states makes any law one of comparative disadvantage!
In practice (as distinct from in economic 'theory') the ownership of economic resources, while involving nation states at a certain level, is concentrated in the hands of an international capitalist class which operates in terms of a world system. This class had its origins in the countries of Western Europe in the Middle Ages and from the l4th century spread its control over the world economy. As the world system developed, it incorporated non-capitalist economies, fitting them into the expanding division of labour as producers of particular commodities. As a result the countries of the `periphery', incorporated into the world system as colonies and semi-colonies, have always been dominated by a high degree of `foreign ownership' and control of their national resources, if not by direct political rule. They have 'developed' to suit the interests of international capital rather than of the indigenous populatíons.
In the case of the white-settler dominions such as New Zealand, though self-governing, the domination of `foreign' capital in the ownership and control of economic resources is no Iess real than in any other form of colony.11 What distinguishes the dominions from other colonies, however, is the greater extent to which the investment of 'foreign' capital - especially in the form of the national debt - allowed them to 'develop' as highly efficient primary producers in the international division of labour.
This in turn provided the basis for the establishment of a protected 'import substitute' manufacturing sector and the expansion of the state and tertiary sector. In some cases where indigenous raw materials made a heavy capital goods industry possible as in the USA the settler colony developed into a major capitalist power. Where, on the other hand, the settler economies remained `dependent' on the export earnings of the primary sector to finance capital goods imports for domestic manufacturing, as in New Zealand, economic 'development' remained 'lopsided' despite the attempts by economic nationalists to insulate the economy from dependence.
Sutch, for example, as the forernost architect of economnic nationalism in New Zealand, promoted the view that the more New Zealand developed its manufacturing sector and its own raw materials and energy supply, the more it moved from colonial dependence topwards national self-reliance. The realisation that this policy could not provide alternatives to a continuing dependence on the primary sector, and would increasingly provide opportunities for direct foreign investment in the New Zealand economy, did not occur to him until the late 1960s when he wrote Takeover New Zealand. However, in my view, the 'Takeover' was in 1870 not 1970, and the Future course of New Zealand's economic development was established in the time of Vogel and not in that of Coates.
While a form of 'dependent' partial development took place in the white-settler colonies, it was largely determined by the production of specialised commodities in the international division of labour. lt is the basic assumption put forward here, that New Zealand's social structure is determined by its economic role in this division of labour. Its role as a primary producer was, is still, and will remain for some time the basic determinant of its economic, political and cultural development. Such an assumption means that despite the appearances of national `independence' and political sovereignty, Government economic policy is necessarily confined within narrow limits established by the external forces controlling New Zealand's place in the world system.
In order to understand this process, it is first necessary to consider the historic origins of the white-settler colony arising out of the crisis of mid-l9th-century British imperialism. What particular conjunction of forces and events gave rise to settler colonisation between 1830 and 1870?
British Capitalism 1830-1870
According to Marx the main factor allowing British capitalists to take the lead in the l9th century was the imperialist domination of non-Europeam people and the `primitive accumulation' of their natural wealth as ‘capital'. Without the wealth extracted from the empire, this class would not have had sufficient capital to embark on its industrial development. In an ironic inversion of the orthodox theory of ‘Takeoff', Britain industrialised by ‘capitalising' her subject populations' wealth. Marx describes this ‘primitive accumulation' as:
"nothing else than the process of divorcing the producer from the means of production…The treasures captured outside Europe flowed back to the mother-country and were turned into capital there... the expropriation of the direct producers was accomplished by the most merciless barbarism, and under the stimulus of the most infamous, the most sordid, the most petty and the rnost odious of passions ... If money, according to Augier, 'comes into the world with a congenital bloodstain on one cheek,' capital comes dripping from head to toe, from every pore, with blood and dirt." 12
If plunder and slave labour provided the necessary capital for the industrial revolution - 'Liverpool grew fat on the basis of the slave trade' - in return, cheap British manufactures flooded the colonial markets. The conquest of Ireland and India are the classic examples of the two-fold destruction of primitive accumulation. In Ireland, half the agricultural population was driven off the land within twenty years to free the land for wool production. In India 'the bones of the cotton weavers' made redundant by the invention of the mechanical loom "were bleaching the plains of India".13
But while the natural wealth of the colonies was enough to Iaunch British industry it was not sufficient to sustain its rapid growth. The growth of manufacturing carne up against the barrier presented by the landowning class in Britain and the protected colonies. Capitalist industry depended upon capitalist agriculture for cheap raw materials and foodstuffs, but the developmnent of capitalist farming was held back by the extraction of an ‘absolute rent' which went to tlhe landlord rather than to improving the efficiency of agricultural production. The resulting stagnation of agriculture prevented industry from benefitting from cheap raw materials and foodstuffs, raising costs of production and limiting profits. The end result was a period of prolonged crisis from 1830-1850 - a combination of over-accumulation of capital, a low rate of profit, unfavourable terms of trade (high prices of imports), and an unfavourable balance of trade (low price of exports relative to imports). Accompanying this economic contraction were mounting signs of social crisis and social disorder in the form of agricultural labourers' riots, Chartist demonstrations, an unemployed surplus population, pauperismn, disease and crime.14
The solution to the crisis caused by the landlords' monopoly of land was for the rising industrial capitalists to break their monopoly over agricultural prices. This `revolution' finally came as the result of a long and bloody class struggle in which the industrialists enlisted the support of the working class and the pauperised tenant farmers to ‘reform' parliament, abolish price protection - the 'Corn Laws' - and establish free trade in agricultural commodities. The competition of free trade cut the prices of the raw materials and foodstuffs, thus lowering costs of production, stimulating demand in the domestic economy and the world market and leading to a recovery in profits. From about 1850, British industrial capitalism 'tookoff' again into heavy capital goods industry based on coal, iron and steel, to become the 'workshop of the world'. 15
What is important for us in establishing the causes of emigration is to understand what in this development - from 'crisis' to recovery - created the vast surplus population from which the emigrants were drawn. The stagnation of agriculture and of industry increased the numbers of unemployed in the towns, driving down wages and creating widespread discontent and unrest. Even with the `recovery' after 1850 the numbers of unemployed and their living conditions did not improve. In order to escape these harsh conditions, between 1815 and 1859 over five million people left Britain for all parts of the world - about 685,000 destined for Australia and New Zealand. Many of these went as assisted emigrants in schemes deliberately promoted by capitalists concerned about the growing threat of political rebellion in Britain and eager for wage labour to exploit in the colonies.
In the 1830s the `colonial reformers' were advocating the plan for ‘systemmatic colonisation' at a time when the fear of social disorder was at its peak. 16 The expansion of capitalism into the 'new· lands' they argued would solve the problems of capitalism at home by finding new outlets for surplus capital and labour. For Karl Marx this ‘new theory of colonisation' demonstrated for all to see the role of the state in artificially creating the conditions for the 'free market' to operate in the colonies:
"It is the great merit of E.G. Wakefield to have discovered, not something new about the colonies but, in the colonies, the truth about capitalist relations in the mother countmy. Just as the system of protection originally had the objective of manufacturing capitalists artificially in the mother country, so Wakefield's theory of colonisation . . . aims at manufacturing wage-labourers in the colonies…So long as the worker can accumulate for himself - and this he can do so long as he remains in possession of his means of production - capitalist accumulation and the capitalist mode of production are impossible. The class of wage-labourers essential to these is missing… How can the anti-capitalist cancer of the colonies be healed?"
"The trick is to kill two birds with one stone. Let the governmnent set an artifical price on the virgin soil, a price independent of the law of supply and demand, a price that compels the immigrant to work a long time for wages before he can earn enough money to buy land and turn himself into an independent farmer. The fund resulting from the sale of land...extorted from tlne wages of labour by a violation of the sacred law of supply and demand, is to be applied by the government…to the importation of paupers from Europe to the colonies, so as to keep the wage-labour market full for the colonists." 17
The purpose of the colonisation of New Zealand couId hardly be more clear: a part of the universal expansion of the capitalist mode of production in an attempt to find new sources of land, raw materials and labour power. Yet the usual interpretation put forward by historians is that in the case of New Zealand, annexation and colonisation, while part of the drive into the ‘new lands' was ‘moderated' by the 'humanitarian' policy of the British state to protect the Maori people from the worst effects of this destructive process. In what way, if at all, was the Colonial Office's annexation of New Zealand, the "killing two birds with one stone", moderated by a humanitarian influence?
The Humanitarian Ideology and its Critique
The case for the 'humanitarian' explanation of annexation is based on three arguments. First, in response to the pleas of the missionaries to establish law and order and protect the lives of both settlers and Maoris, the Colonial Office was precipitated into action. Second, in the absence of any great economic interest in trade with New Zealand it is assumed that humanitarian concern ‘explains' the willingness of the Colonial Office to undertake the expense of annexation in a period of free trade imperialisrn. Third, the Colonial Office's reliance on ‘moral suasion' rather than military force is taken as further evidence of a humane rather than economic interest in the colony.18 Sinclair describes the Colonial Office rationale for its action:
"These instructions marked a new and noble beginning in British colonial policy. The history of New Zealand was to be distinguished from that of earlier settlement colonies; the fate of the Maoris was to differ from that of the American Indian, the Bantu, the Australian Aborigines, for the new colony was being launched in an evangelical age. Imperialism and humanitarianism would henceforth march together. Even the Colonial Office, without much conviction, hoped that New Zealand would be the scene of a Utopian Experiment.' 19
We can criticise this explanation on two levels. First, bourgeois historians have themselves pointed to several errors of fact and interpretation. As Adams has shown, whatever the ‘good intentions' of the Colonial Office, there was a thinly veiled expediency lurking just beneath. It seems that the policy of ‘moral suasion' adopted in New Zealand came not from any reluctance to use force, but from a 'shortage of imperial soldiers'. In a situation where the settlers were vastly outnumbered but were meeting with no resistance in trade and in land purchases, 'moral suasion' was clearly the expedient policy.
Second, Adams found the records of the Colonial Office revealed that the 'good intentions' attributed to it by historians were not good by design but by accident. The Colonial Office had not intended that the terms of the Treaty of Waitangi would allow the Maori people to retain their land. The object of the Crown's right to exclusive purchase of Maori land was to buy the land cheaply and resell it dearly. By this mneans it would `kill two birds with one stone' - setting a 'sufficient price' on behalf of capitalists and paying for immigration and public works with the proceeds. There could be no clearer evidence of the fact that the annexation of New Zealand and the protection of the Maori came second to the procection of capital.20
While recent bourgeois historical research reveals the weakness of the `moral suasion' argument, it leaves untouched the other two arguments supporting the moderating effect of humanitarian ideals. To demonstrate the failings of these arguments we have to step outside liberal ideology and make a critique at the level of Marxist science. As I have stated, bourgeois ideology functions to reproduce exploitative social relations by obscuring thhe ultimate economic determination of political and ideological events. Historical accounts codify this practice by taking a superficial view of the historical process as an interaction of `independent' causes. Humanitarian or religious ideas are seen as independent of economic ideas. History becomes a drama in which these conflicting forces struggle for supremacy. With this conception of history, the act of annexation becomes a political struggle between the economic interests of the colonisers to dispossess the Maori people of their land, and the ideals of the missionaries and hurnanitarians wishing to protect the Maori people from destruction at the hands of the settlers. Hence in the absence of valued economic resources in New Zealand, and with victory of the humanitarians over the colonisers, the main cause of annexation must have been humanitarianism.
If we understand the function of ideology, then we can see the ideological purpose the humanitarian explanation has in obscuring exploitative class relations in New Zealand. It creates a mythology in which the colonial state acts in an economically ‘neutral' way to establish the rule of law and prevent the settlers from unjustly plundering Maori land. Under the protection of the neutral state the Maori people are able to act as equals in persuing their 'economic' interests in thhe market place. This mythology completely misrepresents the functions of the State in creating the conditions for capitalist production. In the first place, the intervention of the Colonial Office to establish law and order, while partly in response to humanitarian concerns, was a necessary condition of furthering economic interests in the colony. As it happened, annexation was by treaty rather than by force, but the form of the intervention in no way alters its function. Under different circumstances, as in Afghanistan and China, the British state could put down resistance to the rule of law and the market with military force.21 Far from acting in opposition to the 'economic' interests of the settlers on the basis of some ‘ideal' the Colonial Office, in annexing New Zealand and establishing law and order, was furthering the interests of the colonists and British capitalists.
In all its general features, once the superficial events of 'ideological history' are placed in a scientific context, it can be seen that the process of primitive accumulation in New Zealand was no different from that which took place wherever the British Empire expanded into pre-capitalist societies. Marx, commenting on the British in India, leaves no room for illusions:
"The profound hypocrisy and inherent barbarism of bourgeois civilisation lies unveiled before our eyes, turning from its home, where it assumes respectable forms, to the colonies, where it goes naked. They are the defenders of property, but did any revolutionary party ever originate agrarian revolutions like those in Bengal, in Madras, and in Bombay? Did they not, in India, to borrow the expression of that great robber, Lord Clive himself, resort to atrocious extortion, when simple corruption could not keep pace with their rapacity?" 22
Just as in India, the ‘profound hypocrisy and inherernt barbarism' of bourgeois civilisation unveiled itself in New Zealand. Beginning with the 'simple corruption' of trade and religion, then the 'atrocious extortion' of land dealing, and finally the military destruction of Maori Society, the rule of capital was established.
The Destruction of Maori Society
What was distinctive about the British colonies of settlement was the attempt to create 'little Englands' in new lands. This was to be done not merely by expanding trade and commerce, but by physically transplanting a vertical slice of British society - economics, politics and ideology. This meant that the impact of the settler societies upon the pre-capitalist societies already, in existence in the new lands was total and devastating. New Zealand as a ‘branch of the mighty Empire' did not need to be governed from Britain. Granted the 'dearest right of Englishmen, the privilege of self-government', the colony would bind itself to Britain 'with chains no power on earth could reak'. It would be linked by trade and commerce and by the lasting ties of race, culture and language.
Overlying the economic basis of white-settler imperialism there was the profoundly hypocritical doctrine of `imperial destiny'. The native peoples were to be `protected' and `improved'; land was seen as a `wilderness' and `God's gift' to the English middle class rather than the material basis of primitive economies. 23 The drive to dispossess the Maori people of the land therefore followed inevitably from the establishment of a settler colony. It involved a total frontal assault at all levels of society -economic, political and ideological - in order to remake Maori society in its own image.
Standing between the settler colony and the land was Maori society. 24 It was a society based on a form of production in which common ownership of the means of production and collective labour provided the material needs of the community within the limits imposed by nature and the rudimentary development of the forces of production. Land was the key resource in production and the whole organisation of Maori society was concerned with its protection and conservation. Even the power of the chiefs was limited by their duty to act as trustees of the people in controlling the land and its products. In this the chiefs acted not as a ruling class, but as representatives of the community (though it is probable that slaves and women were exploited groups) to reproduce non-exploitative social relations. As such, the chiefs proved highly resistant to the `simple corruption' of the capitalist market and the Christian faith. There was no way the colonising power could drive a wedge between the interests of the chiefs and the Maori people as a social unity.
In the case of Christianity, it became apparent to some missionaries that many Maori `converts' regarded religion as a useful means serving their practical ends of living and trading with the colonists. This view was shared somewhat cynically by Merivale who regarded religion as the main means of `exciting the mind of the savage to desire civilisation'. 25 In New Zealand Christianity worked so successfully that the Maori people rapidly adapted their habits of production and consumption yet without any major conversion. In this sense they 'out-civilised' tlhe settlers, since they retained common ownership of the land, produced for the capitalist market and shared in the total value produced. However, over the period from 1840 to about 1855, the 'enthusiastic adoption of culture forms' as Firth puts it, there was no significant change in Maori society. The simple corruption of religion and trade was not sufficient to break down the resistance of Maori society to the alienation of their best land in the form of `private property'.
However, after 1855, with the growing numbers of settlers and their demand for more Iand the amicable relations between the two forms of society began to break down. When the `simple corruption' could no longer keep pace with the settlers' rapacity, the Government resorted to the `atrocious extortion' of stepping up land purchases with little regard for traditional ownership rights. This created alarm among certain tribal groups who responded with a refusal to sell more land. According to Sinclair:
"Opposition to land sales was partly due to fear. In the Wairarapa it was reported in 1860, the leading chiefs had sold nearly all their land and were in a helpless state of debt and poverty which paved the way for discontent and jealousy against both the Government and Europeans generally. But beyond fear, . . . was an attitude which rested on the deepest and most responsible considerations of the welfare and future of the Maori people. Wirimu Kingi, the Waitara chief, wrote to Gore Browne and McLean in February 1859 refusing to sell his lands: ‘These lands will not be given by us into the Governor's and your hands, lest we resemble the seabirds which perch upon a rock: when the tide flows the rock is covered by the sea, and the birds take flight, for they have no resting place'."26
Though the resistance took on the form of Maori `nationalism' (kotahitanga) drawing on some of the features of European nationlism, it is clear that the substance was the concern of thhe chiefs for the survival of their society. This was the traditional role which became the basis for a 'united front' of landholders against landsellers. We should not therefore make the mistake of thinking of the King Movement in ethnocentric or European terms. The movement had its roots in pre-European Maori society, and the use of the King as a symbol to unite formerly independent tribes into a political `nation', was simply a device to find some means of restoring the traditional material basis of Maori society. Nor was the adoption of a Maori 'King' an attempt to emulate the British state and legal system. Because Maori society had no separate state, legal apparatus, or written culture, and because all custom and belief had no purpose other than the reproduction of material life, the chiefs were able to see through the hypocrisy of the missionaries, protectors and Governnors. They were all the more convinced, that unless they could resist the 'Queen's sovereignty' at the level of ideology with their own `King Movement', their land would be lost to the Pakeha.
Rather than trying to sort out whether the Wars were really about land, rebellion or simple racism, I prefer to stress the fact that the Wars were fought at all levels simultaneously. They were however, wars of conquest which had the:
"common features of . . the arrival of aggressive, acquisitive members of European society among a primitive people, forcing the latter, whether attacked or not, to fight for the existence of their society...they were not the product of unique local circumstances but the result of forces operating throughout a large part of the world."27
So while it was the land that was at stake, both sides mobilised all their political and ideological resources. As Scott has put it:
"The process was breath-taking
in its simplicity - and in its expected rewards: (I) the land had been
wrongfully seized; (2) the Maoris had resisted; (3) punish the Maoris for
resisting, recover costs and legalise the seizure by confiscation."28
3 Development and Underdevelopment
The Ideology of `Development'
If New Zealand began its existence as a capitalist white-settler colony, what characteristics of the colony determined its development? Is New Zealand still a colony today, or has it become a developed nation? Or is it some intermediate type of society? In the classic l9th century bourgeois view, - conservative, as I call it here - all nations are held to compete as equals in the international market. Economic development takes place when the natural advantage of a country allows it to accumulate sufficient capital to take-off into industrialisation. The failure of any nation to develop is explained away as due to some internal deficiency (i.e. some natural disadvantage) which prevents the formation and investment of capital. The usual cause of backwardness invoked by conservatives is the resistance put up by traditional cultures, religions, or national character, to the process of rnodernisation and rational economic behaviour.29
According to conservative ideology, New Zealand's `development' has resulted from a combination of advantages. First, a surplus of labour and capital was transplanted in the new colony where it combined with a moderate climate and natural fertility to make New Zealand an efficient producer of primary products for the British market. Second, w·ith the destruction of Maori society and the implantation of capitalist classes, there was no traditional resistance to rational economic behaviour. New Zealand's natural advantage was its primrary production which earned the foreign exchange necessary to accumulate sufficient capital for the take-off into industrialisation.
According to Blyth, New Zealand made the transition from a `colonial dependence' on primary production to secondary manfacturing in the1880s. The take-off was the result of a number of `historical accidents' (the export boom, i.e. the demand for agricultural products in Britain) and `natural forces' (falling wages in New Zealand together with a growing domestic demand), which combined to encourage the growth of domestic import substitution manufacturin. Since this period, in Blyth's view, the New Zealand economy has made steady progress towards full industrialisation carried along by rising domestic demand. There is little doubt that in the conservative view New Zealand has long since ceased to be a colony and is now a developed capitalist country.30
It is clear that the conservative conception of national development takes no account of the role of states in creating the conditions in which `historical accidents' and 'natural forces' operate. The presumption is that `market forces' prevail without politics or ideology in determining economic development. By contrast the late l9th-century and dominant 20th-century bourgeois view of development - liberal as I shall call it - does not view the State as having no role to play, but sees it as a key factor in economic development. Inequality in the liberal view is caused by too much power concentrated in the hands of a national elite.
The solution is for the powerless to struggle for political representation and displace the power elite. Those countries which are able to prevent the accumulation of wealth in the hands of an elite are potentially capable of turning the wealth to productive use. Those which are dominated by elites who consume rather than invest their wealth in production, remain underdeveloped. In the case of colonies, the liberal view takes into account the external political domination of elites. The process of developmernt is much more difficult in such cases where the maldistribution of power involves imperial domination because the colonial peoples can take no direct action against the foreign elites.
For liberals then, there can be no development without a political struggle, arnd in the case of colonies, the colony must gain political independence from the imperial elite. The liberal view of New Zealand's development sees the struggle to insulate the colonial economy from British capitalists as the crucial step. Sutch, the best known representative of this approach, focuses on the role of the State as the means by which the economy developed from colony to nation.31 The conservative view of 'take-off' is wrong. Leaving aside the question of the 'historical accident' of the boom in exports to Britain, the lowering of wages and the growth of internal demand in the colony was not the result of some `natural force'.
On the contrary, the falling wages in the Great Depression (Blyth says they were not rising as fast as British wages) though the obvious result of the law of supply and demand, were actually caused by the 'law of state-assisted immigration'. This, together with the discovery of gold in the1860s which flooded the country with a surplus of labour, forced down wages, rnaking production in New Zealand internationally competitive. The other factor making local production competitive was the irnposition of import duties or tariffs: In the second place, the growth of internal demand which supported local production was itself linked to the State's policies of immigration and public works. 'Take-off' for Sutch, then, was very much state-assisted.
Against the conservative view of comparative advantage Sutch puts his view of the power struggle between nations. As a colony New Zealand clearly fell under the domination of British capitalists:
"New Zealand's fortune was Britain's fortune. Refrigeration, climate, and Britain's place in the world…made New Zealand a specialised colony, profitable to Britain…it dominated New Zealand through its control of shipping, finance, insurance, handling and selling of products; New Zealand became a market for some British manufactures; cheap food produced in New Zealand kept down the wages of British workers; New Zealand's development provided long-term security for British financiers; British investment became increasingly important in manufacturing."32
If New Zealand was going to advance from colony to nation it would have to insulate its economy from British control. The local State would need to intervene in the economy to provide cheap credit, public works, services, marketing and shipping, to reduce the dependence on British capitalists. In Sutch's view, some measures had been implemented successfully by the mid 1960s, reducing New Zealand's colonial dependence on Britain and allowing the economy to move towards full national independence. This explains why he viewed tlne threat of 'economic take-over' in the 1960s as a reversion to colonialism. It was the direct result of successive National Governments' abandoning the policy of economic 'nationalism' thus making the economy more dependent on international finance (World Bank, IMF and international merchant banks) and direct foreign investment in manufacturing:
"In the last decade (1960-970) Foreign finance, now coupled…with international industry, has vastly extended its power in New Zealand through finance companies, insurance companies, merchant banking and trading banking."33
The solution was, as always, the re-assertionn of
the national interest through the ownership and control of the key sectors
of the economy. Not until New Zealand followed the lead of other 'conservative'
countries in gaining national control over the economy would it deserve
the reputation of `nation'.
The Marxist Critique of `Development'
The Marxist critique of `development' begins where the liberal view ends. 'Development' is neither the result of `market forces' nor of neo-colonial `independent' states asserting control over their economies. 'Development' is the consequence of the place of an economy within the international division of labour; by this I mean the country's particular role in producing particular commodities for the international economy. According to this conception, the role of a colony is to supply relatively cheap raw materials and labour-power to an imperial power whose function it is to import raw materials from colonies, process them, and export some finished products back to the colonies. Semi-colonies are intermediate economies which combine aspects of both roles.
The fate of certain countries to be assigned a colonial role and to remain underdeveloped, while others become imperial and developed powers, does not, however, stem from either their natural advantages or the independence of their states. The attempt by conservatives to explain away `underdevelopment' by pointing to internal causes is clearly incorrect. 'Poor' countries are not poor today because they lack the resources or the 'will' to develop. They are poor because they were once `rich' and their raw materials and labour have been plundered and exploited by the more advanced European powers since the l6th century. Far from being underdeveloped because they are `backward', these countries are `backward' because they have been underdeveloped.34
Nor are underdeveloped countries poor because they are politically dependent. Liberals claim that decolonisation frees formerly colonial countries and allows them to develop their own resources free of external controls. However, political independence does not do away with econnomic dependence. Liberals fail to understand that the ownership and control of the economic resources of the poor nations is concentrated in the capitalist class of the imperialist states who are able to use the neo-colonial elites in the former colonies as their agents in maintaining economic dependence. Thus the so-called `development' that is possible through aid, loans and other forms of assistance, is still controlled from the centre. Foreign capital forms an alliance with local `comprador' capital, to develop those resources required by the centre or for consumption by the neo-colonial elites, but does not allow the mass of the colonial people to control their own economic welfare.
What is more, the illusion of national independence with popular support mobilised by nationalist, populist, or socialist slogans, acts as a political cover for the continuation of economic dependence. For example, Sutch belatedly recognised that New Zealand had "become even less in charge of the decisions about its own economic affaírs than it was in the 1880s before there was universal suffrage…What difference, then, did universal suffrage and parliamentary democracy make? This is the question."35 The liberal solution to the problem of underdevelopment does not confront this question. Just as it puts up hope that workers can all become petty capitalists within the framework of parliamentary democracy at home, it puts forward the utopian dream that with decolonisation, `poor' countries can all become `rich' within the framework of the capitalist world system.
The Marxist explanation of New Zealand's 'development' therefore rejects both conservative `market forces' and liberal 'political independence' explanations. As Marx showed in his criticism of Wakefield, the colonial State `intervened' to create the market forces for capitalisrn to operate. But it was not the State independent of British capitalists; rather it was British capitalism that assigned to the semi-colonial State a role which determined the form of `development that took place in New Zealand. In other words, settler colonies like New Zealand escaped the trap of underdevelopment, not because local states were able to resist the British State, but because they acted as agents of the imperial State by 'developing' along lines which furthered the expansion of British capital.
Why then did the settler colonies get such preferential treatment when other colonies remained trapped in the periphery? What role did they play in the capitalist world system that allowed them to achieve a particular kind of development'? The first step in this explanation is to analyse the defects in the liberal account of the State's role in this process. According to Willis Airey:
"The conditions we enjoyed were possible only on a frontier of European imperialist expansion by the export of men and capital. In getting access to the land we wrecked the Maori way of life and subordinated them to our superior technical power. From outside interference we have had security at small cost to ourselves, and our main markets have been bolstered, for the time being, by imperialist exploitation of other peoples. Our achievement in fact, rests partly on our sharing in a privileged dominating position in relation to non-European peoples. Without this we could not, by the relatively peaceful, tolerant means we have used, have achieved our peculiar and happy position of an easy-going individualism and lack of sharp class division, combined with state-chanelled welfare provisions."36
From this point of view, New Zealand's favoured development came from the colony's sharing of the imperial privilege of the British in relation to the non- European peoples. It is an extension of the liberalism of Sutch (in which the colony is exploited by Britain) because it recognises that the `European imperialist expansion' o fwhich New Zealand was part took place within a world system. This idea has recently been elaborated by Emmanuel who argues that the white settlers and their states were able to develop because they benefitted fronn the indirect exploitation of low-wage workers in the `third world'.37
While this explanation adds another dimension to the liberal explanation of New Zealand's development, the conception of the world system put forward is still one in which 'peoples' or 'nations' exploit or are exploited. New Zealand's place in this scheme of things is somewhere in the middle, a nation which indirectly exploits and therefore benefits from favoured development yet at the same time is dependent upon British capital. The problem is of course that we are still thinking in terms of 'nations' in some international pecking order of strong and weak states.
But in what sense is New Zealand both exploiter and exploited? By staying at the level of nations we are blind to the underlying reality that exploitation is one of class relations which can only be understood at the level of the world system, and which determines the power struggle among nations. Once we grasp the significance of this then the whole terminology based on the concept of the `nation' is shown to be ideological because it masks the underlying reality that it is classes which have social relations, not 'peoples'. So for example when we read the following passage frorn Barratt-Brown who writes in the Marxist tradition we find the terminology of the 'nation' constantly hindering our understanding of class relations.
"The countries settled by capitalist 'kith and kin' did develop inndustrially, and the British economy did appear to benefit at least as much from their successful development as from Argentina's or India's failure. In other words, despite the protection that the Dominions applied in order to nourish their infant industries, British economic development, far from suffering a setback from the competition of new industrial centres appeared to benefit from it."38
Here, of course Barratt-Brown is attempting to get
his point across by using liberal terminology. The only way this very important
point can be understood however, is to criticise such language and use
the language of class relations. How exactly then, were British capitalists
able to exploit the so-called economic development' of the Dominions, and
in particular that which took place in New Zealand?
New Zealand in the International Division-of-Labour
Marx wrote:
"By constantly turning workers into supernumeries, large-scale industry, in all countries where it has taken root, spurs on rapid increases in emigration and the colonisation of foreign lands, which are thereby converted into settlement for growing the raw material of the mother country, just as Australia for example, was converted into a colony for growing wool. A new and international division of labour springs up, one suited to the main industrial countries, and it converts one part of the globe into a chiefly agrícultural field of production for supplying the other part, which remains a pre-eminently industrial field." 39
With the establishment of the new `agricultural field of production' in the Dominions, British capitalists benefit in several ways. And more important, these benefits increase with the development or industrialisation of their economies. But this is to jump ahead of the argument which should be taken step by step.
As I have said, the `conversion' of New Zealand into an 'agricultural field of production' mean the destruction of Maori society and the separation of the native producers from their land. However, what is important in the `growing of raw material for the mother country' is its price and not how it is produced. Strictly speaking, had the colonisation of New Zealand taken place one hundred years earlier without the influx of settlers, capitalist merchants would have taken advantage of Maori production for the capitalist market (assuming there was one) and made their `profits' by buying cheap and selling dear, without any need to destroy Maori society. It is not necessary therefore for agricultural production to be run on capitalist lines so that raw materials can be produced cheaply for the capitalist rnarket.
However, having made this point, we should recognise that normally under conditions of price competition capitalist agriculture will produce cheaper commodities because of the higher productivity resulting from investment in machinery, and that because of this normal tendency, agricultural production will become more and more capitalised. There are exceptions to this where non-capitalist agriculture can compete with capitalist agriculture and produce commodities at a lower price. In these cases while there may be a tendency towards the capitalisation of agriculture it is not a pre-condition of agricultural production for the 'mother country'. New Zealand was one such exceptional case where the production of agricultural commodities was based upon a petty commodity form of social relations. I shall now look at the factors which made this exceptional form of agriculture competitive.
The first advantage was that of 'founders' rent, that is, a natural fertility which provides a high return for a given amount of capital before this fertility has to be replaced artificíally. To understand founders' rent, however, we need to understand the concept of rent and differential rent. Rent represents the value produced on land with a given amount of capital and Iabour-power. Differential rent is the differential value produced from land of varying productivity for the same amount of capital and labour-power applied. The two factors which determine differential rent are fertility annd location. The more fertile the land the greater the value produced for a given amount of capital and labour-power. The closer the land to market the less capital required to produce a given amount of value.
Now, in the case of New Zealand, once the disadvantage of extreme distance from the UK market was technically overcome by the invention of refrigeration, the remaining disadvantage of distance (or location) was more than compensated for by the high natural fertility (or founders' remt). Thus for a considerable period New Zealand producers had a natural advantage over their competitors and on average could produce cheap commodities and earn at least an average rate of 'profit'. Although they had to spend more capital to overcome the barrier of distance to market (e.g. transportation and insurance) they had to spend much less than their competitors in building up the fertility of the soil by artificial means.
The second factor which worked to the advantage of the New Zealand producer was the social form of production. Most smallholders used only their own family labour and perhaps one or two regular wage labourers. Generally rural farm workers (many of whom were Maori) were paid low wages or worked in return for their keep. Labour costs were therefore very low. A comparison between NZ and UK costs of production in the following example shows how these differences in costs affects prices. 40
In this hypothetical example it costs a UK farmer £100 to produce one ton of butter against the NZ cost of £70 landed in the UK. These costs are made up as follows: in the UK case £80 constant capital (C) advanced for stock, fertiliser, transport, etc., against £60 in NZ. In the UK £20 is spent on wages, variable capital (V) compared with £10 in NZ. I assume that the rate of exploitation is the same; i.e.100%. Both UK and NZ workers spend half the day in necessary labour and half in surplus labour time, UK workers using more advanced machinery on less productive land than NZ workers. We assume an average rate of profit (20% of cost price CP) on the grounds that farmers would not invest capital for a lower rate of return. Now we can see that the price of production (PP) equals CP plus 20%. The UK farmer needs to sell his ton of butter at £120 to get his money plus average profit back, compared with a NZ price of production of £84. What we learn from this example is that the NZ producer is in the position to sell at the same price as the UK producer if demand exceeds supply and make the average profit of 20% plus an excess profit of 50%. If the market is over supplied he can cut his price to £73 and still make a 5% profit.
Under these circumstances New Zealand producers can get excess profits for as long as their costs of production are the most competitive. They monopolise agricultural production in New Zealand and are not faced with the normal inflow of capital which equalises the rate of profit in industry. They are at the same time fulfilling the specialised production of cheap raw materials for the `mother country' which, as I shall show, furthers the accumulation of capital in industry. However, the smallholders in New Zealand were like immediate producers elsewhere subordinated to a class of merchant bankers who advanced money capital on credit for the buying of land, means of production and means of subsistence. The interest payments on the credit advanced by merchant bankers to the smallholders therefore usually amounted to a significant portion of the potential profit.
In New Zealand this merchant banker class came to
control trade, and to some degree the buying and selling of land - the
notorious `land companies'. While some of these charges, such as the price
of raw materials or handling and freight charges were standard, the proportion
of the farmer's profits deducted varied inversely to the differential rent
of the land within New Zealand. That is, the better the land, the higher
the profits and the less the farmer would be in debt to the merchant banker
class. What this meant was that the smallholders in New Zealand did not
form a single uniform class of petty producers; they were differentiated
into rich, middle and poor peasantry according to the rent of their land.
The Differentiation of the Peasantry
In my discussion of the average differential rent of New Zealand land over the average UK rent I ignored the consequences of differential rent within New Zealand. Using the example of NZ and UK cost prices and prices of production above I will demonstrate how the differentiation of the peasantry may have occurred within New Zealand.
assume for the purpose of this example that a ton of butter fetches £100 landed in the UK. Assuming too that the proportion of total profits deducted as interest on merchant banker credit is fixed at 15% of total capital advanced or cost price, the real return to the rich peasant is: actual price £100 less 15% of CP £92.50, an average profit of 20% plus 64% excess profit; middle peasant: actual price less 15% of CP, £89.5 an average profit plus 4% excess profit; poor peasant: £100 less 15% of CP, £86.50 which is less than cost price of £90. Some consequences of this differentiation of the peasantry are clear enough, others less so.
First, it is obvious that the rich peasant with a profit of 84 per cent can rapidly pay off his (sic) debts and accumulate capital to invest in either improving his efficiency or buying more land. The long-term consequence of this was the establishment of rich capitalist farmers linked to the merchant-capitalist class which became the basis of what we can call the 'national bourgeoisie'. This class was able to build upon its initial advantage of high differential rent to aggregate land holdings and concentrate capital investment in agriculture, in banking, and later in industrial manufacturing. The middle peasantry while making an average profit tended to maintain its position or move up into the rich or down into the poor peasantry depending on the circumstances.
