The undemocratic free market, Bryan Gould

Beyond the Free Market: Rebuilding a Just Society in New Zealand
David Cooke, Claire Hill, Pat Baskett and Ruth Irwin (eds)
Dunmore Press, $30.00,
ISBN 9711927212189

In the opening essay of this impressive collection, Nicky Hager identifies 1993 as the crucial date when opinion turned against Rogernomics and Ruth Richardson; and yet, he asks, “more than 20 years after that profound change in public opinion, New Zealand still retains many of the policies of the 1980s and early 1990s. Why?”

As the contributions from his fellow essayists sadly demonstrate, his question is well-taken. Neo-liberal or free-market doctrine is alive and well in today’s New Zealand. Wherever one looks, its malign influence is apparent, whether it is in the legacy of growing and stultifying inequality identified by E W Thomas or in the so-called reforms of welfare provision addressed by Sue Bradford.

Free-market ideology has been particularly dominant in the labour market, where the balance of advantage has moved inexorably in favour of employers and against working people. The results are seen in the appalling safety record of industries such as forestry and the ports – as Helen Kelly and Peter Conway point out – but also in macro-economic trends, like the rising share of profits and the falling share of wages as proportions of the national wealth.

There is little understanding that the working hours are hugely important elements of people’s lives and directly influence their quality of life, and that the wages they earn are an essential and beneficial factor in establishing an effective level of purchasing power and demand in the economy.

Neo-classical economics, on the other hand, persists in treating labour as just another commodity and as a production cost that must constantly be driven down. The notion that the economy as a whole and employers as individuals cannot afford to pay living wages has, sadly, been accepted by many unemployed and low-paid people, driven no doubt by their experience of job insecurity (zero hours contracts are a prime example) and of seeking work in a market where the employer holds the whip hand.

Why is free-market ideology still so dominant, despite its destructive record both here and overseas? A partial answer may lie, as Bill Rosenberg points out, in the increasingly narrow base of media ownership in New Zealand and its increasingly narrow political outlook. The demise of public service broadcasting (with Radio New Zealand an honourable exception) has also contributed to a political debate that offers no alternatives to current orthodoxy.

But there are other factors at work as well. The free-market ideology that continues to weaken our democracy and fracture our society has taken a peculiarly New Zealand form. The current National government, under John Key’s leadership, has deliberately avoided using ideological language, and has perfected a “step by step” approach to change so as to conceal its significance from voters. John Key was quite explicit about this strategy in November 2014 when he advised the former and now unlamented Queensland Premier, Campbell Newman, that he could get away with asset sales provided they were introduced gradually.

The right-wing agenda in New Zealand is based on the apparently simple proposition that the country will prosper only if the important decisions are made by business people (who are assumed to know more than anyone else about the economy), or at least by governments representing their interests – a simplified and practical man’s version of the doctrine that the market is infallible and must prevail and that there is therefore little or no role for government.

The New Zealand conflation of the two propositions takes the form of ensuring that business and government are populated by the same people and serve the same interests; it represents a powerful and practical application of the totally misleading but constantly promoted view that running a country’s economy is no different from running a private business.

No one seems to notice that if the market cannot be challenged and government exists only to serve business interests, there is little left of democracy. The point of democracy is, after all, to ensure that the democratic legitimacy of government will restrain what would otherwise be the overwhelming power of those who dominate the marketplace. That point is lost if the government is answerable only to big business and if market outcomes are not to be questioned.

The political opposition to right-wing orthodoxy in New Zealand has been constantly wrong-footed by these developments. Prior to Nicky Hager’s 1993 turning-point, Labour was burdened by its own responsibilities for Rogernomics. In more recent years, the Left’s lack of intellectual self-confidence has meant that, while quick to bewail the outcomes of right-wing policies, they have struggled to offer an alternative analysis and strategy and – even when in government – have managed to inhibit or modify the more egregious thrusts of right-wing doctrine, but only rarely to reverse them.

The answer to Nicky Hager’s question seems to lie, in other words, with the reality that the day-by-day erosion of former values and the steady advance of the simple proposition that the market must always prevail has not been directly or effectively challenged. The free-market approach has been normalised. Each new further step simply adds to the expectation that this is how it must be.

We see daily instances of precisely that phenomenon and its insidious ability to reconcile people to the assertion that “there is no alternative.” As I write this, I am told, for example, by the publicly owned Port of Auckland company that their responsibility to maximise profits for the company must take priority over the wishes of the people of Auckland.

Can there be a clearer demonstration of the primacy of business interests than that this assertion can be made with little fear that it will be countermanded?

Bryan Gould is former Waikato University Vice-Chancellor.

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Posted in Economics, Non-fiction and Review
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