Aotearoa/NZ: The Fudget Fiddles while Capitalism Burns

Bill English, New Zealand's Minister of Finance

"The NACTS budget is really a fudget for trying to hide the growing weakness of NZ’s neo-colonial economy behind a veil of spin. The Key regime hopes to promote business confidence in a climate of falling profits by ‘tax cuts’ made possible by cuts to public spending on the ‘social wage’ and by ‘dividends’ created by privatising state assets and plundering public resources such as water and fisheries."

http://thedailyblog.co.nz/2016/06/16/guest-blog-comrade-dave-brownz-the-fudget-fiddles-while-capitalism-burns/

NACTs Zero Sum Budget

Auckland Mayday March against welfare cuts May 1, 2012

NACTs 2012 budget keeps the country heading down the Rip, Shit and Bust road to destruction. The capitalists who rule Aotearoa want to rip out all our resources, shit on the lives of working people, and drive the country bust. Who has the best program to counter the NACTs bosses’ zero sum crisis budge? Labour and Green reformists, Mana radicals or Marxist revolutionaries? Let’s see the bosses’ budget for what it really is, an exercise in spin to cover up making workers pay for the capitalist crisis. Labour and the Greens have got no answers except Keynesian pipedreams and austerity ‘lite’. Mana is staking out a left Social Democratic position with income transfers to the poor. But the cause of the crisis is capitalist exploitation and there can be no effective rolling back of capitalist austerity except as a by-product of the building of a mass workers movement for socialist revolution.

NACT’s zero-sum budget

NACTs spin budget is zero-sum. It presents its austerity measures as ‘fiscal responsibility’ in balancing the budget by 2014 in the middle of a global crisis. Having run up a deficit of NZ$11 billion by bailing out the private sector it has transferred the cost of paying this deficit onto the taxpayer. In reality it is the working class that pays all taxes because the working class produces the wealth. So the real purpose of the zero-sum budget is to cut wages to boost profits. It boosts profits by forcing austerity on workers. Austerity is the bosses’ solution to their crisis as it cuts wages and social spending as a drain on bosses’ profits. It tries to make workers pay for the crisis by cutting capital’s costs at all costs. It restores profits by cutting taxes to rich, while increasing taxes to low paid workers like paper boys and girls; cutting social spending such as education from ECE to tertiary, ACC, welfare benefits, health and housing. This budget adds a new list of cuts in the NACTs austerity regime. A new round of austerity will hit when assets are privatised and power charges, education fees, health, ACC etc rise, and attacks on union rights and beneficiaries weakens unions and drives down wages.

Labour’s ‘Budget’

Of course capitalists argue that they are entitled to their profits, and to influence policy to restore them. They justify this as necessary for growth in the economy and the creation of rising incomes and living standards. Labour (social democratic) reformists agree with the capitalists that profits are earned rather than expropriated by capitalists. Capitalism is not inherently exploitative but there are some bad bosses (today the villains are usually Bankers) who ruthlessly exploit workers. They think that the cause of the crisis in not any inherent flaw in the economic system, but the wrong policies that create inequality and falling incomes for the poor. Labour accuses the NACTs as deliberately pushing austerity policies to enrich the already rich and worsening the gap between rich and poor.

The typical response of Social Democracy around the world is to replace austerity with ‘growth’. Keynesian solutions to the crisis are pushed. Keynes was a bourgeois economist who recognised that when profits fall the capitalists stop investing causing a slump. Keynes’ solution was to take over from the capitalists and use the state to borrow and spend on creating jobs and boosting incomes so that rising demand would trigger capitalists reinvesting in production. Roosevelt’s administration in the US and Labour Governments in NZ both applied Keynesian economics overcoming the worst effects of the Great Depression of the 1930s. In NZ the reformist left is pushing these solutions. Problem is inequality which can be fixed by state intervention.

