One area of reform proposed by post-neo-liberals such as Skilling and Weldon which has the potential to involve some serious upheaval is the state sector.

A problem for capitalism is that all kinds of activities – some standard industrial and commercial activities as well as ‘public good’ activities like health and education – require a significant state-owned sector within the economy.  In New Zealand, the state has been a major player since capitalism first arrived here in the nineteenth century.  Without the state, little of the infrastructure would have been built, for instance.  The inability of private capital alone to create a modern capitalist economy, complete with infrastructure (from banking to railways to mass communications), meant the state had to pick up the slack.  The state could do this because it had access to chunks of surplus-value through direct and indirect taxation, could borrow on a massive scale and did not need to make a quick and substantial profit.  The state could, in fact, produce goods and services outside the operation of the law of value – in other words, it could produce and provide goods and services without profit being built into the price; in fact often goods and services were produced and provided below cost.  Private capital could make use of these goods and services without paying a price which reflected their actual value.

[Read more…]

– Philip Ferguson

This is the second of a two-part feature; the first looked at how a capitalist economy works (and doesn’t work), while this part looks at trends in the NZ economy, government policy and the February 28 Jobs Summit

The state of the New Zealand economy today, like that of the global economy, is best understood in the context of the end of the post-WW2 boom (around 1973-74), the onset of a protracted period of capitalist economic crisis and the failure of counter-crisis measures (both Keynesian and neo-liberal) to solve the problems that came to the fore with the end of the boom, let alone open up the road to a new period of dynamic growth on the same kind of level as the postwar boom.

As we noted in last month’s paper, the end of the boom and the onset of a new period of crisis was the result of the working out of the law of the tendency of the rate of profit to fall, a process which is built into capitalism.  In New Zealand, the crisis was exacerbated by the loss of traditional markets, dependence on imports such as oil and the use of Keynesian policies to try to escape the crisis.  None of these latter factors were causal, but they did make the problems worse.

[Read more…]

Philip Ferguson

The Spark February 2009

(The following article is the first in a two-part series on the present economic crisis. This part explains how the system operates; the second part, in our March issue, will be an examination of what’s happening right now – and what workers can do about it.)

According to economics.about.com, “In every economic system, entrepreneurs and managers bring together natural resources, labor, and technology to produce and distribute goods and services.” They do qualify this by claiming, “But the way these different elements are organized and used also reflects a nation’s political ideals and its culture.” (They also note Marx’s description of a capitalist economy as one in which a small group of people who control wealth make the key economic decisions.)

It’s important to understand that the idea that every economic system has, or requires, “entrepreneurs and managers” in order to operate is factually wrong. For most of the time that human beings have existed we lived in collective societies, without entrepreneurs and managers. Different social classes only arose about 10,000 years ago and it’s only in the past few hundred years that capitalism has been the dominant global system. Facts, however, have never been allowed to get in the way of capitalist ideology – that is, the set of ideas which seek to justify the present system and usually do so by making it appear that capitalism is ‘natural’ and eternal.

[Read more…]