We can do better than this

A dislike of capitalism is something that unites the partners in the new government. They believe it has done more harm than good. But what do they actually mean? And what is their alternative? Over the next three years we will find out and whether our lives can be better. 

Capitalism is a "blatant failure" when it comes to housing the poor - Jacinda Ardern.

"Far too many New Zealanders have come to view today's capitalism not as their friend but as their foe" Winston Peters.

"...free market capitalism is dead" James Shaw. 

If there is one thing that unites the leaders of the new Labour-led government, it is the belief that the version of capitalism currently on offer, often referred to as neoliberalism, is a failure.

It is important to be clear that none of them is saying that they are opposed to private ownership, profit, markets or competition. They are not talking about revolution. They are talking about the need to do something about the way capitalism currently operates because it has failed too many people. 

As new Prime Minister Jacinda Ardern puts it, "we can do better than this". 

The coalition leaders are not alone in their view. All over the world, the neoliberal version of capitalism is being questioned by people from across the political spectrum. The momentum for change is gathering. 

But, to date, change has not come. Neoliberalism staggers on. Partly because it still has the support of some very powerful interests and partly because no one seems to have a convincing alternative. More correctly, there is no progressive alternative that is at once credible, popular and implementable. 

That may be about to change. I say maybe, because the new government is only days old and has yet to provide a comprehensive statement about what they see as the alternative to neoliberalism. Each of the leaders has proposed policies that make it clear they want to move in another direction, but the story that binds everything together is still to be heard. 

When they are ready, the story could go something like this. 

The central problem with neoliberalism is its fondness for deregulation - "...a future in which dynamic entrepreneurs, unshackled from employment laws or social responsibilities, create new businesses and open new markets. Theirs is the future of extremes, where the rich get richer and the poor get poorer, and where the rewards for success are matched only by the risks of failure. Economically, it depends upon the unceasing drive for competitiveness through ever-cheaper production and the pursuit of short-term profit; socially, upon the reduction of public services and public spending; politically, on a logic of centralisation, destroying institutions that stand between law-making government and individual decisions in the marketplace: (1).

Sound familiar? It should because, during the 1980s and 1990s, successive Labour and National administrations put this kind of thinking into action as they deregulated the economy (mainly Labour) and rolled back the welfare state (mainly National).

There was justification for making these changes. In the middle part of the 20th century, New Zealand had a highly protected economy and a welfare state it could not afford. By the early 1980s, the country, in the colourful words of former Labour Prime Minister Mike Moore, was "stuffed". The policy fashion of the day, driven by former British Prime Minister Margaret Thatcher and former US President Ronald Reagan, called for deregulation. New Zealand governments were just doing what seemed necessary to create an economy and a society fit for the times. 

Deregulation was sold to the New Zealand public as not only necessary but also as the pathway to prosperity. From the vantage point of the early 21st century, we can see clear evidence that this was a false hope. Instead of prosperity, neoliberalism has given us an underperforming economy, inequality, social problems, environmental degradation and a pervasive sense that it is every person for themselves. 

As the years rolled by and the costs of neoliberalism mounted up, the question of who was going to deal with the fallout became the centre of political debate. Pollution? That is the environment's problem. Lack of housing? The poor and young will just have to lower their sights. Underinvestment in public services? Get on a waiting list. Not enough skilled labour? Complain that teachers do not understand the needs of employers. 

As for the loneliness, anxiety and depression that seems to accompany neoliberalism? Well, people will have to become more resilient, harden-up and realise that this is the way a modern society has to work. There is no alternative. 

Given the costs of neoliberalism, it is a miracle it lasted so long. That is has, is probably down to the belief that it was good for business. But even business is now sceptical about the virtues of a deregulated world that lurches from crisis to crisis and seems unable to generate the high-quality human and physical infrastructure that an economy needs. Business is relearning the fact that capitalism needs to be saved from itself. 

No wonder Jacinda Ardern thinks we can do better.

Once again it is important to emphasise that nothing the government is saying suggests that it are against capitalism. Markets do have benefits. The question is, what needs to be done to address the damage they cause when left to their own devices? It is a matter of getting balance right. 

I get the impression that if the government were to tell its story it would be based on the word investment and say, "Investors combine the ethics of community with the dynamics of a market economy. They believe that the extension of economic opportunity is not only the source of economic opportunity but also the basis of social justice. This demands strong social insitutions, strong families and strong communities which enable people and companies to grow, adapt and succeed. Investment in people is the top priority. Investors see security, not fear, as the basis for renewal. They argue we must engage with change - in the home or at work, in local government (and globally) - if we are to extend social justice" (2). The only thing to be added is that a sustainable environment must also be a priority. 

These are the kinds of words that make sense of Jacinda Ardern's insistence that the success of an economy cannot be judged by GDP alone. It is the state of the wider society (inclusive of culture, politics and the environment) that will tell us whether we are succeeding or not. 

One of the strengths of neoliberalism was (and is) that it appears to be simple. Markets rule, leave them alone to deliver the goods. The investment argument is not able to be so neatly packaged. It is not simple because the world is complex. It will, therefore, need explaining and that is where politics comes in. 

Over the coming term of government, it will be vital for Ardern, Peters and Shaw to tell a the compelling story that lies behind their policies. It would be a mistake to assume that the support for change expressed through the election result is underpinned by a shared understanding of what that meant. There are many points of view. Many people will want change but do not necessarily know how to get there. And there is the reality that significant interests cling to the neoliberal doctrine. 

The new government will do best if it can convince the majority of New Zealanders that there is a better way to deal with the stresses of a rapidly globalising world. They could talk of things like a new social contract and the importance of us moving on together in these challenging new times. 

This is not just a question of politics. There is a moral dimension to what the government is talking about. The way neoliberalism has divided people one from another is not in anyones interests. It is time to ask again, "What does it mean to be a New Zealander?" The answer is that we share a culture and beliefs that should make us want to pool some of our resources to ensure every New Zealander has a fair chance of succeeding. If this is accepted we will do better. 


Commission on Social Justice (1994) Social Justice: Strategies for national renewal. Vintage