Identity politics vs class politics - 7: The neo-liberal/social-liberal tradeoff in the 4th Labour Govt

One of the most perplexing questions in the history of the left in New Zealand has been: Why was it a Labour Party that implemented the radical anti-worker neoliberal reforms? What’s more, why did the ‘left’ of the party allow the programme of Rogernomics to be implemented? The answer is partly that the Labour ‘left’ was so surprisingly tolerant towards the economic programme of the government due to the political backgrounds of the now dominant social liberal element in the party organisation. Their experience within the new social movements had taught the ‘new left’ in the Labour Party to concern itself with identity politics rather than class politics. [Read more below]

The new milieu of socially-concerned liberals – described in the last blog post – had essentially joined the Labour Party to oppose Muldoon. So unlike the previous generation of Labour Party activists from a militant union background, the social liberals did not evaluate the reforms with the same class perspective as traditional working class members. As a result, the social liberals in the party mostly took an ambivalent line on Rogernomics. Former Labour Party Cabinet minister Margaret Wilson, for example, has stated:

I was not opposed to the need for change. Like many party members I could see that change was necessary. The misuse of the state's regulatory power by the Muldoon government had not led to the economic and social equity we sought (Wilson, 1989: p.38).

A neoliberal/social liberal truce

Within the Labour Party in the 1980s there was effectively a truce made between the right of the party that was keen to implement neoliberalism and the left of the party, which was now mostly socially liberal in its focus.

The social liberal element of the party had a lot to be pleased about during the first term of the Fourth Labour Government. The Lange Government banned nuclear warships from New Zealand’s harbours, established a Ministry of Women’s Affairs, ceased diplomatic relations with South Africa and introduced treaty legislation to deal with Maori land claims dating from as far back as 1840.

The advent of these social liberal reforms basically meant that ‘there were two great experiments – one economic and the other a social one associated with the "new politics" – going on simultaneously' (Castles, Gerritsen, and Vowles, 1996: p.214). The two ‘experiments’ were achieved by the work of the neoliberals and social liberals of the party respectively. In this respect, the neoliberals in the Labour caucus treated the social liberal reforms – which they were often personally opposed to – as a sort of acceptable ‘trade off’ for getting their own programme of economic reform accepted or at least tolerated by the social liberals of the parliamentary and party wings. As Jesson argues, a sort of division of labour operated where 'The Libertarians of the Right were allowed a free hand in economic policy, with the liberals of the Left being influential in social and foreign policy' (Jesson, 1989: p.72). Quite explicitly, ‘the Labour Party's socially concerned membership tolerated the free market reforms for  the sake of the social and foreign policy’ (Jesson, 1989: p.72). Denis Welch has also commented on the power of this ‘distraction’ in his 2009 biography of Helen Clark:

those to the left of Douglas were in a fine old state of distraction anyway, being entranced by New Zealand’s move towards declaring itself nuclear-free. It really was a dream come true for liberal lefties of the Clarkian type, and more than made up for any right-wing deviance on economic policy’ (Welch, 2009: p.85).

Ex-Cabinet minister, and Labour neoliberal, Kerry Burke has also confirmed the Cabinet’s fusion of social liberalism with neoliberalism: ‘It was able to use… the widespread support for foreign policy issues, especially the nuclear-free issue, in a way that diverted people’s attention from some of the harder economic stuff that was going on’ (quoted in Welch, 2009: pp.105-106).

This tradeoff was not necessarily a formalised or organised process, but a natural reaction to the desire of two quite different party factions to implement their own agendas. As Oliver Riddell has argued, the trade-off was probably not a formal agreement, as ‘neither [faction] was cohesive and organised enough to do a deal with the other’ (Riddell, 12 Sep 1990). Indeed, Wilson disputes any notion of a conscious trade-off:

There has been speculation that the government traded its foreign policy off to the party in favour of its economic policy.  Such a consideration may have influenced the actions of individual MPs, but the issue was not viewed in this way by me or the party (Wilson, 1989: p.67).