In the case of the poor peasantry however, the constant pressure of debt tended to force them to cut the cost price by reducing capital investment and increasing the rate of exploitation of family labour. A less obvious consequence of this attempt to cut costs by increasing the rate of exploitation was that the merchant class, and to some extent the UK industrial capitalist, were able to benefit from an 'unequal exchange' of value. This is simply another way of sayíng that the industrial and merchant capitalist classes both stood to gain from holding down costs of production as much as possible. If, in order to compete, the poor peasant had to drive his farnily to long hours of surplus labour in conditions of poverty, the merchant still got his interest, and the industrial capitalist the benefit of extremely cheap labour. If, on the other hand, the debt burden was too great and the peasant family could not survive on supplementary wage labour, they were forced of the land which reverted to the land company.
Second, while the differentiation of the peasantry into rich middle and poor peasants followed the pattern just described, it did so against a long-term trend which gradually reduced the natural advantage of `founders' rent'. As natural fertility declined it had to be replaced by artificial means requiring a rising constant capital expenditure. This drove up the cost of production say (in the example) from seventy to ninety pounds. Since the industrial capitalist in his desire for cheap commodites is unmoved and will not raise the price from £100, and similarly his merchant capitalist cousin still insists on his fifteen per cent of capital advanced, the middle peasant finds himself selling his ton of butter below cost price. This long-term tendency therefore had a dowvnwards squeezing effect on the rate of profit, increasing the proportion of poor peasants getting further into debt and abandoning the land. This in turn allowed the merchant bankers together with the rich peasants to expand their land holdings and reinvest their accumlated profits into increasing agricultural productivity, raising the organic composition of capital and further equalising the price of production of New Zealand and British agriculture. Thus the initial advantage of New Zealand's specialised production in providing raw materials for the British economy became progressively reduced.
The third advantage of agricultural production in New Zealand was that of state aid in holding down costs of production once the initial advantages of natural fertility and cheap labour had lost their competitive edge. As we have already seen the replacement of natural fertility increases capital and labour costs. This is particularly true if the small size of land holdings Iimits the scope for economies of scale. As rising rents were reflected in land values and reduction in profits, there was a tendency towards a movement of capital out of agriculture and a stagnation of production, unless some means of holding costs was found. The solution to this problem was for the state to intervene and heavily subsidise the capital costs of agriculture by providing cheap credit, public works to reduce transport and freight costs, and state agencies for the marketing of produce.
By means of state aid of this sort New Zealand farmers
have been able to get the benefit of a growing technical composition of
capital in employing the most sophisticated and scientifically advanced
techniques of production while at the same time holding down the value
composition of capital and thus their costs of production. By drawing on
state revenue, the competitive advantage of New Zealand agriculture was
artificially maintained in the interests of both the 'national bourgeoisie'
who were able to accumulate sufficient capital to embark on the take-off
of domestic manufacturing, and the British industrial capitalists who were
able to keep their supplies of cheap foodstuffs. But while both local and
British capitalist classes gained from this arrangement the costs of subsidising
agriculture were shifted onto the colonial working class who bore the main
burden of the national debt.
The National Debt: `Capital Fallen from Heaven'
"The system of public credit i.e. of national debts…took possession of Europe as a whole during the period of manufacture…The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter's wand, it endows unproductive money with the power of creation and thus turns it into capital, without forcing it to expose itself to the risks inseparable from its employment in industry or even in usury." 41
The key role of finance capital in the 'development' of the New Zealand economy can be understood thus: numerous small investors (rentiers) put their money into loans raised by the New Zealand government to undertake the massive public works necessary to provide the 'infrastructure' for agriculture and later manufacturing. It is in this sense that Marx uses the term `primitive accumulation' to mean the turning of the money capital of small investors into a powerful source of productive capital in the hands of the colonial state. However, with the rise of public credit comes the taxation of the working class to pay off the debt:
"As the national debt is backed by the revenues of the state which must cover the actual interest payments etc., the modern system of taxation was the necessary complement of the system of national loans…Over-taxation is not an accidental occurrence, but rather a principle…as the best system for making the wage-labourer submissive, frugal, industrious…and overburdened with work." 42
The New Zealand national debt did require the over-taxation of the colonial working class. As the poet Fairburn has expressed it:
Smith
A refugee from the black country…
Is an English immigrant
Consider the curious fate
of the English immigrant:
His wages are taken frorn him
and exported to the colonies;
sated with abstinence, gorged on deprivation
he followed them: to be confronted on arrival
with the ghost of his back wages, a load of debt:
the bond of kinship, the heritage of empire. 43
As the story goes, Smith sells his Iabour-power to a British capitalist who pays dividends to the rentier who lends his money to the New Zealand Government for the purpose of public works. Later as an immigrant in the new colony, Smith finds work created by the public debt for which he as a taxpayer is now partly liable. So he, and the rest of the working class, pays the interest on the debt (plus the charges to the `financiers who play the role of middlemen between the government and the nation, and the taxfarmers, merchants and private manufacturers, for whom a good part of every national Ioan performs the service of a capital fallen from heaven'), on behalf of the 'people'. Disguised as a transaction between two 'nations', the doubly exploited English immigrant, having created the finance capital in the first place (`back wages') now pays the interest on the government loans needed to estabIish capitalist production in the country, so that he can offer his wage labour once more to create surplus value for local and British capitalists. We should now be able to see how this analysis of New Zealand's place in the world capitalist division of Iabour exposes the ideological pretensions of both conservative and liberal accounts of `development'.
First, the conservative view of the market as free of political interference is quite false. The market in New Zealand had to be established by the forcible destruction of Maori society and the sanctified law of supply and demand artificially created by the State. After the land had been expropriated and subject to state control, then the settlers could benefit from their `natural advantage' of conquest! And as we have seen one natural advantage was augmented by another, the monopoly of trade and credit by a class of merchant bankers who were able to exploit their natural advantage of cheap, low-paid family labour. Then when these market forces were no longer sufficient to keep agriculture competitive because of rising rents, the developing national bourgeoisie used the state to subsidise their costs in perfect accordance with the law of capitalist supply and demand. The finance capital originating in the London money market 'fell like capital from heaven' only because the New Zealand State could guarantee its security by means of the system of overtaxation of the colonial working class; a working class, largely of state-assisted immigrants employed in a protected secondary industry at that! What an extreme irony to find state interference revealed as the most natural force of all in the conservative scheme of all things natural. So much for the role of the market and natural advantage in New Zealand's 'development'.
The liberal view fares little better. Neither the Sutch version in which Britain exploits New Zealand, nor the Airey-Emmanuel modification in which New Zealand exploits non-European peoples, comes to terms with the class basis of exploitation and the class nature of the state. It is not a matter of international powers stakes, Britain versus New Zealand versus India. Once we understand how the world system works to syphon surplus value from periphery to centre to facilitate exploitation at the centre, we can trace the exploitative relations of classes within as well as across nations. Thus the Britìsh industrial capitalist plunders and exploits the Indian peasantry to accumulate `primitive' capital `dripping from head to toe with blood and dirt' so that he can in turn exploit British wage labour. Here the exploitation of the immediate producers in a colony furthers the exploitation of the working class in the imperial state, accelerating the growth of manufacturing and the expulsion of surplus capital and labour-power to the 'new lands of settlement'. The colonial capitalist class in New Zealand - farmers, merchants and later manufacturers - then set about exploiting the local peasantry and working class, accumulating part of the surplus value created in the colony, while the British manufacturers and financiers benefit from the cheap food supplies and the interest on the national debt.44
Yet this chain of exploitative relations within as well as across nation states appears to be one of exploitation between nations. Class relations become buried beneath the bourgeois notion of the distribution of wealth in which labour, capital and land struggle for their shares within each national economy. Thus, because both the British and New Zealand working class have relatively higher wages than the Indian worker, the impression is created that capitalists and workers in these countries share the benefits and privileges of the exploitation of the Indian people. Add to this the liberal conception of the state as neutral arbiter between classes and representative of the national interest, then the national debt is seen as something which benefits all.
Since it is the colonial state which plays the key
role in economic development, all the classes in the colony become dependent
in one sense on state spending, and there arises a strong consciousness
of nationalism overriding that of class. It can easily be seen why the
liberal version of national development has come to dominate both the popular
and scientific ideology of the country. I turn in the next chapter to the
interactions between classes, ideology and the state, but before I do,
it is necessary to make some general conclusions about New Zealand's 'development'.
Conclusions: Dependent Development
The establishment of New Zealand as a primary producer in the world division of labour in the l9th century determined the course of its future 'development'. This development rather than taking any independent form became extremely dependent upon the external links of the economy with British and other imperial powers. In the first place, British capitalists dominated the production of primary products from abroad through their control of finance capital (both private banks and state Ioans) and of trade (transporting and marketing) and as I have shown profited from this relationship. Yet though production was confined to a narrow range of primary products, the combined effect of fertile land, cheap labour and state subsidies provided sufficient surplus value to satisfy the British capitalists. It also allowed the colonial bourgeoisie to accumulate enough capital to invest in raising agricultural productivity and to establish a domestic import-substitution manufacturing industry.
At this point in New Zealand's `development' conservatives talk of the take-off of industry and a demand-generated self-sufficient growth of the domestic economy. Liberals talk of the beginnings of 'econonmic nationalism' to be furthered by policies designed to insulate the primary sector from foreign credit and market instability, and to protect domestic manufacturing from competition. In reality, the growth of a protected secondary manufacturing sector consolidated the dependence of the economy on its artificially narrow agricultural base. For the lack of any major raw material or energy sources suitable for capital goods production made manufacturing dependent upon the foreign exchange earnings of the primary sector for the import of capital goods and raw materials. Then, once the local market was established, it opened up the possibility for a more extreme form of dependence in which foreign capital not only had control over production by means of finance and trade, but was able to invest directly in domestic production. Add to this the growth of the state sector in the post-war period and you have a flimsy three-tiered economic structure resting on the extremely unstable and vulnerable agricultural base.
I can conclude that the initial material basis for rapid capital accumulation in New Zealand, natural fertility, was always a very fragile foundation on which to build a developed capitalist economy. The experience of 'favoured development' - of rapid growth, and rising real living standards, and of the transition from colony to nation - was therefore the illusion of a short-lived epoch, one which can only be explained in terms of New Zealand's highly specìalised role in the international division of labour. But it was more than an illusion because it generated a whole social structure, (of classes, of ideologies and of politics) which is real enough in its consequences in shaping the country's future 'development'.
"The specific economic form in which unpaid surplus-labour is pumped out of direct producers, determines the relationship of rulers and ruled, as it grows directly out of production itself, and in turn, reacts upon it as a determining element. Upon this however, is founded the entire formation of the economic community which grows up out of the production relations themselves, thereby simultaneously its specific political form. It is always the direct relationship of the owners of the conditions of production to the direct producers - a relation always naturally corresponding to a definite state in the development of the methods of labour and therefore its productivity - which reveals the innermost secret, the hidden basis of the entire social formation, and with it the political form of the relation of sovereignty and dependence, in short, the corresponding specific form of the state. This does not prevent the same economic basis - the same from the point of view of its main conditions - due to innumerable different empirical circumstances, natural environnnent, racial relations, external historical influences, etc. from showing infinite variations and gradations in appearance, which can be ascertained only by analysis of the empirically given circumstances" 45
By taking the 'empirically given circumstances' of New Zealand's semi-colonial development we can show how the 'innermost secret', the 'hidden base of the entire social structure' are the relations of prodruction established in the colony. Despite the 'variations' in natural environment (climate and fertility); racial relations (the destruction of Maori society); external historical influences (ties with British imperialism) which at the level of 'appearance' are taken as the 'special case', New Zealand's development is determined in the last instance by its semi-colonial role in the capitalist world system. But onto this economic base 'is founded the entire formation of the economic community', in particular the relationship between the 'rulers and the ruled', which in turn 'reacts upon the economic base as a determining element'. I now turn to the analysis of the way in which the 'economic base' and the 'social superstructure' are connected within the framework of tlne whole social structure.
The origins of New Zealand society as a white-settler
colony in which four distinct social forms of production - domestic, Maori,
peasant and capitalist - came together, is my starting point for the analysis
of social structure. I stated in the Introduction that social structure
is made up of an economic base and a superstructure, the first concerned
with the production of surplus value and the second with the reproduction
of classes. Social structure therefore consists of class relations in two
spheres; that of production - the relations between the class that owns
or controls the means of production and that which works to produce surplus
value at the level of the economy; and that of reproduction - the relations
between classes in the struggle for the control of the distribution of
the product, politics, and the control of ideas, ideology. It follows from
this conception of class, that a key area of class struggle is that over
the concept of class itself.46 The
marxist concept of class is a critique of capitalist social relations and
a threat to the reproduction of these relations. The bourgeois concept
of class is part of bourgeois ideology suppressing working-class consciousness
of class exploitation through the denial of class relations of production.
I look first at the struggle over the concept of class.
The Concept of Class
The question of social class has recently re-emerged as a matter of public debate in the 1970s with the new awareness of growing inequality.47 As we would expect, however, the terms of the debate are limited by the traditional views of class put forward by the various bourgeois scientific theories in the past. We should familiarise ourselves with the essential ingredients of these theories, and in particular the historic debate between Marx and Weber, before discussing the question of social class in New Zealand. The classic conservative view of the market in which individuals cornpete as equals excludes consideration of any distinct social groupings such as classes. The nearest it gets to class is the concept of occupational strata in contemporary American structural-functionalism.48 These strata do not reflect group characteristics, they are individuals categorised according to ability and reward. It follows that if there are no groupings of individuals with conflicting class interests, the State and culture must reflect the general interest as a consensual set of cultural values. The role of the State is to provide the legal framework and political guarantees for individual competition free of interference or constraint. Individuals come together in pressure groups to advance their interests by influencing government policy through elections and lobbying. In principle all individuals and groups have access to these forms of political influence so that the distribution of political power follows that of the rnarket model e.g. power reflects ability.49
The liberal version of bourgeois ideology does recognise the concept of class at the level of distribution relations. Speaking historically for the interests of the petty bourgeois it is perfectly aware that certain groups are disadvantaged in the marketplace. Definite classes can be identified in terms of amounts of income or wealth, social status and political power. Nor did petty bourgeois theorists miss the connection between economic disadvantage and political disenfranchisement. Unlike the conservatives the liberals argue that rich and poor, black and white, male and female are classes whose economic differences are the direct result of concentration of political power in the hands of a capitalist elite who promote their own dominance as the natural result of market forces. The State, according to the liberals, presents itself as neutral, though acting to protect the privilege of the elite. The solution to the problem of unequal power and the existence of economic classes is therefore for the deprived classes to mobilise their common interests and through a struggle for political representation, redistribute the social product more fairly.
Against these two versions of bourgeois ideology of class we have the Marxist critique of class where relations of production, politics and ideology, are all aspects of class struggle between a ruling class and subordinate class. Marx rejected (as did the petty bourgeoisie) the classic bourgeois concept of the market in which individuals competed freely. Individuals were already assigned to classes with or without the means of production. Against the conservative view of the State as neutral, it was shown to have actively dispossessed the peasants of Europe and the New World, accumulating their natural wealth in the form of capital. Moreover, the State then provided guarantees for private property, preventing the dispossessed classes from expropriating back their property, passing punitive legislation to force wage labour to work. But the liberal view of class is no more correct, since differences in income, status and power are derived ultimately from relations of production. Regardless of the distributional share of income going to the producing classes workers, peasants or petty bourgeoisie, this share is limited by the requirement of the dominating class to extract a surplus from their labour.50
The essentíal differences between the bourgeois and Marxist conceptions of class were expressed most clearly in the work of Marx and Weber, and it is to this classic debate that most discussions return. Since there is still considerable misunderstanding of the two positions it is important to examine exactly what these are. Pitt, in his introduction to Social Classes in New Zealand, expresses the most common rnisunderstanding when he claims that the Marxist view of class puts exclusive emphasis upon the economic base of society, while the approach of Weber recognises the importance of status and power which are not 'reducible' to the economy.51 In fact, what each theorist understands by the term 'economy' is quite different.
Weber preserved the classical 'political economy' concept of the economy as consisting of production, distribution, exchange and consumption. For him, as for the classic theorists, the problem of class arose only at the level of distribution; that is, the shares of the product received by individuals and groups. While competition for economic resources gave rise to economic classes, competition for other scarce resources, social prestige and political influence produced classes of different status and power respectively. Though these classes might overlap - as they obviously did in the case of the bureaucracy which used its political power to manipulate the free rnarket - they did so only at the level of distribution. Weber's analysis then, led directly to the view of the State as being dominated by a power elite (bureaucracy) which controlled the economy, i.e. production, distribution and exchange, and thus the distribution of both economic and status resources.
Marx on the other hand, had a much rnore profound understanding of the 'economy'. For him, the economy also consisted of production, distribution, exchange and consumption. But while Marx too was concerned with the distribution of the product, he thought the distribution of the means of production much more important. Classes did not arise from the unequal distribution of the product, but from the unequal distribution (ownership and control) of the rneans of production. 'Economic' phenomena then, while not reducible to relations of production, are determined in the final analysis by these relations. It is not surprising then to find that income, status, and power classes are not identical and appear to be unrelated to the own ownership of the means of production, because none of these attributes of distribution causes the other. However, the only explanation which accounts for both the relations of production and the apparent independence of relations of distribution, is that which demonstrates how in the final analysis, distribution relations depend on production relations.
The second point of misunderstanding which needs clarification is the relative importance of status and power to the economy. Obviously in following Weber, status and power have considerable autonomy from the economy and are not determined in any sense by it. Some latter-day neo-Weberians have turned this complex argument into idealism by insisting that values which ascribe status come before, and therefore determine, economic and political behaviour. This is one extreme view of this point. The second extreme position is that of vulgar Marxism which allows no autonomy whatsoever to status and power and adopts a rigid economic determinism. It was against this late l9th century vulgarisation of Marxism that Weber reacted in asserting the relative autonomy of status and power. What we find, however, in re- examining Marx's position on this point, is a much more complex and sophisticated understanding of the interaction of class, status and power than is offered by bourgeois theory including that of vulgar Marxisrn. Here we have the basis of an explanation of both the ultimate determination of status and power by class, and the measure of actual autonomy of status and power which accounts for the appearance of complete autonomy in bourgeois ideology.
Before attempting to apply this analysis to New Zealand, we need to understand more clearly the concepts of ultimate determination, actual autonomy, and apparent autonomy. By ultimate determination I refer to the role of the State and ideology in reproducing social relations. Since production is based on relations of exploitation, the subordinate class must be reproduced in order to be exploited and this function is that performed by the State and ideology. For Marx, power corresponds to the State and status to ideology. The ultimate determination of both status and power is therefore given by their reproductive function. Yet for both to have this function they must appear to be autonomous of any class interest and stand for the general interest. And to achieve this they cannot be actually identified with the ruling class and require a measure of actual autonomy. Thus ideology is held to be a set of consensual values, a national culture, while the state is held to be representative of all interests. The degree of actual autonomy which is necessary for the State and ideology to appear autonomous of the ruling class and to reproduce successfully the exploited class, is termed relative autonomy. We can now turn to the analysis of the formation of a class structure in New Zealand and the development of particular forms of the State and of ideology which served to reproduce this class structure.
Developing Class Structure
In looking at the question of classes in New Zealand society, most writers have shown that they fail to understand the differences between Weberian and Marxist conceptions of class.52 Generally, when they are acknowledged, classes are defined in liberal terms according to income, status and power. Such definitions mean that classes come and go according to the state of the economy. As I have shown, Airey attributes the `lack of sharp class division' to the favoured economic development and state-channelled welfare provisions which enabled most groups to share equitably in the national income. It follows that, finding no great gaps in incomes, no major differences in status or life-style and no clearly articulated political elite, for most of New Zealand's history classes have been of minor and passing interest. When in periods of economic recession such differences become noticeable, we find talk of `emerging class structure'. In order to demonstrate the ideological function of this bourgeois conception of class in New Zealand history I will examine the formation of classes in the l9th century.
The liberal view starts with the assumption that the settlers brought only part of the British class structure with them. Beaglehole refers to New Zealand as the 'gift to the lower middle class'. Sinclair points to the absence of an aristocracy, and others note the relatively small industrial working class. The colonial class structure was dominated by the `middle class' which expanded to incorporate all other 'classes'. The most systematic defence of this approach is to be found in the recent work of Olssen.53 He regards the l9th- century class structure as complex. In the first place 'classes and problems of industrial society were left behind'. With the failure of the Wakefield plan to transplant the English rural class structure and the destrurction of Maori society we had the beginnings of an open class society made up of runholders and stationhands small farmers, miners, rnerchants, and the foreshadowing of the industrial class system of workers and capitalists. This complexity becomes confusìon when we are told that the urban and rural social systems "generated not only different systems of stratification but different political systems". The rural social system was one dominated by independent farmers, there 'was no rural proletariat, no oppressed peasantry', and `in most of rural New Zealand class politics did not intrude'. Only in the urban system, with the rise of manufacturing, did class politics emerge, and the `old world ills' take root in the 'new world'.
The conventional liberal model of the open class, frontier society in which the opportunities for economic advancement on the land, and later in commerce, manufacturing and state employment, prevented the formation of 'sharp class divisions', is of course one of a national society. The new world is contrasted with the old world; the pre-industrial rural society with the urban-based industrial society. As Marx explained in his discussion of the failure of the Wakefield system, capital and rent arise not by magic from the mere fact of capital investment and land ownership but require the active ingredient of labour power in the form of peasant and wage labour. The penetration of the capitalist mode of production began with the destruction of the Maori form of production, but the full integration of the new colony into the capitalist division of labour took some time.
The colonial period, which the liberals find so confusing, was in reality the period of transition from one pre-capitalist form of production to the capitalist forrn, in which we find remnants both of the Maori mode and petty commodity production. Viewed in this light, the apparent complexity and confusion of the l9th-century class structure, particularly the so-called rural social systern, can be explained as the articulation of four distinct class relations - domestic, Maori, family and capitalist, brought together under the dominance of capital in the form of finance and rnerchant capital. I shall now take this developing class structure, step by step to show how its apparent complexity dissolves when it is properly understood.
We shall start with the Maori form of production. With the land wars and the confiscation and alienation of the best Maori land, the Maori people were left living a marginal economic existence. The fact that most rural Maoris still owned their means of production and subsistence (land) meant that they could maintain some degree of self-sufficiency. They could not be classified as poor peasants since the form of land ownership was not individual. Nor can they be termed a rural proletariat because they were not entirely dependent upon wage labour for their means of subsistence. Nevertheless, this category of Maori people was exploited by Pakeha capitalists and petty capitalists, since it acted as a source of cheap labour. Maori people in rural areas could exist on lower wages than could European wage labour because they provided some of their own means of subsistence. They could be employed on a casual basis for lower wages as a form of reserve army of labour holding down the value of labour power. It is therefore appropriate to regard this class as a rural reserve army. Increasingly, with the development of manufacturing after the Second World War, this rural reserve army has incorporated into the urban free labour force. This pre-capitalist mode of production therefore, has since 1870 at least, contributed surplus value to the dominant capitalist class, first as a rural reserve army and later as a part of the urban proletariat.
Next we have the 'rural class system' plus the small farmers. To talk of 'urban' and `rural' in this way is to rniss the point. From the outset the runholders produced for the capitalist market - wool for Australia and later the UK. Their contribution to the world capitalist economy was rural only in the sense that livestock eat grass. After all, it was the rural produce that kept British urban workers at work, creating the profits that were in part lent back to the New Zealand Government so that it could build the roads and bridges to get the rural produce to market. What is more, as has now been well documented, the runholders and the merchants in the towns were often the same people, and later formed a colonial bourgeoisie in which 'rural' and 'urban' interests were hardly distinguished.54
This is why Olssen is right to distinguish between the runholders and the srnall farmers, even if he does so for the wrong reasons. We have no difficulty recognising the runholder-merchant class(es) as capitalist, whereas we have to be much more careful about the class position of the general category 'small farmer'. What is important about the small farmer is that he (sic) is essentially a peasant proprietor using mainly family labour. In that sense he belongs to pre-capitalist class now integrated into the capitalist world-system as a petty capitalist. Furthermore as I have argued, it was differential rent which largely determined whether he could escape the clutches of the rnerchant capitalist class and become a capitalist farrner. We can see from this analysis it is as meaningless to talk of a self-contained rural social system and class structure as it is to speak of a distinct rural political system. What else was the rural politics of the late l9th century concerned with if not with the struggle of the poor and middling peasants to use the State to escape the heavy oppression of the merchant-financiers? 55
It should be clear, then, that the `urban', `rural' distinction gives a false picture of the formation of the New Zealand class structure. What is important is the articulation of social relations in agriculture governing the production and accumulation of surplus value. The surplus value produced by domestic, peasant family and Maori labour power was appropriated by capitalist farmers and an increasingly fused merchant and agrarian capitalist class. This accumulation process led to the concentration of capital in agriculture and the development of the forces of production in that sphere. Accompanying this development of capitalist agriculture went the expulsion of the poor peasant and the further dispossession of the Maori reserve arrny. As a result the two basic conditions for the development of manufacturing were realised - an indigenous capitalist class and a free labour force. The shift in capital into domestic manufacturing brought about a limited development of the forces of production in industry as well as stimulating the growth of banking, commerce and the public service. Thus was laid the productive base for the development of the contemporary class structure. 56
In the l9th century class structure therefore, four productive classes - women, Maori reserve, the peasantry, and the working class - created value. What we now want to consider is the extent to which each of these classes fell under the domination of capitalist social relations, and contributed surplus value. The question of the extent to which these classes were exploited by capitalists is that of reproduction, the process of class struggle which determines the division of the value produced between the direct producers and the exploiters. This class struggle involves a contest between rival ideologies or perceptions of equality, backed up by force in the form of the political and legal branches of the State. As we have seen, usually, this struggle is unequal because the ruling class is able to dominate the producer class by means of its hegernonic ideology and its monopoly of state force. It is only when a counter-ideology raises a consciousness of exploitation in the producer class which is matched by a political power capable of overcoming the ruling state that revolution occurs. We shall deal with each of these producer classes in turn.
Ideology, State and Class Struggle
The economic basis of bourgeois ideology is that of the free market in which individuals are guaranteed the right to possess private property by the State.57 The variations, in theory, from conservative to radical, all have a common point of reference in the sanctity of private property. They differ only on the question of who is to be included as having the right to property. Thus the most conservative position reserves the right of property to those who accumulated their property in the period of primitive accumulation by conquest and trade. The liberal version speaks for the petty bourgeois and extends the right to property to the small entrepreneur by means of the state regulation of monopoly. It was a particularly forceful adaptation of the liberal version of bourgeois property right that became dominant in New Zealand. The radical version simply extends the liberal position of equal rights to property to the ownership of labour power, having the effrontery to regard the possession of labour power as a right of the producer, including the right of its withdrawal. Of course such a radical extension of bourgeois rights to that of labour threatens the very basis of bourgeois property itself; it being nothing more than an accumulation of dead labour expropriated from the direct producers. 58 Nevertheless, despite this heresy at the fringe, bourgeois ideology in all its variations, presents a united front when coming into contact with a pre-capitalist form of production.
With the conversion of their land into a commodity in the form of private property, the Maori people remained as a productive class producing their own means of subsistence and supplying rural wage labour. Limiting ourselves to one aspect of social relations between Maori and capitalist forms of production, how did Maori rural workers perceive their relations with European employers? My argument here is that the rapid transition from communal labour to wage labour left Maori workers very aware of the exploitative relation between worker and employer. Because wage labour was being performed side by side with traditional labour, the former was probably understood to be made up of necessary and unnecessary labour. If this is correct then it would explain the resistance of Maori wage workers to increases in the intensity of work beyond the customary level. For in labour-intensive agriculture (given the length of the working day) it is the intensity of work which governs the rate of exploitation. By working at a customary pace during the normal working day, or by finishing a labour contract job as soon as possible, Maori workers would have been able to subvert the expropriation of much surplus labour-time. Since, however, the demand for labour was highly variable in agriculture, and the reserve army had its own means of subsistence, the necessary labour-time of Maori workers was much less than that of town-based European workers, and the employer could extract enough surplus labour to justify their employment. Not until the rural reserve army was forced into the urban proletariat by being deprived of its own means of subsistence would we expect to find any significant change in the attitude of Maori workers to unnecessary labour.
Having established tlie bourgeois right of property by right of conquest in New Zealand, subsequent state land settlement policy was merely the enactment of the liberal version of property rights. But while in Britain liberal democracy was a sop, the price paid by the industrial bourgeoisie for the support of the petty bourgeois in vanquishing the landlords, in the Colony liberal democracy became a 'revolutionary' tool in realising the petty bourgeois utopia of the 'small holder's democracy'. In Britain they got the vote, but in New Zealand they got the vote and land. How was the utopia realised? First the landless used their vote to displace the landed oligarchy from political power. As Sutch saw it, the oligarchy made the job easier by splitting on the free trade protectionism issue. The formerly deprived classes, the small farmers, manufacturers, and wage earners who stood to gain from protection, thereby gained the ascendancy over the merchant-banker-runholder olrgarchy, redressing the balance and redistributing land. 59 This is why the Liberal Government of the 1890s is regarded as the forerunner of the Labour Government of 1935, representing the interests of the landless and labouring classes, breaking down elite rnonopolies of land and capital and opening up opportunities for all to become petty capitalists.
Of course this liberal utopia was an anachronism based on a pre-capitalist peasant form of production made possible only by the special circumstances of the settlement of a new land. Getting established as a small farmer did not rnake one an independent producer free of class exploitation or freed from exploiting. To understand why this liberal ideology became so strong in New Zealand we need to explore its material basis. The failure of the peasantry to perceive their place in a chain of exploitative relations between the working class and the finance capitalist class can only be explained by the historical circumstances which shaped their consciousness of necessary and surplus labour-time. It has been observed that peasants who control their own labour and produce their own means of subsistence; are very much aware of surplus labour-time. They know how long it takes to produce those articles of family consumption, and how long it takes to produce the surplus which goes in rent to the landlord. In this sense, peasants are seen to have a very good understanding of exploitation based on labour-time. In the case of the New Zealand peasantry, however, certain crucial differences served to mask the perception of exploitation.
While the New Zealand peasantry might still calculate that part of their labour-tirne going as payment for loans to buy land and means of prvduction, this part is not seen as surplus labour-time with any basis in class exploitation. For the peasant is a freeholder with legal title to his property so long as he meets his mortgage and other debts. He sees the interest on the mortgage as a necessary price of becoming a freeholder even if the labour-time used up to meet his obligation raises the total Iabour-time (i.e. the working day) to a level where members of the family work Iong and hard hours under conditions of extreme poverty.
Despite such conditions interest payments are not seen as surplus value for two reasons. First, as well as getting the freehold outright, the peasant gets the improved value of the land coming both from his family's labour and from the improved rent resulting from state subsidies to agriculture. The payment of interest is regarded as a necessary and legitimate cost unless a monopoly of credit causes interest rates to be excessively high. In this case the peasantry oppose credit as extortion or usury and agitate for state control. Just as the state land reforms broke the monopoly of land, so the State's breaking of the rnonopoly of credit restores the peasant's faith in the capitalist market and the ability of the small entrepreneur to compete without fear of monopoly. This explains why landless peasants in New Zealand were prepared to support apparently radical measures for land reforrn such as the Single Tax or even land nationalisation. Both these measures limited the right of freehold and taxed the improved value but were small sacrifices to make in return for the state's opening up of land for settlement and cheap credit. 60
For these reasons, the bourgeois ideology of 'possessive individualism' was given a powerful impetus by the freehold system aided by the State. The underlying reality of the smallholder's class position in the capitalist systern as a petty capitalist, exploited by imperialist and local finance and merchant capital and yet exploiting in turn the working class through state aid, was completely masked by the illusion of himself as an independent producer. And while the material basis for the reproduction of the peasantry became increasingly the taxation of the productive working class, the rural populism of the smallholders became the core of the state socialism which played such a key role in dominating the working class in New Zealand. In this way radical bourgeois attacks on the monopoly of land became a natural bourgeois conservatism in defence of petty bourgeois property rights in the face of the rising working class.
Conclusions: Fron Rural Populism to State Socialism
If the State could create the conditions for the development of capitalist agriculture it could not solve the problem of class conflict in the new colony by turning everybody into petty capitalist farmers. The establishment of secondary manufacturing required a wage-labour force. The State had first to ensure the separation of wage labourers from their means of production, and second to maintain the reproduction of a working class. The function of reproduction took on a new dimension in the1880s and1890s when the deteriorating labour conditions produced a growing conflict between workers and employers - the 'labour problem'. The populist ideology of the peasantry proved insufficient to contain the challenge of socialist ideology which put forward the right of free labour to organise and enter into collective bargaining with employers. Of course, this extension of bourgeois property right to include the right to withdraw labour ran directly counter to the capitalist requirement that workers should compete with one another (according to the sacrosanct law of supply and demand) so as to hold down wages as much as possible.
The potential power of a workers' 'combination' (or general strike) posed such an unprecedented threat to the 'free market', that the State was forced to intervene to control the class struggle on behalf of the capitalist class. The most pressing problem facing the State was that of reconciling its domination of the working class with the need to rnaintain its apparent autonomy or neutrality. On the one hand the State needed to act decisively to prevent the labour movement from becoming an organised revolutionary movement; on the other it had to find some ideological cover to present this action as in the national interest. The Iogic of reproduction required the State to suppress class struggle at its roots in the daily struggle between wage labour and capitalists over the shares of value produced and to divert this into state-managed industrial relations. This it did in 1894 with the IG&A Act in advance of any other capitalist state in the world, establishing a system of wage regulation which forced the labour movement to restrict its field of class struggle to the legal channels laid down by the State.
To justify these radical 'state experiments', colonial politicians like Stout and Reeves produced a new brand of progressive liberalism designed to appeal to those traditions of moderation, respectability and deference already firmly established in the labour movemerit. On the classic bourgeois premise that land, capital and labour all contribute to the production of wealth, the progressives extended the rural populist arguments for state control of land and credit, to the state control of the monopolies of capital and labour, or 'state socialism'. The State as the instrument of the 'general will' or 'community' would intervene in the relations between labour and capital to prevent the monopoly of power by either faction. Thus the formation of social classes and the conflict injurious to the community as a whole would be prevented and a fair and reasonable distribution of the national income ensured. Stout produced some polished advertising copy for the new brand of liberalism:
"I assume that the state, as such, is an instrument for the political, economical, and moral advancement of the people constituting the community… hold that, here and now, the great organism of the State has a mission, and that it must look after the moral well-being of the people. Its one exhaustible function is to produce good citizens - perfect in physical health, complete in mental attainments, and beautiful in their lives and conduct." 61
This new state socialist version of bourgeois ideology provided the perfect rationale for the development of a strong capitalist state capable of reconciling its contradictory goals. On the one hand it could manage class conflict by incorporating the working class into its political-legal apparatus, and on the other present its intervention as in the national interest. So long as individuals could see themselves as petty bourgeois with property rights, protected from the monopolies of land, credit, labour and capital, they could take advantage of economic opportunities as self-employed, skilled craftsmen, clerks, public servants or professionals, and achieve a respectable status. The appeals of state socialism, of the peoples' state seemed in perfect harmony with the ideal of 'good citizens…beautiful in their lives and conduct'.
The problem of reproducing the working class in New
Zealand was therefore resolved for the time being by these bold experiments.
The State acting for the community stepped between the monopolies of labour
and capital to introduce 'state socialism'. This new form of domination
worked not only to limit working-class consciousness, it made any form
of organised working-class resistance to this domination illegal, forcing
the labour movement to stick within the framework of parliamentary democracy.
By these means the State was able to ensure the continued reproduction
of the working class and within it the oppression of women and Maori workers,
so creating divisions between men and women, pakeha and Maori, and between
the radicals who stepped outside the legality of industrial relations and
those who remained loyal to the State. In the following Chapters I shall
examine this reproduction process in detail in order to assess its limitations
in the present epoch of crisis. Before doing so, however, it is necessary
to analyse the essential features of the contemporary class structure.
