Labour's Janus head

At the end of June Greece's governing party began to push another austerity programme through parliament, and came a little closer to collapse. After expressing unease at mass lay-offs of public sector workers and cuts to pensions, and refusing outright to support a law which rolled back the legal rights of unions, the long-serving member of parliament Panagiotis Kouroublis found herself expelled from her party.

Kouroublis may have lost some friends in parliament, but she has become a heroine to the hundreds of thousands of Greeks who have been protesting against the austerity programme with marches, occupations, strikes, and riots. Political analysts have taken to describing Greece as 'ungovernable', and a report by the CIA suggested that a military coup might be the only way to get protesters off the streets.

It is worth noting that the government pushing radical neo-liberal policies on an unwilling Greek working class is filled not with evil bankers or a set of emissaries from European Union headquarters in Brussels, but with social democrats. The Panhellenic Socialist Party (PASOK) has traditionally enjoyed the support of the majority of the Greek working class, and includes in its leadership many former trade unionists. But it is not unprecedented for a social democratic party to respond to an economic crisis by attacking unions, wages, and the welfare state. When the Great Depression came to Great Britain in 1929, the Labour government of Ramsay MacDonald decided to cut spending on pensions and schools, acquiesced in mass sackings of workers, and refused, despite the urgings of John Maynard Keynes, to borrow money to stimulate the economy. Businesses were delighted.

In New Zealand the Labour government elected in 1984 was greeted by a debt repayments crisis and a run on the Kiwi dollar. Under the leadership of David Lange and Roger Douglas, the party responded with one of the most thoroughgoing and devastating set of neo-liberal policies seen anywhere in the world. State assets were flogged off at bargain basement prices, tens of thousands of public sector workers found themselves in the dole queue, student fees were increased by several hundred percent, and a Goods and Services Tax which hit the poor hardest was introduced at the same time that company tax rates were lowered. 'Rogernomics' was a blow from which poorer Kiwis and the trade union movement have never altogether recovered.

Labour itself has never quite recovered from the Lange-Douglas era. The party suffered a massive membership decline in the 1980s, and it remains a relatively small organisation today.

Ramsay MacDonald and David Lange were condemned as traitors and as lackeys of the rich by many of the grassroots supporters of their parties. Today similar insults are aimed at PASOK leader George Papendrou by the crowds on the streets of Athens and Thessaloniki. But the likes of Lange and Papendrou are not aberrations so much as expressions of one side of the contradiction which is social democratic politics.

At the beginning of the 1920s, when Ramsay McDonald was promising that the Labour Party would govern Britain in the interests of workers rather than employers, Lenin wrote his famously bad-tempered book Left-wing communism: an infantile disorder in an attempt to sum up the nature of social democracy. Lenin described organisations like Labour as 'bourgeois workers parties' - that is, as parties which claim to represent workers, which have mass working class support, and which advocate some policies beneficial to workers, but which side, in the final analysis, with capitalism and the employing class.

During good economic times, Lenin argued, social democratic governments can reward their supporters by delivering them better state services and higher wages. When capitalism goes into crisis, though, and profit levels have to be restored, the bourgeois workers party comes under pressure to save the system it has sworn to work within, by cutting wages and state spending, and siding with bosses against trade unions in industrial disputes.

Lenin was writing before the 1930s, when a number of bourgeois workers parties, including New Zealand's Labour Party, got elected to government and implemented the sort of policies Keynes had unsuccessfully urged on MacDonald. These governments increased rather than cut state spending, borrowing money to cover rises in benefits and wages as well as public works projects designed to stimulate the economy. Keynesian policies were generally pursued because of pressure from trade unions and unemployed workers' organisations, and in spite the protests of big business and the political right.

Like the Roman God Janus, then, social democratic parties have two faces. They can, depending on the state of the economy and the balance of social forces, adopt either moderately progressive or revanchist, pro-business policy programmes. Keynesianism and austerity are both aspects of the social democratic tradition.

The contradictory quality of social democracy is evident in the Labour Party's campaign for November's general election. On the one hand, the party is demanding a rise in the minimum wage and the substitution of a Capital Gains Tax for some of the tax burden the poor presently carry. These measures would, if implemented, increase the spending power of the working class and - in theory, at least - stimulate the economy in traditional Keynesian fashion.

But a very different Labour Party has been campaigning in the wealthy Epsom electorate, where shadow spokesman for Economic Development David Parker is trying to win votes away from Act candidate and former Auckland mayor John Banks. In a recent guest post for David Farrar's right-wing Kiwiblog, Parker revealed that he was trying to appeal to Epsomites by presenting Labour as a 'fiscally responsible' party. Parker wrote that:

John Banks tripled Auckland City Council's debt...This recent history is very damaging for Key as well as Banks, given their repeated assertions that they are fiscally responsible...Labour under Michael Cullen ran substantial surpluses and reduced government debt, which Key and Brash opposed. There is a widening acceptance that Labour were fiscally responsible, at a time when the USA, UK, and most of Europe were not...

In a time of economic crisis, Parker's enthusiasm for 'fiscal responsibility' and his espousal of balanced budgets should send shivers down the spines of left-leaning Labour supporters and trade unionists. It is, after all, in the name of 'fiscal responsibility' and against the perceived excesses of the pre-crisis years that the governments of nations like Greece, Britain, and Spain are forcing through neo-liberal austerity programmes today. For politicians like George Papendrou and David Cameron, balancing budgets means gutting public services, laying off hundreds of thousands of workers, and selling state assets. (The fact that Parker throws an allusion to the Occupy Wall Street movement and a criticism of neo-liberalism, aka 'the Chicago School of Economics', into a later section of his article doesn't detract from the significance of his rhetoric about 'fiscal responsibility'; it only shows his shamelessness.)

Parker's rhetoric should also remind us of the Lange-Douglas government of the 1980s, which took pride in positioning itself to the right of its National opponents during debates about state ownership of assets and public spending.

If the global economic crisis continues and New Zealand experiences the sort of meltdown which has been the fate of Greece, will a Labour government respond by turning to the Keynesian policies of the 1930s, or to the scorched earth neo-liberalism of the '80s? The lack of influence of Labour's few grassroots members over the party's parliamentary wing and the lack of power of the contemporary Kiwi trade union movement make a repeat of Rogernomics a distinct possibility. Parker's revival of the rhetoric of the 1980s certainly shows how little commitment senior Labour MPs have to left-wing principles and policies.

As the Greeks are learning, social democratic governments can be the most ruthless defenders of crisis-ridden capitalism.

Footnote: Labour offered another bad omen today.

[Posted by Maps]