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2:42 pm, May 15th, 2026 - 4 comments
Categories: capitalism, class war, democratic participation, Economy, International, Keynes, political alternatives, socialism, uncategorized, workers' rights -
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The crisis in the UK Labour Party is properly the focus of much discussion. It’s been a slow train-wreck of a leadership and government. The recent council and regional elections in the UK delivered an uncompromising rejection of both. Worryingly, the extreme Right believes that it’s a sea-change in UK politics. This is challenged by some analyses, but the numbers tell a sorry story.
New Zealand faces a similar growth of right-wing populism. It is an international trend we will not escape. A Reform-type movement has not coalesced to date, but there are all the makings of its equivalent. In a post-modern, post-COVID, post-Keynesian world the fertile combination of nationalisms, conservative values, “othering,” anti-democracy, anti-Capitalism, anti-Enlightenment and anti-Rationalism is abroad.
The NZ Labour tradition is on the back foot as these pressures emerge, much as in the UK. The unchanging approach is to adopt the “small target” mode, say little and watch the Right lose. And the way they are performing, they might!
However, the “small target” approach does not meet the needs of working people in a changing world. Wealth and power are concentrating in an increasingly volatile world in which political assumptions long held no longer apply. Policies, which, first, reverse that concentration and, second, provide a radical policy package for both production and distribution, are essential.
Parties of working people face a stark choice – rethink political direction and programmes or be outflanked by a rampant populism. Yet in NZ as much as the UK, driving change is difficult.
Let us consider three factors, which have narrowed and diluted Labour’s aspirations. This is not an exhaustive discussion – other factors are at play, too – but it suffices.
First, there is the perverse impact of the post-war Keynesian Accommodation. The 1935 Labour Government, like the New Deal in the US, the 1945 Labour government in the UK and the great Scandinavian tripartisms, constructed a stable tension between the interests of Labour and Capital, overseen by the state. Labour enjoyed awards and voice; Capital gained industrial peace and the famous “level playing field;” the state provided the oversight of the Accommodation and, via taxation, key supports – in education, social security and health, particularly.
For Social Democrats, this arrangement seemed to work. It brought a degree of fairness into wealth distribution. It was stable and good at problem-solving. Importantly, it felt and was a lot better than Stalinism. Its success had a perverse effect, best captured in the 1960s in the work of Tony Crosland, the British Labour thinker. He argued that the Keynesian model was so successful that the Left should leave behind its socialist aspirations. Tax systems, collective bargaining, state intervention and persistent growth would resolve problems of production and distribution, wealth and opportunity.
Here’s the catch. Much of the Left agreed with this conclusion, tacitly or otherwise. They accepted an unstated “end of history” thesis and gave up the thinking about, and struggle for, a post-capitalist model. The mere mention of “Socialism” became a red flag. And, whilst the Accommodation held, the argument could be made to the satisfaction of many.
The problem was that, by the 1970s and 1980s, the model had frayed badly. Why is another story. The key point here is that the success of the model reduced, then buried, interest in alternative arrangements, relegating such considerations to an oft-derided fringe.
Second, the responses adopted in NZ and elsewhere to the fraying of the Keynesian model were draconian. Like Chile under Pinochet, New Zealand’s fundamentalist free-marketeers were given full rein to privatise, restructure and, under the ECA, shift permanently economic rewards from Labour to Capital.
That this was begun under a Labour government provided an unexpected and powerful legitimacy for the changes and empowered the subsequent National government. This is not to say some change was not needed to meet emerging global conditions. It did not have to be the wholesale adoption of free market ideology and practice.
New Zealand’s engagement with free-market economics compounded the absence of alternative models in Labour’s thinking. Since the 1980s, Labour has been on the back foot, seeking to moderate piecemeal the impacts of neo-liberalism, hounded by economics experts and the business community whenever consideration of alternatives raises its head.
Labour’s own internal thinking has shrunk as an effect of post-1980s history. When there is no alternative to Capitalism in the mix, or even significant structural reforms, and Capitalism is running rampant, what may be done?
So we arrive at the third challenge – thinking beyond the short term. A combination of defensiveness, pragmatic tinkering, fetishisation of poll data, and a three-year term helps to keep Labour’s collective head down and focused on the three-year cycle. The cycle is important as elections swing round rapidly, but it must be complemented by a longer-term, radical perspective.
Without that perspective, Labour will simply respond, and fear alternatives, to political challenges. Grant Robertson understood this. So did David Parker. The economic transformation and tax debates were foundations for a longer-term perspective. Both are lost in the “Captain’s Calls, small target, shake no trees, follow the polls” world of the current election cycle.
Things must change before NZ Labour loses large parts of its base to populist movements. This has been the fate of the Democrats in the US, Left wing parties across Europe, and is emerging in Australia. One cannot complacently assume that such movements are temporary aberrations, and that “normality” will reassert itself.