5 Contemporary Glass Structure
The developrnent of a protected import-substitution manufacturing sector, especially during the rnomentous decade frorn the mid 1950s to the mid-1960s, saw the working class emerge as the main producing class. Its emergence was slow because of the lack of competition among firms producing for the domestic market. Firms could produce profitably without the need to invest heavily in technological improvements. The result was a relatively slow developrnent of the forces of production reflected in small plants and an occupational structure with a high proportion of unskilled and semi-skilled manual workers. But despite this slow development, the New Zealand class structure exhibits the main characteristics of a mature, advanced capitalist economy. In this chapter I attempt to analyse the contemporary class structure in New Zealand in terms of its objective tendencies towards maturity before rnoving on in later chapters to discuss the relations between class, politics and ideology.
The classic Marxist view of a maturing capitalist class structure is of the growing polarisation of the two main classes - capitalist and wage-labour - and the steady elimination of all other classes such as the petty bourgeoisie. Polarisation occurs as the result of the development of the forces of production and the mounting contradiction between the socialisation of the labour process by the working class, and the private expropriation of surplus value by the capitalist class. The characteristics of a maturing class structure are the increasing:
(a) immiseration of the working class,
(b) concentration and centralisation of capital
in fewer hands,
(c) polarisation of the two rnain classes,
(d) contradiction between social forces and class
relations creating the `objective' conditions for revolution.62
The Immiseration of the Working Class
According to Marx the immiseration, or impoverishment of the working class is something which develops side by side with the accumulation of capital. In the first place as capitalism develops the forces of production and the productivity of labour power it expels living labour on to the slag-heap of the industrial reserve army as a surplus population. This surplus population experiences an absolute impoverishment. Second, while the real wages and living standards of those who remain in employment may improve, they experience an inevitable relative impoverishment because the capitalist class allows this improvement in living standards only as a condition of its own greater enrichment. Third, underlying both forms of material impoverishment lies a deeper form of misery, where the worker, regardless of his or her wage, suffers the degradation of alienated labour.
"The greater the social wealth, the functioning capital, the extent and energy of its growth, and therefore also the greater the absolute mass of the proletaríat and the productivity of its labour, the greater is the industrial reserve army…within the capitalist system all methods for raising the social productivityof labour are put into effect at the cost of the individual worker; that all means for the development of production undergo a dialectical inversion so that they become means of domination and exploitation of the producers; they distort the worker into a fragment of a man, they degrade him to the level of an appendage of a machine, they destroy the actual content of his labour by·turning it into a torment, they alienate from him the intellectual potentialities of the labour process in the same proportion as science is incorporated in it as an independent power;:…they transform his lifetime into working time, and drag his wife and child beneath the wheels of the juggernaut of capital… Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, the torment of labour, slavery, ignorance, brutalisation and moral degradation at the opposite pole. 63
The orthodox liberal approach to class in New Zealand rejects any interpretation of the condition of the working class in these terms. In the first place, the working class has experienced an undisputed rise in real wages and living conditions. In the second place, the development of a reserve army in this country is not a permanent feature. For most of the post-war period the working class has experienced full employment. But as we will see these facts are quite compatible with the immiseration of the working class. Rising living standards and full employment can be explained as the particular conditions of capital accumulation in a dependent secondary manufacturing sector within one small country.
First, the expulsion of living labour into the surplus population as a long-term trend is not evident in New Zealand for two reasons. As we know, protection removes competition as a stimulus to the development of the forces of production and the productivity of labour and therefore reduces the expulsion of living labour. As well, any slackening of employment that took place in the manufacturing sector was compensated for by a policy of full employment and expanding job opportunities in the public service.
Second, those employed in the productive sector (together with those in non-productive jobs) experienced a rise in the historic and moral component of the real wage and were allowed to improve their living standards because the upper limit set by profits continued to rise under conditions of protection, and the lower limit also moved upward in the absence of a reserve army. Both 'facts' fail to contradict the underlying process of immiseration and are in reality a necessary expression of immiseration in New Zealand.
How then does the rising real wage of the working class increase their misery? The argument about relative immiseration is of extreme importance because it goes to the root of the problem of the production of value. We should therefore be very cleax about what is meant by the law of value, for otherwise we cannot understand the basis of relative immiseration.
It will be remembered that the bourgeois view of production is one in which labour, capital and land contribute as factors of production. These 'classes' then compete with one another for the distribution of the national product. If in New Zealand labour has been allowed a rising real wage over a century or more, then it seems clear that it has achieved its 'fair share' of increased production. What does it mean then, to say that workers have got a declining share of the national income? As I said in the Introduction, according to the law of value, under the capitalist mode of production wage-labour produces the value of its own labour power plus the surplus value which becomes the source of profits going to the capitalist and rent going to the landlord. Since the 'national income' is produced by wage labour there can be no talk of 'fair shares' at the level of distribution (see Figure 1). We can however, calculate the share of wage labour of value produced in terms of the rate of exploitation, or s/v - that is, the proportion of necessary labour time to surplus Iabour time in the working day. 64
As competition forces capitalists to use more advanced machinery to increase the productivity of labour power we find the rate of exploitation rising. This is because a larger amount of value is produced in the working day cheapening the value of the commodities needed to reproduce labour power so that the necessary labour time spent creating the value of labour power decreases and the surplus labour time spent creating surplus value increases.
The initial division of the working day is at A, the new division can be at B where all the new value created goes to the capitalist, or at some point between A and B, say C, where the new value is shared in the form of increased profits and increased real wage. Under conditions of rising productivity it is possible for the struggle between wage labour and capital to reach a compromise where both real wages and the rate of surplus value increase together.
While bourgeois ideology interprets rising real wages as labour's share of increased productivity and rising profits as capital's share (in return for greater investment in machinery etc.) the concept of relative immiseration means that the rising real wage is a lesser proportion of the new value added by labour power, than is the rising rate of surplus value going to the capitalist. Let us take the example of the rise in real wages between 1873 and 1940. We assume for the moment that the measure used here does represent a genuine rise in real wages (an assumption which is challenged in Chapter 8). In other words the rise means that workers can buy more commodities for the same amount of labour thus raising their standard of living.
A Marxist would argue that over this period the share of labour in new value created increased, but that as a proportion of the total value created, it fell. The grounds for asserting this are based on value theory and not measurable rates of profit. First, as the organic composition of capital increases (with greater investment of constant capital in machinery relative to variable capital paid in wages) the rate of exploitation must increase in order to maintain an average profit. This is because the capitalist calculates his profit as s/c+v or, the amount of surplus value produced with a given total investment. Thus the capitalist must retain as much of the newly created value as surplus value as possible to get an average rate of profit on his increased capital investment.65
A second reason for maximising the rate of surplus value and holding down the rise in real wages is that out of the capitalist's total surplus value he must deduct his expenses, the most significant of which is the wage and salary bill of the unproductive labour force of circulation, realisation and state workers (see the following section on the New Middle Class and Table 5.2) before making his profit. For these two reasons we can see why the capitalists share of the new value created must be larger than that of labour. There is however, yet a third consideration which bears on this point.
In the liberal view, rísing real wages and improved living standards are taken as evidence of the advancement of working-class interests. By remaining at the level of distribution however, this perception of class interest ignores the fact that rising real wages are a necessary condition of capitalist production as the organic composition of capital increases. Remember that the real wage corresponds approxirnately to the value of labour power; the value of the commodities that the productive working class must consume in order to maintain the use value of its labour power. As competition forces the capitalist to use increasingly advanced machinery so the levels of skill and energy necessary in production are raised. To reproduce more skilled and intensive labour power the productive working class has to expand its wage-basket to include more cornmodities and improved services: e.g. better diet, health and housing. Thus, rising real wages represent more than the gains of workers in the distributional struggle with capital over 'new' value insofar as they correspond with the value of labour power they represent a necessary condition for the continued exploitation of labour power by capital.66
Additional arguments which bear on relative immiseration include the role of the state in influencing the struggle over shares of new value and determining the real wage after taxation and redistribution. In the post-war period this factor has become crucial to this question since a large proportion of the real wage is spent in the form of the social wage on goods and services provided by the State. I take up this poínt in Chapter 8. It is also worth noting the importance of rising real wages as a means of raising aggregate demand in the protected import-substitution sector. This point is taken up in the last chapter.
The Ownership and Control of Capital in New Zealand
If there is some evidence of the growing immiseration of the New Zealand working class at one pole, is there also evidence of increasing concentration and centralisation of capital at the other pole? Of course the factors which limited the development of the working class are precisely those which have slowed down the centralisation and concentration of capital in New Zealand - i.e state protection of domestic industry. Nevertheless, these tendencies are still observable. The process of accumulation takes place as strong firms progressively drive out smaller or weaker firms. The scale of social capital is therefore concentrated in larger capitals at the expense of the smaller capitals, and centralised in the form of larger firms. Both processes are necessary manifestations of the underlying accumulation process which is characterised by an increasing organic composition of capital. For the purpose of showing how these tendencies are working in New Zealand I will treat the centralisation of production in New Zealand as part of a world-wide tendency of production to become increasingly 'internationalised'.
Sutch documents the extent to which the international centralisation of capital into the form of multinational firms has played a leading role in takeovers and mergers of firms in New Zealand. Some firrns have driven out competition and integrated production in certain fields from raw materials to marketing, as in the case of Watties. Others have diversified from a position of strength in one field of production to extend their operations over a wide range of industries. But in all cases these large firms have been dependent upon foreign controlled banks, or have merged their capital in joint production or marketing ventures with multinational companies. In every field of production from the processing of meat or the growing of timber to the production and sale of 'aspirins, films, face creams, biscuits, golf clubs, tyres and zippers', New Zealand firms have been integrated into the centralisation of capital on a world scale.67
While bourgeois econornists acknowledge the growing size of firms, they see this as the result of the competitive advantage of large-scale, capital-intensive production. But even though firms are gettiug huge, covering the world in their operations, this is not to say that the ownership and control of these firms is in the hands of a few rich capitalists, quite the reverse. The ownership of capital has been taken out of the hands of the l9th century family capitalists with the growth of public shareholding and the increasing participation of the State in the economy. The huge firms are run by managers who are responsible to their shareholders and are accountable for bad management. Similarly bureaucrats are answerable to the electorate for decisions concerning the use of state assets, as for exarnple, in nationalised industry. Rather than a growing centralisation of ownership of capital in a capitalist class as Marx predicted, there has been a progressive dilution of ownership of capital into the hands of the middle-class and even the working class. We are led to believe that the combination of large firms run by managers responsible to a mass of small shareholders represents the progress of economic rationality which allows both an efficient use of scarce resources and widespread profit-sharing. Modern industry has completed the task of turning every thrifty worker into a petty capitalist.68
Since social ownership is now so widespread it has brought about a separation of the ownership and control of capital. The function of control is now entrusted to a professional group of managers. Therefore the problem of centralisation or size for liberals is posed as one of power. So long as managers are responsible to owners economic rationality prevails. However, if too much power is concentrated in the hands of managers who are not subject to limits or checks on their power, then a managerial power elite arises. In several articles on the corrtrol of New Zealand industry, P.V. O'Brien has described such an elite.
Writing in 1976 O'Brien claimed that a small 'control group' of between one hundred and three hundred directors 'had the real say in New Zealand business decision-making'. This group was made up of men drawn from four distinct backgrounds. The first was the 'old families which had their origins in the merchant and entrepreneurial activities of the last century'. The second was the 'self-made' men who 'made it on their own' despite the Depression, lack of education or connections with the 'old families'. The third and fourth groups were professional careerists, about twenty lawyers and thirty accountarrts. Although the existence of this control group might be thought 'sinister', in O'Brien's view 'three factors show checks operate against the abuse of commercial power'. The group does not operate in secret; it is highly qualified and talented; and it is open to recruitment from below on the basis of rnerit even if those who join it are selected by the group.69
But these so-called checks, even in liberal terms, are no more than 'wishful thinking'. O'Brien ignores the clear historical evidence which shows that this control group is descended from the l9th century oligarchy. He assumes that the self-made men and professiorrals who have joined its ranks have won their places on merit and have not been handicapped by any particular social background, religion or type of education. But as Jesson has shown, the self-made men of the Depression and immediate post-war years, the Fletchers, Doigs and Kerridges, did not 'make it on cheir own'.70 They joined the oligarchy either by marrying into it, or by borrowing from other members of the oligarclry, to take advantage of the post-war economic expansion and favourable treatment from government to get their businesses established.
Nor are the lawyers, accountants and stockbrokers who have joined the control group drawn from all classes. They are a highly selected group drawn from a very restrìcted pool of talent.Those who are the exception to this rule merely prove that the group needs to be able to use legal and accounting skills in promoting tlreir control of business. Writing again in 1978, O'Brien had changed his mind slightly on the question of the `openness' of the control group. He now felt that the checks were less effective than he had thought and that the concentration of power was not desirable. 71 But he would be one of very few liberals to recognise the existence of a power elite controlling the New Zealand economy. Most see the threat not as a local power elite but as control by a foreign elite. Why is this?
The Foreign control of New Zealand firms worries liberals because they think the benefits of the national resources should go to the New Zealand public which owns these resources and not be exported for the benefit of foreigners. (Conservatives do not regard this threatened takeover very seriously however, since the actual shareholdings of foreign firms in New Zealand firms is not excessive in their view, serves a useful purpose, and can be easily checked by government regulations.72 ) But Sutch, who argued that the takeover could be stopped only by a popular challenge to the power of a New Zealand elite which was operating 'hand-in-glove' with international finance, was closer to the truth. For he had realised that what characterises the power elite is its international operations. Any attempts to check such an elite would have to draw on a popular nationalist movement directed at the overthrow of the representatives of foreign capital in this country.73
By separating the ownership from the control of capital, the liberal ideology poses the struggle for control of national resources as one between the public and elites - local or foreign. Capitalist social relations are transmogrified into a welter of interest groups struggling for power to control the distribution of economic resources. The difference between the working class and capitalist class is glossed over since the worker who saves and invests can become a capitalist. Control is exercised on their behalf by managers and experts together with governments and bureaucrats who are torn between the public-interest or a fair distribution of the reward to all groups and the national interest of the retention of national assets, and the tendency to monopolise power in the hands of national and international elites. But always the public, as the owners of capital and the owners of national assets are potentially capable of wresting political control from the power elite by means of the instruments of parliamentary democracy. In separating ownership from control, liberals separate economic class from political power and fail to see that the capitalist class which controls capital controls power.
The rnystification of class power rests on the separation of the legal ownership of capital from control over the production of surplus value. But the capitalist cannot produce surplus value unless he controls both the means of production and labour-power. And he can only do this if he controls enough capital to exchange for means of production and enough labour power to produce surplus value under historically existing conditions. This means that as the size of capital needed grows with the development of machinery, only those who control large enough chunks of capital can invest capital in production and make surplus value. This is why the concentration of capital must lead to a centralisation of the control of capital in fewer hands. Legal ownership of capital is neither necessary nor sufficient to ensure direct control over investment decisions. 74
While 'public' shareholdings in companies may provide large amounts of capital, unless they can control the decisions governing the investment of this capital they are powerless. The power of managers over shareholders cannot normally be challenged, since small shareholders (and even institutional shareholders such as Insurance companies) have the weakest claim on surplus value created. Petty capitalist investors are the last people to get their dividends after bank interest, managers' fees and allowances, share speculators arrd asset strippers have had their bite of the surplus value. It is therefore ludicrous to argue that legal ownership of small arnounts of capital is the same thing as control of capital. To paraphrase Marx, the only part of the company wealth which goes to the small investor is the company's liability.
It is even more absurd to claim that the public ownership of state assets amounts to a form of social ownership of capital. In the first place the State's economic intervention does not lead to the investment of nationalised capital to produce surplus value for the people. State assets and state employees are operated to provide subsidies to private capital. As I have shown, the working class taxpayer does not increase his or her share of the national wealth, but rather increases her or his obligation to carry the burden of the national debt. The taxpayer, like the small investor, is merely sucked into the expanding credit system which facilitates the concentration and centralisation of capital in the hands of the capitalist class. Rather than spreading or socialising the ownership of capital, the expansion of the credit system has centralised control of international capital in banks and other credit instituions which now dominate the circuit of capital.
In New Zealand the impact of international bankers
was felt in the rnid 1960s when the IMF forced the governrnent to begin
to reverse the protectionist measures of former governments and open the
'economy' to more direct penetration by international capital. 75
As a result, the centralisation process, which had been slowed down by
state protection, was progressively freed and the rapid growth of a number
of New Zealand firms in partnership with international capital in the late
1960s and the 1970s came about. Thus today a few key firms dominate the
circuit of productive capital in New Zealand, at the same time integrating
this circuit more completely with that of international capital and facilitating
the flow of surplus value abroad. It is this process which creates the
'control group' of no more than three hundred directors and managers who
make the decisions (along with the representatives of international banks
and firms) concerning the production of surplus value in New Zealand.
Polarisation of the 'New Middle Class'
With the universal immiseration of the working class at one pole and the centralisation of capital at the other pole, Marx expected the antagonisrn of the two main classes to increase in proportion to the decrease of intermediary classes. But as with both immiseration and centralisation, polarisation has its own bourgeois reflection which presents the two-class system as a one-class or no-class system.
According to the bourgeois liberals the working class has become middle class in income, status and power. Second, as we have just seen, the small class of capitalists has been replaced by the social ownership of capital in the middle class and management is open to middle-class recruits. Instead of a polarisation of the two main classes we have the opposite, a convergence or petty bourgeoisification into the new middle class to join the ranks of the old middle class of farmers and self-employed who are far frorn being eliminated by the development of the mixed economy. We therefore need to examine the material basis for both claims about the middle class. What is the new middle class, and why has the old middle class not been eliminated by the polarisation of the two main classes?
Much hinges on the idea of the middle class. If the bourgeois argument corresponds to the reality then the Marxist analysis of class is faulty. If, on the other hand, the new middle class is simply the ideological reflection of the development of the working class under conditions of advanced capital accumulation, then the concept of class polarisation is valid. The difference comes down obviously to the analysis of classes as distributional or production phenomena. The 'middle class' as a distributional concept is characterised as middle-income, middle-status and by their associated life styles. If enough wage and salary earners qualify in these terms and think and behave as if they are middle class, then they are middle-class. But in terms of relations of production there is no possibility of a middle class which does not own its means of production and the historical tendency is for the traditional middle class to be pushed down ínto the working class rather than for any new middle class to emerge. Who then are these people the bourgeoisie refer to as the middle class?
In fact the new middle class consists of the expansion of the working class into five relatively new areas of employment required for the continued production of surplus value. The first consists of the highly skilled technical-managerial strata which are concerned with the design, construction and maintenance of advanced machinery and electronics and the management of increasingly complex production processes. They are just as much producers of surplus value as are the traditional working class of manual, semi-skilled labourers. To separate these strata from the manual working class is to make a false distinction between mental and manual labour. Marx overcame this illusion by talking of the collective worker to include all workers within the division of labour involved in the direct production of surplus value, such as the'manager, engineer, technologist, the overseer, the manual labourer and the drudge'. The second category is that of service workers who provide a range of personal and public services in both private and state employment. Service workers form two categories depending on whether they create surplus value or not. If they work for a capitalist who profits from the sale of services they produce surplus value and are part of tlre productive working class, if they simply exchange services for money they are non-productive. I shall discuss the significance of this point later. The third category of the new middle class are the circulation workers employed by capitalists in banking and commerce to facilitate the distribution and exchange of commodities and services.76
With the expansion of the credit system this category has increased vastly in numbers. Associated with them is a fourth category of sales and marketing workers who are required to speed up the sale of commodities and services once they are produced. The expansion of this group in the advanced capitalist economy is explained by the need to ensure that the total circuit of capital from money advanced to money realised is as rapid as possible, since the time of turnover of capital is crucial in determining the rate of surplus value and hence the rate of profit. The fifth category is that of the state ernployees who perforrn numerous functions in the administration of the economy and in the reproduction of capitalist social relations. This category has also clearly, expanded rapidly as the need for state intervention in production and reproduction has become vital to the expanded accumulation of capital. As far as the bourgeoisie are concerned, all five categories of workers are distinguished from the working class on the basis of higher status and higher income as the result of skill or professional and technical training, and a superior standard of living or life-style.
Whìle bourgeois theory makes no distinction between a productive and unproductive middle class (for all private sector workers are held to be productive), the way in which this distinction is made by some Marxists lends much support to the bourgeois notion of a 'new middle class'.77 This view holds that because a large number of wage and salary earners are not productive of surplus value but are hired by capitalists to facilitate production, exchange, distribution and consumption and paid out of the capitalist's surplus value, then they should not be classified as members of the working class. It is argued that non-productive workers depend for their wages on the exploitation of the productive working class and that this introduces a basic conflict of interest between the two groups. According to this argument non-productive workers are placed in a contradictory class position because, on the one hand, they are opposed to the capitalist who exploits their labour to realise his profits while, on the other hand, they are opposed to any reduction in the rate of exploitation of productive workers. They must therefore constitute an intermediate or 'middle' class between capitalists and working class.
Though a superficially plausible argument, this view introduces a conflict of interest at the level of distribution as the basis for determining class interest. While it is certainly true that non-productive workers may gain increases in wages as the result of the increased exploitation of productive workers and may side with the capitalists in the struggle over the share of value produced, it is by no means certain that they do. For it is in the interest of the capitalist to reduce both productive and non-productive workers' wages as much as possible, although at this level of interest we are talking of the immediate interests of both types of workers constrained as they are by capitalist production relations. It is in the 'interests' of the non-productive workers to raise the rate of exploitation just as it is in the 'interests' of the productive working class to increase their wages. But what is much more important is their common class interest to end the exploitation of their labour power by the capitalist class. The fact that one group produces surplus value while another consumes it should not distract us from the fact that they are both exploited.
Both groups have been dispossessed of their means of production and assigned to productive or non-productive work under conditions not of their own choice. And while one group is essential in the production of surplus value, the other is just as essential in reproducing the conditions which make production possible. It is for this reason that the only consistent Marxist analysis of the distinction between productive and non-productive labour, must include both groups in the working class on the basis of their 'class interest' and treat any other differences in interest as secondary. Such differences are fostered by the capitalist system as means of dividing the working class ìn its opposition to capitalism. Attempts by Marxists to give theoretical credibility to these divisions merely make the job of the bourgeoisie easier.
If there is no basis in reality for the existence of a new middle class what about the continued existence of the old middle class? The fact that there are still many thousands of petty capitalist and srnall capitalist farmers and businessmen in New Zealand would appear to counter the argument of polarisation. Their existence can be easily explained however as the result of those forms of state intervention that have slowed down the concentration and centralisation of capital in New Zealand. State-aid to family farmers and protection given to small manufacturers has slowed down the rate with which many small capitalists are transformed into fewer large capitalists. But the process is well under way in agriculture and with the return to free market forces in manufacturing accelerating rapidly. The general tendency towards polarisation put forward by Marx as a necessary feature of the law of capital accumulation can be seen taking place in New Zealand under the particular conditions which characterise acummulation in a dependent economy. Just as the general tendencies of a maturing world capitalist class structure can be observed in the polarisation of the rising real incomes of the affluent working class of the industrial states and the persistence of pauperised peasants in the third world, so too in New Zealand the new middle class and the small farrner in no way contradict these trends.
Class Consciousness
If the basic tendency towards immiseration, centralisation and the polarisation of the two main classes is occurring in New Zealand as in any advanced capitalist country, why has this not led to the development of a revolutionary class consciousness? Does this mean that the objective conditions for the overthrow of capitalism are not yet sufficiently developed? Not at all. The failure of the revolution is the most rnisunderstood of Marx's views on class conflict. He at no time expected the capitalist class to expropriate itself and hand over power to the working class. Once certain basic pre-conditions had been met, which I will call objective conditions, the transition to socialisrn would depend on the development of working-class consciousness. Capitalism would not collapse, it would be overthrown by a revolutionary working class. But this would not take place untíl the vital subjective condition of a revolutionary consciousness had been realised.78
So far in this analysis of the contemporary class structure we have considered only the objective factors - the development of a mature class structure that sets the stage for revolution. This is simply to establish the fact that the continuation of capital accumulation rests upon the exploitation of the great majority of the population and its further irnmiseration. Therefore, objectively, the development of the productive forces, the socialisation of the labour process is in extreme contradiction with the fantastic wealth accumulated in a few hands. All the more reason then why the working class perception of this contradiction has to be ideologically distorted and physically repressed by all the means that the capitalist class has at its disposal. I now want to extend the analysis of the reproduction of the working class begun in Chapter 4 and apply it to the reproduction of social relations in contemporary New Zealand.
I explained earlier how the bourgeois ideology of possessive individualisrn was reinforced by petty commodity production on the land, and extended by radicals into a state socialism laying the basis for a pattern of state domination of the working class down to the present day. But the success of the capitalist class in winning over the working class rested in the first instance on commodity fetishism, the inverted perception of production relations as exchange relations. Because it was separated from its means of production the working class did not control the labour process and therefore did not perceive the appropriation of surplus value by the capitalist class. So all differences were perceived at the level of individual differences rather than class differences, and individuals were identified according to racial and cultural characteristics and as citizens of nations. Thus was established the link between mystified production relations and mystified relations as citizens of a national state.
It follows that the successful reproduction of the
working class must be based firmly on these mystifications by constantly
reinforcing the separation of individuals on the one hand, and their membership
of national, racial or sexual groups on the other. The conditions under
which the working class developed tended in themselves to perpetuate these
misperceptions. The protection of manufacturing guaranteed good wages,
and relatively small-scale production isolating productive workers in small
plants among non-productive workers, (clerks, bank managers, etc) and farmers,
integrating them into small-town social networks where the perceived differences
were ones of income, status and power, and, more significantly, of race
and sex. But these spontaneous ideological distortions of capitalist social
relations were not left to do their work unaided by the State. In the following
chapters I look in detail at the role of the State in reproducing the working
class.
6
Reproducing the Working Class:
Labour,
Race and Sex Relations
Conciliation and Arbitration
Industrial relations today is the logical evolution of the ideology of state socialism conceived in the 1880s and given legislative expression by the Liberal Government. Today the original Reevesite philosophy has been watered down and forms the bourgeois rationale for Industrial Relations in a mixed economy which has long overcome the problems of capitalism. In the 1890s the problems were still fresh and the stakes more clearly seen:
"Faced with social problems, industrial discontent and a more militant trade unionism at the close of the '80s, liberals in New Zealand revealed the same uncertainty as elsewhere. Stout passed from an extreme anti-state individualist radicalism to invoking the state as the embodiment of the community, thus taking the path towards fascism." 79
There arose a new state interventionist liberalism to control the 'labour problem', enacted principally in the Industrial Conciliation and Arbitration Act of 1894. Henceforth the State would mediate between big capital and big labour in the community interest to prevent either gaining a monopoly of power. Both unionists and employers had misgivings about whose interests would be served by the Arbitration Court, the unionists fearing the law as a 'leg iron' hampering their right to withdraw labour and enter into collective bargaining, the employers fearing state interference with the free labour rnarket.
In the case of the employers, their initial suspicions proved unfounded when it became apparent that the Court worked in their favour, holding down wages in a period of labour shortage. Once established:
" the general tendency has been for arbitration to be extended from its essentially experimental beginning in a particular set of circurnstances to a more all-embracing system within which all industrial activity must move, with wider effects on the whole life of the country." 80
Having been persuaded to accept Arbitration after the defeat of the Maritime Strike in 1890, the fledgling labour movement now found itself committed to an institution which not only held down wages, but prevented any challenge to the wage system itself. Attempts by sections of the labour movement to withdraw thereafter met with a united front of employers, the State which prevented strikes and gave police protection to strike-breakers, and the 'continued faith of many trade unionists in arbitration'. When the need arose the Act was strengthened to outlaw any form of labour rights. According to Airey, the Public Safety Conservation Act of 1932 and the Emergency Regulations of 1939 and 1951:
"May be regarded as a completion of that aspect of the original decision of 1894 that represents, not the strengthening of the bargaining power of unions, but the institution of a complete framework, resistant to social change, and the idealising of the state as the counter to class struggle." 81
By 1951 and the confrontation between the Holland Government and the trade union movement, the system had already taken on a "considerable resemblance to Mussolini's corporate state and to Hitler's Labour Front". With the changes in industrial regulation since 1951, and the proliferation of wage controls in the 1960s and 1970s, the role of the State in controlling class struggle has becorne a key mechanism in reproducing the working class and manipulating its share of the value produced.
In the last four years the National Government has introduced a number of additional controls over labour designed to neutralise completely union resistance to cuts in wages and intensification of work. They include: a virtual elimination of the right to strike for both private and state employees through the redefinition of a strike to include any form of stoppage or protest action (such as overtime bans, or go-slows) against employers, or any social, environrnental or political action which the Government, or any member of the public, considers to be against the 'public interest'. In the words of one trade unionist: "Our present legislation seems to have taken the most repressive features of British legislation this century, most of which have since been repealed, and lumped them together without any concessions recognising the rights and role of trade unions". 82
It is the outrage of liberals in the face of the union bashing attitude of the present National Government that demonstrates how the industrial relations system still acts as a leg iron of the labour movement. They are completely incapable of understanding that under conditions which force the capitalist class to reduce real wages the 'traditional rights and role of the trade unions' accorded to the working class by the bourgeoisie can be withdrawn overnight. Since the liberal ideology and its spokespersons have had an important role in limiting the development of working-class consciousness in New Zealand we should look at it more closely.
The orthodox liberal view of industrial relations from Reeves onward, sees the success of industrial relations in terms of the subordination of class conflict in the interests of the 'community'. However, the experience of the liberal tradition has been formed over a period of rising real wages when the success of índustrial relations had more to do with the pay packet than any reconciliation or moderation of class struggle. Woods, writing in 1968, could say that: 83
"The New 7ealand industrial relations system is associated with one of the lowest average levels of time lost through work stoppages in the world. It is also associated with possibly the highest standard of living at wage-earner level in the world, and with a high level of trade-union membership."
Yet it would be altogether too simplistic to argue that affluence brought about industrial peace and that the Industrial Relations system introduced in 1894 had nothing to do with creating those conditions for rapid growth and high wages. For it is precisely the State's control of the labour force within a system of legal constraints which allows the capitalist class to take advantage of a disciplined and docile working class. The labour force becomes organised from. 'above' by the Federation of Labour, hampering the breaking away of ill disciplined splinter movements. The institutionalisation of wage bargaining within the framework of conciliation and abitration by means of regular wage orders allows capitalists to keep a share of the newly produced surplus which is sufficient to maintain the rate of profit. In perfect harmony with the workers immiseration, the trade union movement becomes an instrument for holding back rising real wages in the productive working class so as to allow enough surplus value to be allocated to the expanding non-productive working class without putting pressure on profits.
But while the trade union movement works so successfully in times of rising accumulation, as for example the 'fifties and early 'sixties, it is rnuch more effective in reproducing the working class and limiting its consciousness in periods of depression. Such is the strength of the liberal illusion that trade union rights and freedoms have been won by workers rather than conceded by capitalists as a means of controlling the working class, it sees attempts to withdraw these rights as the union bashing of conservative politicians and not the necessary result of intensified class struggle in a period of crisis. In a period of growing contradiction between social production and private appropriation, liberals hold back the political development of the trade unions by encouraging them to rescue their own 'leg irons' frorn the fire of conservative politicians bent on destroying unions as well as the liberal traditions.
Thus in commenting on the record of the last National Government, Woods lamented that National chose to bring forward the "restrictive and hostility-provoking side" of its industrial relations policy rather than its "constructive proposals for joint consultation, worker participation and training". 84 The possibility of National attempting to manage the working class in a period of crisis by advancing its soft options of consultation, participation and training, is just too unbelievable to contemplate. It is one thing to put forward these options as capable of resolving class conflict, and quite another to put them forward in a period of intensifying class conflict. In the first place, consultation and participation do not allow any genuine control of the means of production by workers. They simply foster the illusion that capitalist firms can consider the interests of their workers before their own interests in profits. What is rnore, the only examples of genuine workers' control have occurred when capitalists have gone on strike, abandoned their firms and their workers, rather than make a loss.
What is not understood, is that capitalist states do not wilfully challenge the power of che working class, they have no choice in the matter. Under conditions of declining rates of profits, when wages must be cut severely to restore profitability, the liberal niceties will no longer work. The loyalty of the trade union movement to the industrial relations system is based on the ability of that system to 'deliver the goods'. As soon as the State begins to cut wages this loyalty will be tested. While the trade union leadership may hold firm and try to get the membership to accept 'social contracts' in the national interest, sections of the rank and file will not. It follows that attempts to hold any firm control over the mass of the working class through the leadership will be useless. New ways of disciplining workers will be unearthed in the many statutory precedents and pressed into service. Every possible method of limiting the development of an organised working class resistance to the cuts has to be found not by choice, but by necessity. Meanwhile the liberal 'leg iron' prevents the working class from breaking with its Ioyal tradition.
The Politicisation of Work
The success of liberal industrial-relations policy is explained by several factors. 'the first is the protection of manufacturing for foreign competition which has allowed high wages to be passed on in prices, and profits to be invested in new fields of production rather than in increasing productivity. This has meant a high-wage working class in small-scale labour-intensive workshops, a situation which works against the development of a working class consciousness. So long as the rate of growth (accumulation) continued to rise, generating an expanding labour force and full employment, the appearance of income equality within the market-place was maintained. Avenues of opportunity presented themselves. Working-class children could improve themselves by education and go into a white-collar occupation, a profession, the public service, or into business.
Within this setting, the State as the neutral instrument of the community helped to provide equality of opportunity and break down any group's monopoly of power or resources. When the periods of boom have been halted by slump, these have never been enough to shake the faith of the working class in the state system of arbitration. The employers and the state could always count on the loyal majority to isolate and suppress the militant fringe.85 The most dramatic confrontation between the State and a militant union in 1951 took place not because the working class was threatening the profitability of New Zealand capitalists; it was both a trial of political strength between the labour movement and a farmers' and businessmen's government that had been out of power since 1935, and a geo-political after-shock.86
Since the mid 1960s however, the situation has changed. The profitability of protected manufacturing has tended to fall and has had to be kept up by cutting back the historic share of value going to the working class. So long as profits could be kept up and wage increases allowed the rights of labour to strike and enter into wage negotiations were protected. As soon as falling profits demand wage cuts however, these `rights' become a threat to the survival of capitalism itself. The withdrawal of labour becomes critical for two reasons. The first is that, as the profitability of industry declines, wage rises bring further pressure on the rate of profit. The strike must be deterred at all costs before it can be used to gain increases in wages. Second, as one method of raising flagging profits is to increase the intensity of work through speed-ups, shorter tea breaks etc. any time off for stoppages and strikes may push a firm into bankruptcy. In a period of declining profits therefore it is easy to see why the State has to enforce the capitalists' right to employ free labour over, and at the expense of, the workers' right to withdraw their labour.
While this is the purpose of the recent legislation to restrict the legal rights of the trade union movement, of course it is expressed in terms of the national interest rather than that of the capitalist class. The rights of labour must be subordinated to those of the community since it is only one sectional interest group within the community. Any form of industrial action which is not in the community interest is now banned as a crime against the State. The State defines what is or is not in the national interest but any individual member of the publíc can decide to take action against a union if he or she thinks they have been caused 'suffering, loss or damage'.87 By these controls the State seeks to outlaw any form of industrial action that threatens profits. If it cannot deter militant elements with fines and prison sentences, it can attempt to contain the militancy by penalising any form of solidarity or sympathy in the name of the 'community. Willis Airey's judgement that the 'idealising of the State' could lead to fascism in New Zealand seems about to be confirmed.
But wage cuts, the withdrawal of rights, and punitive action by the State may have rather rnore far-reaching consequences today than in the past. The development of a mature class structure means that a far larger proportion of the population has undergone the formative experience of trade-union membership and recognises a limited collective interest. The State's attempts to fragment this solidarity by holding individuals responsible in law for union actions may undermine tlre belief that there is but one law for rich and poor. Exposing the unions to civil proceedings such as private injunctions may also rebound as contempt for the law. Other factors, such as the impact of education, the struggle for women's rights and Maori nationalism, have all significantly altered the climate and the conditions in which industrial relations now take place. Altogether, the severity of the cuts and the repressive steps taken to implement them by the State may in the current crisis bring about a decisive shift in trade-union consciousness away from bourgeois ideology.
