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- Date published:
12:33 pm, August 25th, 2024 - 28 comments
Categories: act, Austerity, Economy, labour, MMP, roger douglas -
Tags: milton friedman, naomi klein, neo-liberalism, shock doctrine, welfare state
By Elliot Crossan – Cross-posted from post at System Change
According to the Douglas doctrine, you move in quantum leaps. By the time your opponents catch up with what you’re doing, you’re on to the next thing.
That’s how Toby Manhire summarised Roger Douglas’ approach to economic reform in The Spinoff’s podcast series Juggernaut, which marked the 40th anniversary of the Fourth Labour Government.
Roger Douglas, the most revolutionary Finance Minister in the postwar history of Aotearoa, knew how to change more in three years than most governments do in three terms. Rogernomics transformed the structure of our economy with dizzying speed, from protectionist welfare state to neoliberal free market.
Inequality soared across the world in the 1980s as neoliberal reforms were enacted. Poverty rose as union-busting and unemployment ravaged working class communities. Privatisation and deregulation unleashed an explosion of corporate profit. The domination of society by the super-rich, accompanied by low wages and unaffordable housing, is the enduring legacy of this decade.
The radical change experienced in Aotearoa between 1984 and 1993 stood out from what occurred in most other OECD countries in three main ways.
Firstly, these free market policies were initiated here by a Labour Government. In most countries, it was conservative torchbearers such as Margaret Thatcher and Ronald Reagan who spearheaded this agenda. In Aotearoa, it was David Lange’s election which led to what the Prime Minister later described with sorrow as “a juggernaut of the New Right.”
Secondly, no one voted for this devastating agenda. Labour was supposed to be the party of the working class, and had stood in the 1984 election on a social democratic agenda. Once Roger Douglas unleashed the neoliberal juggernaut and National signed up to the same policies, voters did not have a choice. When they voted Labour out in 1990 and elected National on a promise of a return to “a decent society,” they got more of the same — Ruth Richardson took over as Finance Minister and continued an agenda of radical reform in the first three years of Jim Bolger’s government. Rogernomics was followed by Ruthanasia.
Thirdly, the speed and scale of the reforms imposed by Douglas and Richardson was ferocious even compared to the likes of Thatcher and Reagan. There is a reason why Aotearoa experienced a faster increase of inequality in the 1980s and 1990s than any comparable OECD country.
Four decades on, Douglas is still preaching his doctrine of moving in quantum leaps. He has long complained that Lange sacked him before he could implement his agenda in full. He and his allies created the ACT Party to finish the job.
It is high time that the left took some notes from Douglas on how to transform society. If the left leaves it to the right to move in quantum leaps, our political economy will only ever move in one direction: ever-higher levels of inequality.
Douglas’ “quantum leap” approach is what left-wing activist and intellectual Naomi Klein called the Shock Doctrine. In her 2007 book by that name, Klein outlined how neoliberal governments exploit moments of crisis when the public is in shock to ram through unpopular policies. Klein is not making this up — she merely had to draw attention to what neoliberal ideologues themselves were saying to come to this conclusion. In 1982 Milton Friedman, the economist dubbed “the most-revered champion of free-market economics since Adam Smith” by the Wall Street Journal, wrote that:
There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.
This insight has been seized upon to devastating effect by the neoliberal right. Their dreams of rolling back the welfare state and breaking the power of organised labour seemed impossible in the 1960s; by the 1990s they had become common sense across the world. Once implemented, they sold their vision as inevitable — Margaret Thatcher famously proclaimed that There Is No Alternative.
Neoliberalism has failed for the vast majority of people. Climate change threatens all life on earth; extreme inequality is tearing society apart. The free market has no answers. An alternative economic system is not only possible, it is desperately necessary.
This alternative system must involve a fundamental and irreversible shift of wealth and power away from the corporations who have been colossally enriched by neoliberalism, and back towards working people. It must uphold Tino Rangatiratanga and Mana Motuhake; and it must involve moving rapidly away from reliance on the fossil fuels which are destroying our planet. But we won’t be able to change the entire system without moving, as the right has moved, in quantum leaps. It is the only way to turn back the tide.
It was argued by many academics and pundits that the introduction of the MMP electoral system had replaced the era of radical change with an era of ‘moderation.’ After sacking Richardson in 1993, Bolger led the Fourth National Government in a more moderate direction. The 2008-2017 government of John Key and Bill English pursued a mild, centre-right agenda. The right was consolidating its gains, not wanting to provoke further societal conflict after its application of the Shock Doctrine in 1984-1993.
