What Made the Neoliberal Revolution?

The infamous 'great experiment' in New Zealand, and to a lesser extent, Australia, has fascinated world opinion for more than a decade. Was this new right shock therapy unique? Was it necessary? Was it the result of an international New Right conspiracy to destroy the social democratic ( if not socialist) 'fatherlands' of the South Pacific? The need to challenge the dominant neoliberal ideology, and provide a convincing explanation of what happened in the last decade and a half, is the main theme of this book. I do this by tracing the arrested development of the Australasian revolution from the origins of the white settler states through the dependent development of Dominion Capitalism, looking for the causes of the present crisis and the grounds for a socialist future. This chapter sets the scene and introduces us to the main protagonists in this intellectual competition - neoliberal, social democratic, neomarxist and marxist - each of whom battle chapter by chapter, to advance their chosen standpoint by solving the problem: what caused the Neoliberal Revolution?
 
 

Exit the workers' paradise

In the early 1990's we saw Mike Moore on TV, carpetbag in hand, setting down in an RNZAF plane near Warsaw to sell supply-side socialism to Lech Walesa. Moore offered the services of Roger Douglas, chief Rogergnome and privateer, to get the state out of the Polish economy. Two years later Douglas was off to Russia as a World Bank advisor on Yeltsin's economic shock therapy to bring capitalism back to life.1

What made the New Zealand Labour government a world-beater in bureaucracy busting? What made Roger Douglas the favourite financial whiz-kid of the OECD and the World Bank? By the end of the 1990's Douglas was running New Zealand's biggest firm, Brierley's and Moore was lobbying for the top job in the World Trade Organisation. What can explain the rapid rise to the top of two former Labour party Ministers?

The answer is that they had six years hands on experience in applying shock therapy to one of the most massive and firmly entrenched interventionist states in the Western world, and successfully implemented an open deregulated semi-colony into the hands of US, Japanese and EU imperialism.

Australia wasn't far behind. Cushioned by the ACCORD which kept the unions docile for much of the 1980's, while Hawke swanned about with his corporate mates Kerry Packer and Alan Bond the Keating-led Labor government brought-forward the neo-liberal agenda in federal politics, while the non-labour Kennett rammed new right legislation through the Victorian state parliament. 2

There is a satisfying logic to all of this; that it should be two Labo(u)r governments which entrenced the protectionist regimes in these states, that began to take them apart.3 Nowhere else in the world has this "Great Experiment" happened.4 Yesterday, New Zealand and Australia earned the reputation of the socialist fatherlands of the Second International. Lenin even commented about "this Australia where socialism could be gained through a special sort of Labor party".5

Yet today these countries have earned the reputation of executioners of' 'state socialism'. That this lesson should have been learned first in New Zealand and Australia appears on the surface to be an incredible irony of history. Why should the 'workers' paradise' of the founding social democracies, become a century later, the first to be so rapidly and irreversibly demolished by a latter-day generation of social democrats? Lets look at the competing answers to these questions.
 

The New Right Amnesia

The most influential answers to these questions currently are those of the New Right or neo-liberal conservatives. There is not much new about the NR. It simply blames the working class and Labo(u)r governments for interfering in the market, redistributing wealth from the entrepreneurs to the welfare 'scroungers'.

In particular it attacks Keynesian economists and politicians for insulating the domestic economy from the world market.6 The guiding principles of neo-liberalism are those of Adam Smith and Fred Hayek. The belief that the market choices of individuals are the sacred basis of all that is civilised. Getting the state out of the market is the main slogan of the NR.

The self-promoted captains of industry like Alan Bond and Alan Gibbs, don't mince words when calling for more deregulation to get the economy internationally competitive.7 But their arguments are shallow and self-serving. In itself the conservative ideology is weak on logic and history. In attacking state intervention it ignores the role of the state in establishing an infant local capitalism in the first place.

Or it makes grudging concessions, like Edward Gibbon Wakefield, to state aid during the colonisation of nations. So the New Right today repeats the mistake of the classical political economists like Wakefield, who thought capitalism fell from heaven during its 'golden age'. These apologists for capitalism conveniently forget its birth "when it came into the world reeking with blood and dirt from every poor".8

Former Labo(u)rites who have converted to the New Right, like most converts, go even further in avowing their new faith. In New Zealand, ACT leader Richard Prebble disowns his own past advocacy of state intervention in the whole post-war period. The new wisdom is that the welfare state was always a burden on the economy by taxing and spending savings and slowing down investment. In other words, Labo(u(r governments had to implement neo-liberal policies in the national interest.9

This 'revision' of history conveniently ignores the huge fortunes Australian and New Zealand capitalists made from 'milking' state aid for a century. It diverts attention away from the real beneficiaries of the so-called welfare state - the national bourgeoisie.10 Brierley and Gibbs made their fortunes by buying-up and asset stripping undervalued companies in New Zealand. Packer and Bond cultivated connections with the Federal or local states to amass their riches. The only thing that enabled them to profit from these acquisitions was the protectionist regimes which allowed the firms they stripped to become asset rich. This amnesiac hypocrisy is the hallmark of New Right ideology.11

But the biggest lie coming from people like Prebble and Keating is that the national interest is also the interest of the working class.12 The New Right right sold neo-liberalism as necessary for 'our' national economic survival. It exploited nationalism to get everyone to accept the need to make sacrifices for 'their' country. Coopting the social democratic chauvism of the post-war boomtime they put 'Australia First', just as Winston Peters' populist party put 'NZ First'.

In reality it meant that the poor made the sacrifice and the rich got the prizes. On the 'level playing field' most of us were losers, the privileged few were the winners. But winners now became fashionable as national 'heroes' like 'Bondy' in Australia and and Bob Jones in New Zealand.13

The public appeal of the New Right is that it seems to face up to the facts of economic life. It simply lists the 'reforms' needed to get the country out of depression - remaking Australasian capitalism from the rural backyard slum into the trendy globalising jet setter paradise. The ideology is itself stripped down - cut costs at all costs or else no profits will be made. No investment, no jobs. The government out of business. 'Unproductive' state enterprises are made profitable and then sold off to business mates.14

New Right thinking seems like 'common sense'. Workers must accept wage cuts or lose their jobs. "No gain without pain". The trouble is that linking the needs of workers with capitalists together in the national interest cannot disguise the downside of capitalist crisis. For the vast majority of workers, the pain does not bring gain. Growth means more profits, but it means less pay, worse conditions, fewer jobs to go round, and a deterioration in health, housing, education and welfare. Instead of 'Australasia first' we get "bosses first, workers second".15
 

Bankrupt Liberalism

In Australasia, liberalism emerged out of the historic settlement of Dominion Capitalism as a social liberalism based on the collective interests of the the labour movement and the poor. Sometimes mistakenly labelled 'state socialism' this form of social liberalism can be better labelled labourism to signify its class alignment.