Whether the industrial relations system does under these conditions change into a fascist-type 'labour front' will depend partly on the severity and duration of the economic crisis. Just as important will be the divisions within the working class based on race and sex differences which in the past have played an important part in undermining the solidarity of the working class. However, the development of capitalism in New Zealand has also altered the relation of both the Maori and the Women's struggle to the class struggle and opens up the possibility of a coming together of these separate movements as a united opposition to the State. I shall turn next to the analysis of these divisions and their importance in class struggle.
The White New Zealand Policy
The position of the Maori people in New Zealand society has been determined by their own traditional form of production and the way in which they were integrated into capitalist society. According to the liberal view, 'race relations' between Maori people and the pakeha are better than those of other white-settler states. Sinclair provides the most eloquent statement of this view. There are nine reasous why "race relations are better in New Zealand than in South Africa, South Australia and South Dakota". 88 Five have to do with the relatively rapid elimination of Maori society as an obstacle to capitalist society: (1) the Maori people were outnumbered and conquered by the 1860s; (2) they retreated into a marginal existence; (3) this isolation gave the Maori people time to adapt - from 1860 to 1940 the Maori people were weak, remote and posed no threat to European society; (4) they were not required as a source of cheap labour; and (5) they were not a sexual threat, according to some tortured reasoning by Erich Geiringer.'89
During this period, says Sinclair, race relations were really racial non-relations since the Maori people virtually lived a separate existence. Yet unlike the separate existence of apartheid, they were not exploited. But what explains the recovery of the Maori people and their integration into European society since other peoples who were also physically decimated before the advance of settlers never recovered? The crucial differences says Sinclair, were: (6) the influence of rnissionary and humanitarians; (7) the 'social Darwinism' which held the Maori to be a 'superior' native, closer to the European than other aboriginal races; (8) the respect of the settlers for the courage and fighting prowess of the Maori in warfare; and (9) the abilily of the Maori people to adapt to European society.
Sinclair's atternpt to put a liberal gloss on the destruction of Maori society is saying that, by the standards of the racist settlers, the Maori people exhibited some of their own ethnocentric characteristics and were spared complete extermination. However it was not this paternalistic racism which spared the Maori people. In the first place it was not sufficient to stop the land wars. Racism was consciously used to justify the dispossession of the 'niggers', and this justification was not made merely by settlers but by missionaries too, as the case of Rolleston, who took part in the campaign against Te Whiti, shows.90
As we have seen the paternalism of the European had a relatively benign face until the Maori resistance to further land sales forced it to reveal its two-faced nature. The overt racism that whipped up hysteria in the wars for the land was the same white racism that accompanied the settlers wherever they came into contact with indigenous peoples.
The survival and recovery of the Maori people can be put down to something much more earthy - the fact that during the period from 1860 to the 1870s the Maori, as an unskilled rural reserve army of labour and as an urban unskilled proletariat, posed no economic threat to the white working class. In both periods the Maori people fitted into the labour force without competing for jobs with the white working class. Not until such competition did arise was there a rebirth of overt white racism. Sinclair's argument is therefore reversed. It is not an absence of racism that explains the 'relatively favourable environment' in which the Maori people now find themselves, but these fortuitous economic circumstances which make the overt expression of racial differences and divisions within the working class unnecessary. The test of this explanation can be found in the attitudes of the white working class to other racial groups which were perceived as a threat to their economic welfare.
The first alien group to present such a threat was the Chinese diggers in the 1870s. Though it was mainly British immigrants and diggers who flooded the labour market, agitation to remedy this was directed at the Chinese. The justification for this racial discrimination was that the colony had an obligation to accept the poorer classes from the 'homeland' but that unrestricted immigration would bring 'refuse' and 'inferior classes'. Popular feeling was strong enough to force the introduction of a poll-tax on Chinese in 1881. An abortive attempt to restrict Asian immigration in 1896 was followed by the notorious Natal Act passed in 1899 discriminating against non-Europeans and non-British 'undesirables'. The irnportance of racism as the basis of an emerging nationalism was seen during the period of the imperial revival. Beaglehole has expressed this point well:
"New Zealanders began to feel conscíous not only of their Pacific mission, but of their fewness in number; they passed from suspicíon of a French peril in Tahiti and New Caledonia to suspicions of a German peril and a 'Yellow Peril', concentrated on Chinese fruiterers and laundrymen in their midst; and by 1899 Seddon wanted to send an expeditionary force to take over Samoa, and somehow to incorporate the Cook Islands, Fiji, Tonga and the Society Islands with New Zealand. In fact, only the Cook Islands was taken over and an expeditionary force went not to Samoa but to South Africa." 91
In the Marxist view therefore, once racism is put into its political and economic context it can be understood as a central ingredient in reproducing the bourgeois ideology of individualism/nationalism. The apparent absence of overt racism toward the Maori people in much of New Zealand's history is explained by the long periods in which there was no direct physical, economic or sexual competition between Maori and white workers. Where we would expect overt racisrn to show itself as in the land wars; among the unemployed in the Long Depression, and in the current period, it has done so and been expressed as an aspect of nationalism. Thus the appeal of racism was to foster the emerging national consciousness "The idea of New Zealand as an identifiable concept - of a land and a people" at a time when the industrial working class was beginning to show itself as a political force.
Racism, by reinforcing this nationalist awareness, served to reproduce the working class by diverting any incipient stirrings of class consciousness away from class struggle into the struggle against aliens and foreign nations. While the radical leaders of the labour movement tried at the time to convince the working class that the enemy was the 'capitalist at home' and not the 'workers of the world' their words were lost in the rising nationalistic hysteria that built up in the period leading to the Great War.92
Race and Class
The liberal illusion of 'separate-but-equal' in the nineteenth century followed by the integration of the two races as One People in the twentieth still retains the power of myth today.93 Yet it is clear today that Maoris and Islanders are discriminated against in employment, education, health, housing and within the legal system.94 The conservative response to this evidence is to invoke racism to explain it. Either the Polynesian chooses not to take advantage of the market, or is too stupid to do so in which case the fault lies with the Polynesian race and not the market; or, white liberals have destroyed the race's self-reliance and motivation to succeed by making them dependent on welfare handouts, in which case the fault lies with the liberals. This view is reinforced by a conservative media which plays up the self-fulfilling prophesies of Polynesian gangs as confirming the racist stereotypes in the dominant culture.
The liberal response to race inequality put forward by intellectuals, governmerit researchers and social workers is to blame the environment, rather than the racial characteristics of the minority. Discrimination, and the social problems - such as gang behaviour, juvenile crime and unemployment - which are associated with it, are caused by a combination of recent urban rnigration, cultural differences, youthful population and low incomes. The solution to race inequality is to eliminate the barriers to equal opportunity with special schemes and financial support for pre-school education, job training, housing, university education to bring Polynesians up to the same level as Europeans. While on the face of it, this liberal version recognises that race inequality has a social and not a biological cause, its reformist attempts to solve the problem suppresses knowledge of the class basis of racism and therefore perpetuates the problem. It cannot come to terms with the necessity of racism in capitalist society, and like the liberal ideology of industrial relations, sows illusions about the possibility of racial harmony in a system which depends for its survival on the incitement to racial disharrnony.
One aspect of the liberal solution to race inequality is rejected by a number of minority radicals who view the emphasis on socio-econornic reforms as covering up the existence of white racisrn. For them, institutional and personal racism in European society is the cause and socio-economic inequality the effect. The evidence to support this claim is found wherever a comparison of Maori and European people of the same socio-economic position is made - in education, in job opportunities, in the penal system and so on. For example, studies have shown that rnany rnore Maori boys than pakeha boys from the same socio-econornic group are apprehended, charged and convicted (and given longer sentences) for alleged juvenile crirnes, demonstrating that a racial bias exists in the legal system.95
It is therefore clear in this view that racisrn exists independently of class and all attempts to give more equality to racial minorities will fail unless racism is first eliminated. However, by isolating racism from its basis in the class structure the rninority radical position is unable to perceive its materialist roots. Until racism is cut off from its roots in the reproduction of capitalist social relations it will survive all attempts to fight it as a cultural or institutional problem.
Marxist objections to bourgeois solutions to race inequality are grounded in an understanding of the materialist basis of racism in capitalist society. In the first place, racism has an objective material basis in the subordination of non-European peoples as a reserve army of labour on a world scale. The reserve army was created historically by the destruction of the pre-capitalist forms of production. But the logic of capital accumulation is to increase the productivity of labour and create fewer and fewer jobs relative to the mass of means of production it employs. This creates a surplus population, or the reserve army which functions as a reserve when needed, and as a pool of unemployed who compete for the jobs of those who are employed thus holding down their wages and enforcing them to overwork to retain their jobs. "The condemnation of one part of the working class to enforced idleness by the overwork of the other part, and vice versa, becomes a means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army on a scale corresponding with the progress of social accumulation'.96
But why should the reserve army consist mainly of non-Europeans? The colonisation of the non-European world and its incorporation into the world division of labour made use of unskilled labour on very low wages to produce surplus value for the imperialist economies where competition drove up the rate of exploitation but also the skills and real wages of the working class.
As a result non-European colonial peoples became the international floating reserve army characterised by low-skilled, low-paid work, high levels of unemployment, fluctuating demand for work on a seasonal basis, migration to the job and very low living standards.
In New Zealand, the Polynesian people share these characteristics of non-European labour the world over. The Maori migration from rural to urban areas with the expansion of domestic manufacturing performed the role of the floating reserve army, filling the most low-skilled and low-paid jobs so long as the demand for workers grew. The Pacific Island migrants came to the main cities for the same reason. When the expansion begins to slow, and when the restructuring of the economy accelerates the process of labour shedding, it is mainly the Polynesian (and female) reserve army which is thrown out of work. 97Polynesian workers, true to the material requirement of the reserve army, create surplus value as an unskilled layer of the labour force, are dumped back into the reserve army and enforced idleness depending on the circumstances.
The function of the reserve army is to maintain the supply of cheap labour regardless of fluctuations in production. If there are no characteristics which distinguish its members from those in relatively secure employment, the fact that the 'reserve army' and those in employment are part of the working class and are compelled to compete against each other may occur to those who are over-worked and those who are idle. By identifying the reserve army as non-European or alien and playing up the racial difference, rather than focusing on the common class basis of over-work and idleness, a fundamental division is introduced into the working class.
Racist attitudes transmitted by the dominant bourgeois culture present the pakeha and Polynesian segments of the working class as of separate race and nationality. When economic downturn increases competition for jobs, the threatened whites may feel more secure in the physical deportation of Polynesian overstayers and support the police measures used to detain their fellow workers.98 When, as the result of the social conditions associated with a reserve army, social problems among the Polynesians appear, the white working class will join with the petty bourgeoisie in condemning gang rape, pub brawls and petty theft, as confirmation of the fact that Polynesians are a criminal race, biologically predisposed to violence.
It should be stressed that the differences between white and black workers which become the basis for racist divisions in the working class have no basis at the level of productive relations any rnore than have the differences between non-productive and productive workers discussed earlier. These differences are introduced by capitalists and used to reproduce the bourgeois coupling of nationalism/individualisrn against the consciousness of class. Differences in levels of wages and standards of living occur at the level of distribution and in no way imply that the white working class benefits even in terms of immediate interests from the exploitation of the black working class.
So while on the surface these differences appear to be real, they, have no material basis in capitalist class relations. Nevertheless, the struggle to overcome these supports of racism in the working class is crucial to any advance in working-class consciousness. So long as the race division exists, the working class is cut in two, each segment incapable of joining the other in common struggle.
Sex and Class
Unlike racism in the working class, sexism does have a materialistic basis in the exploitation of women by men. As I outlined in the Introduction, the domination of women by men was the first form of exploitation of one group by another to appear in history, enabling the accumulation of the means of production in the hands of a male ruling class. To reproduce this class relationship the ideology of sexism developed, presenting the exploitation of women by men as natural and therefore just. Women were characterised as biologically suited to a reproductive role in childbearing and childrearing and this became seen as a natural sexual division of labour in which women produced children and men produced the means of production.
Sexism is therefore ideology because it masks a socially and culturally determined class relationship in which men subjugate and control women's labour, and functions in order to suppress women's class consciousness. 99 On the basis of this understanding we can see how the exploitation of women takes specific forms in different historical conditions. In particular we can analyse the forms of exploitation in capitalist society and the function of sexism as an ideology masking the position of women as a class in their own right, as well as their relationship with the working class. By doing so we can help to clarify the nature of the differences between men and women and identify a common interest in the abolition of class society.
Under the capitalist mode of production the exploitation of women takes on the dual forms of domestic labour and wage labour. Domestic labour is that which is wholly concerned with the reproduction of labour power. It is thus the contemporary form of the basis of male exploitation of women in which women produce the most vital part of the forces of production - people - by means of unpaid domestic slavery. Domestic slavery can be defined as the form taken by the appropriation of surplus labour when female members of a family work to reproduce the value of male labour power. Historically this means that domestic slaves have been highly exploited, working long and hard hours to contribute to the family labour time, with very little or no control over the conditions of work.
Under the capitalist mode of production this traditional form of labour control has been adapted to facilitate the exploitation of wage Iabour. Highly exploited domestic labour is used to reproduce the value of male labour power (and female as we shall see) much rnore cheaply than if domestic services had to be purchased on the market. Normally, domestic surplus labour is passed on to the capitalist (who pays lower wages/prices) as surplus value. However, there is the possibility that wage laboúr, in bargaining for its share of the new value produced, can indirectly benefit from domestic labour. The question of whether or not, and under what conditions, the male working class has an interest in perpetuating domestic slavery must therefore be posed. Only by answering this question can we see how far the sexual division of the working class has a materialist basis.100
The second form of surplus labour performed by women is wage labour. This produces surplus value dírectly, or indirectly by cheapening the costs of circulation. Wage labour includes all women in industry, sales, commerce, services and public employ. Historically the involvement of women in wage Iabour began with the developrnent of large-scale manufacturing in the nineteenth century. The introduction of machinery displaced the skilled male craftsmen who were replaced with unskilled, youthful (because of its capacity for hard work), and to a large extent female, labour. This move enabled the capitalist to 'kill two birds with one stone'. He was still able to exploit the domestic slavery of women, but could also employ women and children and drive down the value of labour power. Instead of paying the normal wage to women (and an equivalent wage to children) he paid them less than the male wage for the same amount of labour time, thus increasing the rate of exploitation. This cut the male wage to the same level the effect being to drive down the value of labour power (historical and moral) and the standard of living of the whole working class. The results as we can see recorded in the Blue Books of Factory Inspectors were the appalling conditions of over work which led to the physical, mental and moral deterioration of the working class.101
Similar conditions applied with the establishment of manufacturing in New Zealand in the 1880s. As Sutch records, between 1881 and I886, the employment of women in the wage-labour force increased from one in seventeen men to one ín five men. Elisabeth Hutchins, writing in 1907, comments on the evils of 'sweating':
"The comparatively high wages and standard of comfort enjoyed by the working classes of our Australian Colonies has unfortunately not prevented the growth and development of certain industries of the objectionable type known as 'sweated'… wherever the unorganised worker is confronted by the irresponsible capitalist, there seems to be an all but inevitable tendency for the growth of certain types of industry relying on the cheapest possible labour of children, women, boys or unorganised men, who under unrestricted cornpetition are usually employed the longest possible hours for the smallest possible pay, under unsanitary conditions. The underpayment of these unorganised workers, especially female home- or out-workers is one of the gravest social problems that industrial states have to face. The special evil of sweated industries from the point of view of the community is that the bad conditions tend to increase and become intensified as time goes on. The workers in these miserable trades deteriorate in health and efficiency, and their children, growing up ill-nourished and unhealthy, continue the supply of cheap, inefficient, unorganised labour. Labour of this class, though cheap to the employer, is by no means cheap to the cornmunity."102
I have quoted this report at length because it illustrates very well the liberal view of sweating as an unnecessary social evil perpetrated on women and children by 'irresponsible capitalists'. The solution can be read between the lines - the State, acting on behalf of the 'community' regulates the conditions of employment to ensure that minimum standards of wages, health, housing are met in order to provide efficient labour.
The strongest pressure to control sweating came from the male-dominated trade union movement, which was very concerned about the competition of women and children for employment. In one tailoríng firm six men had been replaced by fifty girls; overall, "the influx of female labour had driven away all the men over to the other side [Australia]." 103 Thus while the trade-unionists joined with the liberals in blaming the evils of sweating on unrestricted competition, they responded in terms of sexist ideology in condemning the employment of women whose natural place was in the home, just as it was the father who was the legitimate breadwinner.
It is clear therefore that the ideology of sexism which functions to reproduce women as domestic slaves, has an equally important function in dividing men and women in the wage-labour force. Just as racism is used to separate white from non-white workers and reproduce the working class, so sexism is a convenient device to align male workers with capitalists against female workers. So trade unions have initiated bans and restrictions on female employment supporting discrimination against women and their relegation to a 'floating reserve arrny of labour'.104
Yet the ideological basis of this discrimination,
that of the natural division of labour in which women work in the home
and men in the labour force, cannot sustain itself indefinitely without
the material basis of its existence - domestic slavery. The power of sexist
ideology in the wage-labour force depends upon the necessity of domestic
slavery as a form of surplus labour appropriation under capitalism. In
other words, if domestic slavery can be replaced by socialised services
allowing women to enter the wage force the material basis for discrimination
no longer exists. If, on the other hand capitalism cannot abolish domestic
slavery, then the material basis for sexism cannot be abolished within
the framework of capitalism.
Why Capitalism Cannot Abolish Domestic Slavery 105
There is a convergence between some Marxist and liberal approaches to the question of domestic labour. Both regard the elimination of housework by technological substitutes as a sign of progress. For liberals the freeing of women from housework allows them to shake off an inferior status and join men as equals in the work force if they wish. Those who choose to remain at home should be paid an equal wage with those outside the home. Ideally, apart from childbearing itself, there is no reason why all other domestic tasks should not be neutered - shared by both sexes equally.
For some Marxists, notably Frederick Engels, the same development of the forces of production that brought about the polarisation of the proletariat and capitalist classes, would socialise domestic work (creches, laundries, restaurants etc.) and push women into the working class to join men in the class struggle. But while both viewpoints differ on the significance of this 'liberation', they are none the less both equally wrong in their common assumption that the development of capitalisrn would unyoke wornen from domestic slavery. The reasons for this lie in the basic contradiction of capital itself which places absolute limits on the socialisation of domestic labour.
The main reason is that no capitalist can make a profit out of housework for a long enough period to attract other capitalists to want to invest in domestic labour. This is because capitalist accumulation advances in cycles of booms and slumps. During the boom production can expand into new wage goods such as labour-saving devices in the home (dishwashers, washing machines etc.) and the wage labour needed to make these commodities wíll consist to a high degree of women 'freed' to combine domestic slavery with wage labour. However, the slowing of accumulation and overproduction of these commodities brings about an inevitable contraction in the production of domestic substitutes, lowering of wages, sacking of wornen 'reservists' and a further falling off of demand.
The recovery of profitable production can only be achieved by cutting wages below the value of labour power. Male and female wage earners can now no longer reproduce their labour power out of their wage packets, and labour power must be reproduced through the intensification of domestic labour in cooking, cleaning, producing food and making clothes - goods and services which can no longer be bought in exchange for the money wage. Thus it is the necessily of domestic labour in holding down the value of labour power which cannot be overcome by capitalist production.
It is this necessity which determines womens' participation in wage labour as a latent and floating reserve army. The latent reserve remains primarily committed to domestic work but performs wage labour in addition when conditions permit. The floating reserve army is not committed to domestic work, but is assigned wage-labour functions in accordance with the sexist ideology which treats women as if their prime committment was 'in the home'. As Hill observes in her study of women ernployed in the clothing industry, the floating reserve is not necessarily pushed back into domestic work during a depression but functions as a reserve submitting to increased exploitation as unskilled and unorganised labour, because "as females they have been socialised into compliance with authority, especially male authority". 106
In addition to the cyclic limitation on the socialisation of domestic work, there is the long-term creation of a reserve army on a permanent basis - the stagnant reserve - as capital accumulates. This reserve is likely to be made up disproportionately of women who remain confined to domestic labour or employed in non-productive wage labour such as services, commerce or administration. But equally important the employment of women in non-productive work is also limited by precisely the same cyclic tendency. Because it is a drain on the capitalist's revenue or total surplus value, it exacerbates the tendency for the rate of profit to fall. This does not stop capitalists from attempting to cut their circulation costs as rnuch as possible, making use of women's reserve function to provide cheap, unorganised and compliant labour power in non-productive work.
Thus we find that both the short- and long-term tendencies within capitalist production itself require the continuation of domestic slavery. This explains first, the reluctance of capitalists to get involved in domestic slavery, and second, state intervention to subsidise the reproduction of labour power by providing cheap loans for housing, food subsidies, public health and education. But as we shall see in the next chapter the same limitations which prevent capital from socialising domestic work also operate to prevent the state from 'nationalising' domestic work. Since this is the case we can now return to the argument about whether or not male wage labour shares in the benefits of domestic slavery. According to the liberal view which attributes the inferior position of women to the subordination of women by men within the family, all men have an interest in perpetuating domestic slavery.
First, as with unproductive labour and European workers in relation to productive workers and non-European workers, we should distinguish between 'immediate' and 'class' interests. At the level of 'immediate' interests male wage workers benefit from the exploitation of women as domestic slaves since sexist ideology allows men certain privileges such as relatively more secure, higher paid, employment. These privileges in turn reinforce sexist ideology in the male working class, and the male domination of women in the home. This domination is backed up by political and legal rights which allow men to treat women as their property. In practice these economic, political, legal and other privileges are powerful instruments of sexual oppression which appear to benefit all men regardless of their relation to the means of production.
However, no matter how physically and mentally oppressive these inequalities are, they have no basis in biological need and are historically a means to the end of class exploitation; that is, the expropriation of surplus labour of one class by another. And while at one point in history all men shared the benefits of this expropriation, under the capitalist form of production only the capitalist class does. What we now find is that male domination of women as a class once the interests of all men, is used by the capitalist class as a means of the reproduction of women as a class in its interest alone. The male working class is turned into the agent of oppression in return for whìch it gains certain privileges but without sharing in the expropriation of womens' surplus labour.
Thus like the unproductive worker whose wage is produced by the productive worker, like the white workers who gain higher wages by allowing their black brothers to be super-exploited, male wage workers benefit frorn domestic labour and help to reproduce the sexual divisions within the working class. In each case, these privileges and the divisions based on them, are real enough at the level of distribution, politics and ideology, but in practice they function to reproduce the wage-labour force, the working class, as the exploited class which produces surplus value for the capitalist class. In terms of class interests then, the reproduction of women as a class, serves only the interest of the capitalist class through the reproduction of wáge labour. The material basis of sexism in the capitalist system is therefore the capitalist system.
Conclusion
So far I have shown how the objective historical tendency towards polarisation and immiseration Ieads to the formation of an advanced working class in New Zealand. At the same time the 'expulsion of living labour' from productive work has created divisions within the working class. Those who remain active and overworked are set against each other on the basis of levels of wages or skills, and against the reserve army and domestic labour on the basis of racism and sexism. This produces a privileged aristocracy of labour, a predominantly white, male, skilled and unionised section of the working class who are able to gain the 'benefits' of a high standard of living or real wage. As we have seen, however, this privilege is relative since the gains in real wages are in part necessary to reproduce more productive labour-power and are a lesser share of new value created than that which goes to the capitalist class. What is more, the surplus value created by productive labour goes in part to pay the wages and salaries of non-productive labour much of which is non-European and female.
But sìnce the working class does not perceive the connection between real wages and the rate of exploitation, it is the income and status differences between the aristocracy of labour and the other sections of the working class and domestic labour that are perceived as unequal. So the aristocracy jealously guards its privileges from foreign and female competition, while the less privileged workers envy the benefits of higher living standards. Capitalism therefore has no difficulty in reproducing the aristocracy of labour by appealing to the conservative elements of bourgeois ideology. But it must also reproduce the other sections of the working class including the reserve army and domestic labour. And while it can rely upon a certain submissiveness from non-European and female workers who have been socialised to accept iriferior status, it is not sufficient to contain the rise of widespread discontent and growing threat to capitalist order such as occurred between the Wars in New Zealand.
In Chapter 4 I argued that the labour problem was resolved initially by the new liberalism of state socialism. Radical intellectuals successfully countered the spread of communist ideology with their watered-down version of Fabian socialism enacted by the 'people's state'. In the years leading up to the Great War, the State controlled the militant breakaway unions by means of force with the support of the aristocracy of labour loyal to the 'Court'. In the war years, militants were branded as 'reds' and 'traitors' undermining the war effort. However, in the long decades of low prices, stagnant agriculture and widespread unemployment that followed, the majority of the working class (including many small and bankrupted farmers) began to question a political and economic system that seemed to progress from slump to slump by means of world wars. At no time in the development of the colony has the labour problem come so close to a challenge to the public safety and conservation of capitalist order.
The problem of restoring the loyalty of the mass
of workers to capitalism was solved by the aristocracy of labour, who through
the hard years had retained its faith in the 'people's state'. After all,
the people were now the working class; what stood between them, the victory
at the polls and the rise to power and economic equality? The doctrine
of the working-class majority in parliament, social democracy, was to be
the rneans to the end of a reformed capitalism, the Welfare State.
The movement picked up momentum with the growing support of the Labour
Party committed to the introduction of parliamentary socialism. Elected
on a socialist platform in 1935 the new workers' Government attempted to
introduce legislation that would transform New Zealand society into a Welfare
State. In the next chapter we examine the myths and reality of social democracy
and the Welfare State in New Zealand.
7
Social Democracy and Social Welfare
The Ideology of Sociai Democracy
The liberal belief that the workers' state could control the economy and equalise the distribution of wealth, rests upon the classic petty-bourgeois conception of a class-neutral state. It ignores the fact that the means of production, distribution and exchange are owned by the capitalist class and cannot be nationalised without disrupting the whole economy: The Labour Government very soon learnt what the limits imposed on the State by the capitalist class were, withdrew from any challenge to bourgeois property right and concerned itself with making capitalism more efficient in the hope that the working class would be transformed into a class of petty-bourgeois aristocrats.107
The economic policy upon which the Welfare State was founded was therefore nothing more than one of state intervention in the economy to moderate the boom and slump cycle and facilitate the further expansion of capital accumulation. It represented the practical application by a workers' government of the most advanced bourgeois economics of the day - Keynesianisrn - a set of economic rneasures designed to ensure the more efficient management of capitalist production.108 It was efficient not only in the sense that it controlled the devastating social consequences of the boom-slump cycle, but also in the sense that this control was imposed in the interests of the working class by a worker's government on behalf of the capitalist class.
Each of the economic planks of the new government can be shown to be in the class interests of the capitalists. The control of credit, the programme of public works, the control of marketing and pricing of primary products were all simply extensions of rneasures introduced by Gordon Coates to protect New Zealand farmers against the parasitic rnerchants and bankers.109 These measures facilitated the development of agriculture by guaranteeing a return on investment and eliminating the share of the surplus formerly appropriated by the 'middlemen'. Similarly, import controls designed to conserve the foreign excharnge earnings of agriculture provided the necessary stimulus of protection for the growth of the domestic manufacturing sector.
Protection is the classic device to establish manufacturing in a colonial economy and the workers' government created the ideal climate for the growing direct investment of foreign capital in domestic production. Of course the benefits to the working class arising out of a policy which promoted rapid growth are not to be denied. Full employment, rising real incomes, and a welfare system founded on expansion are precisely those immediate interests which always appealed to the aristocracy of labour. Many would now say that capitalism was a small price to pay when growth was sufficient to allow the interests of all classes to be satisfied and class conflict eliminated. The petty-bourgeois dream, now realised in the legislative record of the Welfare State, had at last 'come true'.
The social democratic Welfare State therefore represents the most advanced form of bourgeois domination of the working class at a stage in the development of the contradiction between capital and labour that requires massive state intervention. The State enters into the management of the economy in an attempt to prevent the tendencies of the system towards crisis from presenting themselves as uncontrolled booms and slumps. In this way the upturn in rising accumulation is artificially prolonged by Keynesian techniques of controlling credit and demand and price inflation to maintain adequate rates of profit. State intervention in wage control and taxation, regulates the share of new value distributed to wage labour and capital in two main ways.
First, it regulates by determining gross income shares. Wage labour's share equals gross wages less rnarket prices, both of which are subject to controls. We find that the share of gross income going to capital has increased much more rapidly than that going to wage labour. Second, real income shares are determined after taxation and transfers in the form of state redistribution of gross income to wage labour and capital. Here we find the opposite to the myth of redistribution which holds that the gross income of the rich (for us the capitalists) is taxed to be redistributed to the poor (the working class). Instead, we find the taxation of the working class is the only source of state income paying not only for the welfare system (much of which goes back to working class) but paying also state subsidies to capital.
The Welfare State as a means of increasing the exploitation of the working class while presenting itself as equalising the incomes of rich and poor, can only perform this conjuring trick so long as the rate of profit can be artificially sustained. And here it runs into the limitations of the contradictions of capital, forcing the state to act more and more to cut the share of income going to wage labour in order to maintain the rate of profit. As soon as this becomes felt as a reduction in real wages (either direct wage cuts, tax increases, social welfare cuts or all of these) then the whole stack of cards begins to crumble and the ideology of the Welfare State begins to wear thin among the working class.
But of course the disillusionment with the Welfare State is not based upon the understanding of its real capitalist function. It is one based on the liberal complaint that the National Government has deliberately eroded the magnificent creation of the workers' party.
What I propose to do therefore is show, why it is
in the nature of the welfare state, assuming that it could ever be restored,
which it cannot be, to operate against even the immediate interests of
the working class. Let us examine in detail the extent to which the objectives
of social democracy can be realised in the Welfare State. We can state
these briefly as (1) equalisation of gross income shares; (2) shares of
net income; (3) equal opportunity in health, education, housing and employment;
and (4) social security and the elimination of poverty.
Distribution of Income
I should stress that I am not talking of the post-war growth in all shares of rising national income here: rather, of the relative shares of wage labour and capital as measured before tax and after tax. For most of the post-war period conservatives and liberals both held that pre- and post-tax incomes were being equalised. Conservatives saw this as an unwelcome interference of the State in capital accumulation while liberals viewed it with approval. Recently, however, some liberals have begun to dissent and point to what they claim is a growing income gap between rich and poor and, as a consequence, the emergence of social classes. Because so much of the argument is based on pre-tax income figures we have at least to make passing reference to them despite the fact that they prove absolutely nothing.
Representing the labour liberals Brian Easton has argued that inequality has always existed in New Zealand but between 1951-71 was gradually reduced slightly. The poorest twenty per cent improves its shares of total taxable income from about one to two per cent, while the richest loses three per cent. The gap still remains; poor (three per cent) and rich (forty-four per cent) of total income. Representing the dissenting liberals, Levett and Braithwaite claim that over the same twenty-year period the share of non-Maori males in the bottom 20% fell from about 9% to 8% while the top 10% increased from 15% to 24% of total income. Jock Phillips, commenting on this data, claimed it was 'a new challenge to our equality'. Easton responded by claiming that the figures for the top 10% has been underestimated in 1951 and that instead of going up by 10% their income share had fallen by 3%.110
Recognising the irrelevance of such income data to the question of 'structural inequality' John Macrae has suggested that it merely creates 'noise' which obscures the problem of the production of incorne. It reflects such superficial distributions as age (older people tend to earn more); education (better educated earn more); hours worked (over-time inflates low incomes); changes in the occupational structure (more highly paid, highly skilled, 'white-collar' workers). Most important of all, pre-tax income bears little relation to real income since it does not measure actual disposable income 'in the pocket'.111
The same can be said for other attempts to measure gross shares of wealth or income. For example the probate method which uses assets declared for death-duty purposes measures the wealth only of those who die before they are able to redistribute their assets or cannot afford the legal fees involved. The most widely quoted measure of the share of national income going to wage labour, capital and farmers is the factor income. But if all other attempts to measure income shares fail to distinguish between wage labour and capital, factor incomes are based on a totally spurious conception in which the wages and salaries of unproductive workers are lumped together with productive workers to give the 'share' of labour. Not surprisingly, given the rapid growth of the non-productive labour force the total share of labour has gone from 53% in 1960 to 65.6% in 1975.112
But even if these figures tell us nothing about the extent to which the gross incomes of the working class have been improved by the welfare state, it is always possible to claim there has been a significant redistribution of income from rich to poor via state transfers. Transfers are calculated as the cash equivalents of goods and services provided by the State that would otherwise have to be bought out of the the wage by households. It is assumed that poor people have a larger proportion of their total income in the form of this social wage than those on higher incomes.
Of course, this assumes that everybody has equal access to these transfers whether they are food subsidies, low-interest housing loans, public health or education; and that once they have benefitted from these transfers, it is not taken away by indirect taxation which constitutes a much larger proportion of low incomes as well! Even in liberal terms, (which is the level on which I am debating the merits of the Welfare State at the moment) all these assumptions are highly questionable.
First, income assessed for taxation purposes under-represents the rich. They are able to disguise their income as company income which is taxed at lower rates; and their expenses as company expenses. 113 Those who invest their income in shares or land can benefit from capital gain without tax. Apart from income which is not taxed, or taxed at low rates, the graduated income-tax scale has become less and less graduated over the years. If we plot the taxpayers against the tax rates we ean see that the most taxation is paid by those who earn (as at 31 March 1978) between $6000 and $10000 a year (Source: NZ Yearbook, 1978, p. 677).
The effect of this negatively graduating tax scale combined with the effect of wage inflation pushing wage and salary earners into higher tax brackets is to make the burden of direct taxation fall mainly upon the middle-income group. Those earning between $6000 and $10000 pay 48% of all direct taxes. This increasingly restricts the scope of potential redistribution of income within the working class, from the middle-income earners to the poor.114
But whether this restricted redistribution takes place is itself highly debatable. First, it does not take into account the cancelling-out effects of indirect taxation which is regressive in its impact on the poor. Second, ít assumes that all income groups have equal access to state transfers or benefits. Let us look at the first point. Real income is not a theoretical concept in the minds of some economists but the actual purchasing power of the net wage after all the deductions and additions of transfers have taken place.
In reality poor people spend a much larger part of their net income on necessities - those wage-goods which are necessary to reproduce labour power - than do those on higher incomes. Now while many of these necessary items may be exempted from sales tax or subsidised by the State, the overall effect of indirect taxation on expenditure is regressive. That is, the lower the income the higher the proportion spent on indirect taxes. Add to this fact the likelihood that poorer families pay higher prices, higher interest and higher rents because they tend to buy in small units which are more expensive, and that most do not qualify for subsidised housing, and bear the brunt of higher sales taxes, and fixed charges passed on by finance companies and landlords. And to the extent that government subsidies on necessities are lifted - for example food and transport subsidies - then the impact of these cuts is rnuch more drastic for the poorest income groups.
The fact that no reliable information on tlre impact of indirect taxation upon income distribution is available in New Zealand is itself evidence of the bias in favour of the myth of redistribution. The only estimates available to me are those of Rosenberg who calculated that in 1964-65 an income of $12000 would be reduced by 5% by indirect taxation compared with a cut of 15% in an income of $1500. 115 Taking this estimate as a rough guideline, it seems that indirect taxes partially undermine the redistributive effect of income tax. Inserting what I would suggest are more realistic estimates based on British research, indirect taxation virtually cancels out the advantages of low direct taxation for the poorest group. 116
Indirect tax estimate (1) is based on Rosenberg. The difference between the Iow-income group and the high-income group after total taxation is reduced considerably. Estimate (2) is based upon UK studies of the tax incidence and may overstate the percentage for the low-income group. Allowing for the fact that consumer tastes of the high-income group for more expensive cars (when they are not fringe benefits), boats etc. may therefore involve higher rates of sales taxes etc. but that some items may be deducted as tax losses, 5% of total income seems reasonable. On Estimate (2) therefore, the effects of total taxation is to tax all income groups at a virtually flat rate of 40% to 48%.
