John Key – Agent of Finance Capital

Emmerson - NZ Herald 6 December 2016

Prime Minister John Key’s sudden resignation has created a flurry on the surface of NZ politics. Left, Right and Centre are writing political obituaries about his “legacy”. Legacies refer to what politicians have done to establish their reputations in history. But what are the hidden assumptions behind the evaluations of political reputations? Unless these assumptions are tested and critiqued, John Key’s actual historic role as an agent of the international finance capital cannot be understood.

As usual the Left is wallowing in superficial chatter. Key’s reputation is as a smooth operator who kept a fragile coalition majority lined up over a 3-term government. Therefore, his departure becomes an opportunity for the opposition to improve their chances of winning in 2017. Little has to “step-up” and Labour-Greens plus a rejigged Mana/MP combo, and even a ‘populist’ NZ First, could combine to form the next coalition government.

Much of the Left’s animus is directed at Key as if he was personally responsible for the failure of the left to win support and remove National from power. The left failed because they could not put up a leader who could compete with Key’s popularity. This is because the left sees their failure as the direct consequence of his success. Yet Key’s success can only be explained by the way he represented the interests of his class, not his personal attributes as such. And that can only be explained by first acknowledging what those class interests are.

Of course, this is equally true of the Left’s representation of certain class interests. And we have always argued that the true difference between Key and his various Labour, Green and NZ First leadership rivals, is that Key understands and knows how to serve his capitalist class masters, while the Left continues to subordinate the interests of working class to those of the capitalist ruling class by appealing to a classless “middle NZ”. We will develop this point in the section ‘Left Opposition in Capitalist Politics’ below.

Economics determines politics

As we have argued in Class Struggle before, bourgeois democracy is a false representation of reality. It presents capitalism as based on the equal opportunity of sovereign individuals who delegate their sovereignty to their political representatives in parliaments or congresses where they legislate to manage the economy in the supposed ‘national’ interest. Thus, the exploitative capital relation based on a fundamental class inequality in the ownership of property, and the conflict and crises that result, are obscured by the fetish of ‘representative democracy’ based on the will of sovereign and equal individuals.

Politics therefore is an extension of economics, where parliament is no more than a “committee to manage the affairs” of the ruling capitalist class. The best capitalist politicians are ‘selected’ (trained, co-opted) to manage those ruling class interests. They do this in two ways. The first is the use state power to advance, protect and subsidise private property and the production of profits. Second, is the role of political leaders to manage the destructive social consequences of capitalist economic policies.

In simple terms the success of Key in managing capitalism then comes down to his performance in advancing the conditions for economic growth as the basis of profitability, and presenting the growing social inequality arising from this as no more than the failure of individuals to make the best of their opportunities in the market. The radical critique of “crony” capitalism does not penetrate this veil because it poses a “non-crony” or egalitarian capitalism as the Left alternative to the ‘capture’ of capitalism by “cronies”.

To assess Key’s performance in serving not just his “cronies” but internationalist finance capital, we have to understand both the place of the NZ economy in the world capitalist economy and the state of the world economy as a whole. These structural conditions determine the tasks of managing NZ capitalism, and Key’s success or failure, as with all politicians, as a political manager. For an analysis of why Trump cannot overcome the Terminal crisis of capitalism or suppress the social conflict it creates without turning himself into a Louis Bonaparte-type dictator, see our article “Trumped, Stumped and Dumped”.

NZ: Neo-colony in global Terminal Crisis

The difference between the US and NZ is that the former is an imperialist state while NZ is a semi-colony of the US and, in the 21st century, of China. China, along with Russia, is now part of an emerging imperialist bloc in competition with the US-led bloc. In relation to the US and China, NZ has an economy that is integrated into the global economy as a producer of mainly primary produce and tertiary services open to foreign investment, ownership and control. Trump’s task to overcome the decline in US imperialism means making weaker imperialist powers such as China, and the neo-colonial countries like NZ pay for the crisis. This is turn determines the task of neo-colonial or “comprador” capitalists like Key to act as the agents one or other imperialist countries.