The response of the labourites to their rout by the new right, is to conduct a guerilla action from the sidelines. But their campaign is self-defeating. It is grounded on the shifting sands of economic nationalism whose time has passed. It starts from the premise that the both Australia and New Zealand were founded as social democracies and that the current crisis is an aberration. Once the New Right is deposed from power, the state can once more return to its familiar role of regulating the national economy to manage crisis.

It draws this conclusion from the historic experience of the periods of social reform of the 1890's which both Australia and New Zealand shared as part of a wider self-governing British territories of Australasia, the formation of a protected Dominion capitalism in the early part of the the new century, and of the post-war boom grounded on welfare states introduced by Labo(u)r Governments in the 1930's. Clearly social democracy credits the state, rather than depression and war, with creating the conditions for national prosperity and in particular the post-war boom.16

For liberals then, the breakdown of the economy results from the wrong policies. The neo-liberals have deregulated the economy and exposed it to uncontrolled international forces. Shit happens because Labo(u)r Governments got hijacked by international finance capitalism and their local agents in the state bureaucracy.

Even if this were the case, and the state was capable of preventing economic crisis, the hijacking of Labo(u)r governments by a rich and powerful electoral minority, blows social democratic theory out the window. Why? Because it destroys the basic assumption of liberalism, that democracy represents the majority will and replaces it with a theory of unaccountable power elites. This means that liberals either go right towards neo-liberalism or left into radicalism. The centre cannot hold.

There is no way that historic Australasian labourism can survive a situation where the world's first welfare states have been partly demolished by Labo(u)r governments elected by workers, still owing some token allegiance to the Second International! The institutions of labourism, the Labo(u)r Parties, and the Trades Unions, are left dangling in limbo - much as in Eastern Europe - or willingly adapting in the form of Blairite Labourism to old fashioned liberalism under the guise of 'new realism' or the 'new times' of globalisation.17

Not all social democrats are happy with the shift right from social democracy to the Blairite 'third way' liberalism. Some Labourites try to present the Hawke and Lange governments of the 1980's as more benign than their Liberal and National Party rivals because their radical programmes of neo-liberal reforms were moderated by gains in social policy - in particular those of womens', indigenous peoples' and gay rights, the defence of labour rights and advances in green reforms.18

But such a defence of social democracy as moderating a social crisis caused by new right liberal economics more drastic than those of Thatcher or Reagan, is not very convincing. In the first place the authors have to admit that the Labo(u)r parties were able to move further and faster to deregulate the economies because of the loyalty of those whom they were attacking.

Second, the authors are rather perfunctory in judging the labour, social and environmental policies of the 1980's as gains. Were these 'gains' for some, fair trade-offs for the 'pains' of the many? Despite their efforts, the labourite apologists cannot make a convincing case that social democracy has kept its side of the bargain. The Beasley and Clark parties no longer retain their historic working class orientation, despite holding onto the allegiance of a large section of their traditional working class vote. Their policies signify a shift from Labourism back towards late nineteenth century Liberalism.19

It seems clear then that the default position of Australasian labourism in times of structural crisis of falling profits, must be to move right 'to market, to market' where it stakes a liberal position on the centre-left marginally more progressive than the Tories. Chris Trotter, ex-Labour and ex-New Labour Party intellectual, reports the impact of this trend on the New Zealand scene.20 What this really reflects is the redundant role of the labour bureaucracy as class 'go-betweens' in the face of globalisation. Under the rule of 'tripartism' the labour lieutenants can openly fraternise with the generals. One-time ACTU head, Bob Hawke made no bones about the Accord being necessary for the survival of Australian capitalism and his corporate mates who cultivated Prime Minister Hawke to get the policies they wanted.

Roger Douglas, New Zealand Labour's 'reforming' Minister of Finance openly advocated the cause of big business, getting appointed to the Board of Brierleys while still in Parliament. Ken Douglas, President of the New Zealand Council of Trade Unions, welcomes the 'new times' when he openly justifies the unions as better able to control workers and extract more profits than the employers could do on their own.

ACTU boss Jenny George has elevated class collaboration to the new art form of class transcendence, when she appeals to the bosses courts to defend the labour movement. The danger of "tripartism" was that it was always going to turn into tripe. The bosses no longer require a layer of bureaucrats in Labo(u)r Parties or the unions to control the working class because increasing deregulation of the labour market allows global market forces, including the threat of unemployment, to directly regulate wages.21

The result is a massive worker disillusionment with Labo(u)r parties and collaborationist trade union leaderships with the move right towards Blairite liberalism or even more unstable, a chauvinistic Peters Populism in New Zealand and Hanson proto-fascism in Australia . This is an ideological return to the 1890's when the Lib/Lab governments combined workers and petty bourgeoise into one constitutency to defend the 'national community'.22

Recognised as racist, chauvinist in Australia, in New Zealand this belief in 'community' was also called 'protofascist' because its reactionary subordination of class to nation. Like the 1890's, the 1990's is a period of refounding of radical currents within the working class and oppressed groups as they try to find a radical political standpoint to the left of defunct social democracy.

Unlike the 1880's, however, the radical constituency today has been transformed into a powerful majority working class along linked to strong women's and indigenous peoples movements. While the Australasian labour movement was defeated and incporated into the national "community" at the end of the last century, at the end of this century we can look forward to a radical class-based coalition in the 'downunder' Asia-Pacific region to overcome national, racial and chauvinist differences and open the road to socialism!23
 

The Radical Idealists

Radical disillusionment with social democracy in Australasia is directed at the labour bureaucracy, or white middle class, which are accused of being the state agents of the ruling class. The centralised, bureaucratised state is not seen as an instrument of radical social change. It is a white, male, middle-class institution. Instead, socialists, feminists, Aboriginal and Maori radicals and left Greens, advocate a strategy of decentralised, 'grass roots', 'power to the people' social movements and a radical restructuring of the state from below. That is 'radicalised democracy'.24

In New Zealand the 1980's opened with Donna Awatere's dramatic 'black separatist' challenge thrown down in Maori Sovereignty. In her book she attacked all pakehas, regardless of class and gender, for uniting as a white elite to oppress Maori. Maori oppression was caused by 'white hatred', and the solution was a Maori political movement to reclaim the land. But she didn't explain the source of 'white hatred' or how it brought about the current crisis and its destructive effects on Maori.

