Taking back Telecom

The Alliance has put out a statement on the government's 'unbundling' of Telecom which makes some good points, but leaves a number of questions unanswered.

Telecom was sold for a fraction of its true value in the dying days of a Labour government hellbent on privatising everything in sight. Shareholders in the company may complain about the 7% that was wiped off Telecom's value this week, but they have benefited over and over from the fact that a key asset and natural monopoly was sold on such generous terms.

Now the Clark government is trying to correct some of the disastrous consequences of its predecessor's decision to privatise Telecom, not by renationalising the company, but by tweaking the regulatory framework and hoping that the private sector will do the work government should be doing. One is reminded of the pathetic attempts of Jim Anderton to persuade multinational companies like International Paper/Carter Holt to undo some of the effects of neo-liberalism by investing in areas with high unemployment like the East Coast. It never seems to have ocurred to Big Jim that government might actually be able to invest in those areas itself to create jobs and reverse population decline. The scope of government has been so attenuated by fifteen years of neo-liberal reform that people like Anderton and Clark are forced to appeal to the private sector to do work that would have once seemed the natural preserve of a social democratic government.

This isn't the first time the Alliance has addressed the issue of the theft of Telecom, of course. After it was founded in 1989 the New Labour Party pledged to renationalise the company, and this pledge became Alliance policy. The party stated that if elected to government it would set aside a fund to pay for the renationalisation of Telecom and other assets privatised by the fourth Labour government.

When it finally got into government in 1999, though, the party forgot all about renationalisation. The best that Anderton and co could do was the bailout of Air New Zealand, which was prompted by the concerns of big business, accompanied by mass layoffs, and resulted in the head of the Business Roundtable running the company. There was also the establishment of the pathetic Kiwibank to take low-income savers off the hands of the serious banks.

What went wrong? I think that the Alliance failed, and continues to fail, to understand the nature of nationalised property in a capitalist economy, and to appreciate the impossibility of reversing the privatisations of the 80s and 90s without challenging capitalist property relations in this country.

Under capitalism, state-owned assets are generally assets which are collectively owned by the capitalist class. They are collectively owned not because of a spirit of collectivism in that class, but because collective ownership is a necessity. A good illustration of this point is the case of the railways in New Zealand. The country's capitalists needed the railways to get their goods to market and to ports, but no one capitalist concern could afford the expense of building and owning the railways. It made sense for the state to step in and organise the construction of the railway system.

The privatisation of so many assets in the 80s and 90s came because international capital was now predominating in the New Zealand economy, and the concerns of local capitalists counted for much less with government. Indeed, some of the big companies that benefitted from the old days of collective ownership of assets by the Kiwi capitalist class - companies like Carter Holt and Fletcher Challenge - have themselves been taken over by international capital. In other words, the New Zealand economy has been globalised. In these new conditions, nationalisation rarely makes sense for capitalism - there are exceptions, of course, like Air New Zealand, but they are and will be rare.

Now the small post-Anderton, post-McCarten Alliance once again talks of renationalisation. But it harks back to the party's old, early 90s aposition - we are supposed to believe that the renationalisation of massive companies like Telecom can be achieved within the boundaries of capitalism, and we are told that a renationalised Telecom should be placed under the control of a capitalist government, which will presumably safeguard the asset and use it in the interests of ordinary New Zealanders. Both these ideas are fantasies, but I want to focus on the problems which attend the first one.

An Alliance government could never afford to buy back Telecom, let alone the myriad other companies privatised in the 80s and 90s, without massively increasing its revenue stream. The massive hike in tax rates that would be necessary would prompt the flight of international capital and throw the New Zealand economy into a crisis. The only alternative to buying back Telecom is taking the company without compensation, a measure which would provoke even greater capital flight and also send the economy into a tailspin. Any attempt by an Alliance government to put controls on capital flight would only exacerbate the crisis by further alarming and radicalising international capital.

All this ought to sound familiar, because it is the scenario that numerous governments of countries dominated by foreign capital have faced when they have tried to enact radical left-wing reforms. It is the dilemma that was faced by Arbenz in Guatemala, by Allende in Chile, by Qassim in Iraq, by Castro in Cuba, and most recently by Chavez in Venezuela. The governments that have survived the crises that have engulfed their reform programmes are the ones that have taken on their own capitalist class and thus broken with the limits of the system they were trapped within. Faced with an outcry from his capitalist class over his plans to reform the oil industry and reverse its de facto privatisation, Chavez was forced to mobilise his own working class and fight his enemies on the streets and in the workplace, during the coup attempts and national lockout of 2002-2003. Faced with a 'strike' by the foreign capitalists that controlled his country's sugar and oil refining industries, Castro was forced to seize their assets and expel them from the country at the point of a gun.

The Alliance still doesn't like to think of itself as a revolutionary party. It tends to hark back to pre-1984 New Zealand, and pretend that an idealised version of the society that the fourth Labour government destroyed can be restored. In a sense, the Alliance and the Greens are the last representatives of the old indigenous bourgeoisie that was decimated in the 80s and 90s. But the best Alliance policies, like the party's call for the renationalisation of Telecom, can no longer be accomodated within the framework of New Zealand capitalism. They can only be won as part of the socialist transformation of society, and they can only be defended by the working class.

That's why the Alliance's critics on the Marxist left argue that the party should call for the renationalisation of Telecom without compensation under workers' control, as part of a transitional programme leading to the establishment of a new society. They point to the factories nationalised under workers' control in Venezuela as an example of what they want. It sounds radical, and it is radical, especially in such a conservative society as ours, but it is less fantastic than the alternative the Alliance touts at the moment.