When most of the NZ Left shares the superficial view that NZ is a minor imperialist power, why do we insist that NZ is a neo-or semi-colony? We can only summarise NZ’s capitalist evolution here. For a fuller Marxist account see the Development of Capitalism in NZ. NZ from its settler colonisation has always been some form of colony dominated by imperialism. The extraction of surplus from agriculture etc., and export of raw materials consigned the colony to underdevelopment, rising inequality, and finally a shift from protectionism to neoliberal counter-revolution from the 1980s to today. Rogernomics called for a new comprador class that rejected economic nationalism as no longer in the interests of international finance capital. From that point on, NZ deregulated its protected market to open it to the global capitalist economy.

A new set of politicians committed to neo-liberalism or its left variant “third way”, or Blairism, were now thrust forward to manage the deregulated economy. So, John Key inherited the neo-liberal legacy of managing a neo-colony a full 20 years after the neo-liberal turn in 1984. He was uniquely suited to that task as no other National Party leader had his background in international finance. This is why some of the conspiratorial Left has seen him as an agent of Wall St, and may well be behind Winston Peter's response to Key’s resignation that he jumped ship before the ship hit the fan. Key represents international capital and knows that NZ is not a healthy, Rockstar, capitalist economy and that the global economy is about to crash. It is a fragile, dependent economy for which Terminal Crisis will pose a new set of tasks, complementary to those of Trump, of making NZ neo-colonial workers pay for the crisis with their livelihoods and lives.

Left Opposition in Capitalist Politics

Instead of basing its strategy on the demise of Key freeing up the “middle ground”, the Left Opposition should rethink its bourgeois assumptions about politics. If Key is an agent of international finance capital, and performed well in advancing its interests, then the Left Opposition policy should counter-pose the interests of those who work for a living and produce a program that fights finance capital. We don’t mean ‘finance capital’ as Wall St speculators, but the Marxist definition of the fusion of banking and productive capital. Instead of playing its classic role of boosting illusions in a reformed capitalism, the Left should understand that the coming economic crash fused together with abrupt climate change has exhausted the potential for capitalist reforms. In the face of Terminal Crisis, we need a Left Opposition that turns to socialism to solve the crisis.

The Left has to give up on the failed utopia of Social Democracy, and more critically, bourgeois democracy serving all citizens and nations equally. The history of bourgeois democracy is that it acts to defend capital and prevent the independent mobilisation of the working class internationally. Worse, it softens workers up for fascism and imperialist war. The delusion that class can be legislated out of existence has to be exploded. The Left has to overcome its failed legacy of reforms now destroyed by the neo-liberal counter-revolution, and go forward towards the working-class majority building its own organisations outside parliament, and increasingly committed to overthrowing the capitalist state and the ruling class it represents. This is what we mean by Survival Socialism!

For a Workers’ Government, capable of expropriating capital and building a socialist economy and society as part of a Pacific Federation of Socialist Republics!

Election Defeat: Will the Labour Party Split?

David Shearer (L) and David Cunliffe, leaders of Right and Left factions before  the faction fight broke out into the open

Our position on the recent elections was to give critical support to the Labour Party and Internet/Mana Party to get them elected in the hope that they would collaborate on a Confidence and Supply agreement as part of a Centre Left Government. Neither would be bound by the others policies and would vote only on the basis of agreement with their program. Workers could then judge them on their own record. We did not give critical support the Greens or NZF as they do not have roots in the working class. So we opposed Labour forming any agreement beyond Confidence and Supply to form a government as that would have created a popular front allowing Labour to blame any failure to keep its promises on compromises with these petty bourgeois parties to stay in power. The purpose of the critical support tactic is not to endorse the reformist programs of Labour or Mana, but prove to workers that they will inevitably betray the interests of their class. This would help workers to break with these parties and form a mass Socialist Party. This tactic became redundant as soon as the National Party won the election with a clear majority of seats. But and in the aftermath of their defeat, debates have opened up in both Parties. The debate in Labour between Right and Left factions we think will lead, sooner or later, to a split along class lines and the formation of a new mass workers party with a socialist program.

