National in Power PDF Print E-mail
Tuesday, 03 March 2009 11:37

Cory A

The National Party was elected last year in the midst of what looks to be the worst economic crisis since the Second World War.  

John Key compared his election to Barack Obama’s in the United States, saying New Zealand had voted for ‘change’.  But what changes will the National-led government bring?  A look at the history of the National Party can yield some clues to its current direction.

Origins of the National Party

The National Party was formed at the end of the Great Depression in 1936 through an alliance of the two major parties of the time – the United and Reform Parties.  Each left their stamp on the character of the new party.  The United Party was classically liberal, promoting democratic values and a commitment to business and the free market.  The rather inaptly named Reform Party was a conservative party popular amongst farmers.  Modelled on the Conservatives in Britain, it was initially formed to counter the Liberals.
The Great Depression, however, permanently changed the political landscape.  Popular discontent split the support of the United Party – urban businessmen and workers – as impoverished workers joined the new Labour Party in droves.  The rising threat of a Labour Party government led the old rivals in the United and Reform parties into a coalition government in 1931.   The pro-business policies of the United-Reform government, however, didn’t improve conditions for the working class, resulting in the election of Labour in 1931 on a tide of strikes and working class militancy, and the merger of the Reform and United Parties to form National soon after.
Labour remained in power until 1949, restructuring the economy, enlarging the state sector and effecting a more state-based capitalism.  While economic growth boomed after the Second World War, the National-led governments did little to alter the structure that Labour had put in place.  While economic stability lasted, National mostly continued with Labour’s economic policies and a conservative appeal, backed up when necessary by bipartisan anti-communism.

Economic Decline and Neo-liberalism

The prosperity of the post-war boom ended in 1976.  Recessions once again became a regular feature of capitalist society, and unemployment began to grow.  Keynesian policies of state intervention and demand management failed to stop stagnation and led only to increased inflation.  The National Party was divided over how to solve the crisis.   One section, under Muldoon, remained committed to Keynesian “Think Big” policies, while a growing chorus of academics and businessmen demanded a return to ‘neoclassical’ economic policies – privatization, deregulation, anti-unionism and budget cuts.  A group of the National Party MPs, including future Prime Minister Jim Bolger, attempted to topple Muldoon in 1980, but failed.
As the economy continued to stagnate, dissatisfaction in the working class at Muldoon’s economic mismanagement and visible impotency also grew, putting Labour back in power in 1984.  But being committed to maintaining capitalist profits, Labour turned on its own supporters and implemented the ‘neoliberal’ policies business had been calling for.
This gave National Party the green light to revise its policy.  It couldn’t allow itself to be beaten by Labour at its own game.  When National was re-elected in 1991 it was open slather against worker’s interests.  Unions were smashed, benefits slashed by 20%, state spending gutted and state-owned industries privatized, while taxes on the rich were lowered.  Student loans, under-funded hospitals, dysfunctional public transport, some of the lowest wages in the OECD and consumer debt are part of the enduring result.

The New National Government

Faced with a new economic crisis that will probably be deeper than any since the Great Depression, Western economies desperately need to restructure if they are to restore economic growth.  The state needs to spend more.  National claims its policies will lead through growth through spending on infrastructure (in particular roading and communications) and increased international trade.  But this itself is predicated on global economic growth – which isn’t happening.

More likely, the National Government will weakly mirror the policies implemented in the major economies overseas.  They’ll be pushed to do whatever leaders overseas are pushed to.  Hence Bill English’s economic ‘stimulus package’ and John Key’s references to Barack Obama.  In lieu of this, they’ll probably continue with more of the same policies that have sucked the life out of the working class – curtailed spending, flatter taxes, and attacks on unions and workers rights.  This is already foreshadowed by increased ACC levies (basically a flat tax on all employed people), changes to KiwiSaver that generally mean higher taxes for workers and the 90-day “fire-at-will” law.

Left to itself, National is unlikely to revive the economy.  Real economic growth requires growth in spending – and in the final assessment this means growth in wages.  National will never grant this no matter how much growth occurs.  Higher wages and increased spending on healthcare, education and transportation will have to be forced from them.  The economic crisis we face can never be defeated within the framework of capitalism, restructured or not.  At the end of the day, the constant threat of economic crisis will only be beaten when the profits of business are taken by the working class and shared for their common benefit.