The budget then, rather than cutting back on expenditure, should borrow to boost working class incomes to stimulate demand and hence capital investment in supply to meet the rising demand. This should be part of a wider policy of state regulation, ownership and economic planning to eliminate the profiteering of the capitalists. . See the big debates over austerity vs. growth on Michael Roberts Blog.

Green's ‘Budget’

The Green leader Russel Norman says that the Greens would “share austerity more fairly”.
They would tax the rich and capital gains, and redirect expenditure away from unproductive motorways, subsides to polluters etc and into a R&D and education for a smart green economy. This is a form of Green Keynesianism spending to boost clean, green, consumption.

The Greens are also against selling state assets having shown that they contribute more in ongoing dividends than in a one off sale. But like the Labour Party they will not commit to buying these assets back. While some think that the Greens are now the real opposition without Labour swinging right under David Shearer, and would keep a future Labour government honest, there are those who think that the Greens could work with Labour under David Cunliffe’s leadership because he stands for ‘Real Labour’.

But however they may rant on that we need throw out the NACTs and replace it with a smart, green Keynesian politics, the reality is that capitalist crisis cannot be solved by ‘growth’. Crisis requires austerity which means depression. This means destroying the value of surplus capital and of workers’ wages until the capitalists are assured that the capital invested in production can once more return good profits.

Mana’s ‘class war’ Budget

Mana is the only radical party in Aotearoa because it is driven by Tinorangatiratanga, or Maori self-determination, and by the socialist left. Radicals know that the state cannot oversee a fair distribution of income, since it is controlled by the capitalist elite that exploits labour by underpaying the true value of the wage. This is usually referred to as unequal exchange as labour is not paid its equal value in the market.

Thus the parliamentary budget is only fiddling with wealth already stolen from the producers. So further fiscal fiddling by the left cannot equalise the burden of austerity. The solution is for the majority working class to realise its potential power and get the true market value of labour. Some radicals want to take over the existing capitalist state to enforce this balance of power by similar means as the reformists. Others think the working class can take power in society and render the state superfluous. On balance Mana is a left reformist party willing to work inside parliament. Matt McCarten’s column in the NZ Herald, “Derisory Budget wages war on the poor”, sums up the Mana left Social Democratic politics.

Mana wants to get elected to represent Maori, and all other workers, and as its leader Hone Harawira said in his budget speech, “Tax the rich and free the poor”!

Workers’ revolutionary ‘Budget’

Marxists take a very different approach to the budget.  The capitalist economy is based on the production of value by the working class and the extraction of surplus value by the capitalist class. The state serves the capitalist class by defending the right of capitalists to the exploitation of labour as private property. That is, the state oversees the exploitation of the working class on behalf of capitalists’ profits. The income and expenditure of the state is therefore the consequence of the production of value and its distribution via incomes and via state incomes policy among the different ‘revenue’ classes to reproduce those classes.

The Marxist explanation of capitalist crisis is that is it caused by falling profits due to the inability of the capitalists to extract enough surplus value. This is the Tendency for the Rate of Profit to Fall. Bosses whose profits are falling stop investment, growth stagnates, and to restore the rate of profit the mass of capital has to be devalued as well as the value of wages until such time as the amount of surplus extracted represents a profit over total capital invested. The devaluation of the wages to restore profits is the essence of ‘austerity’.

The state plays a key role in creating the conditions for the return to profitability. It introduce social and economic policies to increase the rate of exploitation (increasing the share of profits) by making workers work harder for less pay. Here we see a whole box of NACT austerity policies to attack living standards, workers rights, union rights, and attacks on beneficiaries and the sick and injured to drive them to work – workfare – and so on to make workers produce more value and cut the share of value going to wages.