Lessons of defeat spell victory

So the NACTs (National and ACT the two main parties in the Government since 2008)got back in power with a few more votes than 2011 and are able to govern alone. The NACTS  can complete the process of building a Bonapartist regime that concentrates ruling class power into the Executive so that Cabinet is not constrained by Parliament, the Bureaucracy or the Judiciary. This will see NZ drawn more firmly into the orbit of US hegemony trying to reverse its decline with trade protection under the TPPA, and a military alliance to fight the US war on terror designed to stop the rise of its main rivals China and Russia.

Labour’s gamble to win the ‘centre’ from National failed and it has been reduced to its core constituencies of urban blue collar workers now including  6 of the 7 Maori seats. The move to the left under Cunliffe was resisted by the ABCs ('Anyone But Cunliffe' members of Caucus) so as not to frighten the middle class. But this backfired as Key painted the Labour party as part of a left wing conspiracy run by Kim Dotcom from his mansion. We have to see this defeat as a defeat of the right-wing faction in Labour as its strategy means becoming National-lite to beat key in the battleground of the centre. As we will show later, the interests of the middle class are not that of the workers unless the working class is strong enough to win over the middle class. That means building a strong working class political movement capable of solving the problems of the middle class.

After the election the task now facing Labour members in the core working class constituencies and the unions is to continue the push left and prevent the Blairite right-wing members of Caucus from restoring its domination of the membership.

This election has served notice that a Labour party cannot serve both Capital and Labour in a period of global capitalist decline and stagnation and must sooner or later split. Those who want to die in the centrist swamp competing with NZ First, the Greens and National, should leave and let the Labour Party get on with leading workers in the struggle to break NZ from dependency on US imperialism. The Greens are a petty bourgeois party trapped between Capital and Labour because capitalism cannot be ‘Greened’ to stop climate change, conserve nature and avoid human extinction. The Greens failure to get more than 10% sends the message that it needs to turn to the working class and recognise that capitalism is the cause of catastrophic climate change. 

The biggest defeat was that of Internet Mana who lost their only MP, Hone Harawira. There will be no voices from the radical left in parliament to attack the ruling class. This hardly matters as Parliament will be even more of a rubber stamp in the next three years and Mana will without doubt continue building the protest movement that took shape in the fight against Labour’s Foreshore and Seabed betrayal. Key turned Hager’s book on Dirty Politics into a ‘left wing conspiracy’ by the opposition parties with Harawira and Kim Dotcom as its leaders. The Internet Party formed by Kim Dotcom as part of his campaign to fight for internet freedom was demonised as was its partner, Mana.

Joining in the vilification were the rest of the Centre Left parties who tried to distance themselves from Kim Dotcom for fear of alienating the ‘centre’. As well as posing a question for Mana about its political alliance with the Internet Party, this becomes another question for the Labour Party membership. A real Labour Party that fights for workers must make common cause with a party based on the workers like Mana and agree on a socialist program.

Before discussing the prospects for a mass working class party with a socialist program, we need to look at NZ’s working class, assess the damage done to it by neo-liberalism, and the debunk those who argue that the working class is dead or dying so that there is no longer any traditional Labour constituency forcing it to turn instead to sections of the middle class. 

Neo-liberalism: a defeat for workers

Neo-liberalism was capitalism's response to the onset of the crisis of falling profits in the 1970s. Since 1984 the electorate has re-aligned behind the neo-liberal consensus. The backbone of neo-liberalism is deregulation and privatisation to free up the market, and a monetary and fiscal policy of balancing the budget and tax cuts to the rich. National under Bolger and Shipley continued to implement monetarist policies, and the Clark government from 1999 to 2008 adapted the right-wing social democratic ‘Third way’ program associated with Tony Blair leader of the UK Labour Party after 1997. Blair defined the ‘Third Way’ as that between ‘neo-liberalism’ and ‘socialism’. Its class base was the rising middle class or the 'political centre'.

Between 1984 and 2008 both National and Labour competed for the political ‘centre’ made up of a growing middle class whose political fortunes were linked to rising incomes. The middle class is made up of several components; salaried, managerial and supervision jobs in public and private sector; farmers and self-employed ‘tradies’; contract workers; small family businesses; most of whom identify as ‘independent’ of, or not members of, the working class.