Although what happened was probably more natural rather than contrived, nonetheless there is evidence that major players from both left and right factions were highly aware of the operation of the trade-off. For example, ex-Australian Prime Minister Bob Hawke, relays in his published memoirs the details of a meeting with David Lange over Labour's anti-nuclear ships policy where the two discussed the trade-off:

I felt to compelled to tell him that it seemed he didn't really seem to believe what he was saying [about the anti-nuclear ships policy] and his government seemed prepared to cop the left's view in return for a freer hand to run economic policy. He replied without equivocation, "That's right." He indicated that the nuclear-free policy had been fashioned by the Left and accepted by the party, and there was virtually nothing he could do about it (Hawke, 1994: p.281).

In a sense, the trade-off was also a logical extension on the part of the social liberal faction of the general lowered horizons resistance strategy used by party president Margaret Wilson of accepting what they could not defeat and instead working for what they perceived as achievable. According to Jesson:

They couldn't affect economic policy, but they could gain a trade-off – the anti-nuclear position for economics, in many cases. In the case of the unions, the trade-off was compulsory unionism (Jesson, 1989: p.75).

Maryan Street, who was active in the party at the time, and who later became party president, also had the impression that the dominant rightwing of the party were happy to let the leftwing carry through their social liberal reforms. According to Street: ‘Sometimes it was easy to get the impression as an activist that you were only allowed to do things that didn't impede the "important" things that were going on’ (quoted in Fowler, 1994: p.91).

The feminist tradeoff

In fact it was the feminist – or women’s faction – within the party that provided the strongest example of social liberalism acquiescing to neoliberalism by consent. Jesson points out that those from the feminist movement showed little understanding of matters economic and were surprisingly weak in the opposition to economic restructuring despite its obvious negative effects on many women. This is partly explained, according to Jesson by the fact that: 'There was no concept of the marketplace in the notion of patriarchy; and feminists showed little interest in economics. And there was an ambivalent attitude to the state' (Jesson, 1989: p.28).

Tradeoff’s and avoidance of the 1980s economic debates thus occurred very easily. As an example of this, Welch cites the Labour women’s caucus:

The Labour women’s caucus met for lunch every Thursday but the discussions kept clear of economic policy, precisely because, as Clark herself has said, there were sharp divisions over it. Rather, they talked about issues they could agree on and influence, like childcare and domestic violence (Welch, 2009: p.79).

There was subsequently a policy pay off in women’s issues during the Fourth Labour Government, with the establishment of Ministry of Women’s Affairs, and the introduction of the Pay Equity Act.

A new neo/social liberal consensus

In a ‘bigger picture’ sense, the neo/social liberal tradeoff has come to embody post-1984 New Zealand politics right up until today. The 4th Labour Government and then subsequent governments eventually created a new consensus in New Zealand parliamentary politics which was both socially liberal and neoliberal:

the peace-and-love brigade’s eventual legacy was decent espresso coffee, a smidgen more gender equality, and a relaxed dress code. They won the cultural war – social liberalism and sexual permissiveness have swept the field since 1968 – and they had a great time making New Zealand nuclear-free, but they lost the economic war because, when it came down to it, it wasn’t a war they were actually all that interested in winning’ (Welch, 2009: p.63).

In many ways the liberals of the postmaterialist cleavage have won most of the arguments on postmaterialist issues, just as the right-wing have generally won the arguments on materialist issues – leading to a consensus that is economically right-wing and socially liberal.

This means that the new centre developing since the 1990s could be said to involve a right-wing position on the economy (with the left parties having to accept the continuation of the modified neoliberal framework as established by Douglas and Richardson), and a liberal position being adopted on social issues (with the conservative parties like National, New Zealand First, Act and United Future having to accept the socially liberal framework established by Lange, Bolger and Clark).