But that increased share of value does not go towards restoring profits if it is taxed to pay for state expenditure that does not produce bigger profits i.e. is a net drain on profits. So to restore profits the NACTs on behalf of the capitalist class want cut back on state spending by massive cuts in jobs and the social wage (the part of the wage made up state transfers – benefits, pensions, Kiwisaver, health, education WFF etc)

The budget ‘deficit’ therefore is an excess of state spending over state income that is a net drain on profits. The ‘balancing’ of the budget means reducing the state functions to only those that cannot be done more cheaply by the market. So we see the wholesale privatisation of state production, distribution and exchange (energy, airlines, banks etc) and services (health, housing, education, prisons etc). The capitalists kill two birds with one stone. First, state spending reduces the net drain on profits, and second, privatised state activities become directly profitable as the accumulation of capital (stocks, shares, interest etc).

Our conclusion is that ‘austerity’ is not merely a policy option like ‘growth’. The NACTs austerity policies are necessary for the capitalists’ survival, and they will not give up power or wealth without a fight. Thus liberal reforms are useless. Power has to be taken. It cannot be taken by peaceful means on the streets or other institutions. Radical reforms will come up against insuperable state power unless they take the form of a working class insurrection. Power has to be seized and the capitalist state power replaced by workers state power. For working class and the planet to survive the capitalist system must die. 


From Class Struggle No 100 May-June 2012

Bludger’s Budget

As we would expect from a NACT [National/ACT/Maori Party coalition government] regime backed by the Maori Party, the 2011 Bludgers’ Budget marked a further attack on workers to boost profits. The main attacks were on Kiwisaver, WFF, and plans for the ‘partial privatisation’ sale of state assets. Key boasted that he would create 170,000 new jobs, the same claim he made last year. Of course he is right - he subcontracted job provision to Australia while NZ lost jobs. Key echoed Treasury’s fraudulent claim that the NZ economy would grow at 4%, again same claim made last year, again reached by Australia, towed along by China, while NZ had negative growth. Which country does this guy think he is i: NZ, Hawaii, China or Australia? We, however, not being NACTites or LABOURites, see this budget as reinforcing NZ’s role as a cheap labour country with its assets being primed for sale to China. Welcome to the Great South Seas Islands.

Kiwisaver: State cuts back its contributions, appears to put the burden equally on workers and employers, but in fact allows employers to take it off wage increases.  Thus kiwisaver becomes like a US type worker contribution pension fund that will amount to workers saving for their pension, with companies contribution deducted from their wages, while at the same time the state will cut back on Govt Superannuation, raise the age of entitlement etc/, thus shifting the burden of paying for retirement entirely onto workers. That amounts to a real wage cut and a rise in the rate of exploitation. If Kiwisaver is privatised then workers may end up like US workers who have had their corporate based pension schemes worth billions expropriated to bail out company bankruptcies. Privatised pensions have fine print which says the bosses own your retirement as well as your working life! The only secure retirement for workers is to expropriate the expropriators, not only the pension funds but all the corporate wealth the workers created through their generations of labour.

WFF: Working for Families was a Labour Party policy to redistribute tax (actually a tax rebate like the old rebate for children) to workers who had families. So it’s part of the welfare system. The NACTs opposed it when it was introduced but then left it in place until now when they have reduced the rebates slightly for families on higher incomes probably because this is ‘middle NZ’ and potentially NACT voters. And lots of other nasty, mean cuts where it hurts.

Privatisation: NACTs propose the partial privatisation of a number of specified State-owned Enterprises – namely the four major power generators, Solid Energy and Air New Zealand. In an attempt to head off popular opposition to privatisation the NACTs propose ‘partial privatisation’ i.e. 49% private ownership 51% retained in public ownership. These are major corporations with good returns. So what the NACTs are doing here is grabbing nearly half for their own class, here and overseas. They are trying to sweeten the pill by saying ‘mum and dad’ investors will get preference and this will boost kiwi ownership and the NZX. Well, those mum and dad shares will be gobbled up by corporates damn quick. Campaign Against Foreign Control of Aotearoa [CAFCA} has a good critique form the standpoint of NZ social democracy, that state ownership implies more public control than private foreign ownership.  In fact nationalisation is a form of collective capitalist ownership since the state is the state of the capitalist class. What nationalisation does, however, is facilitate workers control as a step towards the socialisation of capitalist property. So the answer to the NACTs ‘part privatisation’ plans is to fight for nationalised property to be under workers control and for the big private corporates to be nationalised, without compensation, and under workers control.