Now let me take the second questionable assumption, that of equal access to state transfers of income. If the poorest income groups contribute up to 40% of their income in taxation then they will need to get back more than this in the form of the social wage before they break even; similarly for the rich group. The estimates available on the proportion of the low income made up of the social wage vary from about 33% (Rosenberg) to 75% (Easton).117But they are all based upon unrealistic assumptions about the effects of taxation and access to the social services.
Obviously, before any group can begin to get back from the state what it has contributed in taxation, it must have access to state transfers. The bulk of state transfers making up the social wage are in the social services constituting in 1978-79 about 60% of state spending. The remaining 40 % of state spending is to finance the state corporations, government administration and 'assistance to industry'. Table 7.2 gives a breakdown of Government Expenditure by item over the last thirty years. It is of some value as basic information but tells us very little about who benefits from government spending.
Looking at social spending first it is usually taken for granted that all income groups have equal access to the social services, health, education, housing and social security benefits, and that they can use them according to their needs. Let us look at each of these in turn to see if this assumption is justified.
Education
"Most New Zealanders set considerable store by education and expect a great deal from the schools and other institutions which have been established to help provide it. There is a wide acceptance of the concept that a good education for all, regardless of the financial means of the parents, is a pre-requisite for equality of opportunity. Education is seen as an investment in tomorrow's producers as well as a way of assisting individuals to develop their talents and to find satisfaction and fulfillment in life." 118
Expenditure on education has risen rapidly in the post-war period to meet these objectives, coping with both a growing school population and rising educational standards. What is not examined by the Planning Council, or any other public body, is the extent to which rising social spending on education has fulfilled the commonly held objectives of equal opportunity and personal development. Although it is clear that more cash does not necessarily mean better education, nobody has suggested that more cash means a worse education for most New Zealanders.
But if one looks at the changes that have taken place in the way money has been spent in education since 1951 it becomes obvious that it has gone into providing a more expensive education for an elite rather than into a better education for all. Instead of spreading the huge increase across a wide base so that all social groups could take advantage of a really free and universal education, the money has gone into a narrow range of expensive facilities, particularly at the tertiary level. Thus two sources of inequality have been built into the systern. The further a child goes up the system the more expensive the private cost not met hy the state. Yet spending between 1951 and 1979 has greatly favoured those who get beyond secondary level.119
This table shows that spending on primary education has dropped by 56% and tertiary increased by 143% over this period. Expressed on a per capita basis primary education has gone from $48 to $569, secondary $78 to $679 and tertiary from $100 to $3220 between 1955 and 1979.
Although all these resources are being concentrated at the top of the system not everyone as we would expect has an equal chance of making it to the top. Though the proportion of those getting University Entrance is growing (13% in 1951, 25% in 1976) they are not drawn in equal proportions from all educational groups, and those getting to university are mainly from a managerial, professional and technical background. In 1955, 65% were drawn from this educated elite compared with 21% from a manual working-class background. By 1969 those from the elite background had increased to 83 % while those from the working class had fallen to 6%.120 There is every sign that in the decade since then the trend to an exclusive elitism has continued. And as we shall see there are good practical reasons why this should be so.
How do we explain the growing trends towards unequal opportunity in education? What are the consequences of this inequality in employment, income and status? Are the children of the manual working class less intelligent than those of the professionals? Or are they not interested in educational or occupational mobility? Such explanations are favoured by conservatives, especially when applied to the Maori people who are the most educationally deprived. A third possibility is that of underachievement, by which equally able and highly motivated children from the working class, both pakeha and Maori, are systemmatically blocked from advancement, and 'tracked' into relatively low-status, low-skilled occupations. Is it possible that the education system is geared to reproduce the divisions created within the working class by the development of capital accumulation? Fortunately, there is some excellent research available which allows us to test these different explanations.
We can dispense with the conservative attempts to invoke racism to explain away educational failure. Despite the rehabilitation of a biological deterrninism which regards certain differences, such as intelligence, as inherited and therefore incapable of environmental modification, this 'scientific' racism has been discredited. There are no known ways of proving that IQ scores are inherited and there is plenty of evidence that what is called intelligence can change depending on the environment.121 It is safe to assume, therefore, that working-class children are endowed with the same range of native abilities as professionals' children until proven otherwise. This leaves the other two explanations, the failure which stems from the conscious choice to reject achievement, or underachievement which is caused by systematic discrimination within the system. Whom do we blarne them?
The widespread belief that education is the key to
occupational success has been shown to exist in New Zealand. It seems that
the will to succeed is universal. Whatever causes educational 'failure'
must then take place sometime during the education process itself. Vellekoop's
excellent study of the job expectations of a sample of 14 year old pakeha
boys gives us half the explanation. She found that most sons, regardless
of their parents' social position, wanted jobs at least equal if not better
in status. We get a breakdown like this:
[insert table here]
What is quite remarkable about this pattern of expectations is that it corresponds approximately with the actual work-force distribution of jobs. The discrepancy between the actual number of jobs in each category available and the total number of boys wanting these jobs is much less than we would expect if the same proportion of boys from each parental rank aspired for the 'top' jobs.
Already at the age of 14 these boys have modified their expectations to reality. Few children from a manual or farming background expect to become professionals or managers, while nearly half the latter's sons expect to follow their fathers' footsteps. There is therefore very little occupational mobility across the manual-mental labour divide, a division reproduced by some process of reconciling aspirations with experience. The fact that this sample overaspires in some respects probably reflects the fact that it is pakeha. 122Even so there is a strong tradition of upward mobility out of the manual working class into farming and white-collar occupations still evident in the expectations of these boys. But if our assumption is correct that there is no reason to suppose that working-class children should perform any better or worse than the sons or daughters of professionals, how is it that they adjust their expectations to accept a much lower achievement?
A complex pattern of cause and effect operates here. Parents tend to overaspire for their sons' success (according to the commonly accepted status-ranking of occupations) but they modify these expectations in terms of their experience of life chances. High-status parents know that their expectations of their sons' chances of success are good and improving. Their sons are motivated to succeed. They have the financial backing for an expensive education. They are able to buy property in the zones of schools with a high academic record. The schools concerned are able to offer a specialised education suitable for the mental occupations.
By contrast, low-status parents teach their sons to limit their occupational horizons early in life, children have less motivation to succeed at school, and perform relatively poorly in the academic criteria of IQ tests, achievement tests etc. They are then Iabelled as underachievers destined for a non- academic education and tracked into low-streamed vocational courses. Of course there are plenty of exceptions to this rule and those with motivation and parental backing can overcome the handicaps in the education system.123 As a result, the matter of success and failure is perceived in terms of an individuals' ability and motivation and seldom in terms of the barriers built into the education system.
What has happened to education - the great leveller, the means of equal opportunity 'regardless of the financial means of the parents'? Of course there are always uninterested and stupid people at all levels of society but the lack of interest and the stupidity that the conservatives blame for educational failure is the consequence of a deliberate failure of the educational system to meet the demands put on it for equal opportunity. Why is this? The liberal explanation is to look for the beneficiaries of knowledge in the professional, technical, managerial, administrative, occupations and accuse thern of manipulating a scarce resource - education - for their own immediate interests.124
In the advanced industrial society knowledge is the key to high income, status and power. The mental elite is predominantly male and pakeha, and bears a striking resemblance to the aristocracy of labour. Could it be then that while the mental elite benefits from education at the level of immediate interests, the real beneficiaries of education are the capitalist class that exploits the surplus value created by both mental and manual labour?
Perhaps the failure of equal opportunity in the education system serves the purpose of reproducing the divisions within the working class required by capitalist production? On the one hand the concentration of capital has brought with it more advanced techniques of production which in turn require the training of professional, technical and managerial sections of the working class in more advanced science and technology and the universities and polytechs are expanded accordingly.125 On the other hand there is a de-skilling of the traditional semi-skilled and skilled working class and the increasing displacement of the active workers into the reserve army of labour, or into replacement jobs in services or state employment. The de-skilled sections of the working class no longer need the level of technical education formerly required in a period of rapid economic expansion and intermediate technology, so they can be educationally downgraded.
It follows that these divisions in the working class will be reflected in the school and university curricula and in the areas in which spending is reduced or increased. Because relatively few individuals are required to replace or renew the technical sections, and because their training is expensive, the education of these workers will become more selective. This explains the growing tendency for higher education to become more elitist. For if the cost of replacing technical labour can be met partly by the private sector, then this lowers the cost to the state. There is no necessity to spend scarce public money in the training of working-class children to the level required for technical labour when the children of the existing aristocracy of labour will pay for much of the education of their own children. The cost of equality of opportunity is now too high a price to pay for a reserve army and the cuts in educational spending now taking place will make this inequality of access even greater.
Health: Who Benefits?
Like education, health is a basìc objective in the liberal conception of the Welfare State. New Zealand's public health system is regarded as one of the most advanced in the world. In the post-war period health spending has grown Erom 3.1% of GNP in 1950 to 5.8% in 1979. In real terms health spending per person has increased from $6 in the 1920s to $100 in 1978. It is now recognised that the quality of health does not improve in direct proportion to the quantity of money spent on the health services. But the assumption remains that these improvements in health care have been available to all social groups and that any cuts in spending will also affect all social groups equally.126
So strong has the belief in equal-access-according-to-need in the health services been, that the real effects of health spending have been overlooked; namely, that increased spending has never raised health standards uniformly for all groups; that, particularly since the 1950s, the public health system has been converted into a state subsidy to the private health system; and that, as a consequence, cuts in health spending as they are now taking place will accelerate this tendency towards inequality in the provision of health services.
Writing in 1971, Sutch claimed that since 1950 "the provision of medical and hospital attention in New Zealand has become more restricted in coverage, less free, and less universal". He warned of the growing state support of the private system at the expense of a deteriorating public system.127
More recently, Fougere has argued that declining standards of health in the low-income, aged, child and chronically sick population are directly caused by the growth of private medical insurance schemes and private hospital treatment. The failure to establish a public monopoly of health provision in 1938 has allowed those who could afford to use the pivate system to avoid delays in the public system. Successive governments, rather than increase spending to bring the public service up to a standard which would cut off the demand for private services, have found it cheaper to subsidise the expansion of the latter. This in turn has led to a further deterioration of the public services as scarce resources are channelled into the private sector.128The result is that, like education, equal access has been blocked off, and an elite get the benefits of a state-supported private health system while the other sections of the population suffer a decline in medical care.129
But while this growing inequality is most visible in the so-called private health care, the distinction between public and private is a false one, since the public system itself has become a means of reproducing the divisions within the working class. Its post-war development has been very uneven showing rapid real growth in those areas of health care that benefit the rising technical layers of the working class, and real declines in the provision of broadly based public health services required to maintain the th health standards of the industrial reserve army. The uneven developrnent of the public health system can be seen in Table 7.4.
What this table reveals is how the two per cent real growth per person over the years 1960 to 1974 was distributed to meet the health needs of the population. The most obvious point to note is that the most broadly based services, general practice and public health, if taken together, failed to keep pace with inflation and declined in real terms. Health Department figures show that both the number of GPs and the number of services they performed, per head, have declined.130 And it is well established that these GP services are not equally available to all income-groups because of their unequal distribution
Against this absolute deterioration in public health provision we find the direct public funding of private institutions increasing at 0.8% per annum over these years. Looking at the figures in Columns 2 and 3 it is clear that this subsidy represents part of the money saved by cutting back on preventative services. Furthermore, the evidence shows that the cuts in preventive health care are not rnade up for by improving health standards in the other areas of hospital care, medication, and specialist services, standards which have been raised by the spending in research and teaching.
In reality increased real spending on hospitals, medicines and specialist services has produced a further deterioration of health standards. In some cases it has led to a decline in services per head. -Two key indicators of the quality of hospital care are the numbers of patients on waiting lists and the availability of full-time specialist services. Thus as more and more patients are pushed into the hospitals by a failing preventative health system, they are confronted with an absolute decline in the number of specialist services. Fougere shows that in Auckland between 1968 and 1974 there was an absolute drop in full-time hospital specialists of six per cent. Taking into account a population increase of about fourteen per cent in Auckland over this period the real decline is seventeen per cent. 131
Not surprisingly, as a result of this bottleneck controlled by the specialists, waiting lists grow longer producing dissatisfaction and an increasing switch to private medical insurance and treatment. In view of these facts, then, most of the real growth in health provision over this period has been to redirect resources from the public provision of preventive services towards direct and indirect subsidies of private provision of hospital care under the control of specialists.
The apparent beneficiaries of this switch are first, the medical profession which is able to command very high salaries through its monopoly of medical knowledge, second, the technical layers of the working class who are able to pay for private health care out of their relatively high wage or salaries, and third, building firms and drug companies who benefit from spending on capital works and medicaments (though this point will be taken up in the discussion of other non-social service state expenditure).
The losers are those who cannot afford to opt out of the public system and in particular are prevented from doing so because they are not eligible for private medical insurance (the chronically ill, and those over 65 years of age). It could not be made more clear, that the function of the health system has been shifted from the provision of universal health care under conditions of full employment, to the selective provision of health care for the technical layers of the working class at the expense of the deteriorating health of the reserve army.·132
Housing -Who Benefits?
A third important plank in the Welfare State is the provision of good quality housing for all. By means of the construction of state rental housing or the advancing of low-interest housing mortgages, the State has, in the post-war period made it possible for those who could not afford to buy housing on the private market to own their own homes. In providing cheap housing, sorne redistribution of income from middle-income to low-income groups has taken place.
According to Easton housing standards have improved, overcrowding falling from 29% in 1951 to 23% in 1971.133 Allowing for the fluctuations in state aid depending on which government was in power, since 1945 the proportion of state funding of private housing to total money spent on housing has been between 30% and 50%. Approximately 40% of all post-war housing has been built with state assistance.134 In terms of lower rents which are well below market rentals, the owner-purchaser of state houses, and the lower rates of interest paid on state mortgages, this total state assistance represents a considerable part of the 'social wage' of those who benefitted from this aid.
Since about 1970 however, the contribution of housing aid to the social wage has fallen off. Despite the third Labour Government's attempt to restore the 'right to adequate housing' as a basic and fundamental facility that is the need and must be the right of every family', rapidly rising housing costs and escalating interest rates put 'adequate' housing out of the reach of most low-income families.
Instead of maintaining first mortages that in the past would cover the full purchase price of a house they have fallen to 43% of an average house and section in 1971 and 38% in 1976. The result has been the deposit gap between the first mortgage and house price which has to be filled with second or third mortgages. This forces more home buyers on to the loan market, either to get more expensive first mortgages to cover the gap, or to finance companies and solicitors for second and third mortgages. Second mortgages have risen from 12.9% of all mortgages in 1971 to 35% in 1977.
The consequence of this increasing withdrawal of state aid in the provision of housing has been a significant cut in the 'social wage'.135 Where formerly the costs of housing for most people had been kept down to one third of the average weekly wage, since 1972 they have risen to over one half. Whatever redistributive effect housing aid may have had in the past it has been largely eroded. The consequences are the growth of unequal access to adequate housing and the deprivation of below-average income families and single-income families.
"As a result, an increasing proportion of the population is expected to become 'locked in' to their housing situation, and the overall housing stock will deteriorate because of low rates of replacement. Thus by 1986 sorne 20,000 to 30,000 families are Iikely to be living under sub-standard or overcrowded conditions." 136
But while this relatively low-income section of the working class, also discriminated against in education and health provision, finds itself sinking into the immiseration of the reserve army of labour, the expanding technical sections of the working class are able to afford housing on the private market.
Social Security - Who Benefits?
Perhaps the central plank of social democratic welfare philosophy is that of social security. The Planning Council gives as its definition of the 'primary objective of income support policies' an 'acceptable level of income (or that no one is unacceptably poor).' 137 Social security may therefore be defined as the absence of poverty as the community defines it. Basic measures introduced to meet this objective are the minimum income, the general wage order, and a range of benefits to maintain the incomes of any persons who have a temporary interruption or long-term lack of earned income; those who have retired from active work; those who cannot work because they are responsible for dependants; and children who are still dependent.
For the moment I am concerned only with transfers in the form of benefits to see how far they effect a redistribution of income from rich to poor. That is, I assume that all individuals who receive benefits (or in the case of dependants, some member of their family) have contributed taxation, and that the tax contributions are about the same, around forty to forty-eight per cent of their income.
As I mentioned earlier redistributive effects can only come into play if one or other group, rich or poor, gets back more or less than they contribute in taxation. In the cases of education and health we can say with certainty that the rich, or rather the middle-income, group benefits from social spending in these institutions. They come out on top in the redistributional struggle which of course is reflected in their higher earnings and ability to meet their housing needs in the market. The real benefit that did flow to low-income families through state aid to housing, is now limited to the very poorest group, and on balance the huge advantages gained by the rich over the poor are not cancelled out by the modest transfers now taking place in the provision of housing. This leaves transfers in the form of benefits as the only rnajor area of social spending which could redress the advantage of the rich in the distributional struggle.
The first point to rnake is that the main benefits are universal; that is, available to all who qualify as a right. They are however income-tested which means that they are reduced in proportion to any extra income earned or unearned over and above the benefit. Thus, for example, the two most popular benefits, National Superannuation, and the Domestic Purpose Benefit are available to people who qualify in each case. But those on lower incornes are likely to get higher benefits than those on higher incomes. One might argue that in the case of the DPB and unemployment benefits the poorer families are at greater risk than middle-income families, and therefore receive in transfers an actual redistribution in their favour.
But even if we were to argue that all poor persons and farnilies at greater risk and eligible for such benefits actually received them which is certainly not the case, the redistribution of income through such benefits would need to be very great to outweigh that favouring of the 'rich' in education and health. Going back to the table which sets out the amounts spent in each category of social services we can see that health and education together amount to 26.56% of total public expenditure while social security transfers and expenditure also arnounts to 26.16% of the total! I do not think there would be a liberal prepared to argue that the poor get back more of the taxation in `social security' than they lose in health and education, especially since 71 % of social security transfers is spent on superannuation compared with 12% on the Family Benefit and 8% on the Domestic Purposes Benefit. 138
The social democratic arguments about realising the immediate interests of the working class by buildìng a welfare state are clearly false. The State has not equalised gross incomes, nor redistributed net incomes by means of the provision of equal opportunity in health, education, housing and social security. Instead we find the underlying class nature of capitalist society asserting itself in growing inequality between an aristocracy of labour and a reserve army of labour. Confronted with the evidence the liberal can only point to the emergence of classes monopolising knowledge or professional skills, and the dominance of a conservative, capitalist governrnent.
The failure of both conservative and liberal theorists
to understand the Welfare State and its relation to the developrnent of
capitalism in New Zealand, rests, as we have seen, on the ideological view
of the State and of the struggle for shares of the national income at the
level of distribution. So while it is possible to agree with the liberal
that the beneficiaries of social spending, particulary in health and education,
appear to be the technical-professional-managerial or rnental sections
of the working class, this is only in terms of immediate and not class
interests. The real class beneficiaries of the welfare state are the capitalists.
In order to demonstrate how the state works on behalf of the capitalist
class I want to go back to the earlier discussion of the State to pick
up the threads of the argurnent.
Mechanisms of State Aid
In the preceding chapters we have seen how the State played a decisive role in establishing the capitalist mode of production in New Zealand, through the use of force, the legal system, and a number of interventions in the economy. Capitalist social relations were established in agriculture and in domestic manufacturing and were expressed as class struggles in which the State intervened politically and ideologically to dominate the working class and reproduce capitalist social relations. It has been recognised by many bourgeois historians that the state socialism of the Liberal period marked the origins of what came to be known as the Welfare State in the rnid-twentieth century. It combined the belief in the State as agent of the collective will - statism as it has been called - in bringing about 'socíalism' as the common end.
However, as I have argued, the centralised role of the state in creating the conditions for capitalist production had already established a strong state, and statism was but a continuation of this role. Moreover the goal of socialism, was never that of the 'socialisation of the means of production, distribution, exchange and consumption', but merely their nationalisation in the interests of the capitalist class. New Zealand was the first European state to apply, in practice and in the name of state socialism, a form of state capitalism that was to become universal in the twentieth century.
With its roots deep in the traditions of state socialism social democracy in New Zealand was already firmly entrenched in the labour movement by the Great War. But just as its prototype in the nineteenth century did no more than consolidate an existing state apparatus, the first workers' government in the 'thirties did no more than extend the centralised role of the State in the economy. But that role remained one of 'helping' the capitalist class to accumulate capital, even if in the process the rapid rate of accumulation allowed rising real wages for large sections of the working class.
This was no more than 'helping'. It certaínly did not create the post-war economic expansion (except as the 'warfare' state which took advantage of the war effort to discipline labour and control marketing) the high prices for primary exports did that. All the Welfare State has done in the post-war boom is moderate the tendency for the New Zealand economy to react sharply to overseas market prices and help to hold down costs internally by nationalising production, distribution, exchange and consumption.
I use the term nationalising to signify the advantages to capitalists of the State's intervention in holding down costs. All this means is that the capitalist class uses the State to provide a range of subsidies, not that state intervention in any way implies serving the interests of the working class. Thus the State has been able to moderate the effects of rising costs of production in numerous ways prolonging the long upward swing of the post-war boom until the late 'sixties. I shall postpone the discussion of the limits of state intervention in preventing the current crisis until the final chapter and concentrate here on the various mechanisms of state intervention. The best way to approach this question is to visualise the circuit of capital and see how, at each point in the circuit, state intervention during the post- war boorn held down costs of production.139
MC - PC (MP, LP)(………) CC - MC'
The circuit of capital goes from left to right through a series of transformations. First, money capital (MC) is exchanged on the market for productive capital (PC) in the form of means of production (MP) and labour power (LP). For example, a capitalist buys raw rnaterials, machines, and labour power. He then puts them to work in the production process (.... ..) producing commodities (CC) goods and services for sale on the market; the exchange of CC which embodies surplus value for MC', more money than was originally invested, realises this surplus value as money which may or may not be re-invested in production.
The essential point about the circuit is that only during its phase as productive capital does capital become increased, so it is in the interests of the capitalist to inake sure that the turnover of capital is as rapid as possible. The faster the turnover the higher the rate of surplus value over a given period of time.
The costs faced by the capitalist are those which raise the prices of all his inputs and which delay the turnover time. Moving from left to right they are: expensive money - bankers charging high interest rates; high prices for means of production - e.g. machines, oil, plastics; high price of labour power - the costs of reproducing labour power e.g. education, health, housing); and finally, not enough money·available to exchange for his (sic) commodities at their price of production. This last factor becomes a cost because it slows down the turnover time.
At all of these points in the circuit of capital, the state has intervened to hold down costs and the over-all effect of this intervention is designed to arrest the tendency of the rate of profit to fall. Of all the interventions the most important is that which cheapens the cost of money or credit, at the point where MC is borrowed to buy· PC. We have already seen, in the case of the dependence of the small farmer on finance capitalists, how the pressure to nationalise credit through state banks was prompted by the burden of high rates of interest eating into the producers' profits.
The intervention of tlre State to advance credit to settlers or later, with the setting up of the Reserve bank, to control the interest rate, was the effect of rnaking cheap MC available for production in certain periods and in certain ventures where the amount of capital required is too large, or the risk involved too great for capitalists to invest. In New Zealand, the joint venture between the State and private capital usually involves a certain amount of public capital investment, as for example in Maui Gas, as well as other public subsidies. The essential point about cheap credit in the sphere of production however, is that it encourages the productive investment of capital as opposed to hoarding or speculation, neither of which creates surplus value.
Tlre next important intervention is the nationalisation of the means of production. By this I mean the State provision of raw materials, energy or capital goods to the capitalist at below market prices. This may be in the form of public works where the State produces MP such as roads, railways, and ports at a fraction of the cost even where it contracts this work out to capitalists. In this case, the capitalist firms who do public works for the State make their profits, while the MP produced - as in the case of roads - are used by· firms as PC in transporting their MP or CC at a fraction of the real cost. Nationalised industry·also provides cheap raw materials (timber, ironsands) energy (coal, power) and services (railways, Post Office).
A second important form of MP subsidy is generous depreciation, direct grants, or tax rebates. A dramatic example of the benefits of both forms of subsidy is the forestry industry which gets trees, railways, roads, housing, power lines as well as a port (Mt. Maunganui) provided cheaply by the state and pays very little or no taxation as the result of incentives and allowances.140 The importance of these capital subsidies is very great because they help to prevent the rate of profit from falling. This is because the capitalist does not pay the full value of his constant capital but gets the full value when he sells his product.
Equally important is the State's nationalisation of the reproduction of labour power. The value of labour power is defined as the socially necessary labour time involved in its reproduction. We now know the role played by domestic slavery in reducing the value of labour power to the capitalist because domestic work is outside the capitalist market and unpaid. With the rapid development of machinery in the post-war period labour power has required rnore skills and better health within the technical sections of the working class. We have seen how the social spending in health and education has been transformed towards the reproduction of this mental labour power.
By contrast, the de-skilling of most of the remainder of the working class, especially those female and Polynesian sections of the reserve army, has lowered the value of labour power, since competition for jobs drives down real wages. Thus the social expenditure formerly required to train and keep in good health the whole working class in the period of full employment at the height of the post-war boom has now been re-directed into the reproduction of the mental workers. Nevertheless, the State can still perform this task more efficiently than private capital because of the massive capital investment and large public sector employment necessary.141
But the reproduction of the working class does not stop with subsidies to health, education and housing. It also includes much of the social security expenditure on benefits and expenditure on law and order. National Superannuation which takes up seventy-one per cent of all benefits can be regarded as part of the value of labour power which is concerned with the reproduction of the whole family across generations. Just as the cost of children is included in the value of the wage worker's labour power, that part which would normally be included to keep the worker alive after retirement is contributed in the form of superannuaton to be paid on retirement.
Of course other benefits such as Domestic Purposes, Accident Compensation and Unemployment serve the obvious purpose of reproducing labour power to be called upon in the future. The cost of law and order is often regarded as an unproductive expense although, as I shall try to show in the next chapter, the role of law and order in reproducing ideology and maintaining social control is a necessary condition for the reproduction of the working class and could never be done as cheaply and efficiently by the capitalist class itself.142
The last point at which the State intervenes to facilitate the accumulation of capital is consumption. Here I make a distinction between three types of consumption. The first is public consumption and it is obvious that, as customer and buyer of commodities (whether for the nationalised industries - such as capital goods in railways, Post Office or electricity generation - or in capital expenditure in the social services - schools, hospitals, state houses) the State generates considerable production and realisation of surplus value for the capitalist class. Here, as mentioned earlier, public money, is used to buy capital goods and wage goods which then enter into productive consumption at lower than market prices, combining two forms of subsidy.
The third type of consumption as it affects wage goods is individual consumption which takes place when wage labour exchanges its wages for the commodities required to reproduce labour power. If this exchange takes place on the market it is facilitated by income maintenance, or the payment of social security benefits which allows those not earning to buy commodities. Income maintenance has a very important function in preventing stockpiling of commodities and helping to speed up the circuit of rnoney capital. It is for this reason that social security is often seen as more important in consumption than in reproducing labour power.
We learn from these forms of state intervention that public expenditure functions to cheapen the costs of capitalist production. In Table 8.1 I have tried to combine the different items of current, capital, and transfer expenditure listed in Table 7.2, in categoríes which make more sense to the state's role in circulating capital. Obviously however, this is very approximate since most items enter into the cizcuit at more than one place.
[Table 8.1 about here.]
While this table shows us how the State uses its revenue to serve the interests of the capitalist class, it does not tell us where the revenue comes from. This is the most important question of all because it forces us to confront the social democratic ideology of redistributional struggle in the State head on. For liberals it is always possible to argue that each factor of production's share of income is taxed and redistributed. If the capitalists get an increase and the working class a decrease after redistribution, this is only because a power elite has taken over. The workers' state will regain power and impose higher taxes on capital and cuts in direct and indirect taxes on the working class.
But if we begin with the analysis of production of surplus value and show, as I did in the discussion of immiseration, that rises in real wages are conditional upon the capitalist's first getting his (sic) average rate of profit, then we can see that the distributional struggle, and by extension the redistributional struggle, is determined by productive relations in the first place.
The most important state intervention of all in reproducing capital is the nationalisation of the means of distribution.143 That is the extension of its controls over wages, prices, taxation and finally, public expenditure itself. In nationalising the means of distribution the State is able to act on behalf of the capitalist class in determining the distributional struggle within the limits imposed by the rate of accumulation. During the post-war boom period the Welfare State was able to allocate shares, after tax and after transfers, expenditure that allowed first, the real wage of the working class to increase (both productive and unproductive); second, its own share or value in the form of revenue to rise slightly; and third, the rate of surplus value to rise sufficient to rnaintain the rate of profit. We can express this graphically, in Figure 4.
Here we see first that total value produced by the productive working class has increased (dotted sections) allowing the new value to be split between wage labour and capital. Second, the old share of wage labour, old value of labour power is net of 'Tax 1 which is redistributed as the social wage (SW) and Tax 2 which is redistributed as public expenditure subsidies to capital. The new value of labour power increases to include the area between Tax 1 and 2, and amounts to a real increase of about ten per cent. Third, for the capitalist, old surplus value must cover his expenses (particularly the wage bill and taxation of the unproductive working class) and his own tax. The new surplus value is sufficient to maintain the rate of profit.
Now we are in the position to see how the State intervenes in a period of adequate profits to redistribute shares of value. Capital can afford to forgo the new value to wage labour because it gets Tax 3 (unproductive workers tax) and Tax 4 (company tax) back in subsidies. It also gets part of gross wages (Tax 2) via public expenditure, part of which becomes added to surplus value and part of which is required to run the State (i.e. pay for state administration, debt servicing). Tax 1 is redìstributed in the form of the social wage. In effect, we have the new value split into one-third value of labour power and two-thirds surplus value.
On the basis of this analysis of the State's role in distribution we can predict the measures the State will take under changing conditions of, first, declining profits, and second, crisis and restructursng, to reduce the historic share of wage labour and increase that of capital. Under the first condition, declining profits, the State exerts its control over wages, prices, taxation and public expenditure to erode the Welfare State by the more indirect and subtle means of 'fiddling' prices, taxes and the social services.
The End of the Welfare State?
Having explained the way in which the Welfare State works to reproduce capital under conditions of 'optimum growth' i.e. rising accumulation, I now want to show how it behaves under falling growth, or declining profits. By doing so we will see that both conservative and Iiberal bourgeois versions of the 'decline and fall of the welfare state' are false. Both serve as ideology first in blaming the fall on the working class, second, in blaming an international power elite, yet holding out the social democratic hope that the Welfare State can be restored. It is important to expose these versions of bourgeois ideology because in a period of rising class struggle they are both designed to confuse and disorganise the resistance of the working class to the attacks made on it by the State. How do these two theories influence the attitudes of the working class?
For the conservatives the Welfare State represents excessive state intervention in the market. This has allowed a shift in the national wealth from capitalists and farmers to the working class by means of pegging wages to prices and not productivity, and transfers from production (company taxation) to consumption (subsidies to wage labour). This starves capitalists of productive resources, profits fall, investment slows, companies collapse, jobs are lost.
Second, it produces a class of welfare scroungers, bludgers, dole bums, whose need to sell their labour power to the capitalist has been replaced by the subsistence handout. The problem as the conservatives see it is clearly that of workers' parties interfering in the normal market forces, preventing the allocation of economic resources by the market, slowing down growth, creating the social problems of unemployment, poverty, and a non-productive parasitic class running the State. The Welfare State creates poverty by attempting to moderate the natural market forces of the capitalist economy.144
Of course in the liberal view, the role of the Welfare State has been to interfere with the pre-tax distribution of wealth by wage regulation deliberately to keep wages in line with prices. The purpose of redistribution from rich to poor via the social services was to ensure equality of opportunity for all. While this policy was successful under Labour governments, since the mid-1960s, a series of National Governments began to erode the social services, cutting back on the level of spending required to rnaintain equality of opportunity in health, education and housing, shifting the distribution of income back in favour of the international financial elite. The result has been the emergence of classes, the growing gap between rich and poor, and the rediscovery of poverty.145
What both versions obscure is the role of the State in dividing the share of the value produce by means of its control of wages, prices, taxes and public expenditure. Both draw attention away from the productive relations which determine these income shares. Both make the rise and fall of the Welfare State a matter of a power struggle and different economic policies. The conservative position is particularly cynical. We have seen how from 1894, state fixing of wages confined the labour movement within a legal framework and coopted its leadership into the bourgeois state apparatuses. Though capitalists resisted state regulation of the labour market initially, they soon realised that state manipulation of wages allowed them to increase their relative surplus value without the labour movement's realising how it was done. Thus a fair wage was one where real wages became tied to prices. As I have shown this procedure had the effect of limiting wage increases to only a fraction of the new value created by wage labour. Pegging wages to prices in this way abandoned free-market forces and put in its place the antithesis of the market - state control.
This form of state interference in the market worked very well for capitalists so long as productivity rises were in advance of price rises. It worked against the normal cycle of wage movements in boom and slump, checking their rise in periods of expansion, and accelerating their fall during depressions. By the mid-1960s however, this procedure was proving no longer sufficient in holding down the share of wage labour. This was because the overall effect of protection was weakening competition and the drive to increase relative surplus value. As the rate of accumulation was checked by a slowing down of technical improvements, profits were maintained by price rises. Whíle the fixing of wages to prices historically served to maintain the value of labour power, with price inflation the value of labour power rose ahead of productivity. The pegging of wages to prices now 'overhung' a slowing productivity, taking a larger share of a diminishing new value, putting pressure on the rate of profit.146
Naturally, in line with the philosophy of free rnarket forces which justifies wage control, protection and monopoly, capitalists now talked of wage-inflation putting the squeeze on profits and causing a slowdown in productivity. Yet again the State would need to act as the instrument of the law of supply and demand and force the labour movement to accept nil wage orders to keep wages in line with profits. The State's traditional wage-fixing policy was now seen as being against the interests of the capitalist class, especially as the unions could stand on tradition to resist any radical lowering of labour costs. The 'historic compromise' of state wage regulation with its built-in inertia of wages tied to prices now stood in the way of free market forces working to lower the value of labour power. Attempts had to be made to find new market forces to free up this wage rigidity.
One method was to revise wage fixing procedures by fiddling prices. The Consumer Price Index (CPI) which is used to measure the 'cost of living' as the basis of cost-of-living wage orders, does not in fact represent the true cost of living because it averages out patterns of expenditure in low- and high-income groups to establish a mythical average cost of living. 147 Now wage orders based on this 'average' wage allow some middle-income earners to maintain the real wage, and high-income earners to increase their real wage at the expense of cuts in the real wage of those on low incomes. The following exarnple will demonstrate how price fiddling in this way creates a widening incorne gap between rich and poor groups.
Now the CPI shows up the seven per cent cut in the average wage (of course this is made up of all items, such as housing, clothing, transport, and entertainment, not just food). As a result of union pressure a seven per cent general wage order is made which has a 'ratchet effect' in spreading the income gap.
Over a number of successive wage orders the ratchet effect increases the wage relativities between the new mental workers and the serni-unskilled and reserve-army workers, allowing an increase in the value of labour power for the former and cutting the value of labour power for the latter. In this way, while the average income was cut by two per cent to seventeen per cent from 1974 to 1979, the bottom twenty per cent of income earners suffered a real cut in their so-called real wage by at least twenty per cent.148 However, the State cannot rely on price fiddling alone to cut wages and spread the relativity of high and low wages required by capitalists, because it comes up against the organised resistance of the trade unions.
It is for this reason that conservatives adopting the free market forces strategy have called for the indexing of wages to productivity rather than prices. This is to be backed up by stronger labour legislation designed to limit the power of unions in resisting the change over from the cost-of-living principle to productivity principle. But while such radical measures are obviously being contemplated they have yet to be put into effect, and meanwhile behind this feint to the right by the ideologues of capitalism, the State continues to use its central controls of taxes and public expenditure to cut and spread the value of labour power indirectly.