The result of this centrist convergence around neo-liberalism of Labour, Greens and NZ First was the disenfranchisement of the blue-collar working class – mainly low paid manufacturing, service and clerical workers - except for the 1989 split from the Labour which created the small New Labour Party and its development into the Alliance that became part of the Labour lead coalition between 1999 and 2002.

Political disenfranchisement of workers went hand in hand with de-unionisation from around 50% of workers in 1984 to less than 15% today. This explains the weakness of organised labour facing the centrist development of the Labour Party under Helen Clark. In fact the union leadership largely went along with the “Third Way” as that of balancing the power of employers and unions by state regulation and sharing increases in labour productivity. The growing inequality that resulted between the traditional working class constituency and the middle class ‘centre’ is the widening class division that runs through the Labour Party and explains the split between ‘right’ and ‘left’. It is the basis of the fight between the unions and working class membership to pull the party back to its traditional working class constituency from its middle class constituency.

The problem for the Labour Party however, is that the political centre is also the hunting ground of the Centre Right parties, in particular the National Party. Under conditions when the economy is expanding the middle class sharing in this growth, National prevails. Yet, even when the economy slumps and the middle class gets squeezed, it doesn’t follow that it will swing towards Labour. The global conditions for the rise of the middle class are changing. The first Labour Government enabled workers incomes to rise behind a protectionist economic policy. As long as the profits of  NZ manufacturers were protected from international finance capital, workers living standards benefited.

Today, 30 years after Rogernomics, manufacturing is integrated into the global economy only if it is competitive. This has deregulated and casualised the working class and made the middle class dependent on the global marketplace. The latter is fickle and only respects power and wealth. This is the legacy of Rogernomics and so long as Labour does not break with neo-liberalism it cannot serve the interests of the embattled, impoverished, working class. Neither can it win over those sections of the middle class whose incomes are being squeezed and now find themselves sinking back down into the working class.

Towards Socialism

We must use this defeat as an opportunity. The membership must reject the resurgence of the Right faction seeking revenge for the electoral loss. It was the Right that made it impossible for Cunliffe to take a consistent left line during the election. Cunliffe has responded to the Caucus majority's attempt to replace him without triggering a primary by resigning and nominating himself to set the primary process in motion. This is a victory for party democracy against Caucus domination of the party.

This is the time for the membership to mobilise the Party branches and the ranks of the unions and prevent Caucus insiders from gerrymandering the leadership vote. The revival of Labour as a party that professes loyalty to the working class would start with the Labour Left winning outright control of the party. Whether this is possible without a split depends on what happens to the Right faction. If Cunliffe wins then they should resign to form another party that better reflects their interests as part of the middle class campaigning for support in the 'centre ground'.

Labour has to turn its back on the neo-liberal consensus that has dominated politics since 1984. It has to put up an alternative program that the majority of workers in Aotearoa can support including the missing million voters. It would be a program to socialise the strategic industries, the banks and energy and resources. The Reserve Bank would manage the money supply by printing money backed by state owned assets to fund state spending on public works, infrastructure, housing, health, education and welfare. Resistance by the NZ ruling class and their US and Chinese imperialist backers would spur organised labour to build their own social institutions culminating in a Workers' Government.

A revived Labour Party would be based on workers democracy in community councils that unite the union ranks and local neighbourhoods along with activists from the Greens and Mana, and mobilising to fight the NACT dirty politics and attacks on labour rights; spying; fighting against climate change; providing decent health, housing, welfare and education. Strikes, occupations, self-help, bans, are the working class methods for collectively defending and demanding the labour rights, wages and conditions that we need. This would prove that it is possible to activate the disenfranchised and stop the stupid electoral rivalry that divides the left and allows the ruling class to rule. Workers democracy would ensure that workers interests were not high-jacked by bureaucrats, and that the Corporate Media was rendered powerless by workers own media and social media. A revitalised working class political culture would emerge based on speaking the truth and acting on the truth because it would incorporate the values of Labour against Capital.