Since the Fourth Labour Government went down in flames, Labour has won power again twice — for three terms under Helen Clark, and for two under Jacinda Ardern and Chris Hipkins. Neither of these governments followed Douglas in implementing radical right-wing reforms; both Clark and Ardern defined themselves in opposition to the neoliberal free market era. Yet both governments left the fundamental reforms of the neoliberal era in place, and as a result, both failed in their stated missions of tackling our country’s “unacceptable” levels of inequality.
The centre-left held to the notion that MMP had put a permanent break on radical change. The message was that only incremental progress could succeed: maybe one day we would return to a more equal society like what existed before Rogernomics, but it would be a long, slow process.
The Coalition elected in 2023 is shattering that myth. ACT today has a record number of MPs, and as the second-largest party in government it holds more power than ever before. Douglas is urging the party he helped found to take the same approach he did 40 years ago.
In recent years, ACT has moved in a right-wing populist direction, seeking to win votes by appealing to racist sentiment rather than economistic libertarianism. Since the pandemic, NZ First has joined ACT on the populist right — today, both parties align themselves with extremist anti-Treaty groups such as Hobson’s Pledge.
The National Party may be the most moderate element in the government, but it too has allowed itself to be pulled rightwards. The Coalition is thus mounting the most vicious attack on Te Tiriti o Waitangi and indigenous rights that we have seen in a very long time. The Government is further attacking tangata whenua through its law-and-order populism, a thinly-veiled dog-whistle for locking up more Māori, who are disproportionately incarcerated by the colonial prison system.
This racist agenda is accompanied by harsh austerity. Finance Minister Nicola Willis is taking a sledgehammer to the public service in order to pay for tax cuts. ACT’s Brooke van Velden has been appointed Minister for Workplace Relations, and is predictably using this position to attack workers’ rights. Environmental protections are being watered down, with the repeal of the ban on new offshore oil and gas drilling and the dangerous Fast Track Approvals Bill allowing for an aggressive expansion of fossil fuel production.
The Coalition set out its intentions by using parliamentary urgency an unprecedented number of times in its first 100 days. Douglas’ doctrine is being applied. After 30 years of moderate National and Labour Governments, we are back to the era where change happens in quantum leaps — and the pressure on the National Party by its more right-wing coalition partners means that MMP is enhancing the rate of change, not slowing it down.
If a Labour-led Government moves the needle one or two inches to the left, and is followed by a National-led Government which moves the needle five, ten, twenty inches to the right, then overall politics has moved to the right. Zoom out 40 years, and this is the path Aotearoa has taken. Ever since 1984, we have experienced a seemingly-inexorable rightward drift.
The cautiousness of centre-left leaders such as Ardern and Hipkins will never be a match for the ruthlessness of neoliberal leaders prepared to move with speed and ferocity. The approach of the Coalition, inspired by Douglas and Richardson, is to move so quickly from one reform to the next that social movements are left dazed and confused, unable to build resistance against one devastating attack before being faced with another. The left needs to push back on all fronts at once.
We live in an era of crisis. Inflation has given way to recession and unemployment. The housing crisis is not going away. Ordinary people work long hours for low pay while the rich get richer. Attacks on Te Tiriti are polarising society; the social division we have recently seen overseas has arrived on our own shores. The climate crisis threatens all life on earth.
This situation is urgent. As Friedman knew, in times of crisis “the actions that are taken depend on the ideas that are lying around.” The left needs to put forward its ideas without equivocation, else the ideas that are enacted will be the ideas of the populist right.
The incrementalist centre-left parties who have failed time and time again to turn back the tide on neoliberalism will never implement radical demands of their own volition, let alone lead the charge towards an alternative economic system. These parties must be pressured from below. At the same time, new organisations must be created that are committed to truly transformational change, including a political party committed to dismantling the entire capitalist system.
We need to organise and demand transformational change to occur in quantum leaps. But the agenda of the radical left — redistributing wealth from the 1% to the 99%, repealing anti-union laws, phasing out fossil fuels, and Tiriti-based constitutional transformation — will encounter fierce opposition. The neoliberals understood that such opposition cannot be reasoned with. It must be overwhelmed.