Fiscal Fiddling, the Social Wage and Poverty
If the State's ability to redistribute pre-tax wages in favour of capital is limited by organised labour, it has much more freedorn to redistribute post-tax wages in its allocation of public expenditure. As we have seen, even during the period of optimal growth at the height of the boom the conservative and liberal assumption of redistribution in favour of low incomes was false. All public expenditure came from surplus value in the first place but the net transfer was in favour of the capitalist class, while that which was redistributed within the working class for reproduction has favoured the high-income rnental workers.
A number of courses are open to the State in cutting the value of labour power. First, it can shift the burden of taxation further onto the working class by means of inflation which increases rates of income tax on low- and middle-income families; by concessions and tax rebates made to capitalists; and by increasing the proportion of indirect taxation, which is regressive, to direct taxation, narrowing or even reversing the very slight progressive impact of total taxation at present (i.e. forty to forty-eight per cent). I have noted that the greatest amount of direct tax is paid by the middle-income wage and salary earners. But this has been paralleled by a steady reduction in company taxation as a proportion of total taxation from eighteen per cent in 1950 to less than eight per cent in 1979.149 As yet there is Iittle move towards more indirect taxes, but the sarne effect can be achieved in other ways.
The total effect of these taxation measures is to 'take back' part of the discretionary new value allowed to wage labour in the past, to finance public expenditure and increase the total surplus value at the command of the capitalist class. Referring back to Figure 4, Tax 2 on the gross wages of the working class eats into the new value of labour power cutting real wages.
Second, there is the general category of cuts in social spending. The object is to transfer as much of the public expenditure used in the reproduction of labour power as possible to the capitalist in the form of cheap credit and means of production. Basically this means a switch from a universal provision of social services required for full employment to a selective provision reproducing a section of rnental labour and a semi-skilled and de-skilled reserve army. This allows spending on health, education and housing to be selectively cut in such a way that money is concentrated in higher education, private health and private housing. Such trends were observed in the last chapter.
At the other extreme standards of health, education and housing are allowed to decline since former standards are no longer required for the production of surplus value. These selective cuts in the social services are a way of reducing that part of the value of labour power contributed by the cash-equivalents of the social wage. They, are not included in the CPI as part of the cost of living and cannot be priced in terms of human and social wellbeing. For example cuts in public health and general practice impose costs such as time off work and transportation, as well as the costs of deteriorating health. The deposit gap in housing forces people into poor standard developments or high rental accommodation. There are many more examples.
As well as cuts in the social wage savings can be made in social security transfers either by reducing the monetary, benefit or making it more difficult to qualify for a benefit. The purpose of benefits is to maintain income at a level sufficient to reproduce labour power, and for this reason they are pegged to a 'reference wage' representing 'a basic but adequate standard of living'.'150 In 1979 the married benefit was set at about seventy-three per cent of the 'average ordinary time take-home pay' for a married man allowing it to sink along with the falling value of average ordinary time earnings.151
In making a case for cutting spending on National Superannuation, the Planning Council recently stated that 'in the longer term the only benefit scheme for the elderly should be a universal scheme along the lines of National Superannuation, but from age 65.152 Despite the expected growth of unemployment in the aged, the Council wants no disincentive to work before the age of 65. By allowing benefits to sink and tightening up eligibility of the aged, umemployment, DPB and other benefits, a reserve army of female, child, and aged labour is kept in existence to exert its downward pressure on wages.
The consequence of these cuts in the historic level of the value of labour power for below-average-income families including those receiving social security benefits, is clearly the condition of chronic poverty. But this is not something which can be 'rediscovered' as if poverty comes and goes like social classes. Attempts by conservatives and liberals to blame each other for the 'new poor' fail completely to come to grips with the problem. Conservatives see poverty as either the natural inadequacy of individuals incapable of coping with normal life, or the result of the Welfare State's misallocation of resources away from production into the mean of subsistence of state scroungers. Liberals see in the existence of poverty the eroding of welfare policy by conservative governments bent on taxing the poor to benefit the rich. Both fail to understand the necessity of poverty as a basic feature of a maturing capitalist society. The existence of chronic poverty among rural Maori populations and the rediscovery that poverty affected twenty per cent of New Zealanders in the early 'seventies before the real effects of the depression were felt, shows that poverty is not a temporary cyclic phenomenon that comes with depressions and goes with booms.153
The inevitability of poverty under a welfare state is a manifestation of the underlying tendency towards immiseration. The consequences of poverty are well known - the poor become trapped in a cycle of deprivation, 'the poverty trap' from which there is little chance of escape. Lack of money causes impoverishment in the broad sense of poor health, family stress, marital breakdown, underachievement, and many other social problems, all of which are the distinguishing marks of the undeserving poor, tlte stagnant Iayer of the reserve army of labour.
It also produces the criminals, dope fiends, beggars and thieves, the most depressed layer of the reserve army - the lumpenproletariat. But more than this, poverty is the expression of one side of impoverishment at its worst, that which pits the idle against the overworked. The other side is that which 'distorts the worker into a fragment of a man (sic) . . . alienates from him the intellectual potentialities of the labour process . . . transforms his lifetime into working-time, and drags his wife and child beneath the wheels of the juggernaut of capital'.154
We can now understand why poverty is an intractable, endemic part of capitalist society, one which is necessary for the accumulation of capital. Moreover we can also see why, under conditions of declining profitability, it was the State which used its control of the means of distribution to create poverty on a mass scale in order to restore the rate of profit.
The Welfare State is only one guise the capitalist state puts on in fulfilling its functions on behalf of the capitalist class. It is this function which creates difficulties for the 'welfare' form of state. It is forced to turn social security into social insecurity, benefits into instruments of deprivation, and it fails utterly to patch over the growing rifts between different sections of the working class based on privilege, race, sex and age. It runs the risk of losing credibility in the eyes of the working class if it cannot somehow reconcile its role of directly exploiting and oppressing the working class with that of appearing to stand above the class struggle.
Before analysing the problems facing the State in
the current crisis, it is necessary to consider the ways in which the State
attempts to retain its hold over the consciousness of the working class,
and to use the political and legal apparatuses to maintain social order.
An understanding of these vital state functions is part of any proper analysis
of the role of the State in class struggle in a period of growing economic,
political and social crisis.
We have looked at the role of ideology in reproducing capitalist class relations in the period leading up to the post-war boom. The consent of the working class over this period was secured by rising real incomes and the invention of state socialist and social democratic versions of bourgeois ideology. Inequality was no longer taken as a natural fact of life, and could be overcome by a workers' party willing to reform capitalism on behalf of the people. But apart from pointing to the connection between petty-bourgeois self-satisfaction and rising real incomes, I have not exarnined how ideology is produced in the minds of individuals.
How was the experience of rising real wages translated into consciousness? How was the experience of the market-place generalised throughout the whole society cementing it under the hegemony of the capitalist class? Despite the apparent ease with which the undisputed loyalty of the working class was secured, in fact the winning of the workers to capitalism always involves a constant ideological struggle between the capitalist class and the working class.155
The hegemony of capitalist rule does not come naturally. It is the outcome of ideological class struggle. But this struggle does not take place in a cultural vacuum. It is fed constantly by the contradictions within the capitalist economy. If we remember the earlier discussion of bourgeois ideology, the fundamental point made then was that 'experience determines consciousness'. Economic life (that is, social or class relations) determines the forms of politics and culture found in any particular mode of production. These different modes have certain distinctive characteristics which allow us to identify the dominant class relationship, but they are never pure in the sense of completely excluding other forms of economic life.The existence of non-capitalist social relations within capitalist society, in particular, petty commodity production and domestic labour, complicate the economic experience which shapes consciousness.
The dominant class relations within capitalism are the exploitative relations between capitalist and wage labour. Workers have been dispossessed of their means of production and produce for the capitalists' profit and not to satisfy their needs. In this way the experience of exploitation is obscured by the ‘fetishism of commodities' – the inversion of production relations as exchange relations. Thus workers sell their labour and buy consumer goods. Capitalists exchange commodities with each other and with the workers. Under the veneer of equal exchange on the market 'the secret of profit' in surplus-Iabour time is submerged.
But capitalism also exploits the labour power of at least two other types of labour – domestic labour and peasant labour. While the latter produces for profit in New Zealand, both forms of labour retain their means of production and understand the value of Iabour power. This means that they, unlike wage labour, have an existence that produces a consciousness of class exploitation. In the case of domestic labour, it is expressed as an awareness of male domination. This experience is then exposed to the ideology of sexism which suppresses the class consciousness to some extent. But the important point here is that the consciousness of women is fed from two distinct experiences representing their position in two modes of production. In that sense bourgeois ideology can never dominate women as it can wage labour.
The case of peasant labour is not quite so clear because in New Zealand it is a form which is passing away as most peasants have become capitalist farmers or joined the working class. Much more significant in this country is the Maori form of production which still has a economic existence in the land and in cooperative labour. Both forms of ancient production, domestic and Maori, each with its reserve in the kitchen or the marae, are resistant to the total penetration of capitalist social relations and produce a consciousness which is, in its pure form, anti-capitalist.
Another type of existence which competes with commodity fetishisrn in exchange relations is that which emerges out of the material basis of capitalist production itself. It is born of the basic contradiction of capitalism - the socialisation of the forces of production coming up against the relations of production - and develops side by side with these relations as the first stages of a socialist ideology. As I have argued earlier, the whole business of production, exchange, distribution and consumption is now performed by the working class in a complex division-of-labour (the collective worker). The socialisation of the forces of production rneans that the whole of society is engaged in the circulation of capital as a matter of necessity.
And yet this social production is still subject to the capitalists' profit rather than need. This means that production can only proceed by driving up the rate of exploitation of the overworked, and expelling the surplus population into poverty. So while the free worker exchanging his or her labour power for its value on the market remains a condition of capitalist production, the tendencies towards immiseration and polarisation forces the working class to develop a defensive trade union consciousness; it is a consciousness of the interest of the class at the level of distribution, and in the market struggle with employers constitutes a distinct break with bourgeois individualism.
The struggle for ideological hegemony therefore has a rnaterial basis in the forms of productive life and experience of the family, peasant and Maori society as well as capitalist class relations. The struggle between these collective sub-ideologies (because they are subordinated by bourgeois ideology) and bourgeois ideology permeates the whole of society in all the institutions which have some part in the shaping of an individual's consciousness. But the struggle is heavily biased in favour of the capitalist class so long as the State is able to intervene to prevent the collectivist elements of consciousness from becoming fully anti-capitalist. It does so by means of its authority to delegate the use of force to the family and school in the socialisation of the young, and the legal restrictions it imposes on most other institutions, for example the media. The family-church-school bloc is the capitalists' front line of defence in the battle for the minds of the proletariat. It produces authoritarian personnel fit for capitalism, backed up by the political and legal reserves of the state.
However, as the capitalist system itself generates increasingly unequal exchange relations in the market-place, the material supports are cut out from under the front-line defences and whole section of society are set apart from each other. The collectivist undercurrents in the labour movement, in the wornens' struggle and in the Maori right movements are activated in response. The conservative propaganda of genetic inferiority becomes a lie when the inferiority of women, Maoris and other stigmatised groups is seen to be social.
But nor does the liberal strain of state-aided collectivised commodity fetishism fare much better in the face of social insecurity, mass poverty, public squalor and private wealth. The front-line defences begin to crumble under the weight of social problems and the State is forced to bring up the second line of the reserve army of capital to restore social order. In doing so the basis of class rule shifts from consent towards repression and the State, as the last bastion of capitalist rule, finds itself divided within.
In the rest of this chapter I shall try to subject some of these sweeping statements to a more detailed analysis, starting with the front-line defences of family-school; examining what is known about working class culture; showing how the State controls deviance; and finally making some conclusions about the breakdown of capitalist hegemony.
Institutions of Social Control
The most important institution of social control is the family. Its main purpose is to socialise the young, and to 'internalise the norms' of capitalist society. The mechanism by which the character structure of children is shaped is that of the repression of the basic biological needs by physical force and the cultural attachment of these needs to fetished commodities of the market-place. Long before Freud, historians had observed the link between the suppression of sexuality in the name of puritanism and the dedication to hard work and the acquisition of property. It seems that without the prior repression and control of sexual needs within the monogamous farnily, the learning of bourgeois values of hard work and property rights would not have been possible.
The work of Freud and some of his more radical followers allows us to distinguish between necessary repression found in all modes of production, and surplus repression - that which is required to form a capitalist character structure. Freud regarded the repression of sexual instinct or life force (libido) as necessary in the reproduction of civilised life in any form of society. The pleasure principle of unbridled emotions had to be subordinated to the reality principle of social order. Because civilisation inevitably involved the repression of needs it would continue to generate discontent, neuroses and psychoses.156
However, one of Freud's co-workers, Reich, challenged the notion that repression is universal in all societies. He held that repression in the rnonogamous family was unique to capitalism, and had arisen for the purpose of sublimating sexuality into the work ethic. Repression and self-denial was the basis of a distorted personalíty characteristic of capitalism and Ied quite naturally to the excesses of hysteria and mass psychopathology of fascism.157
Other psychoanalysts have pursued the sarne theme. Karen Horney refers to the 'neurotic personality of our time'. Theodore Adorno and others of the Frankfurt School (which brought psychoanalysis and Marxism together) including Erich Fromm, have argued that the authoritarian character is normal in capitalist society. Its basic features are an excessive weakness and submission to authority, lack of self-confidence, an aggressiveness to others, and what has been called a 'closed mind'. In other words a weak, defensive personality beaten into submission in early childhood, which tends towards irrational, obsessive and neurotic reactions to any threat.158
One member of the Frankfurt School, Herbert Marcuse, attempted to reconcile these two positions. In Eros and Civilisation he sought to demonstrate that some sexual repression was necessary in all forms of society, but that in the case of capitalist society there was more repression than was necessary or surplus repression. In his view surplus repression served two purposes, first, in reproducing the family as a source of labour power, and second, producing bourgeois ideology. The first of these was obviously the case of capitalism harnessing the family form of production which exploits domestic labour and converting it for the production of surplus value, but Marcuse did not follow up this point. He concentrated on the second function.
Here he argued that sexual repression was used to indoctrinate the young into bourgeois values of achievement and acquisitiveness, but as well as this it provided a basis for sexploitation. The degree of surplus repression once needed to discipline the working class, could in the 'age of affluence' be relaxed to allow sexual needs to motivate the increased demand required to buy capitalism's products. While some of the more uncritical New Left writers of the 'sixties saw this relaxation as a 'sexual revolution' in the groin of bourgeois ideology, Marcuse was more cynical. The liberation was phoney, it remained repressive because it sucked people's sexual needs further into the capitalist machine of production and consumption. Sexuality itself became a commodity in the market-place.159
But while the Marxist psychoanalysts have given us an understanding of the role of the family in producing a personality type suited to capitalist society, with the exception of Marcuse they have completely ignored a more basic form of repression upon which the surplus repression of capitalism depends. This is the repression of women as a class by men. In between necessary repression which is held to be universal and capitalist surplus repression there is gender repression.
As we know domestic labour is not wage labour. It is the material base of a sexist ideology which is harnessed to bourgeois ideology, but which is necessarily independent. Women experience direct oppression (or domination) by men which cannot be covered up by surplus repression. For, however sexisrn is exploited (to keep women in the home, to discriminate in wage labour, to sell femininity as a commodity) it is always perceived as a male/female relation - hence its independence from bourgeois ideology. What goes unrecognised by the psychoanalysts, is that the bourgeois family as the first line of defence against sexual liberation, contains within it the seeds of its own downfall. Women as a class have the potential to rebel against sexism as an ideology and destroy the 'earthworks' upon which the foundations of bourgeois ideology rest.
Closely linked with the family as an agency of social control is the education system. Recent work by many liberals and Marxists has shown the ways in which formal education reproduces bourgeois ideology. The most important are language, authority and the curriculum. 160 Linguists like Chomsky have argued that our perception of the world is structured by the concepts embodied in language. Over the centuries, words have taken on meanings which are value-laden, in particular the values of the market-place. Some writers claim that words are also class- and race-specific, so that working-class or racial minorities' children develop a limited range of concepts suited to their class position in capitalist society. The 'we' versus 'they' concepts noted by Richard Hoggett or the 'restricted codes' of Bernstein are such class languages.
More recently, Habermas has developed a theory of the role of language in the production of bourgeois ideology. For him, the selective punishing and rewarding of the use of words in infancy and early education, produces a 'distorted communication' which includes a fertile language of bourgeois values, of work, property, achievement, time and so on, but which sterilises the language of dissent. 161 Of course the language learning process is well under way by the time a child enters school, but it is the authority structure of learning in schools which establishes language as the basis of all forrns of social control.
Most closely concerned with language as the vehicle for distorted communication, is the hidden curriculum, that part of the forrnal curriculum that inculcates bourgeois values. Two forms of learning occur here. First, what is learned constantly anticipates how it will be used in the division of labour. People learn to develop themselves as individuals and to be useful in society. The choice offered is between different types of wage labour as means towards the goals of success, property·, leisure time, fame. The second form is the learning of basic concepts such as individualism, work habits, property rights, sexual relations and submission to authority, within the school as a social organisation.
The school is set up like a factory or large office as a simulated trainer in which people are rewarded for being obedient to authority, for punctuality, for diligence, for respect for property, for sexual abstinence (within school bounds). They are punished for rebellion, tardiness, slothfulness, vandalism and promiscuity (within school bounds). By the time children become wage labourers they must be able to think, speak, and behave, and of course, act on what they have learned, in fulfilling their function of producing or circulating surplus value.
But the mass production of ideologically fine-tuned workers is pointless without the necessary training in the skills required by the technical division of labour. The curriculum is therefore determined by the type of knowledge needed for producing commodities, selling, transporting, financing and administering the whole circuit of capital. These vocational requirements are learned in the basic sciences, maths, commerce, accounting, engineering, public administration and management.
Education must also serve the process of reproduction, and in particular the production of ideology itself. Teachers, lawyers public servants, social workers are all necessary as agents of control (as are the police, the magistrates and the army necessary to administer law and order). These agents of social control must be trained in the special skills needed to produce compliant wage labour. The reproduction of labour power is satisfied mainly by the learning of sex roles in the family and school. Girls are taught the specific homecraft skills needed to perform domestic labour, and those skills which can be useful in the female-dominated secretarial, service or manufacturing floating reserve occupations.
Yet there is a fundamental contradiction in the education systexn which makes it (independently of external factors) incapable of containing ideological class struggle. This is the fact that the further one goes up the system to be trained as a mental worker, the more it is necessary to develop one's 'critical faculties'.162 We find therefore, a significant proportion of university students taking ideological standpoints which are critical of, if not opposed to, capitalism. This tendency is then reflected in the intensification of ideological struggle in the media and other social institutions such as the church and political parties. The polarisation of attitudes opens up new areas of public debate which puts increasing strain on bourgeois hegemony.
Two recent exaxnples will serve to illustrate this tendency. The first concerns the struggle for independence of the only non-capitalist section of the media in New Zealand, the BCNZ and its weekly magazine The Listener from political interference.The second is the withdrawal of government support from CORSO, and a similar challenge to the National Council of Churches, sparked off by conservative church members who find these organisations threatening to their bourgeois values.163 Splinter movements in a variety of institutions such as the legal profession over questions of civil liberties, for example, show that the formal education system cannot, any more than the family hold the first line of defence against the mounting ideological offensives of radicalised sections of the working class.
What, if any, effect has this growing challenge to bourgeois hegemony had on the consciousness of the working class as a whole? Before attempting to answer this question we have to investigate what attitudes and values are held by the working class, (or sections of it) in order to predict what changes may take place as the result of ideological struggles in particular institutions.
Ideology and Popular Culture
Surveys of popular culture in New Zealand have revealed attitudes which cover the whole ideological spectrum. The Heylen poll has found that on questions of morality about thirty per cent of the population are 'hardliners' who resist all changes in moral standards. They oppose vasectomy; freely available contraceptives, and want a tightening of book and film censorship. About twenty per cent are 'traditionalists' who draw the line at sex education in schools, nudism, and the display of 'adult' books in bookshops. By contrast fifty per cent are progressive enough on moral questions to favour the liberalisation of abortion, nudism and sex education in schools.
On questions of law and order, the hardliners (forty percent) want a return to corporal punishrnent and more armed police, while the traditionalists (twenty per cent) approve of corporal punishrnent in schools, and think the present penalties for the use of marijuana adequate. The moderates (twenty per cent) approve of school uniforms, and are against the legalisation of marijuana, while the radicals want to legalise marijuana and abolish school uniforms.
On questions of political authority, the conservatives (sixty per cent) like the national anthem played in the theatre, want to maintain close ties with Britain, and blame the unions for work stoppages. The rest, the liberals (forty per cent), disagree.164 On these findings, the majority of the population is clearly more conservative than liberal with a tendency towards the extreme hardline 'right' than to the radical 'left'. Is there any particular pattern in these conservative beliefs?
One psychologist has developed a Conservatism Scale to measure such attitudes. He found four types of conservatism (1) retributive- racialist: that is, nationalist, racist, tough on law and order and aggressive in their world outlook; (2) intolerance of youth; (3) socio-sexual fundamentalism - an opposition to change in the status of women (sexist) committed to traditional moral values; (4) religious rigidity.165 Though these attitudes were not necessarily held to the same extent by all conservatives, they are strikingly similar to other surveys which have shown that an authoritarian belief-system dominates the popular culture in New Zealand.166 The essential ingredients of the authoritarian character structure are identifiable: a weak self-concept expressed in obsessive success striving and deference to the successful; a repression of sexual needs causing neurotic anxiety which becomes manifest in a moral conservatism, sexual intolerance, and religious conventionalism.
Altogether the popular cullure reflects the dominant
bourgeois ideology as a tough, individualistic, intolerant and moralistic
set of beliefs. We can summarise the three main components of authoritarianism
in New Zealand;
(1) a generalised political and racial intolerance
at home and abroad, more familiar as extreme nationalism and racism; (2)
an opposition to state intervention and welfare spending better recognised
as individualism of the free market variety; (3) an idealised faith in
political equality and democratic rights, combined with a willingness to
ignore the rights of others and submit to political authority.
Against the dominant authoritarianism there exists the minority liberal culture which embodies the classic radical or progressive attitudes towards reform, equality and the protection of rights and freedoms of minorities. Obviously, these two versions of bourgeois ideology represented in popular culture are not held in their pure form. The rnajority of New Zealanders hold a mixture of attitudes which include both conservative and liberal positions on a wide range of issues. Nevertheless, it is still possible to identify those who are most authoritarian or most liberal in terms of certain social, cultural and personal attributes.
Bourgeois social scientists have tried to explain the authoritarianism of the poor and unskilled working class as either a personality defect of those who sink to the bottom of society in the struggle for survival, or the impact of economic deprivation on family life. Even Adorno and his colleagues, who certainly understood its cause in the nature of capitalist class relations, put it down to social conditions. Not until recently has it been suggested that the causes may be the combination of at least three factors; lack of education which is strongly associated with manual work; rigid personaity type or the psychic structure of capitalism; and a set of conservative beliefs and values learned in the, family, school and other institutions of social control.
It seems that ignorance may, with certain personality characteristics, prepare the ground but unless the seeds are sown and cultivated by the family, schools, churches, polilical parties, media and other institutions, it is unlikely that they will take root and flourish as a fully grown authoritarianism. Let us see how these factors combined to produce authoritarianism in New Zealand.
First we take scores on the authoritarianism scale. The questions which most strongly represent positive responses on this scale are: ‘communists are criminals’; ‘sex criminals need flogging’; and ‘China should not be admitted to the United Nations’. If we compare scores on the A-Scale with occupation, income, education, political party and age we find:
Occupation (-0.24) Income ( -0.40) Education(-0.45)
Party (0.31) Age (0.55)
What this means, on the surface, is that authoritarians are rather unskilled, poor, ignorant, aged and vote National more than Labour. However, if we look more closely at these attributes it is education and party affiliation which are most important with income, occupation and age of slight importance.
TABLE 9.1 here
Authoritarian and liberalism scores in manual
and non-manual workers by secondary education and political party choice
What we find here is that the distinction between manual and mental labour makes little difference in determining whether or not a worker is authoritarian or liberal. Much more important are education, which tends to break down the ignorance in one's knowledge of oneself and the world, and political party affiliation.
The most authoritarian workers are likely to be those who have little education, are poorly informed about politics and current affairs, and who are tuned into the key conservative social institutions. The National Party, as the custodian of conservative bourgeois ideology, is the most influential. Support for the party implies an acceptance of the dominant symbols of nationalism and tradition inherited from the nineteenth century. Almost as important is the effect of religion which shows up as membership of the Catholic Church, and high attendance at non-Catholic churches.
If we consider personality factors associated with authoritarianism, we find the characteristic ambivalence towards authority. On the one side there is the strong belief in democracy expressed in doing one's duty as a citizen ie voting. On the other side there is the submission to authority implicit in a sense of powerlessness, lack of trust, and dependence on others. If the theory of repressed·sexuality as the cause of authoritarianism is correct, there is every reason to expect this personality type to be found in all sections of the working class. But it provides only the bare ground for the influence of education and institutions of social control This allows us to put forward an explanation of the variations found within working class popular culture in terms of the impact of education and social control institutions upon the personality.
I argue that the authoritarian personality type is fairly universal in New Zealand and is the underlying cause of the petty-bourgeois ambivalence towards authority. The idealisation of the state and collective welfare at the expense of individual freedom is a strong characteristic of even the most libertarian intellectual tradition in New, Zealand. Such is the ground created by the widespread repression of sexuality within the rnonogamous family in a capitalist society. On to this ground are spread the seeds of bourgeois ideology, of both conservative and liberal varieties. But because the conservative influence is greater ín the holy trinity of family-church-school, the ground is better prepared to take the staple crops of individualisrn, nationalisrn, racism and sexism.
The petty-bourgeois liberal institutions, particularly the Labour Party and the trades unions can, nevertheless, find some hard ground on which to sow the seeds of collectivism. Out of the sarne working-class cabbage patch there emerges a popular culture with two distinct strains - one individualism one collectivisrn. But in all other respects the crop is still nationalist, racist and sexist. The logical development of these strains in their rnost virulent forms are nineteenth-century laissez faire nationalism, and twentieth-century national socialism. We then add the compulsory herbicide of education which kills off the most virulent strains and reduces nationalisrn, racism and sexism with increasing dosages. However, too rnuch herbicide also kills the crop and destroys the religious and moral nutrients in the soil, so the dosage is reduced by means of censorship and libel laws and changes in the curriculum.
Social Problems and Social Control 167
Within the popular culture there exists two threats to bourgeois hegemony. These are the threats posed to the individualism/nationalism core by collectivism and education. Hegemony can only be restored by neutralising these two progressive tendencies and reinforcing individualisrn and nationalisrn. Since the working class embodies both conservative and liberal beliefs, hegemony is reproduced by turning these elements of the working class against one another - the technique of divide and rule. I shall demonstrate how this works as the system attempts to control the social consequences of growing inequalities.
The social problems caused by inequality all stem from the objective tendencies towards the concentration and centralisation of capital and the immiseration and polarisation of the working class in mature capitalism. The market-place can no longer live up to the expectations of equal opportunity. Nor can the Welfare State and its social services prevent the growing gap between the bourgeois ideology of achievement and the failure to realise this goal. Since the material basis of bourgeois hegemony in the equality of the market-place is no longer present, how does the capitalist system prevent the working class frorn abandoning its loyalty to society? How does it maintain social order?
The answer is found in the different ways individuals adjust to failure. Taking the conservative view of market-place, the majority adjust to failure on the basis of individualism or nationalism. They remain firmly under the grip of the front-line institutions of social control and blame their failure on their own inadequacies, or the interference of some group or individual such as the trade unions, immigrants, communists or women. Those who blame themselves, the retreatists, are commonly found among the mentally ill and the drug dependent. Traditionally tlrese groups have been diagnosed as morally· weak or blameworthy for their condition. Today they are treated as sick by social workers and the medical profession and subjected to therapy which is designed to restore them healthy to society. In this way the problem is made to seem one of the failure of the individual and not of the class nature of society.
The Marxist view of mental illness is the reverse. The normal personality in capitalist society is psychopathic because it is the product of a family geared to the reproduction of impoverished, alienated labour. It is not surprising to find, therefore, that numerous studies of actual numbers of people suffering from mental illness and alcoholisrn show these adjustments to capitalist life to be normal. While the official figure gives only one per thousand people suffering from severe mental disorder, the numbers of those whose lives are made thoroughly miserable by anxiety, obsessions, and depression is more likely to be between thirty and forty per cent.168 As for alcoholism and gambling, we all know what would happen if somebody shot all the horses and swilled the booze down the drain. The country would go to the dogs.
Retreatism has low social costs. Apart from the expense of hospitalisation and the loss of production involved, this mode of adaptation does not threaten bourgeois hegernony. Nor, as we shall see, do those who conform, who adapt to their failure by blaming others, present a problern. Their aggression and frustration can be deflected away from the class structure onto some scapegoat group.
Thus the conformists, secured by the front line, are used as the shock troops against the deviants. Whether they are ordinary members of the public, 'mothers of ten', vigilante groups, or recruited into the social-control agencies as social workers, police or sociologists, they all occupy on behalf of the capitalist class the second line of defence in the class battle for social control. Conformists are to be found supporting conservative values in every social and cultural conflict over work, sexuality and authority. They maintain the 'normal' standards against the abnormal, pathological, 'deviant' who presses for economic, political, sexual and racial equality. On a whole range of issues - contraception, homosexuality, abortion, race and sport, church and politics, unemployrnent, drug-use, crirnes of violence, trade union communists, and so on - conformists and deviants contest each other. Three of these social problems, abortion, violent crirne and drug-use present particularly good examples of such conflict.
The issue of abortion is particularly volatile because it symbolises the conflict over the control of sexual reproduction. It thus threatens not only the hegemony of bourgeois ideology, but more seriously, sexist ideology. The conservative position is posed as one of the rights of the child, but in fact it is a defence of the rights of men to oppress women, and of the interests of capitalists to exploit their labour power. To tolerate abortion-on-demand would be to remove the basic control which keeps women dependent on rnen and oppressed in their role as domestic slaves. Capitalism therefore mobilises its working-class allies with the support of the church and parliament to make a last ditch stand against this threat to the family as the basic unit of society.
That abortion-on-demand may not lead to family breakdown and divorce but have quite the opposite effect is ignored because the real issue is the control of women. The confomists, in opposing abortion, are defending their own tenuous adjustment to inequality. They are the most threatened by any relaxation of sexual or rnoral codes because they are highly anxious about their own repressed sexual needs. In this way the capitalist system plays off the conformists' fear of freedorn against the deviants in such a way as to minimise the threat to bourgeois hegemony.
It has often been observed that the level of public concern over violent crime has little to do with the chance of being assaulted on the streets. Violent crime is less than ten per cent of all serious crime, and ninety per cent of the violence is caused by common assault. A recent liberal document on the subject argued that it was impossible to prove that violent crirnes were on the increase.169 Indeed, it was possible that the upsurge in violence may have been caused by a growing public alarm, better policing, or the arresting of young people for behaviour that would pass as 'normal' on the rugby field.
Of course there is no denying the existence of 'crimes against the person', but it seerns that physical violence serves the purpose of allowing those conformists who have severely repressed aggressive impulses to participate in a vicarious 'bashing'. The tough punitive reaction to the most threatening expressions of violence (birch the bikies) is an important mechanism in controlling and channelling the authoritarian aggression of the conformists in a socially acceptable way. It acts as a safety-valve, turning hostility away from the class system onto other members of the working class.
Another issue which divides the working class is drug use, in particular the public reaction to marijuana. The real threat of this drug to the conformists is not in its supposed effects on health, but in its social consequences. In the first place, other much more harrnful drugs, such as alcohol and tobacco, are not subject to the same legal repression. In the second place, the authorities know that the listing of soft drugs as illegal, has the effect of pushing harddrugs. The authorities are the biggest pushers of all because they guarantee a market rnonopoly for the hard-drug heavies. Marijuana presents a much greater threat to bourgeois hegemony. It is seen as the number one symbol of the cultural revolution which threatens to undermine the basis of sexual repression and with it those bourgeois values of hard work and respect for property.
The Board of Health Report on Drug Use of 1970 saw
the threat and recommended that "young people be protected from pressures
inimical to their good rnental health and sound social adjustment'"- that
is, the drug culture. Other than improving "health, education and welfare
services" the Report could suggest no way of protecting young people.170
Nor should we expect it to. Drug addiction is a normal fact of life in
capitalist society because by and large it serves the reproduction of the
working class. Alcohol and barbiturates are good guarantees of 'sound social
adjustment'. However, as soon as drug use becomes counterproductive i.e.
a hallucinogenic and not a soporific, the soporifs are wheeled out against
the drug fiends. The conformists, backed by the breweries and the Health
Department, unite against the deviants in the name of mental health.
The Case of Juvenile Offending
The question therefore arises in what way are the deviants, especially, those who respond to inequality by rebelling against the system, a threat to bourgeois hegemony? How serious are their challenges to property and authority? Juvenile offending is the obvious example. Those who retreat from, or conform to, the experience of failure remain caught up in the front line defences of family-church-school. They adopt the conservative view of inequality and blame themselves or others for their failure but not the system itself. When the front-line institutions fail to hold for reasons of poverty, family breakdown, or lack of parental control, children are able to evade these social controls. They tend to react to inequality by resorting to theft of property -- a sort of adolescent primitive accummulation. Theft brings the up against authority in the form of the law and order agencies of the second line of defence - police, social workers, magistrates, probation officers, social scientists.
While most juvenile offending against property or persons is not serious in terms of the amount of property changing hands, 171or the personal injury inflicted, it raises the spectre of 'anarchy' in tlre minds of capitalists and their working-class allies. It poses the possibility of a total breakdown of social order based upon the sanctity of private propety. It is for this reason tjhat the State's repressive forces of law and order treat the problem seriously. Rebellion rnust be contained at the second line of defence. By the punishment of the few will the many be deterred. To what extent is the fear of rebellion and anarchy justified as a growing class consciousness in the working class?
Writing on the subject of crime in the lumpenproletariat, Marx held that theft did not mark any consciousness of class exploitation. It was a personal rather than collective act of appropriation. It did not challenge the bourgeois right to private property at the level of production, being merely a type of redistribution.172 Its effect was to reproduce the individualism/nationalism coupling of the general interest and suppress the consciousness of a class interest. Some socialists have objected to this view as middle-class moralism, forgetting that property has nothing to do with morality. Regardless of the rights or wrongs of property ownership, Marx was simply saying that the lumpenproletariat was the least aware of any section of the working class of the need to organise to fight the capitalists. And this he attributed to their highly individualistic solution to the problem of inequality.
It is precisely for this reason and not from any moral stand that we can argue that the lumpenproletariat in New Zealand is not the most backward section of the working class. For the reasons given earlier, the Maori mode of production still has a material base in contemporary society, and generates one form of collectivist sub-ideology in conflict with bourgeois ideology. Therefore because young Maori people are the backbone of the lumpenproletariat, juvenile crime in New Zealand represents a challenge to bourgeois ideology.173 The actual process called juvenile offending is a euphemism for class struggle. This is because Maori youth are actively criminalised by the capitalist authorities, that is labelled a criminal class in order to 'individualise' the collective sub-ideology represented by Maori Gangs.
This explains why the State takes juvenile offending seriously and why, if it does not exist, it has to be invented. For the second line of defence can only hold if the bulk of the reserve army is deterred from rebellion. As the structural tendencies of the system undermine the material basis of bourgeois hegemony in the market-place, as the front line of defences begins to crurnble, everything rests on the ability of the law and order agencies to turn all acts of rebellion into crimes against property, the person, or the state.
It is the growing threat of the lumpenproletariat in a period of structural crisis that explains the shift from liberal treatment to conservative punishment of juvenile crime.174 Ever since the first enunciation of official policy on juvenile offending in 1955 the State's approach to the problem has been to concentrate on prevention and detection. At that time the public was treated to lurid accounts of gang rapes, bodgies, widgies and milk-bar cowboys. The Mazengarb Committee blamed this behaviour on a lack of moral training at home and sexploitation in the media. But censorship laws and sex education for parents did nothing to prevent the rise of juvenile crime. Ten years later offending was up by sixty per cent, much of it, some suggested, the result of borstal training. Periodic Detention, fines, and probation took the place of borstal and still the rate of offending kept climbing. By 1971 it was suggested that treatment after the age of 10 was pointless, and the emphasis shifted to early detection and prevention.