Awatere's political solution to the crisis was utopian - a Maori minority overcoming by force of 'moral suasion' a racist Pakeha majority.25 The result was the cooptation of Maori radicalism into the Courts, and long march through the statutes to Treaty settlements which set up Tribal authorities on a capitalist model, and limited the vast mass of Maori workers to a share of the 'doled-out' benefits.26

In Australia, Aboriginal land rights protest also took a radical turn in the 1980s partly also under the influence of the US Black Power movement. Aboriginals challenged the history of conquest, and racist assimilation, demanding land rights and self-determination. Roberta Sykes was one of the most prominent.27 Under Labor, major legal challenges such as Mabo and Wik gave some basis in law for the return of stolen land, and settlement if not self-determination.

Yet instead of realising these radical ideals, Blacks came up against the hard rock of capitalist reality. Land rights were tokenised and merely legitimised reservations or bantustans in the backblocks, and even these gains then came under threat from the big mining and farming interests backing the Howard Coalition government. Meanwhile the urban Aborigines languished near the bottom of the reserve army of labour, and labelled an 'underclass'.28

Even in the case of the women's movement - perhaps the strongest case for radical social movement which rejected class politics, the radical solution has also come up short. In New Zealand the high hopes of equal rights and equal pay failed to get traction. The demands for free abortion, for job sharing, for wages for housework, for state provided childcare etc barely made it past first base before coming up against the 'backlash'. Even abortion on demand is now under threat.29

The radical/socialist feminist conclusion is that men's resistance to these changes are ultimately responsible for the backlash rather than the restructuring of the economy forced by falling profits. This ties radical and socialist feminism to the belief that gender equality is still possible through challenging and changing the white male dominated state apparatus.30

Australian radical and socialist feminism has as well developed critique of patriarchal capitalism as both a system of patriarchy where men dominate women, and a system of wage labour where women are discrirminated against. Radical feminsts reduce gender oppression to partriarchy, while socialist feminsists tend to explain patriarchy as an effect of capitalism (understood as a system of wage labour where exploitation occurs in the sphere of distribution).

It follows that the broadly radical-socialist scenario points to a male-dominated patriarchy or capitalist state as the cause of women's oppression. So when women come up against the limits of patriarchy and the state it is argued that the barrier is male gender and not capitalist social relations.31

While the radical-socialist argument recognises that falling rents and profits will cause a crisis and require drastic economic restructuring, and the renewed ideological legitimation of the domestic 'reservation', it cannot avoid putting the blame for falling profits on rising wages and state spending. This is because radicals cannot break out of the trap of classical bourgeois economics.

They never go beyond a neo-Ricardian (sometimes labelled neo-Marxist) analysis of the economy, where exploitation results from unequal exchange, and the share of wages and profits have to be at the expense of each other. When profits fall, this must be the result of rising wages, and since Aborigine's, Maori or women's share of the wage is not rising, it must be because men's share is.32

Therefore in their attempts to explain the bewildering reversal of Labourite policy from regulation to deregulation, the radicals cannot counter the New Right claim that high wages drawn from high profits in the past began to squeeze profits in the 1960's bringing about a crisis of profitability and the need for urgent economic reforms. These reforms are designed to cut wages and state spending to restore profits, and are most severe in their impact on the most oppressed layers of the working class, Aboriginals, Maori, women and youth.

So Radicals have no solid ground from which to oppose restructuring other than the 'balance of gender/ethnic/class forces'. Crisis results from wages squeezing profits. Restructuring too depends on how much 'reform' the working class will accept. The radicals cannot escape the trap that workers and oppressed groups must bear the cost of wage cuts if everyone from the New Right, to the New Left thinks that wage hikes are the cause of the problem.

Mobilising resistance to restructuring is therefore based on very weak arguments based on 'fair shares' as argued by middle class intellectuals. And when the media are mainly owned by big business, this debate comes down to a very one-sided view of whose morality and statistics rule! And inevitably for Radicals there is a slippage from neo-ricardian economics to new forms of social democratic, green, or anarchist politics.33

None of the arguments sketched so far can offer a convincing explanation of the neo-liberal revolution. They cannot explain why the post-war class compromise failed and why the Labourites ran into the arms of international finance capital. What caused the amazing turnaround in the balance of class forces during the 1970's? How was it that the working-class was able to hi-jack the state for 50 years and achieve high wages without squeezing profits until recently? And why is it that the Labo(u)r parties, which conceived the welfare state, as John A Lee put it "from the erection to the res-erection", now became its gravediggers? 34

The neo-ricardian radical explanations are certainly an advance on the New Right denial of state intervention, and the liberal panacea of economic nationalism. They do face up to Australia and New Zealand as relatively weak and dependent states in the global economy. Yet the radical scenario is grounded in a theory of exploitation at the level of distribution. It fails to recognise that the struggles of workers, indigenous peoples, women, and other oppressed people cannot be resolved by moral claims about social justice, and technical claims about income distribution and poverty, both adjudicated by nation states.

This is because sooner or later social movements based on such claims come up against an intractable state machine which represents the interests of the capitalist ruling class. It defends the capitalists ownership of the means of production, allowing them to exploit wage labour at the point of production, rather than exchange.

Therefore the radical political objective of a just redistribution of income and equal rights cannot succeed because it cannot overcome the class distribution of the ownership of the means of production - capitalist relations of production. In other words, while the bosses own the factories, workers cannot force them to give back the surplus which they expropriate.