ACC: The NACT wants to privatise Accident Compensation; another step towards destroying the working class as the only force able to stop social barbarism and human extinction. The whole point of privatising is to open up lucrative business to bosses and make the workers pay for it. It’s an ideological reform sure, but it’s driven at every level by profits. Ideas don’t exist without material roots. Bosses are looking to drive down the costs of insuring workers on the job and paying for their accidents off the job, and insurance companies are looking to make more profits from user pays. The pro-market ideology is just that. They want ACC privatised to shift the cost onto workers. Reformist complaints about the ACC meeting some noble ideal of the ‘community’ sharing the cost of accidents is a nonsense for capital which uses up the flesh and blood of workers, exhausts nature, and drives humanity towards extinction, to make a profit. Social democratic appeals to some redeeming feature of capitalism is merely avoiding the calamity and weakening our ability to stop it in time. What has the Labour Party got to say about this Bludgers’ Budget?

Labour’s shadow Budget

Labour opposes the cuts in the Bludgers’ Budget but has not committed itself to restoring them. It has made a point of saying that some cuts would still be necessary given the worsening debt situation. It has promised a small tax increase for high income families and to impose the Environmental Trading Scheme [ETS] on farmers in 2013 to raise $800 million over the next four years for R&D. It committed to raising the minimum wage from $13 to $15 on hour. NACT and big business hit back with claim that this would lose 5000 jobs unless Youth rates were reintroduced. Labourites have countered with research that showed that raising the minimum wage in the US and in NZ did not see rising youth unemployment as hours worked by youth increased (see Tapu Misa).  These research findings prove the Marxist view that rising wages are the spur to growth in economic productivity as employers are pressured to introduce new technology and raise labour productivity to increase profits. The immense growth of capitalism over the last 150 years arises from this pressure.

The Labour Party recognises the importance of labour productivity growth but but does not see this as increased exploitation of labour and limits itself to strengthening organised labour to win a larger share of income. Yet the statistics show that in NZ the productivity share of workers has declined to the point that even real wages have fallen. While Labour’s reformist perspective of maximising workers income shares in the imperialist epoch of capitalism in decline cannot stop mass poverty, at least it is not openly complicit like the Maori Party in the NACTs bosses’ agenda of NZ as a low-wage-asset-stripping country competing directly with other low wage countries!

A Workers’ Budget

For the NACTs a ‘workers budget’ is what they have to produce at the WINZ office to prove they are not ‘bludgers’ and can qualify for a benefit. Enough! The real Bludgers’ Budget is part of the NACTs attack on workers to create a cheap labour force and smash resistance to privatisation and asset sales to China. Labour has yet to take a stand on a Budget that puts workers needs before profits. The Green’s 5 point alternative budget has some immediate aims but spoiled by its dream of managing capitalism as a “sustainable, prosperous and fair economy” when it has to be overthrown as a precondition to our survival.

The closest we got to a Workers Budget in Parliament was when Hone Harawira of Te Mana Party described the Bludgers’ Budget as the “Key / Turia / Brash “Watch me clap while my people get shafted again” Budget. I have seen GST go up, food prices go up, petrol prices go up, house prices go up, unemployment go up, while the only thing to come down is taxes for the rich, and I intend to propose a radical way forward that will: • ease the plight of the poor • scare the shit out of the rich • and give Maori hope for a better future.

We say Enough! Tumeke! Outrage! Indignity!

 Reverse the  cuts! Occupy the foreshore and seabed! 

Occupy all workplaces that close or sack workers! 

Nationalise all corporate assets without compensation and under workers control! 

Build workers councils everywhere!

For a general strike against the system that is destroying us all in the name of profit! 

We say outrage > revolution > expropriation > socialism!