Now the schools would be used to monitor the behaviour of children from an early age. Psychologists and teachers would collaborate in the detection of pre-delinquent behaviour such as bed-wetting, speech defects, temper tantrums, absenteeism, habitual lying, petty thieving, marked restlessness, hostility to adults, moodiness and wandering. A decade later a report of this research came to the not very surprising conclusion that children showing signs of pre-delinquency were no more líkely to become delinquents than those who were continent, attentive, alert, fluent, and keen on the teacher.175 In the same year, 1975, the liberal approach represented by the Joint Committee on Young Offenders, had reached the limits of its usefulness to the State. It reported that the high proportion of young Maori boy offenders was due to the 'inequities that currently exist between the European and non-European populations in New Zealand'. A levelling of these differences would cut the rate of offending by at least eight per cent.176
Such liberal good intentions are bad news in a period
of growing structural inequality since they give credence to a class or
race view of crirne wlhen the state must re-assert bourgeois individualism
against any form of collectivist class, sex or race challenge to capitalist
hegemony. Predictably, the conservative biological and racist ideas of
criminal types, the genetic inheritance of violence etc. have come to the
fore in the public debate about crime, while the ‘do-gooder' liberal excuses
have been eclipsed.177
Conclusions: The Generalisation of Class Struggle
I can now try to put together the pieces of the picture puzzle of capitalist society. Instead of the isolated fragments which make up the bourgeois ideological perception of free and equal individuals exchanging on the rnarket-place (and having the rights of citizens within a nation-state) we can see that these market relations have their origins in capitalist productivn relations. So long as workers continue to see themselves as free individuals selling their labour power at rising market values, they remain ignorant of their exploitation. But there are a number of objective tendencies within capitalisrn itself which work against capitalist hegernony. That is, there are certain historic forces outside the control of individuals that make history behind their backs.
These tendencies all spring from the fact that capitalism is a specific mode of production with its past history carried along inside it and its future transition into a new mode of production already foreshadowed in the growth of the working class. Capitalism gets surplus value not only from wage labour, but also from the labour of female, peasant-family and Maori direct labour, but it cannot subject these pre-capitalist forms of labour to the same degree of ideological domination and at some point its past catches up with it like a nemesis.
At the same time capitalism itself creates the growing contradiction between the socialised forces of production and class relations of production. On the one hand the development of the forces of hand and head has produced an objective control by workers (the collective worker) of the production process. And the knowledge generated by education allows workers to expand their horizons from wage labour in the market-place and begin to perceive some of the more apparent effects of the contradiction. Thus on the other hand the continued vast accummulation of wealth in the hands of the capitalist class, raises questions about ecology, the third world and the rationality of the market-place.
But not only is there the long-term historical tendency and its immediate effects, the process of accumulation is punctuated by periodic crises which destroy huge amounts of the socialised forces of production and throw large numbers of the working class out of work. It is this cyclic destruction which has forced the working class to organise to defend the historic and moral value of its labour power and to extend this defensive action into social democratic politics. And while each cycle worked itself through from boom to bust, the trade-union-cum-social-democratic consciousness of the working class remained at a level of a sub-ideology within capitalist hegemony.
Nevertheless, as is apparent in the present world economic depression and its effects on the New Zealand economy, the conjunction of long-term hístorical and short-term cyclic contradictions has presented a new problem for capitalism. The tendency for the rate of profit to fall can no longer be counteracted by Keynesian Welfare State interventions and the circulation process begins to breakdown. I shall go into the precise ways in which this occurs in the next chapter.
The general consequence however, is that the conjunctural crisis undermines the market-place as the material cornerstone of bourgeois ideology. Instead of managing the circulation process to facilitate equality of exchange, the state must break the cash nexus at all the points in the circuit. It modifies its subsidies to capital and to labour power to destroy value and to restructure both labour and capital.
With the breaking of the cash nexus which holds the producing classes to the market-place there follow a number of consequences that affect the subjective process of class struggle, consequences which push the consciousness of workers towards a class consciousness allowing them to act as a united political force in shaping history. At the immediate level of the reaction to growing inequality in the market, the direct producers activate their collective ideologies to defend the value of their labour power. This takes the form of first, trade-union resistance to wage cuts; second, the growing struggle of women to fight cuts in social services, food subsidies and the intensification of domestic labour; third, growing struggles among the Maori people to prevent further alienation and exploitation of their land; fourth, the peasant producer being squeezed between rising costs and falling prices and raising the populist demand for more state aid.
What characterises these protests at this level is their defensive nature. They seek to resist or restore cuts in living standards and do not challenge class relations. Trade unions, women's groups or Maori and youth groups may form loose urban-based coalitions on a range of issues such as housing, unemployment, abortion, racism or nuclear energy, but they do not coalesce into a united anti-capitalist front. Their separate collectivist sub-ideologies are geared for struggle in the market and often come into collision.
For example, demands for women's rights such as abortion or an adequate Domestic Purposes Benefit meets with resistance from rnany trade unionists, male and female. Union demands to restore wages find opposition among some housewives who bear the brunt of the loss of wages through strikes. Whether these defensive struggles can lead to a development of working-class consciousness depends therefore on the ability of those groups within the coalition to overcome the nationalist, racist and sexist differences that still divide them, and to recognise their common interest in class struggle.
The transition to class consciousness can only come with intensified class struggle. The more severe the crisis the rnore workers' defensive struggles are turned automatically into offensive struggles. The capitalists have to cut back wages to restore the rate of profit. Any resistance to cuts necessarily reduces the rate of profit. The normal 'rights' and 'freedoms' of the labour movement to bargain in the market-place are outlawed in the national interest and violations of law and order are treated as sedition. This creates a crisis of confidence in the reformist leadership of the labour movement among the rank and file and the breakaway of militant or autonomous movements in the working class prepared to break the law. Whether the militants become isolated as extreme guerilla-type splinter groups, or form the leadership of a broadly based working-class political organisation depends on the support they can get from the rest of the working class struggle.
Meanwhile the State is doing its best to prevent the spread of an anti-capitalist rnovement by using its legal force to isolate and destroy the militant sections of the labour movement, the wornens' movement and the Maori nationalist movement. In the past this divide and rule technique has been very successful. But in the present conjunctural crisis the underlying objective contradictions are much more developed. Attempts to drive a wedge between the aristocracy of labour and the militant sections of the working class may not be able to count on the past loyalty of the majority forcing the state to resort to open repression.
The reproduction of the working class would therefore
no longer be based on their consent as in the past, but rather on systematic
terror. In this event the State's mode of domination would have followed
its natural course from state socialism to national socialism. Capitalist
social order shifts its mask from petty bourgeois socialisrn to petty bourgeois
fascism. Just how real a prospect this is of course is open to debate.
In the next chapter I will try to analyse in more detail the events that
are shaping the course of class struggle today.
10 Crisis, Restructuring and the
Working
Class
New Zealand is currently facing the most serious economic crisis of its short history. New Zealand capitalists can no longer produce enough goods profitably on the world market to retain the confidence of their creditors overseas. It is much more serious than the crisis of the 'thirties, for at that time New Zealand farmers were still the most productive in the world and markets existed for their products. Neither is the case today. Because the crisis is one of falling profitability, it can be solved only by means of a state-managed depression which restructures backward and inefficient farms and firms into more concentrated, large-scale and internationally competitive enterprises.
But the crisis of profitability cannot be solved simply at the level of the economy. The State is now the key actor in the drama of crisis and restructuring. It rnust reverse its post-war policies of insulation arxd protection and re-allocate the economic resources tied up in these backward sectors of production - family farms and family companies - into new areas of production demanded by the international capitalist class. The former favoured development of small-scale New Zealand national capitalism is now up for auction on the world market as its natural resources of land, energy, raw materials and labour power are 'knocked-off' to the highest bidder.
Such a dramatic reversal of economic policy on the part of the State, from protector to international pimp, will inevitably bring about a major political crisis. This will arise because the State is bound by the contradiction of capital to undertake two mutually incompatable tasks. To fulfil its economic role of restoring the rate of profit, it rnust reduce the living standards of the working class drastically. Phase one of this attack has already been completed vvith the huge wage cuts since 1974. At the same time however, the State must act in its capacity of policeman of the working class, and it can only act in this capacity whilst the working class abides by bourgeois Iaw and order.
Therefore, the more the State must act to cut living standards in the name of the national interest the more it runs the risk of exposing its capitalist role. A political crisis will result if the State is forced to `blow its cover' and resort to physical repression of large sections of the working class. In my view such a political crisis is highly likely given the seriousness of the economic crisis. Whether it develops into a rnore general social crisis, in which the reproduction of capitalist social relations become jeopardised, depends, as I hope to demonstrate, upon a number of very uncertain circumstances surrounding class struggle over restructuring. At any event, the current crisis is one of profitability that can be solved only by means of depression, and as such reveals itself as an epoch- rnaking event in the development of New Zealand capitalism.
Why then is the economic crisis so serious, and why does its solution involve such drastic consequences for the working class? To answer this question we have to go back to the laws of capitalist development. Marx wrote that the contradiction between capital and labour would become manifest as a long-term tendency:
"The centralisation of the means of production and the socialisation of labour reach a point at which they become incompatible with their capitalist integument. This integument is burst asunder. The knell of the capitalist private property sounds. -The expropriators are expropriated." 178
Contrary to rnany bourgeois opinions expressed on this matter, Marx did not write a blue-print for revolution. The knell of private property, would come only when the working class was capable of revolution.
Nor did this contradiction work itself out independently of human action as a sort of 'hidden hand'. It would take the form of class struggle between individuals who were capable of understanding the historical forces working behind their backs. The concentration and centralisation of capital in the hands of the capitalist class and the socialisation of labour in the form of the collective worker, would develop by means of periodic crises and renewal. Each industrial cycle consisted of a period of rapid expansion or boom followed by a contraction or slump lasting about ten years in all. 179 Each time the less efficient capitalists would be expropriated by the more efficient who would then invest their capital in more advanced machines. In this way, over a period of time, the forces of production would be further developed and the contradiction manifest itself as Marx expected.
But the whole process of spasmodic development would take place only in free market conditions where capitalists could compete with one another. The protection of markets would prevent the more efficient firms from undercutting the less efficient firms and getting a larger share of the market. The basic mechanism of development would then be arrested by interference in the market. Of course, in the real world, once capitals became a certain size, protection has been the rule rather than the exception. Even at the time Marx was writing about capitalism, using mid-nineteenth-century British capitalism as his model, firms in other countries had to rely on state protection to survive the competition of British firms.
Imperialisrn worked on the principle that each state would carve out its own 'sphere of influence' as suppliers of raw materials and rnarkets. As Lenin pointed out, this protection led to war and the re-partition of large chunks of the world.180New Zealand did its best to get in on the act in the Pacific and succeeded in the case of German Samoa. This process of partition and re-partition was to continue until the post-Second World War international trading agreements gave what by now was an international capitalist class the free run of tlte world market.
Yet during this whole period, right up until the sixties, New Zealand maintained a strongly protectionist trade with Britain. In return for cheap New Zealand foods or fibres, Britain was allowed a privileged access to the New Zealand domestic market, including the setting up of many British subsidiaries. This mutually beneficial relationship (for the capitalist class in both countries) would continue until the benefits that British capitalist derived from this relationship no longer applied. This point was reached when New Zealand primary producers ran headlong into EEC farmers political influence in protecting their rnarkets. And once this point had been reached, then it was only a matter of time before British capital invested in New Zealand manufacturing would begin to lose money.
Against this background of protection within the British 'sphere of influence' what now can be said about the current crisis in New Zealand? If capital accumulation proceeds by means of competition, crises and restructuring, then production within protected markets runs up against a barrier beyond which accumulation cannot proceed. Firms which are protected from competition do not have the same reasons to invest their profits in advanced machinery in order to undercut the market and edge out their rivals. They can of course 'gobble up' the smaller firms in the market by cornering raw materials, political patronage or whatever. And they are protected at the same time from take-over from abroad by (as has been the case) restrictions on foreign investment. Sooner or later these surviving monopolies will find the initial advantages of protection a handicap which prevents them from expanding on to the international market.
This point was reached in New Zealand manufacturing towards the end of the 'sixties when it became clear that profitability was being eroded from two sources. First, the permanent disadvantage of having to rely on imported raw materials and capital goods which were now rapidly rising in price with the international crisis came headlong into conjunction with the second weakness of the New Zealand economy, the scarcity of foreign exchange earned by primary·exports. While the first problem could have been absorbed on a cost-plus basis without major dislocation, the second was much more serious.
The traditional function of the New Zealand economy in providing cheap food and other wage goods for the British working class was at an end. Ironically it was not a self-imposed end (though I argued earlier that New Zealand primary production has always been artificially competitive) because New Zealand farmers were still capable of easily underselling their EEC counterparts. The end was imposed by British farmers and French peasants who represented a much greater force in European politics than did a succession of visiting New Zealand ministers of trade.
The fundamental cause of the current economic crisis in New Zealand is therefore the breakdown of its traditional colonial specialisation in the international division of labour. The class of rich peasants who for generations have been able to milk the working class through the national debt, capitalise its profits and socialise its losses, can no longer sell enough goods to pay for the vital imports of the protected manufacturers. At its roots then, the crisis is the result of the inexorable forces of international capitalism breaking into and demanding the restructuring of a small, internationally inefficient national capital to open up its resources to the free market forces of the world economy. The New Zealand State has no option but to comply with these forces, renouncing its past policies of support for small capitalists and family farmers and following out the policies dictated to it by international capitalists. What then, had brought about this decline in profitability and how does the State seek to restructure production on the land and in the factories?
The Crisis on the Land
New Zealand established its economic development on the basis of highly efficient primary production. The mutually beneficial extraction of surplus value from the land allowed not only British rnanufacturers to get the benefit of cheap food for their workers. It allowed a class of colonial compradors, financiers, land-speculators, run-holders and rich peasants, to accumulate capital as a national bourgeoisie. They were then able to branch out into domestic manufacturing as soon as sufficient workers were available to hold down wages. So was established the wonderfully symbiotic relationship whereby the colonial worker, 'overworked and overtaxed' supported both rural and urban capitalists. But the initial advantage of founders' rent soon succumbed to overstocking and erosion and productivity could only be kept up by increasing injections of state aid. The peasants went on the welfare in this country Iong before the working class.
Nevertheless, prirnary production had already established itself as an indispensible source of foreign exchange and even when the farmers' governments were overthrown by workers governments, it held the final say over whether the policy of insulation and import-substitution would work. Because they produced the foreign exchange needed to pay for the imports of domestic rnanufacturing and to pay off the overseas debt, farmers could continue to exact a ransom from the taxes of the working class. This tax on manufacturing could be sustained for as long as these firms could pass on their wage increases in prices to consumers.
Farmers' have always claimed that it is they who are taxed by the New Zealand worker because in exchange for their jobs, the workers pass on their wage increases to farmers in higher costs. But this claim has been refuted by the facts. McLean who could not be called a partisan of the working class, has stated that these costs have been deliberately compensated for by state subsidies and incentives. 181 And this is only a fraction of the total subsidy to farming, which has been estimated to be forty per cent of the price of production today.182 There is no doubt that on balance primary production receives its subsidies of various types of capital savings which by far outweigh those costs passed on by manufacturing and those costs imposed by farmers on themselves through speculation in land values.
So in the sarne way that land became a barrier to capitalist expansion in Britain in the early nineteenth century, so today in New Zealand small farmers' ownership of small farrns have become a barrier to increased productivity on the land. It is only the massive forty per cent plus public share in primary production which makes New Zealand agriculture any where near competitive. And now that the bottom has dropped out of its prized market, this subsidy is a total loss for other capitalists eager to get their hands on this handout for themselves. The small farmers are now an expensive luxury because they drain surplus value from manufacturing without converting it into low priced inputs elsewhere in the world market. Officially they are still profitable but unofficially they are bankrupt. But while the State still pays them to produce, or as McLean suggests not to produce,183 then, dynamic capitalists in New Zealand are faced with a structural rigidity of huge resourees tied up in agriculture which should be released for restructuring into more productive firms.
It is clear to the bourgeois state planners that farmers have to be encouraged to increase production or get off their land.184The Task Force suggested that subsidies should be more selective to facilitate the amalgamation of land into more efficient farms - at the price of 'ending the family farm' if necessary. This rationalisation, together with improved marketing, would restore the true economic price of production (i.e. reduce state aid) as farmers invested in more and better machinery. They would also be discouarged from putting their money,into land mining. This would free up the less productive land (as the small farmers sold up and joined the working class) for use in other sorts of farming or forestry. Those farmers which increased their productivity would obviously still need state aid to overcome the natural barriers of declining fertility, climate, seasons and cycles, but they would 'pay their way' in retaining their share of traditional markets as well as winning possible new rnarkets such as Japan.185
At the same time that traditional agriculture is freed from protection and exposed to market forces new Iand-uses are being expanded rapidly The Planning Council believes that:
"…successive governments will concentrate on the dynamic development of those resources which New Zealand has (for example in energy and the products of the land and forests) and which can form the basis of sustained growth during the 1980s." 186
In particular rnarginal and Maori land is being turned over to the expansion of forestry.187 While the emphasis is upon forestry as an export earner, it is clear that the first priority is its profitability on the world market. As distinct from traditional farming, forestry is an advanced form of 'agribusiness' undertaken by international firms. Its success depends upon the elimination of peasant producers and the aggregation of huge tracts of land, and investment of large amounts of capital in high technology. Such concentrated investment depends in turn upon a world-wide division of labour where decisions to produce are made by giant firms oh the basis of access to cheap raw materials, energy or labour power.
It is in the nature of such large-scale investment that the products will be exported on to the world market and that at the same time the import of capital goods and raw materials will be necessary. Liberal objections to the involvement of foreign firms in forestry on the grounds that it will be energy-intensive (rather than provide jobs) and earn very little (if any) foreign exchange, miss the essential point. There will be no production in New Zealand unless it is profitable for international capitalists, and it is this fact and not any concern for the environment or full employment that dictates the future use of New Zealand's resources by international capitalists.188I shall come back to this point in the discussion of restructuring in the manufacturing sector. It is sufficient to say here that the move towards a more capital-intensive land use is the mainstay of the free market strategy in underdeveloping the New Zealand economy in the interests of international capitalists.
The Crisis in Manufacturing
The second major barrier to the continued accumulation of capital in New Zealand has been the protection of import-substitutíon manufacturing. Though without protection there would be no manufacturing, today with protection there are few profits. The high cost of imported raw materials and capital goods to produce for such a small market has Ied to the growth of relatively small and inefficient firms. Since competition was limited to the local market, once certain firms had commanded a monopoly position, profits were maintained by, passing on costs in prices to consumers. To assist in the realisation of these prices, wages were pegged (more or less) to prices.
Once the limits of the local market had been reached the only way these firms could expand was to break into the international market. This they could not do easily because of the high cost-structures in the domestic market and their technological backwardness. The failure of the whiteware and clothing iridustries to survive in the Australian market in 1977-78 is a case in point.189Thus the strategy of import-substituion had reached its natural limits in sustaining production once attempts were made to export. For the logic of exporting on to the world market is that of international competitiveness and large-scale capital investrnent - or very low wages.
The current crisis of falling profits was precipitated finally by a rise in the price of imports that could not be passed on in prices without causing hyperinflation. While export prices have been rising slowly since 1970, import prices have escalated rapidly even during international downturns.'190 The reasons for this are first, the growth of producer cartels such as OEC which are able to manage supplies to maintain good prices. Second, the energy trusts such as the Seven Sisters that control not only the world marketing of oil but have huge stakes in the nuclear industry as well. Third, as the international economy has slowed down, capital has been withdrawn from productive investment in favour of speculation in commodities, property, gold, silver etc bidding up their prices. While these high energy and raw material prices put an additional strain upon profits internationally they have been the last straw for New Zealand rnanufacturing. This was dramatically so in the case of oil.
It was really the so-called 'oil crisis' that finally triggered the crisis in domestic manufacturing in 1973-74. While all other major energy supplies are provided cheaply by the State, past governments have deliberately allowed international oil companies to control the New Zealand market. Between 1973 and 1975 the cost of oil imports went from six per cent of export earnings to twenty-one per cent. 191 Since such a large price incease could not be passed on entirely, rnuch of the cost had to be absorbed by industry. By 1975 manufacturers had responded with an 'inestment strike'. 192The fact that the Labour Governrnent borrowed heavily to pay for the deficit did not do rnuch to stimulate business confidence. The result was that the National Party went to the electorate in 1975 making alarming claims that the economy was on the verge of collapse.
What this really meant was that the international capitalists who had investments or shareholdings in New Zealand industry, thought it was time to break down the protection of the domestic market from the international market and do away with that 'New Zealand disease' - the inefficient use of resources. By introducing free market forces the larger, more efficient firms could take over the inefficient, and get access to New Zealand's rich natural resources. The State would obviously have to take a leading role in this restructuring by putting its protectionist economic policies into reverse and introducing a managed depression
Within five months of the new Government's election to office a 'task force on economic and social planning' had been launched. Six months later, the first of a large number of planning documents had been produced, New Zealand at the Turning Point. Briefly, this report contained a set of proposals for the restructuring of the New Zealand economy to overcome the structural weaknesses of traditional agriculture and protected manufacturing. The State would be the main instrument of this policy, shifting resources away from the working class and small business towards efficient export production. Instead of across-the-board subsidies to all industry which penalised efficient industry by diverting its taxation to prop up otherwise uncompetitive firms, firms would have to prove by their performance that they were worthy of support. Thus government goods and services to industry that were formerly underpriced to provide cheap constant capital (e.g. roads, rail, power,) or variable capital (the social wage) would now be priced at an economic level - the so-called ‘user pays principle’. By this means the state would `kill about five birds with one stone'.
First, real wages would be cut as higher charges bit into living standards. This would amount to a transfer of value (i.e. the value of labour power) from the working class to the capitalists who qualified for state assistance.193 Second, the cut in wages would restrict domestic consumption helping to redirect resources away from working class consumption in New Zealand towards exports for foreign markets.194Third, both increased charges and reduced domestic consumption would have the same effect as a depression and force inefficient firms to close down. Fourth, the assets of these firms would then be bought up at bargain prices by the surviving firms.195 Fifth, the rise in unemployment caused by firms going bankrupt and by other firms investing in capital-intensive plant and machinery, would force wages down further.
The overall effect of this pricing policy and export subsidy policy would be felt by 1978-79 as a rise in the rate of profit as the devaluation of constant capital (plus subsidies) and falling wages cut costs. Assuming that the restructuring policy is carried through consistently there should then be a rise in business confidence heralding a new round of investment in more advanced technology, and a new period of capital accumulation. The protection of the domestic market would have been decisively broken, allowing international capital to insert the New Zealand economy into the new international division of labour. What consequences will such a policy have for the economy?
Restructuring Means Underdevelopment: 1978-1984
The restructuring of the economy to fit into the new international division of labour will make the economy increasingly underdeveloped. First, more and more resources will be switched from the consumption of the working class into export ventures. The joint venture - the partnership of international, local and state capital - is the model for this. Second, because the joint venture is dominated by international firmns with large investments, high technology, exporting for world markets, New Zealand will become what Sutch feared when he wrote Takeover New Zealand, "a book entry of the supranationals'. Third, the economy becomes a 'book entry' because the supranationals are interested only in accumulation on a world scale, that is, the export of profits from New Zealand overseas. Consistent with the 'breaking and entering' of the supranationals, is the net export of capital from New Zealand.
The meaning of underdevelopment then is that the surplus value created in a country is transferred elsewhere. Instead of the forces of production being developed further in the country of origin, they are developed somewhere else according to the master strategy of the firms concerned.
Underdevelopment does not contradict the basic tendency of capital. It is simply the geographic expression of its existence on a world scale. In the post-war period, the development of the forces of production have been very uneven. Colonial or neo-colonial states which specialise in producing raw materials for the advanced econornies have been further integrated into the production of commodities by direct investment of foreign capital. Foreign firms have set up operation in these countries to produce wage goods and capital goods for the world market. Liberals have seen this industrialisation as the result of de-colonisation and the end of the age of imperialism. It is quite the opposite, and signifies a growing dependence of these countries on international capitalists. Brazil is a good example.
What Gunder Frank calls the 'new dependence’ is based upon the world-wide re-location of high-technology production in the underdeveloped countries to take advantage of cheap raw materials, energy and labour power at their source.196 While the old dependence usually meant adverse terrns of trade, the new adds to this the export of surplus value as invisibles. Thus, rather than development the new international division of labour spells further underdevelopment, the most dramatic expression of which is the chronic balance of payments deficit. The deficits are financed by central banks, the IMF or the World Bank, who are then able to dictate economic policy to the client states, pushing them further into the debt trap and ensuring that the interests of international capitalists are protected.197
How exactly does 'restructuring' lead to underdevelopment in New Zealand? The first point is the switching of resources from domestic consumption (wage goods, cars, housing) to export production dominated by the supranationals. The technical backwardness of local manufacturing plants (srnall capítal, outdated technology,) has required the participation of foreign firms to provide new technology, access to world markets, skilled personnel and so or, in partnership with New Zealand firms and the State. Even so, exports will sell on a world market only if they are competitively priced. The difficulties of breaking into or holding markets will mean that the working class will have to work harder for lower wages. Mason points to the drop in manufactured exports in 1977-78 as the result of retaliation by Australian rnanufacturers against the already lower wage costs of New Zealand imports of carpet, whiteware and clothing. 198 How does the Plannitrg Council view this failure to export? Not by blaming the Australian rnanufacturer.
According to the Planning Council, New Zealand exporters lose their incentive to export:
"…when domestic costs persistently rise more rapidly than those of trading partners or competitors, or when regular delivery is impeded by industrial disruption or inefficient transport and other services.199
There is no doubt in the minds of international capitalists and their spokesmen in New Zealand about what must be done to cut costs. Any reluctance on the part of the working class to hold down their costs below our competitors, say Japan, Taiwan, South Korea, will be firmly dealt with by the State acting on instructions from foreign banks or firms. West German firms are known to have a strong interest in investment in New Zealand but only if the Government will give thern assurances against 'industrial disruption'. 200
Given for the moment the export-lead growth of international firms, we can expect as a result the rapid deterioration of the current balance of payments deficit. There are four rnain mechanisrns under the free rnarket strategy for exporting surplus value overseas.
(1) Import Prices While the volume of imports will fall (mainly because the working class is not consuming as much), prices of imports and therefore the total value of imports will not. In relaxing import controls to allow firms to import plant and machinery the state loses control over import values. The well known rigging of prices - or transfer pricing - that takes place allows international firms to import commodities produced by themselves elsewhere into a country at excessively, high prices. This allows these firms to justify a high value of exports to pay for the irnports, and to 'con' the client state into providing concessions to cover their fictional costs e.g. cheap energy. So the control of imports passes from the state to the international capitalist class which is able to set up the prices of imports so as to extract a high rate of surplus value in the form of exports to the world market.
(2) Exports The export of goods and services is the only way that imports can be paid for. Under the system of protection liberal economists wrote of New Zealand's dependence on exports to pay for its imports. But since the 'thirties this dependence was subject to some state control. Under the free market strategy, the export of goods and services will have to grow very rapidly to give a profitable return on foreign investment. The protection strategy did not restrict foreign firms to twenty-five per cent shareholdings for nothing. The objective was to ensure the re-investment of capital made in New Zealand. With restructuring, foreign firms will have the right to repatriate their profits elsewhere, but in addition, they will be able to extract a hidden super profit in extra exports of goods and services. The super profits come from overpricing and state subsidies and are worth treating separately.
(3) Export of Profits. New Zealand workers will have to work harder for less pay to produce exports to pay for overvalued constant capital (as the result of transfer pricing) that is, plant and machinery. Steven has argued that because New Zealand exports must be cheap to compete, the volume of exports needed just to balance the value of imports will have to increase. 201 A large proportion of these exports will therefore be a hidden profit for exporting firms. Second, in the same way as the state subsidies to agriculture held down the price of production (see Chapter 3) and enabled New Zealand farmers to profit from a transfer of surplus value, foreign firms get capital concessions which boost their rate of profit. This allows them to undercut the market or, where they control the market, get a super profit. Superprofits are after all the object of inteniational investment in the New Zealand economy.
(4) Export of Interest on the Overseas Debt. In order to pay for the capital concessions offered as bait to international firms, the State's level of indebtedness for imports (railway rolling stock, oil platforms) rises. In terms of the proportion of total capital invested in new production, state investment is very high. 202 The only way the state can pay the capitalists overseas from whom it buys these public assets, is in goods and services produced and exported from New Zealand. Thus a large proportion of exports are needed to pay for the imports which are needed to increase production for export.
It is easy to see that the insertion of the New Zealand economy into the international division of labour represents the beginning of underdeveloprnent. The real value of exports required to pay for the real value of imports is much higher under the free-rnarket strategy than under protection. The basic feature of underdevelopment is the intensified extraction of value from a country by the international capitalist class to pay for this growing deficit. Of course it requires a re-allocation of some of the value of labour power (the high living standards of the age of protection) from the working class to the international capitalist class. Inefficient capitalists will also be expropriated and their capital switched to efficient firms. This is the result of restructuring to overcome a balance-of-payments crisis. As Mason has pointed out there is no risk of foreign banks foreclosing on New Zealand for some time yet as they have not yet done so in the cases of the foundering economies of Turkey Peru, Zaire, or Iran. 203
In reality the object of restructuring is to worsen the balance of payments since this is the only way international capitalists can extract surplus value from New Zealand. Already, the balance of payrnents has shown a dramatic rise in invisibles from $200 million in 1973 to over $800 million in 1977. What this means is that today nearly thirty-per-cent of the total value of exports is needed to pay for the profits of foreign firms in New Zealand plus the installments on the overseas debt. The long-term consequences of this process can be observed in countries similar to New Zealand which have switched from a protectionist to a free market strategy under the control of international capital. Uruguay is often cited as a parallel case. 204
Yet most of these countries differed from New Zealand in one crucial respect. The New Zealand working class has experienced thirty years of affluence equivalent to that of any advanced capitalist country. The attempt to reverse economic policies in the direction of free market forces has therefore to contend with the strong resistance of the working class to restructuring. Such a drastic attack on living standards required by international capital is bound to cause 'social unrest' as the Planning Council puts it. It follows that the speed with which restructuring can be implemented to the satisfaction of the international capitalist class will depend largely on the response of the working class.
Restructuring as Class Struggle
The success of restructuring depends on the State getting the working class to accept massive cuts in its living standards. Unfortunately for the capitalist class and the Government depression cannot do its work without causing political and social crisis of the sort most New Zealanders, after thirty years of affluence, regard as things of the past. How is the working class going to feel about a further cut in wages of twenty to thirty per cent in the next five years to pay for the inducements the state offers to foreign capital? How will it feel as the numbers of unemployed, (women, Maori, youth especially) grows from 100,000 to 200,000 and more?
What will happen if the unemployed are not convinced that their poverty is necessary in the national interest? What if many women reject the intensification of domestic slavery for the sake of saving the country? The response of the working class therefore poses a real problem of social control for the State which it must attempt to counter by going on the ideological offensive, and selling the crisis as a national crisis which cannot be solved unless everyone in the cornmunity makes great sacrifices. It is the outcome of the ideological struggle over the meaning of restructuring which will determine the extent to which the economic crisis will spill into a political crisis.
The ideological struggle is between the State on the one hand representing the international capitalist class, and the working class on the other. The relative strength of each side depends on two things: first the unity of purpose, and second the balance of class forces. By the first I mean the ability of capital or wage labour to organise on a common front. It has been suggested that one major impediment to the course of restructuring is a conflict within the capitalist class between international and national capitalists, 205- particularly those capitalists who grew fat under the system of protection but who cannot compete on the free market.
I have analysed why the limits to profitability under protection have given rise to the crisis, and it follows that those capitalists who cannot compete cannot carry much weight with the government. Nevertheless, small farmers through their influence in the National Party as well as the social capital fixed in their farms, can slow down the restructuring of production on the land considerably. But the Planning Council recognises such conflicts in land use as no more than a problem to be overcome by 'systemmatic consideration of the relative costs and benefits of alternative uses', 206 which is another way of saying, ‘if farming is not profitable it goes’.
The capitalist class is able to present a united front in New Zealand because the interests of New Zealand capitalists must now be completely aligned with international capital. Therefore the Planning Council is able to speak with one voice on behalf of capital, to try to convince the working class to make sacrifices for the sake of the economy. The real role of the Planning Council is not so much to plan the economy, for this is already done by the bureaucracy, but to plan the restructuring of the minds of the working class. The rnain concern for the Council:
"…is with the widespread view that New Zealanders are incapable of changing attitudes, practices, and institutions which virtually guarantee the continuation of instability and slow growth . . . Contrary to the popular mythology, New Zealand's main problem would seem to be its people, and their present attitudes to productivity and the management of their affairs." 207
What this really means is that the traditional power of organised labour to win concessions from employers and from governments which need the votes of the working class every three years, has to be eliminated. The economic crisis is so severe that the labour movement and liberal democracy must be curtailed in the national interest. This sounds ominously like the 'tendency to Fascism' becoming a reality. How far the State proceeds along this course will depend upon the unity of purpose of the working class, that is, its ability to present a united front to the State. How far this is possible depends again upon the militancy and organisation of sections of the working class capable of putting up a political fight.
We know that the capitalists are able to mount an ideological offensive by appealing to the most conservative elements of bourgeois ideology. The appeals to patriotism, and to individuals' self-sacrifice have always worked well in dividing the working class. It enables the state to blame one section of the community for the crisis and to turn the rest of the working class against it. Traditionally in New Zealand the scapegoat is the militant vanguard of the labour movernent, which is usually pictured as a foreign subversive element in New Zealand society. This worked in the past by turning the conformist majority against a rnilitant rninority.
Today the situatíon is different. The working class is now more than eighty per cent of the population, and the impact of cuts have spread over not merely wages and conditions at work, but issues of housing, education, health and land. So the experience of the cuts since 1974 has greatly accentuated the development of a surplus population rnade up predominantly of women, Maoris and young school-leavers who now share a common predicament. Precisely the same neighbourhod social networks that have always sustained a small-town, rural, conservative ideology in the working class, are now generating the new social forms of support or 'socialist consciousness'.
There is then the potential for the development of the collectivist sub-ideologies into a socialist ideology in large sections of the working class, although this potential cannot become a political force without an organised political resistance to the cuts, and this is sadly lacking. The working class cannot break with bourgeois ideology decisively when its leading organisations, in particular the Labour Party and the Federation of Labour, give support to the State's restructuring policies. This they do as long as they fail to put up an alternative programme to restructuring based upon the understanding of the crisis as a capitalist crisis.
In the absence of a political organisation capable of defending its class interest against the cuts in living standards, the working class will remain disorganised. It will remain under the influence of social democratic ideology which presents the crisis as the unnecessary result of a conservative Government's mismanagement of the economy. Until the working class can recognise the necessity of the crisis as one which social democratic Labour parties are incapable of preventing, it will be unable to break away from bourgeois ideology. Some clear examples of this are the responses to the cuts.
The State's ideological offensive blames wage rises for the decline in profits. Wages have risen ahead of productivity we are told. I have argued that this apparent wage-squeeze is a secondary effect caused in the first place by protectionism. From 1955 to l966 the real wage rose by·only two per cent while productivity per worker rose by fifty per cent. Under these conditions huge profits were made which were not ploughed back into increasing productivity. When between 1966 and 1974 productivity rose by only thirty per cent while real wages rose by twenty-four per cent who was to blame? 208 According to the conservatives, the workers for asking for wage increases. According to the Marxist analysis, the capitalists for (I) failing to invest in productivity and (2) allowing wage increases as the mechanism by which they kept their profits up.
So what happens in 1975 when the bottorn drops out? The Labour Party and the trade unions have no answer to the capitalist ideological offensive. Because they understand class struggle as a distributional struggle they have no defence against cuts in workers' living standards except that of maintaining their ‘fair share’. They are totally exposed to the arguments that the crisis has been caused by workers getting more than their 'fair share' in the last ten years.