Enter the Marxists

I will argue in this book that a classic Marxist analysis can offer the best explanation of the neo-liberal revolution. Good explanations require that not only must the causes and effects of the main events explained. These causes and effects must be predicted before they happen so that we can act to change these events. One of the aims of this book is the demonstrate that the dramatic events of the 1980's and 1990's in Australia and New Zealand were clearly foreseen by Marxists.35

They were explained as necessary reforms to overcome capitalist crisis and to restore profitable production by the mid 1970's. This crisis in turn was seen as the logical outcome of the trajectory of Australasia from settler colonisation, through Dominion Capitalism to the limits of protectionism.

The master cause was the unfinished revolution - the bourgeois-democratic revolution - which established the Law of Value but then came up against the limits of the nation state forming a barrier to the further development of the forces of production. The neo-liberal revolution broke through the protectionist barrier and Australasia could then be fully integrated by imperialist capital into the global economy.

On the strength of that record, Marxists today can use the same method to foresee the future development of Australasia as capitalist semi-colonies increasingly dominated by the big imperialist powers. The neo-liberal revolution could temporarily displace the contradiction between the forces and relations of production inside Australasian society.

However, the concentrated ownership of those forces of production in the hands of the imperialist transnational firms, imposed a widening gap between rich and poor on a global scale. In Australasia this would create growing struggles by workers and the oppressed against global capitalist rule. This would create the conditions for going beyond the Bourgeois-democratic revolution to the socialist revolution and the transition from capitalism to socialism.

But predicting crisis and restructuring does not necessarily mean that you have the best explanation. The New Right also saw the the neo-liberal revolution as a necessary solution to an economic crisis. But their explanation as we have seen is riddled with historical amnesia and logical flaws.

They claim the crisis was caused by state intervention which prevented the market from working properly. While this is true as far as it goes, this explanation is wrong, because the New Right cannot explain the historic fact that state intervention is not the fundamental cause of crisis.

The conclusive test of the superiority of Marxist analysis over New Right, liberal and radical thought, is in explaining and predicting the crisis and restructuring as the inevitable result of all the previous historical transformations in the history of capitalism in Australia and New Zealand. In that sense, we cannot understand the present and foresee the future without first understanding the origins and development of settler colonialism and its transition to Dominion Capitalism in Australasia.

1    the causes of white-settlement;
2    the necessary conquest of indigenous society;
3    Australasia as lumpen-imperialist states exploiting states in the South Pacific.
4    the importance of rent in accounting for the semi-colonial specialisation in pastoral production;
5    The development of capitalist class relations under Dominion Capitalism.
6    how gender relations are reproduced as productive relations;
7    the key role of the state in creating the conditions for capitalist production;
8    the role of the welfare state in ensuring the development of domestic manufacturing;
9    how crisis is caused by the tendency of the rate of profit to fall independently of rising wages and state    intervention.

Only then is it possible to provide an historical and materialist explanation of neo-liberal revolution as a response neither to state intervention, nor the result of foreign ownership and control, or of white, male elite power and greed, but rather to a crisis in the capitalist system itself.

Why this book?

Predicting crisis and restructuring as necessary to restore capitalist profits does not mean that these events are independent of human action. Most bourgeois commentators caricature Marxism as a doctrine of historical inevitability in which human action is completely determined by outside forces. This is a gross, and usually deliberate, misrepresentation.

On the contrary, for Marxists social life does not follow some pre-ordained plan. Marxists believe that people do make their own history, but that they do not make it under conditions of their own choosing. They are not totally free-choice agents as conceived by free market philosophers like Fred Hayek, because individuals are members of social classes, or social relations, which shape their lives to a large extent. But it is possible to intervene in these social relations to change the course of events.

As Engels put it: "freedom is the freedom from necessity". Marxists attempt to use their knowledge of society to make people aware of the conditions under which they live so they can act consciously to advance their class interests and achieve their 'freedom' from class society. Marxists see this uniting of theory and practice as 'class struggle'.36

It is in this spirit that this book was written. It began as a collection of articles written over the last 15 years which tried to show how knowledge or theory, can be united with practice in the struggle for freedom. They are all polemics, though their target audiences differed. Some originated as articles written in a popular style for revolutionary magazines. They attempted to apply marxism is an direct way to mobilise working class resistance to the neo-liberal counter-revolution in New Zealand. Their purpose was to attack and expose not only false ideas on the Right, but also the social democratic, liberal and neo-Marxist left which acted as a barrier to working class theory and practice. Others, are aimed at academic audiences, and are more concerned to combat anti-working class ideas in the social sciences.

Whatever the audience, the intention in all these articles was to combine an attack on academic marxism such as it existed at the time, with a more popular application of Marxist theory and political practice. My purpose is to show that classic Marxism is a science able to explain what sort of society we live in in New Zealand and Australia, where this society has come from in the last 150 years, and where it is going in the next 50 years. The point is to prove that, if we understand society and the causes of the crisis we are living through, then we can act to change it - for the better.

In the process of developing a Marxist 'take' on Australasia it is necessary to confront the many rival 'takes'. There are many `stories' of Australia and New Zealand. Manning Clark said of Humphrey McQueen's A New Britannia , that "every generation writes its own history" and in McQueen's case his generation was the 'new left' as distinct from Manning Clark's 'old left'.37

It is also true that every generation 'discovers' a lost continent, or a layer of reality which new events have exposed.38 Australia and New Zealand shared a common Settler history until Australian Federation. This is reflected in William Pember Reeves State Experiments in Australia and New Zealand, published in 1902, Brian Fitzpatrick's The British Empire in Austalia first published in 1941, and in Jan Kociumba's Oxford History of Australia from 1770 to 1860. Each 'take' separated by 40-50 years, 'uncovers' another layer of reality.39

Then there are those 'histories' that reject the comprehensive, especially 'labour histories', as Eurocentric or masculine histories that cannot 'speak' for Aboriginals, or women - more importantly Aboriginal women - and which excludes their 'different', and active, role in history. These realities are said to be visible only to those that live them.40

In New Zealand - there are the mainstream liberal historians from Sinclair's celebration of social democracy to Bellich's post-modern identity history; the 'economic' histories of Sutch or Hawke; the 'labour' histories of Harry Holland on the Waihi strike, Olssen on the Red Federation and Roth on the unions; the women's 'herstories' of James and Saville Smith, Du Plessis; the Maori or indigenous histories such as that of Awatere and Walker, Pere and Te Awekeluku; the 'radical' social histories of Pember Reeves, Beaglehole, Airey and Wilkes.41