Douglas’ agenda was completely undemocratic, and, once the outcomes of Rogernomics started to become clear, deeply unpopular. A programme of left-wing transformation would be neither. Such a programme would favour the vast majority of the population. It cannot and would not be a secret agenda, kept hidden until being sprung upon the electorate to exploit a moment of shock. The left needs to discuss ideas and strategy openly and honestly, publicise our ideas as widely as possible, and win a democratic majority for change in the interests of the many, not the few.
The main opposition faced by neoliberalism was the labour movement — trade unionists which represented the majority of society. Resistance to left-wing reform will come from the super-rich — people with extreme wealth and power who will stop at nothing to protect their interests. This makes it even more vital that a left-wing programme is implemented with speed and scale.
The right moves with speed in order to disorientate social movements. The left must mobilise unions and social movements in order to win power, and then keep people mobilised in workplaces and in the streets for as long as possible. The power of the right comes from elites; the power of the left comes from the people. If movements are demobilised or demoralised, a transformative left-wing agenda will get bogged down. Therefore the left needs to move even faster than Douglas did, demonstrating that the will of the people will not be ignored, however much it is resisted by the wealthy few.
The government of Michael Joseph Savage and Peter Fraser transformed Aotearoa in the interests of workers from 1935-1949. Its programme of change began at pace in its first three-year term. The modern left in Aotearoa can take inspiration from the determination shown by the First Labour Government. However, this historical example must not limit us, as we must move further — a transformational agenda today must move beyond the colonial capitalist system, something the Labour Party has historically failed to do.
You can change more in three years than in three decades. Roger Douglas knew this, and the current Coalition knows it too. The modern left needs to wake up and learn the same lesson. The incrementalism of Clark, Ardern and Hipkins has failed. It is time we built a democratic majority to move Aotearoa rapidly towards a system that favours workers, indigenous rights and the future of the planet over the interests of corporations.
A better world is urgently necessary. If the left relies on the power of the people, and moves in quantum leaps, then that better world will become not just possible, but inevitable.
Elliot Crossan is an ecosocialist writer and activist from Auckland. He is the Chair of System Change Aotearoa.
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There were a couple of reasons why Douglas succeeded.
One is that nobody really took seriously what some in the Labour party were warning (like Jim Anderton) – either because they didn't believe it, or didn't want to believe it. After all, how could a LABOUR government turn against everything it had previously believed in…..? And by the time people discovered what had happened it was too late to do much about it, the Rogernomes were in firm control and Lange was lapsing into indifference with his own personal problems.
The second is that Douglas very cleverly kept the support of the trade unions. There was no move to voluntary unionism (that happened under the succeeding Bolger government) and the trade unions were placated and at the same time Prebble and his cohorts made sure to take control of the biggest Labour Party branches and get rid of the leftist elements.
I could write a lot more on this, this is just a summary.
But it would be nigh on impossible for Labour to do this now. They had their chance three years ago when they (for the first time in MMP history) won an absolute majority at the polls and they could have boldly transformed this neo-liberal economy into a much fairer system. But instead they wimped out and took little baby steps forward which the present government have quickly negated.
So if someone tells me that Labour can do anything transformational, I laugh.
Yep, 2020 was a tragedy alright. The fact is Labour did not have the ideological fire power to even want to make transformational change at a level like these current arseholes have.
A lot of good stuff happened during their two terms, but…but…when Mr Hipkins unilaterally scotched wealth tax and CGT it was all over. NZ Labour has to comprehensively repudiate Rogernomics and hand power back to ordinary party members rather than Fraser House HQ and the Parliamentary wing if they are ever going to be useful to the NZ working class.
Well, I was opposed to Rogernomics from the very beginning having witnessed other implementations of neo liberal economics–which are rather obvious now looking back to Pinochet and the Chicago Boys.
Certain unions like the then Workers Union and Hotel and Hospital Union supported Roger the Dodger, but a hell of a lot of unions did not. The State Sector Unions with their political neutrality stance supported him by default.
But the true tragedy is that each election the State Sector Act and Reserve Bank Act roll over.
That some unions supported Douglas and others didn't was an indication of the confusion that existed over his policies at the time. I was one of those who chose to withdraw from the political scene after the 1984 election – not so much because I was opposed to the new direction but because I didn't understand it. I realise now why. It didn't make sense.
History has proven it a failure – as in the lack of urgency over CC and many other social and economic issues. Helen Clark was slowly removing the excesses of neoliberalism but she was voted out before she could finish the job. Great pity.