What is to be done? What follows is reformism, plain and simple, if radical, and owes something to Varoufakis. If, as I believe is the case, we face two generations of global volatility in which the post-war rules-based system flounders, our choice will be simple. Accept the buffeting of a chaotic world or seek to mitigate that chaos by building a domestic accommodation providing a degree of protection.
The diagram below captures the core policy elements needed for that revamped accommodation. It accords with the updated import-substitution approach for which I’ve argued previously. It sits in a bigger model encompassing climate change and a strengthening of both political and economic democracy. A Population Policy is needed to manage transparently inflows into NZ. A strong focus on trade, even in a narrowing world, makes sense for NZ, too.
There are three stages to the implementation of the model, all fraught. The first is to gain political agreement in its support, that is, to construct a contemporary version of the Keynesian Accommodation. The project may fall at this stage, yet burgeoning crisis might cause shifts in thinking that see such a model operating effectively within an import-substitution framework. The debate should at least be engaged.
Second is the need for all parties to understand and accept that the whole must be accomplished, not just one or more elements thereof. Piecemeal endeavours will always fail.
Third is the issue of policy sequencing. Sequencing is important. Australia’s economic performance derives from sensible policy sequencing under Hawke and Keating. New Zealand failed badly in this by placing employment relations reform ahead of training and investment in skill and technology. One take on this is to start with taxation and savings, then moving on to the other elements. Time pressure exists.
This approach may not have legs. We may be forced to continue with arbitrary policy adjustments, governed by the shifts and turns of MMP in a three-year cycle, in response to unpredictable and growing external pressures. In this case, the absence of post-Capitalism thinking on the Left may come to haunt us.
What is to be done?
Not reform for reform sake obviously.
Reforms that build enduring institutions: Albanese, Clark, and Hawke being the local standouts. Also exceptionally successful Labour leaders.
Reformism or bust? I googled elements of post-capitalist theory, got this:
AI Overview: Post-capitalist theory refers to a diverse set of ideas proposing that capitalism is reaching its ecological, social, and technological limits and will be, or is already being, replaced by new systems. Unlike 20th-century movements that focused on top-down state planning, modern post-capitalism emphasizes building alternatives from the ground up, utilizing digital technology, and restoring ecological balance.
Key elements of post-capitalist theory include:
1. The Proliferation of the Commons: Post-capitalist theory advocates moving away from private ownership toward community ownership of resources, such as shared digital resources, renewable energy, and public land. This model thrives on:
2. High-Tech Automation & Reduced Labor ("Post-Work"): Information technology (IT) increasingly automates work, drastically reducing necessary labour.
3. Alternative Economic Models: Post-capitalist thinkers propose replacing profit maximization with systems based on need and sustainability.
4. Re-imagined Governance, "Prefiguration": Post-capitalism decentralizes power, shifting it from large corporations and nation-states to local, democratic bodies.
5. Ecological Interdependence: Post-capitalist theory strongly critiques extractive capitalism, proposing a shift to regenerative practices geared to planetary boundaries.
6. Social Reconstruction and Value Shift: This element focuses on de-materializing society's goals, focusing on human well-being and social equity.
7. Core Theoretical Schools
That seems to summarise a manifesto for reformism that is both credible and succinct. Sheeple may take one look and say "Egad!" No need to be fazed by this. Humanity has evolved via those who rise to a challenge, not those who shirk it.
Milei in Argentina is the economic outcome of the current populist movement. It is clearly aligned to free-market ideologies that undermine much of the populist rhetoric.
The Keynesian Accommodation was underpinned by an understanding of macroeconomics that doesn't exist today. Government spending ensures the stability of the private sector which on its own cannot use all available resources in the economy and is also extremely volatile.
Government deficit spending and debt are assets in the private sector meeting demand and providing services that the private sector is unable to deliver because of a need for profitability.
Healthcare, education, welfare and pensions are provided universally and free of charge. That is a net gain to the private sector. The operation of these services is paid for with money created by the reserve bank in the first instance. The government spends by fiat not from taxation or bonds.
It also has to run deficits permanently to support each generation in the private sector in the same way. Just like multiple generations of a family will always have mortgage debt to own assets.
But today deficit spending is seen as an evil that must be curtailed along with taxation and public services. As a result costs get pushed into the private sector – the private sector contracts and stagnates as the money supply tightens and business activity evaporates.
From the post –
'Parties of working people face a stark choice – rethink political direction and programmes or be outflanked by a rampant populism. Yet in NZ as much as the UK, driving change is difficult.'
This is an interesting thought. https://www.rnz.co.nz/news/political/595314/new-zealand-in-big-trouble-amid-growing-global-uncertainty-us-china-relations-expert-says
(My comment is that Luxon and/or National and barnacles ACTors and NZFist, are truly relentless and can only find strength in unchanging obeisance to their long-term wealth promoters ie western corpse. These are getting smelly. Time to erect new meat – to be vulgar; the only way to attract any considered attention from the flighty birds in the 'hood.)