In Australia histories have been classified as 'old left' as in Fitpatrick and Russel Ward; 'new left' as in McQueen and Connell and Irving; liberal as in Hancock; anarchist as in Manning Clark; sociological as in Blainey and Stretton; feminist as in Dixon.42 More recently historians can be seen as modernist or post-modernist.43 Manning Clark became a bicentenary 'celebrity' because his anarchist method leant itself to the celebration of post-modern cultural 'diversity'.44

All of these particular histories recreate parts of our total history, but all remain incomplete because they either ignore, or dimly perceive, the underlying material social relations which shape our society and its history. That is they fail to discover the 'lost continent of communism.' 45 As a consequence, they cannot fully explain where Australia and New Zealand came from over the last 200 and more years, and more importantly, where they are going today.46

Over a decade ago I wrote a Marxist 'story' - Rich and Poor in New Zealand. It was an attempt to sketch out a Marxist analysis of New Zealand's history. It was a response to a huge gap in our political and intellectual life -the chronic absence of a classic Marxist tradition characteristic of a white-settler colony, and the prevailing liberal complacency about the true nature of our society.47

The arguments advanced in that book were in met in print with hostility and incomprehension, or totally ignored. Yet today, despite much talk of a 'crisis of Marxism', and the failure of socialism, these arguments have proven more prophetic, more lasting and more powerful than ever as New Zealand has sunk deeper into crisis and depression.

Australian classic Marxists attempted to apply Marx's method to Australia's colonial origins and development. Notably Andrew Wells, in Constructing Australia made a breakthrough in his history of Australian capitalism up to Federation.48

It is the Marxist analysis of Australia's and New Zealand's development as capitalist semi-colonies that reveals the long run forces which have shaped their common past, their present predicament, and which will force them to go beyond a common market and seek political unity in the new century.

It was Marxists who saw that and incomplete 'national revolution' allowed these countries to escape the fate of the non-settler colonies, and to partially suspend the 'law of value' and develop under protection as rich advanced semi-colonies with lumpen imperialist pretentions.49

Marxists also foresaw that such protection was doomed to be but a short-lived suppression of the basic contradiction which underlies the capitalist economy. It was this analysis that predicted the necessary re-emergence of that contradiction, the inevitability of crisis, and the opening-up of these economies to international market forces. Marxists predicted New Zealand's economic re-integration with Australia as the resurgence of a delayed concentration and centralisation of capital.

Marxists warned of the choice facing workers - of becoming a 'third world' Australasian quarry, or of becoming socialist republics as part of a socialist federation of Australasia.50 More recently the bourgeoisie in both Australia and New Zealand have come to see their fate at tied to that of Asia and the wider Asia-Pacific region as the process of 'globalisation' opens up any remaining protectionist barriers to the world economy.

Clearly the dominant theme of 'commomwealth' and white settler nationalism as the basis of identity, has begun to shift inwards to kinship and locality, and outwards to an Asia-Pacific identity.51 None of these themes are new for those who have long understood the origins and development of Australasia in the context of the wider Pacific and global economy.

So I will argue that it is Marxist 'economics', not bourgeois economics, that is vindicated by the global structural economic crisis, and the particular crises as they are felt in the semi-colonies of Australia and New Zealand. It is the Marxist theory of the state that explains the crisis of the Labo(u)r parties today, and the limits of bourgeois democracy. It is the Marxist analysis of Aboriginal and Maori nationalism and women's oppression which transcends the narrow petty-bourgeois ideology on these questions, and demonstrates the necessity for socialism as the means of both indigenous peoples' and women's liberation.

In this book I will pick up many of the threads of Rich and Poor in New Zealand and develop them today for the wider Australasian society. In each of the chapters I try to show that a Marxist explanation today more than ever before, can explain where these white-settler semi-colonies began, where they are today, and where they are going in the new millennium.

Marxism Dead?

Such claims may appear to be totally deluded in the age of the collapse of 'communism' and the widely celebrated death of Marxism. From the right, Marxism is seen as failed, a victim of the move back to the basics of market forces and monetarism. So-called 'communism' falls before the obvious superiority of western capitalism, and socialism as a utopian ideal is finally proven bankrupt after Tienenmen Square and the 'silent revolutions' in Eastern Europe and the ex-USSR after 1989.

Among the left intelligentsia disillusion with the prospects for socialism has set in after nearly 20 years of defeats at the hands of right-wing Reaganism, Thatcherism or the socialist austerity of Mitterrand or Rogernomics. 'Marxism' now becomes, not just a faith in capitalist democracy, but a argument for the retreat to market values and individualism as a means towards that end, East and West.

Academic marxists are in full flight from class analysis back into the navel gazing fantasy world of private individuals and their subjective experience - the so-called post-modern world. They see the 20^th century as a century in which individual freedoms were subordinated to totalitarian movements left, right and centre, and they blame this on western intellectuals fascination with Enlightenment Reason.

Whatever their ideas, however, the key to understanding this huge retreat of intellectuals from Enlightenment Reason, is their class position within capitalism and their role as mediators in the class struggle. When the struggle favours the working class, petty bourgeois intellectuals are 'r-r-revolutionary' in fighting for universal freedoms from tyranny. When the struggle favours the ruling class, petty bourgeois intellectuals revert to being plain 'd-d-democrats' defending individual liberty from tyranny.52
 

Petty-bourgeois disillusionment

But there is nothing new or surprising about this. Petty bourgeois intellectuals first gave up on Marxism 120 years ago while Marx was still alive. Ever since, they have put forward their own personal versions of marxism as substitutes for the real thing. As always, in periods of crisis, the middle-classes panic as they become squeezed between the two main class protagonists in capitalist society. Left intellectuals always take flight from even their pitiful versions of marxism into the arms of the anti-marxists, reformists and even the right.

Virtually all socialist intellectuals capitulated to the chauvinism of the Great War. They ganged up against the Bolshevik revolution as premature, and collaborated in the murder of the German Spartacists, Luxemburg and Liebknecht. By the 1930's the flighty petty bourgeoisie, aided and abetted by Stalin, had sold out to Hitler or the own national military leaders. A similar trend has occurred over the last two decades as world capitalism sank into a new structural crisis. The end of the post-war boom brought about a world-wide mobilisation of workers' and peasants' movements. Following the 1968 May Days, events seemed to be favouring the working class. Vietnam liberated itself from the US military invasion; Portugal got rid of its semi-feudal dictatorship; in 1979, the Sandinistas defeated Samoza.