Trouble is, Labour doesn't have to do this now.
Muldoon had a lot to be criticised for, but he was the thorn in the neoliberals' side. In other circumstances, the neolibs would have rolled out their ideology from the right side of the white line, but Muldoon could see through it and they had to find another stooge.
Once the cracks Roger Douglas's so-called 'vision' was 'outed' by Labour, he and his ilk formed the ACT party and moved across the game board to their rightful position, at the extreme right of NZ politics.
And, unions (I think it also applies globally?) are so weakened now, ACT/Douglas doesn't really need their support. Neoliberalism won those battles and as held that territory. The general public see unions negatively, after 40 years of indoctrination.
I think you're right though (not in the political sense ). If the left were going to do something transformational, they could have done it in their recent heyday. I think Labour's biggest strength is also its biggest weakness, in that it is comprised now of so many different subsets, it can't easily develop a strong, unified strategy or (dare I say it) single-minded ideology.
I keep wondering, if some of the scuttlebutt in The Standard is true, and ACT is being funded by organisations like The Atlas Group, why would they bother with a small country like ours? Why not leave us to play catch-up? The answer, I think, lies in our ability to be a test-bed for public reaction to strategies? If we do this, will the public stand for it? How far can we push our ideas before public apathy turns to public anger? Then, roll that out in bigger countries.
If ? Scuttlebutt ? Have you read some…or any of the links that have been provided on The Standard ? …
Mountain Tui in particular revealed much about their NZ involvement…
As to why? IMO its all part of their desire for global tentacle reach. In every country. NZ has previous, and a particular NZ connection. Obviously with that Gibbs slimebag…and the rotten apple didnt fall far from the tree with daughter Debbi chair of Atlas.
Much, much more, can and should be revealed. The Standard is trying. No scuttlebutt here…………
Sigh, I got in trouble before for saying something was so, without referencing it.
Now, I'm in trouble for not saying so…
Allgood thinker. I, and others, feel this Atlas Network tentacle reach into NZ is so malevolent, its Important its revealed. I always try to read those Links about such.
Have good night.
Prebble certainly got rid of a lot of people in Auckland Central. When, finally he was down to a dozen or so bully boy activists and aged retainers and lost Auckland Central to Sandra Lee, most of the Labour members in that electorate had either moved into adjacent electorates as "political refugees", or existed only on paper.
Yes, he certainly had branches – most of which had the 15 member minimum requirement to have a vote at Party Conferences etc but they had $20 or so in the bank and when we got the printouts of members after his mob departed, we could see that the names were duplications – with 8 or 10 people having the same address. When we called on some of the addresses to get membership renewals they either did not know they were Labour members, or were not at that address. It was all fakery.
He left the electorate with a computer that was theoretically valued at $6,000, and the last Treasurer refused to hand over the accounts.
The same dishonesty was shown in Onehunga where the "Backboners" left the Party organisation with $7 in the bank and the major asset alienated from the Party, when their chosen candidate did not get the Selection.
While I have no problem with this proposed course of action; I find it completely impossible to believe that a publicly radical left agenda – as outlined, would gain significant support in NZ. If that were the case, the Greens and TPM, who have much of this already in their policy documents, would have a much greater share of popular support than they do.
Kindly explain why National, ACT, Labour and NZF, before each election pretend to be much more socialist and socially aware than they really are, if it didn't gain votes?
National was going to “fix the cost of living crisis” for ”hard working New Zealanders”. Sic.
Kindly explain why (if the OP statement is true, that it simply requires a programme of left-wing transformation to be outlined, for the electorate to embrace the winning party) – this has so far failed the GP.
Surely you're not going to claim that ACT, NZ First or National outlined such a programme before the 2023 election!
Awful Trotskyist tosh
We now have MMP with necessary coalition agreements to balance power, a disaggregated state with massively decreased power, and a far more information-rich society that makes secrecy and stealth to steal power near impossible.
Dream on Ad…NZ is a constituted neo liberal state with substantial amounts of previous public infrastructure penetrated by private capital–heard of Fulton Hogan?–Trans power?
Go on go right ahead and get a major project up and running, Fulton Hogan or Transpower or not.
Well as blog commenter I don’t have to do anything, and certainly not major projects, but I have…got an Art Collective happening in the Far North which provides income for local artists, income for trades people and a venue for tourists on an historic DoC owned Reserve. It is still operating well 20 years after set up.
