Some political commentators – and Labour and National party activists, too – are suggesting that this year’s New Zealand general election will present voters with a genuine ideological choice: between a radical leftwing Labour Party that favours nationalised industry and a radical rightwing National Party that wants to privatise everything. Any such description is hugely inaccurate, and a proper examination of the situation would show that the positions of both parties on the issue of state owned enterprises are actually remarkably similar. Once the rhetoric from Labour and National is put to one side, it obvious that both parties favour a mixture of state and private ownership of industry, with only degrees of difference in how much should be owned and which direction should be taken. But given that there is at least some differences opening up on the issue of asset sales – and that this is set to be some sort of election issue, I hope to write a few posts in the near future examining it all in detail. This initial blog post merely raises the question – from a leftwing point of view – of whether there is actually anything progressive about the state owning businesses. It argues that the New Zealand left have developed a nostalgic and false idea that the government ownership of businesses like TV2 or NZ Post is something wonderful. [Read more below]
Back in Karl Marx’s time, it was becoming fashionable for governments throughout the west to nationalise or set up state owned businesses. Germany led the way under the very rightwing Bismarck. Marx’s collaborator, Friedrich Engels, looked at this phenomenon in his book Socialism: Utopian and Scientific:
But of late, since Bismarck went in for State-ownership of industrial establishments, a kind of spurious Socialism has arisen, degenerating, now and again, into something of flunkyism, that without more ado declares all State-ownership, even of the Bismarkian sort, to be socialistic. Certainly, if the taking over by the State of the tobacco industry is socialistic, then Napoleon and Metternich must be numbered among the founders of Socialism.
The same thing, of course happened in New Zealand in the nineteenth century. Under Premier Julius Vogel, and then the Liberal Government, the state expanded quickly into what had previously been seen as the private sector. Railways were built, banks and insurance companies nationalised, telecommunications established, etc. So had New Zealand become socialist? Hardly. Instead, all of this activity was merely what governments need to do under capitalism in order to establish the fundamental infrastructure for economic activity to proceed. Vogel and the liberals were not ideologues or working class heroes, but simply pragmatists that knew what was needed for capitalism to develop. Their use of taxpayers money on such economic activity was in effect actually more of a subsidy for business than any sort of leftwing and progressive programme.
As I’ll point out in future blog posts, this continued to be the nature of most government intervention in the private sector. Whether it was under the First Labour Government or Rob Muldoon, the point was the same – state ownership was not normally any sort of shift towards socialism, but part of bolstering the economy and subsidising capital.
Sometimes there may well have been some positive outcomes for workers, but in general New Zealand governments did not build up “nationalised” industry for a social purpose. And importantly, those businesses were not run by their employees or even by society – ie “socialised” – they remained run by either bureaucrats in the interests of politicians or by private sector style managers along the lines of private industry.
This is not to say that the privatisation of most of these state assets in the 1980s and 1990s under Labour and National was in any way a good thing. I’ll discuss that in a future post. But what was worse than privatisation was corporatisation. And that gets more to the nub of the issue in 2011.
Corporatisation – which I’ll also go into more detail in a future post – was the method that the Fourth Labour Government used to make sure that its nationalised companies were running purely along the lines of the private sector (see image above of Labour MPs creating the Electricity Corporation SOE). Instead of playing any socialistic role at all, the process of corporatisation meant that the State Owned Enterprises that Labour created would have no social function – only a profit orientation. Hence massive job layoffs occurred, post offices closed down, and all sorts of other negative social effects came about.
In 2011, no political party (or other political force) really challenges the corporatisation model. Labour and National want the state to own businesses to varying degrees, but they don’t want these organisations to have a social function or do anything other than follow the pursuit of profit. Hence Kiwibank is run along the lines of Westpac and the BNZ, TVNZ is just about indistinguishable from Mediaworks’ TV3 and TV4, NZ Post makes lots of money but has no other social purpose different from a privately-owned business. Similarly, all the various SOE electricity companies have presided over massive increases in household power prices - in fact electricity went up 72% under the Clark Labour Government. Air New Zealand, notably also operates purely to make money under a mixed-ownership model.
Hence from a genuinely leftwing point of view, it seems there are no significant reasons to fetishise the public ownership of TV2 or NZ Post. Likewise, on the face of it, there seems little real reason to make opposition to National’s proposed SOE private equity raising the most important issue of the 2011 election campaign. So when Phil Goff promises to keep the electricity companies in public hands – without making them serve a significant social purpose – he is no more of a “socialist” than Bismarck was.