During this period of popular ascendancy, the left intellectuals sided openly with the workers and peasants and their doctored versions of 'marxism' became academically respectable. Popular New Left or 'broad left' fronts drawing on spontaneous social movements sprang up encompassing Maoist, Trotskyist and Eurocommunist currents.

However, as we shall see, these brands of marxism were those compatible with the social advancement of the petty bourgeoisie and labour bureaucracy at the head of these progressive movements - and all relied on some revisionist concept of evolutionary socialism.

The Reactionary '80's

But things turned around in the 1980's. The world economy went into a speculative upturn but could not solve its profits crisis. So the New Right went on the offensive to impose more severe austerity measures on workers and peasants everywhere. Thatcher cam to power in Britain and Reagan in the US. The Common Program in France failed, and so on. Now the ruling class was on top. Left intellectuals hurriedly abandoned their links with the working class and cultivated those with the establishment. The market became the new saviour; class and class struggle went out the window; feminism succumbed to post-feminism; marxism along with modernity was now 'post' - supplanted by post-modernism or post-capitalism, and with it new theories focussing upon the individual. Once more, the world-view of the petty bourgeois intelligentsia came to reflect the uncertainty, the confusion and panic with which they viewed the loss of their class privileges.

So if Marxism seems on the defensive, it is only the fake petty bourgeois versions that pin all their hopes on reforming the capitalist economy, or which called the USSR 'socialist'. As past labour reforms were taken back the labour bureaucrats had to find new arguments to justify the new-realism of the market, individualism and freedom of choice. While some jumped into the bosses camp, most have adapted to the new political environment as a remodelled breed of social democrats. They remain today at the head of he labour movement in their pale pink new- realist colours as a barrier to working class struggle.

But in the process they have been forced to abandon any pretence to old-fashioned Marxism or communism. Even 'socialism' today is no more than a watered-down mixed economy where (re)nationalisation is "off" the menu. It cannot claim to meet even the most basic needs of workers and peasants in the coming period. This opens the road for revolutionaries to challenge right-wing Blairite social democracy for the leadership of the working class.

The Millenarian '90's?

The 1990's opened up the prospect of Marxism reaching the most politically advanced layers of the working class and oppressed layers in the world economy. This is because despite decades of defeats, most important the 'fall of so-called communism', the crisis of world capitalism requires stronger attacks on workers and peasants to create the conditions for a new period of economic stability and capital accumulation.

The class struggles that will intensify will expose the weaknesses in bourgeois ideology which normally covers up and obscures the real nature of capitalism. The triumphalist post-communist ideology appears to be hegemonic in the last decade - the New Right seems to have defeated socialist ideas at every point. Yet this ideology depends for its acceptance on 'delivering the goods' both West and East, and this competition to deliver will drive nation states into intense rivalry and proxy wars, if not open warfare between the imperialist blocs. World capitalism is incapable of 'delivering the goods' because the mounting crisis conditions will destroy more and more of the forces of production and fail to meet the most basic needs of the vast mass of the world's population.

As a result the hegemony of the right will be challenged by emerging counter-ideologies based on demands to meet the basic needs of workers and peasants everywhere. When workers become conscious that reforms are not possible, demands for change will grow. Whether these changes are in the direction of international socialism, or get diverted into national wars, fascism or world wars, depends ultimately on ability of an international revolutionary party based in the working class to lead workers and poor people as an independent political force capable of winning power.

To understand what lies beneath these events today we need to break out of the limitations of bourgeois ideology and what passes for social analysis. This is the purpose of this book. Australia and New Zealand are capitalist societies, integreated into international capitalism, and subject to its laws of development as an historically specific and transitional societies with a beginning, middle, and end.

We look at this transition in terms of its past - from settler colonisation to its current crisis as dependent semi-colonial capitalism, and to its future as a socialist society. We will see that capitalism 150 years ago brought with it huge contradictions - the means to break out of stone-age antiquity, but also the seeds of massive future destruction. If we understand this, we can act consciously to change the nature of our society, and so survive its crisis, and the fall into barbarism, and create a new socialist society. This is not just possible, but necessary.
 
 