It is not surprising then to find that social democratic organisations adapt to the pressure from the conservative right to moderate the resistance of the working class to cuts. While the Labour Party or Socialist Unity labour leaders actually believe that wages should be tied to productivity, or that excessive wage dernands lead to unemployment, then rank and file workers and their families tend to believe that the cuts are necessary to restore economic growth and employment.
But it follows that if wages do not cause falling profits, then workers cannot be blamed for any loss of jobs either. Depressions are simply strikes by employers, they alone cause the crisis and they alone benefit from restructuring.
What guarantees are there that restructuring will bring any return to full employment and economic prosperity? None whatsoever. The Labour Party and the other organisations which claim to represent the working class fail to face up to the fact that restructuring, if it is carried out to its full extent, means permanent, mass unemployrnent. The growth of export firms will not restore the lost jobs (COMALCO and the Karioi míll are two examples). 209 Nor can the State take up the slack in the public service as its own costs, particularly the wages of its 38,000 workers, are under attack as well. It is clear that the working class is being asked by its organisations to make sacrifices in the false hope that a Labour victory in 1981 can usher back in the Welfare State. Such illusions fly in the face of history.
In the same way, the working class, women, and children are disarmed in the face of the cuts in the social services. The State has stepped up its offensive against the working class, cutting back on all state expenditure which does not have a role to play in restructuring. As the attempt to cut wages by more direct means runs headlong into union resistance the more circuitous route is being taken. The slogan is unproductive state spending. This means cuts to the social services which reproduce labour power which is no longer required by capitalists. Instead people are invited to rely on their own communities rather than the State to provide support for those in need. 210
How is the working class to respond to this broad attack on the Welfare State? The conservative argument has rnuch power in the underlying logic that you cannot have welfare without production. Thus the Labour Party and trade unions respond to the cuts in social spending in exactly the same way in which they respond to direct wage cuts. The Welfare State is regarded as a major victory for the working class in its struggle to overcome the monopoly of the capitalist class. But like high wages, it too must be sacrificed if the situation demands it. The labour movernent will fight for limited cuts where they are least harmful to welfare, but having conceded the argument they have lost the battle. Such a flimsy position becomes easily undermined by the propaganda that cuts today will bring their reward tomorrow.
Because labour organisations can put up no alternative other than a half-hearted resistance which is being steered into electoral support for the Labour Party in 1981, the potential of working-class struggle is held back. The organic developments in working-class solidarity, particularly around issues of housing and education are exposed to divisive conflicts within. The traditional conservative appeals to nationalism and individualism gain support among some sections of the working class. The collectivism of trade-union consciousness, potentially capable of acting in defence of cuts that are enforced by highly repressive laws, becomes beseiged by anti-communist hysteria and extreme right-wing strike breaking. The collectivism of women in the face of a concerted attack on their rights and welfare is driven back by the sexisrn of authoritarian males. The aristocracy of labour uptight and upright in its respectability turns against the welfare scroungers, and the state employees. The collectivism of the Maori people is transforrned by racism into the threat of the 'gang', and the rapidly growing lumpenproletariat (not altogether Polynesian) will find itself harrassed and victimised as the criminal class.
It is impossible to predict what will happen in New Zealand in the next decade. A number of unknown factors such as the seriousness of the international crisis will determine the amount of pressure put on the State to restructure in the face of working-class resistance. The level of this resistance itself depends upon the ideological class struggle for the consciousness of the working class. The balance of class forces seems to favour the ruling class at present. Its unity of purpose is much greater than that of the working class and it commands the resources of the State. The Planning Council and the Social Democratic labour organisations are able to get most of the working class to see the future as the capitalist class would like it. They are doing their best to persuade the people that if they resist restructuring, New Zealand will become a 'receding backwater'.
Yet this balance can shift in favour of the working class. In its moves to suppress the union movement the State has already risked its credibility as a 'liberal democracy'. It seems prepared to move towards a more repressive form of government to achieve its econornic objectives and rely upon the traditional loyalty of the petty bourgeois aristocracy of labour . In this the State is moving away frorn 'liberal democracy' towards 'national socialism' and heading for a political crisis in which it can retain mass support only by resorting to fear, demagoguery and repression. This will force the working class to fight not only for their rights but for their lives and to chose between barbarism and socialism. But it will be a socialism made in New Zealand in a long and arduous struggle with history.
Chapter One
1 W.T. Doig, Rich and Poor in New Zealand (Christchurch, 1942).
2 W.T. Doig, 'A survey of the Standard of life of New Zealand Dairy Farmers.' Department of Science and Industrial Research Bulletin, Number 75, (Wellington, Government Printer, 1940).
3 This discussion is very cursory and cannot be a substitute for the classic Marxist texts such as The German Ideology and Capilal. For attempts to apply this approach to New Zealand see the Wellington Writers' Group, "The Crisis in Social Relations', and John Macrae and David Bedggood, 'The Development of Capitalism in New Zealand', both in Red Papers, 3 (Summer 1978-79).
4 Marx distinguished between 'classical' and 'vulgar' political economy. Vulgar economists "Flounder around within the apparent framework of capitalist social relations, ceaselessly ruminate on the materials long since provided by scientific political economy, and seek there plausible explanations of the crudest phenomena for the domestic purposes of the bourgeoisie. Apart from this, the vulgar econornists confine thernselves to systematising in a pedantic way, and proclaiming for everlasting truths, the banal arid complacent notions held . . . about their own world which to them is the best possible one." Capital, I. (Harmondsworth, Penguin, 1976), p.l75f.
5 S. Harvey·Franklìn, Trade, Growth and Anxiety (Wellington, 1978), p.57.
6 A lot has been written recently about ‘modes of production', particularly the 'articulation' of pre-capitalist and capitalist modes of production in the contemporary world system. For New Zealand see my 'The Destruction of Maori Society: the Articulation of Modes of Production in New Zealand', paper presented to the 48th ANZAAS Congress, Auckland, January, 1979.
7 Marx and Engels rnanaged to evade this point, but it has been forcefully argued by Marxist, usually female, anthropologists, and is quite consistent with Marxism. See for example: Critique of Anthropology, 9 & 10 ( 1977 ), 13 & 14 (1979).
8 These terms are introduced in CapitaI 1, Part one: 'Commodities and Money', and see also Mandel's Introduction to the Penguin edition, pp·38-59.
9 Veronica Beechey, 'On Patriarchy', Feminist Review 3 (1979j, pp.66-82.
Chapter Two
10 Quotations taken from Keith Sinclair, A History of New Zealand, (Harmondsworth,1969) pp,232, 233, 282 and J.C. Beaglehole, `The Development of New Zealand Nationality', Journal of World History, 2 (I954), pp.106-I23.
11 Michael Barratt-Brown, Economics of Imperialism (Harmondsworth, Penguin, I974) especially Chapters 5-8; Philip Ehrensaft and Warwick Armstrong, 'Dominion Capitalism: a First Statement' in Australian and New Zealand Journal of Sociology 13 4 part 2 (October, 1978) pp,352-363.
12 Capital 1, pp·918, 926, 928.
14 F. Engels, The Condition of the Working-Class in England. (Moscow, Progress Publishers, 1973) pp.220-244.
15 Barratt-Brown, op.cit., Chapter 5.
16 K. Marx and F. Engels, Articles on Britain (Moscow, Progress Publishers,1975) pp.160-163. Marx refers to this as 'modern compulsory emigration' and 'forced emigration'.
18 See J.W. Davidson, 'New Zealand 1820-1870: an Essay in Re-interpretation' Historical Studies of Australia and New Zealand, 5 (1952) pp.349-360; Sinclair, op.cit., pp.65-69; J.M. Ward, Colonial Self-Government: the British Experience 1759-1856 (London, 1976 pp.159-164; and P.W.T. Adams, Fatal Necessity: British Intervention in New Zealand 1830-1847 (Auckland, 1977) pp 34-171.
19 Sinclair, op.cit., p.68-69.
20 Adams, op.cit., pp,218` 175-208.
21 Anglo-Afghan war I838-42; First Opium War 1840.
22 Marx and Engels, Articles on Britaìn, p200.
23 Quotations taken from J.M. Ward, op.cit., pp.233-235, 238-240.
24 This summary draws on my 'Destruction of Maori Society', and R. Firth, Economics of The New Zealand Maori (Wellington, 2nd Ed. 1959).
25 See K. Sorrenson, 'How to.Civilise Savages: some 'answers' from Nineteenth Century New Zealand', New Zealand Journal of History 9, 2
26 K. Sinclair, The Origins of the Maori Wars (Auckland 1961), p,67,
27 K. Sinclair, ibid p.21. See also Alan Ward, A Show of Justice (Auckland, 1974), especially the discussion of the impact of British law upon Maori society on pages 42-91.
28 Dick Scott, Ask That Mountain. The Story of Parihaka. (Auckland, 1975) p.19.
Chapter Three
29 See A. Gunder Frank The Sociology of Development and the Underdevelopment of Sociology (London, 1972), and Barratt-Brown, Economics of Imperialism, for a good summary of conservative (classical) and liberal (Keynesian) views of 'development'.
30 C.A. Blyth, 'The Special Case: the Political Economy of New Zealand' in S.D. Webb and J.S. Collette (eds), New Zealand Society (Sydney,1973) pp.3-12. See also Franklin, Trade, Growth and Anxiety. Op cit
31 W.B. Sutch, Poverty and Progress (Wellington, 1969) and Colony or Nation (Sydney, 1966).
32 ibid Poverty and Progress p.153.
33 W.B. Sutch, Takeover New Zealand (Wellington 1973) p.128.
34 Barratt-Brown, op.cit.; S. Amin, Unequal Development (New York , 1976); A. Gunder Frank, Accumulation and Dependent Development (London, 1978); W. Armstrong, 'New Zealand: Imperialisrn, Class and Uneven Development', in Australia and New Zealand Journal of Socialogy, 14, (3) part 2 (October, 1978) pp.297-303.
35 Sutch, Takeover New Zealand, p.10.
36 Willis Airey, New Zealand Foreign Policy relaled to New Zealand Society Development and Current World Trends (Christchurch, 19.54) p.20.
37 A. Emmanuel, Unequal Exchange: a Study of the Imperialism of Trade. (London, 1972). See also Barratt-Brown, op.cit., Chapter 10.
38 Barratt-Brown, op.cit., p.160.
39 Capital 1 pp.579-580, my emphasis.
40 See Macrae and Bedggood, op cit section 3.
43 A.R.D. Fairburn, Dominion. (Christchurch, 1938).
45 Capital 3 , (London, 1974)
pp.791-792.
Chapter Four
46 As I mentìoned in the Introduction, the Marxist standpoint holds itself to be 'scientific' and to have a correct understanding of class relations, while bourgeois concepts of 'class' are ideological in opposing this scientific conception.
47 See my 'Power arrd Welfare in New Zealand: Notes on the Political Economy of the Welfare State', Australia and New Zealand Journal of Sociology,10, 2 (1974) pp.104-111; C. Vellekoop Baldock `Stratification and Social Welfare' in A. Trlin (ed.), Social Welfare and New Zealand Society (Wellington,1977) pp.132-153, and D.C. Pitt (ed.) Social Class in New Zealand (Auckland, 1977), Introduction.
48 Franklin's view of social stratification in New Zealand is functionalist. Individuals are categorised according to their occupation and their social mobility, see Trade, Growth and Anxiety, pp.57-76.
49 The political doctrine corresponding to economic conservatism is that of pluralism. It holds that different occupational and interest groups enter into compromises to maximise the general interest. See Franklin's concept of 'social concordance', Trade, Growth and Anxiety, p.78.
50 This point is argued in the next chapter.
51 Pitt's Introduction to Social Class in New Zealand, op cit p.2.
52 The confusion flowing from a misunderstanding of Marxism is evident in the discussions on 'class' in The New Zealand Journal of History, I3,(1) (April 1979). Marxism is identified as a theory of industrial capitalism which is irrelevant to New Zealand, pp.65-88.
53 Especially 'Social Class in Nineteenth Century New Zealand' in Pitt (ed.), op cit. pp.22-41.
54 Olssen, op.cit., pp.25, 38, 39, 38, 37.
55 Bruce Jesson, '·The Family Affair', Red Papers,1 (1976) & 2 (1977) and Sutch, Takeover New Zealand, p.28.
56 Armstrong, 'New Zealand etc' op cit.
57 See Capital 1 `The Fetishism of Commodities', pp.163-177.
58 The so-called `rights' of labour are discussed in Chapter 6.
59 Sutch, Colony or Nation, p.106.
60 See my 'New Zealand's Semi-Colonial Development: a Marxist View', Australia and New Zealand Journal of Sociology, 14, 3 part 2, (October 1978) pp.285-290.
61 Sir Robert Stout, `The Drink
Question and its Solution', Review of Reviews, (Australasian Edition),
February 1894.
Chapter Five
62 The classic Marxist view of class relations can be found in The German Ideology and The Communist Manifesto. The outline of capitalist class relations is found in Capital 1 ‘The General Law of Capital Accumulation', pp.762-801.
63 Capital 1 pp.798-799. My italics.
64 The concept 'rate of exploitation' is explained in Capital 1 Chapter 9.See also Mandel's discussion on `Marx's 'Theory of Wages' in the Introduction to the Penguin Edition, 1976 pp.66-73.
65 See G. Mason, 'A Marxian Explanation of Capitalist Crisis', Red Papers 3 (Summer 1978-79).
66 Jurgen Kuczynski, A Short History of Labour Conditions under Industrial Capitalism in Great Britain and the Empire, 1750-1994 (London, 1945) Vol. I, Part 2 'Labour Conditions in New Zealand'. The author comments that the apparent increase in wages between 1873 and 1939 does not prove that the share of value going to labour (rate of exploitation) favoured the working class. He argues that the share going to capitalists increased as the result of the growing monopolisation of industry (p.120).
67 See John Macrae, 'The Internationalisation of Capital ín New Zealand', Red Papers, 2 (May 1977).
68 Franklin adopts this view explicitly when he talks of more Managers, Experts and Workers 'spending their working life within .. . hierarchcally organised institutions in both the private and public sector, whichoffer a range of facilities and benefits to the individual ... and which apply the rationality, that is associated with Weberian bureaucracy', Trade, Growth and Anxiety, p.79.
69 ‘The Top 100', a series of four articles in The New Zealand Herald, 23 December 1976 to 3 Jarruary 1977.
71 Peter O'Brien, National Business Review, 3 May 1978.
72 See for example, R.S. Deane, 'An Economic Dilemma: the Case of Foreign Investment in New Zealand', Reserve Bank Bulletin, No. 18 ( 1975).
73 Takeover New Zealand, pp.131-132.
74 Compare the argument in R. Steven, `Towards a Class Analysis of New Zealand', Australia and New Zealand Journal of Sociology,14, 2, (June 1978).
75 Takeover New Zealand, p.55.
76 See Macrae and Bedggood, op cit Section 3.6, for discussion of the 'collective worker' and productive and unproductive labour.
77 R. Steven, "Towards a Class Analysis of New Zealand', op.cit pp.121-125.
78 See Mandel's concluding section
of his Introduction to Capital 1 pp.80-6
Chapter Six
82 Con O'Leary·, 'Wage earners or slaves', Industrial Relations Review. l, (I) (May·1979) p.29.
83 N. Woods, Industrial Conciliation and Arbitration in New Zealand (Wellington, Government Printer, 1968) p.l.
84 Quoted in O'Leary, op.cit., p.31.
85 See my, 'Class Consciousness in New Zealand' in D Pitt (ed) op cit pp.113-129.
86 Airey·, op cit saw 1951 as having "fascist implications". It can be argued however that these events fell far short of fascism, see my forthcorning 'Social Democracy and Stalinism in New·Zealand', Red Papers, 4 (Winter, 1980).
87 See O'Leary, op.cit., and Labour's Leg-Irons (Wellington, New Zealand University Studerrts' Association,1977) for summaries of recent legislation.
88 New Zealand Journal of History, 5, 2 (October 1971) pp.l21-127. Reprinted in Webb and Colletfe (eds.), New Zealand Society, pp.l8-24.
89 Compare Geiringer's view with the sexual jokes reported by Brian Jackson in 'Maori and Pakeha: New Zealand's Racial Bomb', New Society, 31, 643 (30 January 1975) pp.250-252.
92 See Pat Hickey, Red Fed Memoirs (Auckland 1925).
93 See for exampIe K.R.Howe, Race Relations: Australia and New Zealand. (Wellington, 1977). Howe attributes recent 'Maori protest' over their land and their 'social position' to 'rising expectation' which will be met by government policies designed to ensure tlrat 'the bulk of the Maori population will continue to be included socially, economically, and physically into white society' (pp.81-83).
94 Numerous studies and publications represent liberal reactions to this evidence, see for exarnple G. Vaughan, Racial Issues in New Zealand (Auckland, 1972); Macpherson in Pitt (ed.), op cit. pp.99-112; Brian Jackson, op.cit. For more radical reactions see the reports of the Auckland Committee on Racial Discrimination (ACORD) and the Bastion Point Defenders' Takaparawha-Bastion Point (Auckland,1979).
95 For example, ACORD, Task Force: An Exercise in Oppression (Auckland, 1975); Patrick O'Malley, 'The Influence of cultural factors on Maori Crime rates' in Webb and Collette, op.cit pp.386-396; D.M. Ferguson et.al., The Effects of Race and Socio-Economic Status on Juvenile Offending Statistics (Wellington, Governrnent Printer, 1975).
97 Figures are not available for the 1970s but Jones reports that the Maori unemployment rate was double that of the Pakeha in 1967-68, see P.E.R. Jones, Maori Population and Labour Force (Wellington, Departmerrt of Labour, 1968).
98 For the background to the 'overstayers' issue see J. de Bres and R Campbell, The Overstayers, and Worth their Weight in Gold, both (Auckland, 1976).
99 See Beechey, Feminist Review, 3; Critique of Anthropology, 9,10 (1977); and Women's Study Group, Women Take Issue (London, 1978), especially Chapters 3, 7 & 8.
100 A recent discussion of the dornestic labour question is found in S. Himmelweit and S. Mohun,'Domestic Labour and Capital', Cambridge Journal of Economics, I (1977), pp.l5-31.
102 E.L. Hutchins, Labour Laws for Women in Australia and New Zealand, (London, 1906), p.l.
103 Evidence to the 'Sweating Commission' AJHR, 1890, H5, p.39, 1452.
104 On women and the reserve army of labour see Women Take Issue, chapter 3, and R.M. Hill, 'Women, Capitalist Crisis, and the Reserve Army of Labour', unpublished M.A. Thesis, University of Canterbury, 1979.
105 This argument follows that put forward in O. Adamson, et.al., Women's Oppression under Capitalism', Revolutionary Communist, 5 (November 1976); Part Two of this article is reprinted in Red Papers, 2 (May 1977) pp.33-45.
Chapter Seven
I07 The analysis of the Labour Party as a Social Democratic Party with its roots in state socialism has yet to be made. See my forthcoming 'Social Democracy and Stalinism in New Zealand'.
108 Mason, 'A Marxian Explanation of Capitalist Crisis'. Op cit.
109 Takeover New Zealand, Chapter 2.
110 Brian Easton, 'Social Structure and Social Crisis: of Dairy Farmers and Auckland', paper delivered to the Sociological Association of Australia and New Zealand Conference, (Christchurch, 1976); Allan Levett and Eric Braithwaite, 'The Growth of Knowledge and Inequality in New Zealand', draft paper (April 1975); Jock Phillips, editorial, New Zealand Listener, 26 June 1976; Brian Easton 'Egalitarian Society', letter to the editor, New Zealand Listener 17 July 1976.
111 John Macrae, 'Income Distribution and Structural Inequality in New Zealand' draft paper (1977).
112 Report of the Task force on Economic and Social Planning, New Zealand at the Turning Point (VVellington, Government Printer,1976) p.215.
113 The Planning Councìl estimate that income 'escaping tax assessment' as 'fringe benefits' was 5 per cent (or about $500 million) of total wage and salary incomes in 1978-79. 'They also noted thal Mr L. Ross, formerly of the Taxation Review Committee put the figure at 10 per cent (or $1000 million). New Zealand Planning Council, Income Maintenance and Taxation: Sorne Options For Reform, Report No. 6 (Wellington,1978) p 20.
114 This explains the concern of the Planning Council that 'skilled, (i.e. mental) workers' are being taxed too heavily, ibid., p.26.
115 W. Rosenberg, A Guidebook to New Zealand's Future, (Christchurch 1968) pp.99-104; compare this with Royal Commission of Inquiry, (Report) Social Security in New Zealand (Wellington, Governrnent Printer,1972) pp.89-91.
116 This is a very crude estimate in the absence of more detailed data. The United Kingdom data are taken from J. Westergaard and H. Resler, Class in a Capitalist Society (Harmonsworth, 1976) p.60.
117 Rosenberg, op.cit., claims that 33 per cent of low incomes are made up of transfers, and Easton, 'Social Structure and Social Crisis', claims that up to 75 per cent are rnade up of transfers. The social wage is therefore that part of the value of labour power rnade up of state-provided goods and services for which no payment or exchange on the market takes place.
118 New Zealand Planning Council, The Welfare State? Socíal Policy in the 1980's. Report No.12 (Wellington, Government Printer,1979) p.49.
120 G.W. Parkyn, Success and Failure at the University (Wellington 1967) p.105; L.G. Wright, 'Paper on Student Incomes arxd Expenditure' (Wellington, New Zealand University Students' Association 1970).
121 See for exarnple, Leon Kamin, Science and Politics of I.Q. (Harmond sworth, 1977) especially pp.225-230.123 C. Vellekoop Baldock, Vocational Choice and Opportunity (Christchurch, 1971 ). See also her chapter ‘Occupational Choice and Social Class in New Zealand', in Pitt (ed.), op.cit pp.78-98.
122 Vellekoop Baldock notes that 30 per cent of Pakeha boys aspired to be professionals, managers, or clerical workers compared with 17 per cent of Maori boys ('Occupational Choice', p.87).
123 ibid 'Occupational Ghoice', pp.92-93, cites research that shows that by the age of 17, 50 per cent of school pupils are from professional or managerial families, and that the correlation between educational achievement and social background is negligible. The 50 per cent of studerrts of this age drawn from lower social positions represent the 'exceptions to the rule'.
124 Levett and Braithwaite, op.cit., p.25.
125 See my 'Marxism and the University', Red Papers, 2 (May 1977).
126 See The Welfare State? pp.33-47; data are drawn frorn Department of Health, Health Expenditure in New Zealand-Trends and Growth Patterns, Report No. 53 (Wellington, Government Printer,1979)pp.3-5.
127 W.B.Sutch,The Responsible Society in New Zealand (Wellington,l971) p.94.
128 G.M. Fougere, 'Exit, Voice and the Decay of the Welfare State Provision of Hospital Care', unpublished M.A. Thesis, University of Canterbury, 1974; and G.M. Fougere, 'Submission on the White paper on Health’. Unpublished paper, 1975.
129 G.A. Salmon demonstrated that the needs of mothers for obstretic and infant care in low socio-economic status areas were served by poorer rnedical services than those living in high status areas, New Zealand Medical Journal, 80 (1974), pp.396-403. See also B. Kirkwood, "The Future of New Zealand Medicine', Nursing Forum, 6, 2 (1978) pp.l3-15.
130 Health Expenditure, op cit p.30.
131 Fougere, Exit, Voice, op cit pp.153-162.
132 Shannon makes a similar point about the Accident Compensation Scheme in New Zealand. He argues that large firms with higher accident rates benefit from the levy paid by smaller firms. This amounts to a cheapening of the costs of reproduction of 'rnental' workers. For large firms. See his 'The New Zealand Accident Cornpensation Act 1972: Towards an Historical Materialist Account of the Development of Public Legislation', unpublished paper, Departrnent of Extension, University of Otago, 1979.
133 Easton, 'Social Structure and Social Crisis', op cit. p.5.
134 Dianne Piesse, 'Houses for Homes', unpublished M.A. thesis, University of Auckland, 1979, p.77.
135 ibid. Piesse notes that between 1965 and 1974 housing expenditure rose by 54 per cent and household operations by 28 per cent of the total housetrold expenditure. "To make up for the increased share... that housing and transportation took, New Zealanders cut back spending on food (-69%) and apparel (-34%)." p.138,.
137 op cit The Welfare State? p.80.
138 See Income Maintenance and
Taxation, p.10, table 3. Moreover the percentage of GDP spent on family
benefits, widows and domestic purposes benefits has fallen from 3.1%a to
2.1% between 1950 and 1979,(The Welfare State?, Table 16). The inadequacy
of 'family' support is discussed in detail in: Social Development Council,
Family
Finances: Can the Community Do Better? (Wellington, 1977).
Chapter Eight
139 For an explanation of the 'circuit of capital' see Capital 2 (Harmondsworth, Penguin, 1978), especially Mandel's Introduction. See also Macrae and Bedggood, op.cit pp.92-107.
140 G. Mason, 'Private Profits from the Public Purse', New Zealand Listener, 28 October 1978.
141 All the more efficiently since while the costs of this capital outlay are still met by the taxpayers, they are now being told by the Planning Council that preventative health starts in the 'home' and that higher taxation on alcohol and tobacco should be introduced to discourage unhealthy life-styles. (The Welfare State? pp.92-95.
142 Yet the Planning Council is worried about these benefits becoming too excessive. It has the delicate job of trying to balance expectations for welfare with the need to restore the rate of profit.
143`Nationalisation' in this context means the state's role in controlling monetary and fiscal policy on behalf of the capitalist class. See Macrae and Bedggood, op.cit pp.100-101.
144 The more extreme advocates of the 'market forces' strategy such as Len Bayliss seek to restore the rate of profit without any concern for the drastic effects on the working class and smaller Iess efficient capitalists. See for example, Christchurch Press, 5 August 1978.
145 See for example Levett and Braithwaite, op.cit 'Growth of Knowledge', and Easton, 'Poverty in New Zealand: Estimates and Reflections', Political Science, 28, 2 (1976).
146 McDonald reports a Chamber of Commerce survey which shows a falling rate of profit in the 1970s and attributes this to the real wage overhang-that is, 'the gap between real wage growth and productivity'.National Business Review, 14 February 1979.
147 See Official Yearbooks for Consumer Príce Index revisions of 1965,1974 and 1977. Not only do food, household expenses, clothing and transport comprise a larger share of poor families' expenditure, the price rises of these items ís highest (especially with additional cuts in state subsidies to these iterns). See Economic Review, Public Service Association Research Paper No. 10 (Wellington, 1978) p.6.
148 The lower estiinate (2%) is frorn Monthly Abstracts, April 1979 and the higher from Economic Review, p.9, which uses a 'living standards index' to estimate prices increases not measured by the Consumer Price Index. The 20 per cent fall in living standards for the poorest 20 per cent of the population is a conservative estimate.
149 New Zealand Planning Council, Public Expenditure and Its Financing: 1950-1979. Report No. 12a (Wellington, Governrnent Printer, 1979).Table II.
150 See The Welfare State? pp.80-81. The reference wage is a compromise between an 'acceptable' level of income which allows a 'sense of belonging to the community' and a level that would becorne a disincentive to work.
151 The falling relative wage is achieved by a combination of wage controls, price, and tax adjustments. The Planning Council will ensure that benefit rates fall in line with the reference wage by recommending that benefits be taxed.
153 See my 'Power and Welfare' op.cit; Easton, `Poverty in New Zealand' op.cit and John Macrae, 'Income Distribution and Poverty in New Zealand' in Pitt (ed.), op. cit pp.42-55.
154 Capital 1. p.799. Marx cleatly anticipated the attempts by the capitalists to get the working class to pay for 'poverty'. "…pauperism forms a condition of capitalist production, and of the capitalist development of wealth. It forms part of the faux frais (incidental expenses) of capitalist production: but capital usually knows how to transfer these frorn its own shoulders to those of the working-class and the petty-bourgeoisie" (P·797).
Chapter Nine
I55 Basic references on ideology are K. Marx and F. Engels, The German Ideology (London, 1970); G. Lukacs, History and Class Consciousness (London, 1971); A. Gramsci, Selections from the Prison Notebooks (London, 1971) and L. Althusser, Lenin and Philosophy and Other Essays (London, 1971). For a good recent overview see Centre for Contemporary Cultural Studies, On Ideology (London 1977).
156 See J.A.C. Brown, Freud and the Post-Freudians (Harmondsworth 1964).
157 ". . . every social order creates those character forms which it needs for its preservation. In class society the ruling class secures its position with the aid of education and the institution of the family, by making its ideology the ruling ideology of all members of the society" .This goes much deeper than "mere attitudes" to the "formation of a psychic structure". W. Reich, Character Analysis (London, 1950) p.xxii.
158 See T. Adorno et.al., The Authoritarian Personality (New York 1969).
159 H. Marcuse, Eros and Civilisation (London 1969), and One Dimensional Man (London 1969).
160 See P. Bourdieu and J. Passeron, Reproduction in Education, Society and Culture (New York,1977); and D. Holly, Education or Domination? (London 1974).
161 J. Habermas in H.P. Dreitzel (ed.), Recent Sociology No. 2: Patterns of Communicative Behaviour (London 1970).
162 Gramsci refers to 'positive educative effects'. See On Ideology op cit p.51.
163 Warvick Roger, 'Why CORSO got the axe', Auckland Star, 6 October 1979.
164 My own analysis of Heylen Poll returns.
165 Roger Boshier, quoted in my 'Conflict and Consensus: Political Ideology in New Zealand' in Levine (ed.), New Zealand Politics: A reader. (Sydney 1976).
166 ibid., and my 'Authoritarianism and the Working Class in New Zealand', unpublished paper, 1976.
167 This section draws on my ‘State Capitalism in New Zealand' in: Trlin (ed.). Social Welfare, pp.209-212.
168 Estimate based on Department of Health, Medical Statistics Report, part II: Mental Health Data, (Wellington, Government Prínter,1970)Table 15. Epidemiological research overseas suggests that the real incidence of 'serious' mental disorder is nearer two per cerrt of the population. But mental health data do not reflect the actual 'disorder' of the capitalist character structure, but rather the numbers disabled and incapable of functioning effectivety in capitalist society.
169 Department of Justice, Violent Offending, Research Series No. 2 (Wellington, Government Printer, 1971).
170 Board of Health Report, Drug Dependence and Drug Abuse in New Zealand. (Wellington, Governrnent Printer, 1970).
171 Kirkwood comrnents: "Lawyers have the highest rate of conviction for theft, steal more in each theft, and serve shorter sentences when convicted than any other occupational group. In I975 one lawyer stole nearly $500,000 and is presumed to have invested most of it overseas. He was sentenced to six years. With time off for good behaviour this works out at $1000,00 per year in jail'. Paper delivered to New Zealand Medical Students Association Conference, May, 1976.
172 Marx defines the 'lumpenproletariat' as "vagabonds, criminals and prostitutes', Capital 1 p.797.175. Morgan found that 74 per cent of a sample of adult offenders in 1971 were unskilled or unemployed. Of these 27 per cent were Maori, see 'Occupational Status and Crime Data', unpublished report, Department of Sociology, University of Auckland, July 1972; ACORD's report Task Force shows how the police concentrated upon arresting young Polynesians in Auckland City on charges which might be considered 'normal' for the whole population -drunkenness, offensive behaviour, obscene and disorderly behaviour.
173 This summary of policy changes is drawn from my 'A matter of Accounting', Wagonmound, (Auckland 1974), pp.l6-I8.
175 Joint Cornmittee on Young Offenders The Prediction of Juvenile Offending, Report No. 3 (Wellington 1975).
176 D.M. Ferguson, Effects of Race, p.24. But equalising Maori and Pakeha socio-economic status leaves between 67% and 84% of the higher incidence of Maori offending unexplained. This unknown factor however corresponds to the now generally accepted view that about 80% of Maori offending is caused by the European Iegal system (p.18).
177 The late Tom Pearce was reputed to have said at a public meeting "we don't want a lot of headshrinkers telling us that little Johnny has grownup bad because he was deprived of going to see a football game when what he needs is a damn good hiding'"
Chapter Ten
179 See Mason, 'A Marxian Explanation of Capitalist Crisis'. Op. cit
180 Macrae and Bedggood, op. cit Section 2.6.
181 Ian McLean, The Future of New Zealand Agriculture: Economic Strategies for the 1980s, (Wellington, Government Printer, 1978) p.16.
182 G. Mason, 'Notes on Restructuring', New Zealand Monthly Review, March and April, 1979.
183 McLean. op.cit.. pp.28-29.
184 ibid.; and New Zealand at the Turning-Point, op. cit pp.281-288.
185 McLean, op.cit., pp.67-70.
187 Forestry exports were 7% of export earnings in 1977 and are projected to increase to between 20% and 25% by 2000; see G.M. O'Neill, 'Forestry Production and Planting Targets', paper delivered to Forestry Development Conference, 1974. For a discussion of the impact of Forestry on Maori land, see Ruth Nuttall, 'Land for the Forests, a Shadow for the People; a study of Exotic Afforestation of Maori Land in Northland', unpublished M.A. thesis, University of Auckland, 1980.
188 See D. Trussell, Afforestation, Wood-processìng and New Zealanders (Auckland, Friends of the Earth, 1979).
189 Mason, 'Notes on Restructuring'. Op. cit
190 Economic Monitoring Group, New Zealand's Economic Trends and Policies. Report No. 1 (Wellington, 1978) p.4.
191 New Zealand Planning Council, Planning Perspectives. Report No. 4 (Wellington, Government Printer, 1978) p.37.
192 Organisation For Economic Co-operation and Development, New Zealand, Economic Survey (Paris, 1979) p.10, Table 2.
193 Mason, ‘Private Profits from the Public Purse', op cit notes that against a cut in real living standards of wage workers, state assistance to export companies has been estimated at over $1 billion a year.
194 Cutbacks in housing and car production are well under way with housing production halved in five years, see Mason, 'Notes on Restructuring'.
195 "resources in the housing industry (labour, materials, machines, capital funds) have been `freed', but . . . they will not be shifted into productive activity elsewhere (apart from the migration oI skilled labour overseas) until the slump has run its course and the profitability of expanded production and investment has been restored', (ibid., p.8).
196 See for exarnple Frank, Accumulation and Dependent Development p 200.
197 Barratt-Brown, Econornics.of Inrperialism, pp.283-284; and T. Hayter, Aid as Imperialism. (Harmondsworth 1971).
198 Mason, 'Notes on Restructuring'.
199 New Zealand Planning Council, Economic Strategy:1979. Report No. II. (Wellington, Governrnent Printer, 1979) p.7.
200 National Business Review, 22 August 1979, p.ll.
201 R. Steven 'Towards a Marxian theory of 'terms of trade' in New Zealand', Red Papers, 3 (Sumrner 1978-79). Trussell, op.cit., has calculated that between 1971 and 1975 New Zealand Forest Products imported plant and machinery, that cost approxímately 62% of its pulp and paper exports.205.
202 Though no accurate estimates are available it is certain that the total state subsidies to the six pulp and paper producing plants in New Zealand far exceed the profits of these companies. See Trussell, op.cit.
203 Mason, 'Notes on Restructuring'.
204 See Ehrensaft and Armstrong, 'Dominion Capitalism'; McLean, Future of Agriculture… and Franklin, Trade, Growth and Anxiety, p.94.
205 Steven, 'Towards a Marxian Theory of 'terms of trade', op. cit p.74.
206 Planning Perspectives, p.39.
207 Economic Strategy, p21, my emphasis.
208 Steven 'Toward a Marxian theory of terms of trade', p.72, Table 3 p.212. op cit
209 In 1974 the six pulp mills employed a total of 5682 workers, while the building industry is expected to lose over 20000 workers in the next two years.
210 The Welfare State? makes
the conservative point that social welfare tends to undermine self-reliance
in a bland, well chosen phraseology. It is suggested that people rely less
on the state and rnore on community 'resources'. This will of course require
a 'fundamental change in political and social philosophy' (p.28). Of course
it will. It is known as laissez faire, or the 'survival of the fíttest'.