The times they are a changin' - back?

My first taste of political activism came in 1991, when I tagged along on a few of the angry marches against benefit cuts and the Employment Contracts Act that regularly closed Queen Street to traffic that year. Along with a couple of mates, I was a member of my high school's journalism class, and I justified skipping school by telling dubious teachers that I was collecting material for the next issue of the school newspaper.

Those weekday excursions to central Auckland ended when TV One's evening news bulletin showed footage of my friends and me being chased down Queen St by a group of angry cops. The morning after our television debuts we were summouned to the deputy principal's office - it always the deputy principal we were asked to see, presumably because the principal himself liked to preserve an Olympian detachment from the sordid business of crime and punishment - and given a series of after school detentions as punishment for our journalistic curiousity.

Over the next few days, a number of staff members approached my friends and me to ask about our adventures in Queen Street. Some of them were curious as to whether we were seriously interested in politics, or merely 'doing it for fun'; others were sympathetic, because they were active members of the teachers' union, and had taken part in a huge demonstration against the Employment Contracts Act earlier in the year.

A number of our interlocutors, though, were hostile, and I remember trying to improvise arguments against the deep cuts in benefits and the rollback in union rights which the National Party was presiding over, in flagrant violation of the pledges that had helped the party win election in 1990. I found myself running off to the library to research these subjects before daring to cross the quad, where a right-wing Economics teacher lurked. Students always learn more from arguing than from listening.

In retrospect, 1991 perhaps marked the zenith of the influence of neo-liberal ideology in New Zealand. National was continuing the neo-liberal 'reforms' which Labour had pursued with such energy between 1984 and 1990, the Soviet Union and its satellite states were dying, and two-bit Hegelians like Francis Fukuyama were rushing to proclaim the end of the history and the economic and ideological hegemony of the United States and free market capitalism. National's benefit cuts and anti-union laws were, it seemed, an historical inevitability.

Although neo-liberalism was viscerally unpopular amongst many New Zealanders, there seemed to be little serious intellectual opposition to the doctrine. The unions organised huge demonstrations against National's industrial relations legislation, but seemed uncertain about what to advocate in its place. As soon as the legislation had passed through parliament, Council of Trade Unions leader Ken Douglas proclaimed that his organisation would 'have to accept it'. The Labour Party could not act as a focus for opposition to National's agenda, because it had just spent six years implementing a very similar agenda. The breakaway New Labour Party/Alliance began promisingly but soon fell under the iron control of Jim Anderton, and began purging or disciplining its most clear-headed members in the name of 'electability'.

I certainly felt very bold, back in 1991, arguing that unions deserved the right to negotiate national awards, and that solo mothers deserved to receive something resembling a living wage, rather than a few handouts from a foodbank. The teachers that I argued with in the quad and on the field found these positions absurdly unworldy: they called me an anarchist and a communist, as well as many less charitable things.

Looking back, though, I realise that I was making very simple, social democratic arguments against government policies which had been borrowed from the playbook of the radical right. If I had been arguing in 1981 rather 1991, then my points would have been taken as boring truisms. Until the onslaught of neo-liberalism began in 1984, all mainstream New Zealand politicians had been committed to the welfare state, negotiated settlements between employers and unions, and heavy government intervention in the economy. Class compromise and Keynesian economics had been a feature of Kiwi life since 1935, when Michael Joseph Savage and his mates took over the Treasury benches for Labour.

In a few short years, though, economic policies had changed radically, as a section of the New Zealand capitalist class and their friends in government ruthlessly globalised the economy and chipped away at the welfare state. The ideological climate had changed as the facts on the ground changed, and what had been common sense had come to seem absurd.

Ideological transformations of this sort are not, of course, peculiar to New Zealand. They occurred in many different places in the twentieth century. I'm reminded of the story of the Soviet soldiers who pushed into Germany near the end of World War Two, and were amazed when they were told that the bombed-out factories they found there were owned by individuals, and not by the state. Raised in a society that had done away with capitalism, they could not believe that such an archaic system could exist in the middle of Europe. In only twenty-odd years, the Soviet system had been 'naturalised' in the minds of many of its subjects.

I think back to the arguments I had in 1991 when I read about the new crisis of the global finance system, and observe the sudden conversion of the likes of George Bush and Gordon Brown to the nationalisation of banks and mortgage firms. Bush's takeover of Freddie and Fannie was not motivated by any sudden lurch to the left, but by necessity. Nevertheless, it has the form, if not the content, of the policies of the Keynesian era. Brown's takeover of the Northern Rock bank appears, on the surface, like the sort of 'ultra-left' measure that smug Western commentators have scolded Hugo Chavez for implementing in Venezuela over the past few years.

The appeal of neo-liberal ideology has been badly damaged by recent events. Will we therefore be seeing the re-emergence of the sort of social democratic policies that dominated politics in the Western world through most of the second half of the twentieth century? That seems to be the hope of commentators like Bryan Gould, who has a piece in today's Granny Herald condemning the reforms of the '80s and '90s.
It is naive, though, to believe that emergency bail-outs of a few banks and finance companies can compare to the complex set of institutionalised compromises between a powerful labour movement and the capitalist class which made the Keynesian era possible. Despite their populist rhetoric about protecting ordinary people from the excesses of the finance markets, what Bush and Brown are delivering is a sort of 'socialism for the rich' that protects a few big firms from collapse whilst ignoring those further down the food chain.

An important underlying cause of the current crisis is the lack of spending power of working classes in the West. Despite the economic boom of the late nineties and early noughties, the average real wage remained flat in a number of Western countries, and actually declined in some places. In New Zealand the real average wage declined slightly between 1981 and 2001. The real average wage in America today is a third lower than it was in 1973.

The gutting of the industrial sector and the decline in trade union membership and power helped reduce the ability of workers to win better wages. Over the past decade demand has been sustained by borrowing, not genuine increases in wealth. Private debt has soared, as people borrowed to pay the bills and took dodgy mortgages. Reckless borrowing has been encouraged by banks that mail credit cards to families picked randomly from the phonebook, and sign clients they nickname 'ninjas' - as in 'no income, no job, no assets' - up to sub-prime mortgages. It is hard to believe that those in power did not know what was going on: after 9/11, George Bush urged Americans to do their patriotic duty and go shopping, so that the economy would stay afloat.

Now Bush is bailing out the companies that behaved so irresponsibly for years, but socialism for the rich will do nothing to improve the incomes of American workers. The left and the union movement have to demand that ordinary victims of economic crisis receive relief. These folks have got the right idea.

I'm off to go bargain-hunting in the discount aisle at Pak 'n Save. If I bump into my old economics teacher there I must ask him whether he still believes in historical inevitability.