Notes.                  (go to bibliography)
    1    See Roger Douglas, Unfinished Business; Mike Moore, Fighting for New Zealand.
  2    McGregor on Paker and Bond etc (Class in Australia p 90). Keating's association with Treasury and Reserve Bank neo-liberal a whizzkids like Bernie Fraser (McGregor, p 51). Links between Murdoch, on the class role of the Accord and those for and against see Frankel, 'Beyond...' and Irving, 'Labourism...'.
  3    The Liberals in NZ (Lenin, Notebooks...533) and the Liberal Protectionist Party in Australia (Schwartz, Dominions...) set up protectionist regimes before the First World War, but it was Labo(u)r governments that made economic nationalism into a state religion.
4    Castles et al (eds), The Great Experiment.
5    Lenin, Notebooks...p?; Meyer, Marx, Engels...
6    Bill Sutch best known economic advisor to Labour Governments and advocate of protectionist policy and state planned economy. See Sutch, Poverty... and Takeover..
7    See Harris and Twiname, First Knights, for a survey of the NZ Business Roundtable and its Australian connections.
8    Adam Smith and Fred Hayek are the best known advocates of the free market. See Hayek, The Road to Serfdom. Marx's critique of Smith's account of the origins of the market is in Capital 1 Chapt 26.
9    Bassett, The State in NZ...; James et al 'A Defence...'
10    Bedggood, State Capitalism...; Ian Verrender and Steve Burrell, 'The Companies you Keep' Sydney Morning Herald Dec 6 1999.
11    Prebble and Gibbs are the two most extreme advocates of New Right ideology in NZ. See Prebble, Ive Been Thinking, and Gibbs, The Secret of My Success.
12    As McGregor (p 235) puts it: ..."aafter 1983 the Hawke and Keating Governments went out of their way to get support from business and promulgate economic policies which advanced the interests of corporations. Paul Keating as Treasurer floated the dollar, deregulated the financial system, encouraged privatisation, introduced negative gearing and dividend imputation, and reduced income tax levels on high-income earners; as Prime Minister he pursued these policies further as well as beginning to deregulate the labour market through enterprise bargaining and pushing through the sale of further government instrumentalities, including the Commonwealth Bank and Qantas, to private enterprise."
13    Business success was linked to sporting success as Bond won the America's Cup and Bob Jone's (NZ property millionaire, NZ Party founder and boxing afficionado) boxed prying reporters.
14    Prominent among the private beneficiaries in NZ were Fay Richwhite, Fletcher Challenge and Brierley's who scored between them Air NZ, the Bank of NZ, state oil and gas rights, forestry etc etc. A similar list of privatised assets in Australia. In many cases these assets were quickly onsold to foreign investors, or sold directly (eg. NZ Rail) with local firms acting as brokers (Fay Richwhite) and raking on millions in commission.
15    Cite poverty and income gap studies. And Stephen, Rankin and Podder and Chatterjee in NZ and ??? in Australia.
16    Easton, The Commercialisation... for a liberal account of why the wrong policies slowed down NZ's growth. See Dalziel, 1999 for a comparison of NZ and Australian economic performance over the period since 1983.
17    Frankel, 'Beyond Labourism...'; Emy, Remaking...; Bell, Ungoverning...; See Eichbaum et al A Third Way... for a Blairite programme for NZ.
18    Some see the social legislation of Labo(u)r parties as moderating neo-liberalism. Some see neo-liberalism as a foreign doctrine imposed on Labourism but unable to destroy Australasian 'uniqueness'. Frankel ('Beyond..') views labourist social policy as a trade-off for containing labour with the ACCORD etc. See also Castles et al (The Great Experiment...p? ) and Beilharz, 'Social Democracy...')
19    See the backsliding from Labourism to the 'social market' (Emy, Remaking...) or the neo-corporatism of Fred Block (Bell, Ungoverning...278). In NZ Labour Prime Minister Helen Clark, and most of her senior cabinet ministers such as Cullen and Maharey are supporters of the original Clinton 'third way' gurus such as Robert Reich and Lester Thurow. In NZ this line is promoted in Eichbaum et al The New Politics: A Third Way for NZ.
20    Trotter is a columnist in the business weekly The Independent. He also edits the NZ Political Review which specialises in condemning the labour movement for failing to resist the impact of the Rogernomics and sows illusions in the revival of social democracy. See the articles by Jesson and Lee in NZ Political Review nos?? which bemoan the left's demise and patronisingly preach about the future prospects for socialism in the new millennium.
21    The union tops have become open collaborators with the bosses to keep their jobs. Jenny George has now been replaced by another 'new generation' union leader, Sharon Burrow, of the AEU - the main teacher's union, which is typical of the middle class takeover of the labour movement in Australia described by Tom Bramble. In NZ the CTU leader, Ken Douglas kept his job by preventing a general strike against the Employment Contracts Act in 1991.
22    See Airey for an analysis of the lib-labour compromise as 'proto-fascist'. In that sense 'national socialism' was totally subordinated to a racist nationalism.Today the semi-colonial crisis in Australia and NZ poses the same question of a revival of reactionary nationalism to promote the 'imaginary identity' of nationalism against a resurgent working class challenge. See McDonald's books (Red over Black...Shadows over NZ) proto-fascist books on Australia and NZ. Cf Spoonley, Race...; and Vasta and Castles.
23    Of course this doesn't mean that liberal intellectuals are not working overtime trying to re-invent new post-colonial (or post-structural) plural nation(s) in an attempt to recreate a post-modern 'community' or 'civil society' in which race, gender, class and nation become transformed into questions of identity and cultural diversity. Eg Coates and McHugh, Living Relationships...; Castles et al Mistaken Identity.... In terms of my argument here, this is an attempt to erase capitalism and the class struggle that makes history, and the need to complete the bourgeois revolution as a socialist republic, and to substitute a psuedo-democratic 'post-modern republic'.
24    The single issue 'social movements' are expected to combine into a 'rainbow movement' of all the oppressed minorities, identities etc. See Beilharz et al Arguing... This question is taken up in detail in the chapters on class.
25    Awatere, Maori Sovereignty...Awatere's intervention set up a chain reaction which shaped much of the debate on the Maori question in the 1980's. This is discussed at length in other chapters (The Race Question etc). One particular reponse, that of Rob Steven ('Glorious Country...') argued that the material basis of white racism was sharing in the rent extracted from stolen Maori land. Workers gained through high wages. The historic class compromise between labour and capital was made possible by sharing the rent. When the rent ran out, labour would not longer have an interest in class compromise and it would be possible to unite workers across racial lines in the struggle for socialism. This argument is critiqued in the chapter, "Glorious Countries..." A further point he makes is that rents and high wages allowed men and the state to subordinate women and make them dependent upon the 'family wage'. This argument is critiqued in the chapter "Abort, Retry, Ignore..."
26    See Chapter "The Conquest of Aboriginal and Maori Society".
27    Sykes, The Black Majority...; McGregor, Class...272-274
28    See Rowley, The Destruction...; Reynolds, Frontier...; Markus, Governing Savages...; Mcgrath, Contested Ground... and Kaufman, Wik...
29    Note the femocrats success compared with the effects of the backlash on the majority of women, especially working class and migrant women, wage gap, unequal rights, abortion rights, casualisation, de-unionisation, health and education trends. Issues which are discussed at length in "Abort, Retry, lgnore..."