Plus I help organise local Artisan Events in the North and support various Iwi political actions.
From that Bruce Jesson article…………..
"Labour almost entirely deregulated the economy. It privatized most of the state’s commercial activities. It reorganized both central and local government along commercial lines. The government ceased to play any role in economic management, with the exception of eliminating inflation, which became its sole economic goal. To this end it operated a high-interest-rate monetary policy………………"
In this years general election in America the Democrats catch cry is "we are not going back"
It is painfully obvious that here in New Zealand "we must go back"…….cos we are definitely on the wrong track……….not holding my breath though cos the only way it would happen is under a more inclusive political system where governance is a true contest of ideas rather than the adversarial petty party politicking status quo.
Regarding MMP, the demise of United Future left the 'middle' rather bereft of parties. This forced National to align with ACT.
NZFirst – I never know what they're about- I did have respect for the likes of Ron Mark and Tracey Martin. But this current iteration with Jones – I just shake my head in despair.
A split in the Labour Party would make a lot of sense- a middle of the road party and a full socialist left party. Natural allies, but different appeal. And with a bit of luck would keep ACT out of play if National had another choice in the centre.
I am just waffling off the top of my head here.
S'alright. Its Sunday night – waffle time. 😉
Left-wingers haven't had a clue since '71 when I realised they were as much part of the problem as right-wingers (dunno about before then). I learnt about Mondragon around '72 and wondered why they weren't advocating that model.
Provision of social equity by design and consensus. Proven to work in the long-term. You replace the status quo by providing a positive alternative. Elinor Ostrom won her Nobel prize when she explained it to the economists. It's a no-brainer.
I always hope leftists will get their act together but they never do. Pretence can be a survival strategy but authenticity impresses everyone.
Mondragon is still cranking along with multi billion Euro annual revenues. Imo Historical and Dialectical Materialism as per Marxism needs to be employed to make sense of the global scene. Co-operatives have not spread widely because of Capital and International Finance Capital.
Capital is all about concentration of ownership and monopoly–not sharing the love. Consensus cuts little ice with the Billionaires–they will not cede power voluntarily.
I help run a small co-operative with mutual community benefits and it beats sucking up to landlords and all the rest, but this planet is in such dire straits climate wise that a fundamental shift in class power is needed really to have any chance. There is no longer the time for incremental social equity.
I help run a small co-operative with mutual community benefits
Good on you. It's a vital part of the solution, lacking only a method of scaling up into mass influence. Some contemporary insight into how such thought/praxis is trending globally can be gleaned from Nick Romeo's book The Alternative.
TINA, apparently, was a Thatcherism. I mistakenly thought RR invented it but she was just cloning her master model. I knew there was an alternative to the 19th century but neither the left nor the right want to admit it.
My view on class is that the framing needs revision. Historically, the dyad rulers & ruled has been persistent – and still dictates the thinking of conspiracy theorists – yet various groups operate as medial and thus form a triad between upper & lower. Harvesting the middle class in the gfc worked well for the 1% – both left & right voters remain too stupid to figure that out. Professional politicians work the medial function expertly, which is why Hipkins remains complacent.
The french use estate theory with media as 4th estate (a tetrad). The Indians retain their antique caste system – also a tetrad. I see the BBC reports India's micro-caste divisions too, which will delight classification freaks everywhere…
Workers, attention! Subdivide, now!
Sorry, forgot to include their link: https://www.bbc.com/news/world-asia-india-35650616
Whilst the Marxist class division system never got mass traction, it's true that the middle class emerged as a valid mass phenomenon in many countries. Since we know that middle links top & bottom, we know a triad was the basis of this.
Inasmuch as contemporary Aotearoa features a plethora of folks who don't self-identify as top or bottom class, one could argue that they are middle by default. If this group is indeed an effective majority, one would expect both Labour and National to compete to represent it. Seems to me our status quo features such behaviour persistently, so we have theory matching reality (rare in academia).
I saw a poll a while back which found that 90% of professors believe they are above average in their performance. You can imagine the delusional culture they co-generate! Not all students succumb though, so inter-generational idiocy often seems rather moot. It's true that several generations of students have sucked up the neolib Kool Aid – so we can be confident that the idiocy rate remains about 90%.
Much like the research where drivers self-asses their ability.
http://www.scielo.org.co/scielo.php?script=sci_arttext&pid=S0121-54692021000200087