30    Waring, Counting....' James and Saville-Smith, Gender...
31    Cass, 'Sex-class...'; Curthoys, For and Against...; Pettman, Living...;Burgmann, Power...
32    For an analysis of neo-Ricardian economics see the chapter "In Defence of Living Marxism".
33    Most neo-Ricardian or neo-marxist intellectuals end up working in left social democratic parties rather than 'far left' parties.This is because there is a natural slippage from an exchange level analysis of exploitation to a distributional level analysis of political struggle over exchange. (See chapter "In Defence..."). Prominent examples in NZ are Bruce Jesson ('The Disintegration...' and Only their Purpose...) who was a New Labour Party leader before he resigned; Jane Kelsey, (The NZ Experiment, Reclaiming the Future) Mike O'Brien and Chris Wilkes (The Tragedy...) who are broadly aligned to the Alliance. In Australia we have Frankel ('Beyond...') Emy, (Remaking...) Wiseman (Global...), McIntyre (Reds...) to name a few who while critical of Labourism have not broken to the 'far left'. There is a general rejection of Leninist politics as "undemocratic" (Beilharz, Trotskyism...).
34    See Bedggood 'From Cradle...'
35    Macrae and Bedggood 'The development...' and Bedggood Rich and Poor... used Marxist method of analysis to predict the crisis of in NZ arising from the partial suppression of the law of value during the protectionist era of dominion capitalism. Australia lacks a similar analysis of the Dominion period although there is not lack of radical Ricardian calls for protection from foriegn investment and control in the 1970's and 198O's. The point however, is that only Marxists were in the position to predict the necessary neo-liberal revolution as the means by which the law of value restructured dominion capitalism in the interests of global finance capital.
36    The famous Marx quote about "men making history" is from the opening passage of The 18^th Brumaire of Louis Bonaparte. The equally famous Engels quote is from the closing passage of Socialism:Utopian and Scientific.
37    Clark is 'left' only in a very loose sense and in the minds of his right wing enemies, since he never claimed to be a socialist or Marxist, unlike Fitzpatrick. McQueen, who was labelled by Australia's secret service duruing the Vietnam war as "an orthodox Leninist, Trotskyite and academic anarchist" has returned the favour and come to Manning Clark's defence against his new right detractors in Suspect History.
38    For example, centuries after the white settlers discovered 'empty lands' occupied only by 'animals' or 'barbarians', they discovered that human rights ought to be applied to Aboriginals and Maori after these subjects stood up and demanded them!
39    It is interesting that these three outstanding exemplars of the 'Australasian school of historiography' were, or are, "progressives" in their time. Pember Reeves was a 'state socialist' of the Fabian variety. A ferocious if academic debate surrounded his 'socialism' in the NZ Journal of History in the 1970s. His State Experiments...helped to create the myth that Australia and NZ were at centuries end, examples of a new form of social democracy. Fitzpatrick was also on the 'left' though a 'left nationalist'. He was much less sanquine about the 'success' of social democracy. The British Empire... was his second book (after British Imperialism in Australia 1783-1833, and was published in 1939 spanning the period 1834-1939. Fitzpatrick dropped using the terms "Australasia" and "Australasian" in his second book in deference to "proper national sentiment", as NZ readers apparently found them "offensive" (xiii). The third, and living historian, Jan Kociumbas adopts a neo-marxist framework and has a number of comparative references to NZ in her book which makes it an excellent contribution to the 'progressive' tradition a century after Pember Reeves.
40    Eg. McGrath, Contested Ground...includes Aboriginals writing their own history. McGrath argues that this is necessary to rescue their history from 'whites' who have exploited Black history (359-391). This includes the so-called "Bell controversy" which surrounded Diane Bell when she published work including that of an Aboriginal collaborator and was accused of patronising Blacks by Anna Yeatman among others. I discuss this question in the chapter "Abort, Retry, Ignore".
41    Bellich, Making Peoples...;Sutch, Colony...; Hawke, An Economic...;Holland, The Tragic...;Olssen, The Red...;Roth, A History...;James and Saville-Smith, Gender...;du Plessis, 'Women...'; Awatere, Maori...'; Walker, Struggle...; Pere, ; Awekalu, ; Pember Reeves, State....; Beaglehole, A History....; Airey, A Short...; Wilkes, Re-inventing...
42    This classifcation is that of Pascoe, The Manufacture...This classification lacks any theoretical rationale since no attempt is made to link writers to any class position. An interesting recent, as yet unpublished, challenge to contemporary middle class Australian intellectuals is that of Bob Gould who rejects Dixon's (Imagining Australia) and MacIntyres (Reds) reworking of Australian labour history in terms a pessimism towards the working class, but an optimism directed as the 'new class' of petty bourgeois intellectuals who are seen as the historical agency for progressive change in Australia (forthcoming book, privisionally titled "The World According to Gould").
43    Goodman, 'Postscript 1991...' for a good view of the link between the bicentenary and 'explicating the openness of Australia in the global economy'. Also Bennett et al Celebrating...which theme is the reinvention of a post-colonial (modern) Australian identity' also Hudson and Bolton, Creating... which explores post-modern themes of diversity, resistance and identity. Cf Gould who attacks post-modernism in 'Post-modernism, cultural theory, the decline of the humanities and the demobilisation of the left" in The World....
44    See Carter, 'Manning Clark's Hat...'
45    This refers to the dialectic of the opaque social relations of capitalism that develop the forces of productdion and socialise production to create the conditions required to prefigure communism (see chapter in "Defence of Living Marxism").
46    See note 41.
47   Rich and Poor drew on a decade of Marxist analysis and debate including Trotskyist politics, the Political Economy conferences between 1978-1980, Red Papers on NZ and left academic commentary (eg Gager, 'Reeves...')
48    Well's book presents a Marxist account of Australia's founding and development up to Federation in 1901. It is distinguished by its classic Marxist method compared to the exchange analysis of McMichael, Connell et al. Unfortunately, no like analysis has yet been produced for the period since 1901.
49    Eg Australian Communist Left Programme 1976. Bedggood, Rich and Poor...Cf in NZ the analysis of Geoff Pearce and Brian Roper who attribute the capitalist crisis to an abstract fall in the rate of profit unmediated by state intervention. The crucial point is that the concrete conditions of Dominion capitalism in Australasia were that of the partial suppression of the law of value. Hence the onset of crisis did not result directly from the tendency of the rate of profit to fall, but rather its suppression by state intervention and protection from the world market. This debate is taken up in subsequent chapters.
50    Australian Communist Left Programme 1976; NZ Communist Left Programme 1984.
51    Since the dominant ideology under conditions of global crisis fixates on culture as the determining instance in the Australasian social formation, it is not surprising to see the question of identity becoming debated increasingly in a context freed from economic and even political factors. See Kociumbas, p 365.
52    The flight of the 'new class' from economics and class politics to identity politics is well documented in Australia and NZ. See Revolution, No? Year?. also Gould, The World... Apart from the established books by Callinicos, Eagleton etc a very useful critique of postmodernism from a Marxist standpoint is that of Teresa Ebert, Ludic Feminism.