[OPE-L] The Development of Capitalism in New Zealand: Towards a Marxist Analysis

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Tue Feb 20 2007 - 19:19:21 EST

You are correct, I didn't take a position. I didn't take a position because
due to unfortunate circumstances I never got to research it as it ought to
be researched and write a story about it as it ought to be told for my
audience, i.e. carefully convey the real meaning of what happened and how
people experienced that, good and bad. And usually I don't like to take a
position, unless I feel that I have inquired into it sufficiently. I used to
regard the New Zealand state as basically imperialist, but if I say that,
what does it mean? You have to explain specifically what it means,
what the implications are. Anybody can toss around labels, my job
is to understand what it really means.

I can sketch a few things though.

By the way, David Bedggood did publish a book, called "Rich and Poor in New
Zealand: a critique of class, politics and ideology" (1980) it was a
sociological Marxist primer. And he published a number of articles. But I
was a bit doubtful of his understanding of economics and history.


An "intermediate country" was a category acknowledged by the Communist
International in its resolutions (from around 1926 I think, see the volumes
edited by Jane Degras). An intermediate country would be a country that was
neither clearly a colony nor a semi-colony, nor clearly an imperialist
country, but transitional between them, i.e. a half-industrialised dependent
country. The central question was, in whose interests the state mainly
acted - local capitalists or foreign capitalists.

The classical Communist argument was, that the domination of the world
market by the rich countries largely blocked the development of poor
countries; an international division of labour emerged, in which the poor
countries could develop industrially or otherwise, only insofar as they
serviced the needs of the rich countries (agricultural and mineral exports
etc.). The local elite in poor countries was in cahoots with the elite in
rich countries, but otherwise had little interest in developing their own
country in a balanced way.

It was therefore held to be impossible for the poor countries to develop and
industrialise, or acquire independence, other than through a Communist
revolution and the conquest of state power by the local workers and
peasants. And if the imperialist states had carved up the world into
"spheres of influence", the corollary was, that all countries of the world
could be classified according to their place in these spheres of influence.

The phenomenon of imperialism/colonialism is an enormously complex topic
however, on which there is a very large literature, and what I read of it,
inclined me to "unorthodox" view of it. Lenin showed a shrewd political
insight into it, but some of his propositions about it cannot be sustained
in the light of the facts, and this is also welldocumented by economists and
historians. Different authors disagree about even the most basic concepts
involved (what is imperialism?) and they differ in terms of the questions
they ask, to which the concept of imperialism is supposed to be the answer.

Imperialism was originally simply a bourgeois descriptive concept, with the
positive connotation of spreading civilisation internationally, but it
acquired a critical, radical meaning from the time of Luxemburg and Lenin
onwards. It has both political and economic dimensions, but not only that -
it also has cultural and legal/ideological, and even psychological/spiritual
dimensions. In the wake of the colonial revolutions and decolonisation
process during and after world war 2, the concept fell into disrepute in
bourgeois circles, and indeed became counterproductive to foreign investment

Thus, the official line in the US is that "we aren't imperialist, because we
have no colonies and do not aspire to an empire". This of course is not a
very substantive argument from a Marxian point of view, insofar as legally
possessing colonies is not essential to the Marxian concept of imperialism.
The American state sees its international role as fostering healthy business
development in the world, and keep order, and therefore its foreign policy
can only be a force for good. Hence America has a natural right to intervene
in any nation in any way deemed appropriate. This gives rise to the leftist
notion of "empire" (Negri & Hardt).

Broadly, imperialism describes the "domination" of a country, a nation or a
people by another (or several others), asserted by economic, military,
political-legal, cultural or ideological means. The development of the
dominated society is therefore largely controlled or directed by the
dominating society, which sparks off political movements that seek
liberation from that domination and its ideological justifications, racist,
religious or otherwise. Capitalist imperialism is rooted in the quest for
market expansion, international business competition and the control over
strategic resources or territory, justified with more or less racist or
religious interpretations, theories of economic benefits, or arguments about
"civilising missions".

This brief definition may be unexceptionable, but the first problem you have
there is that Marx never systematically developed a theory of international
trade and international relations, although he wrote a considerable amount
about international relations (e.g. India, Ireland, the USA, Mexico...). His
viewpoint was often rather ambivalent, often very specifically oriented to
the circumstances of different countries, and sometimes ethnocentric -
imperialism was in his view both the source of gruesome oppression of
foreign peoples, and also a source of progress, insofar as it enabled
"modernisation", i.e. insofar as it eradicated obstacles to the development
of the "productive powers of labour" ("Produktivkrafte", a concept which he
borrowed from Adam Smith) and assisted the unification of the world. In the
Communist Manifesto he stated how "the bourgeoisie had to nestle everywhere"
in making new trading relations, and already in the Grundrisse he had
described how market expansion fostered an enormous amount of new social
relations and contacts among people the world over. However he did not yet
research the accumulation of capital on a world scale, talking rather
modestly about "'my sketch of the genesis of capitalism in Western Europe".


New Zealand was in some ways an exception that proved the rule. To borrow
from the blurb of Michael King's history, "New Zealand was the last country
in the world to be discovered and settled by humankind. It was also the
first to introduce full democracy. Between these events, and in the century
that followed the franchise, the movements and the conflicts of human
history have been played out more intensively and more rapidly in New
Zealand than anywhere else on Earth."

On 28 October 1835, the Declaration of Independence of New Zealand was
signed by a loose confederation of Maori tribes, organised by the British
resident James Busby. This document recognised Maori independence. Five
years later the Treaty of Waitangi was signed, which ceded the independence
(recognised by King William IV of the United Kingdom) of Maori to the
British Crown. New Zealand was originally a sub-colony of New South Wales,
but in 1841 it was created a colony in its own right. From the 1840s, New
Zealand was clearly a settler colony, importing all kinds of manufactures
and exporting farm products mainly to Britain (although a modest
manufacturing sector developed, even in the 19th century). There wasn't any
particular class structure at that time, and indeed the settlers (mainly
skilled workingclass people from the UK) had quite a strong egalitarian

Marx refers to Wakefield's theory of "systematic colonisation" and even many
of the streetnames for the four new settlements to be built were dreamt up
by architects and draughtsmen in Britain - the layout for the initial four
towns and many buildings was designed in Britain, and then built in New
Zealand. In the case of Christchurch, for example, the planned township
around the cathedral was accidentally sited on a swamp, so the swampland had
to be drained first, which they did.

But Wakefield's British theory (land to be purchased by the Crown from
Maori - whose title to their own land was formally recognised - and sold off
for a price at which settlers first had to do a lot of productive work,
before they could earn enough to own it) did not really work, simply because
the Crown was for a long time not in the position to exercise control over
land sales and private annexations, or enforce property rights rigorously
(limited self-government of New Zealand existed from 1852). And initially
the settlers (mainly men) were vastly outnumbered by the Maori tribes, who
were skilled fighters and eagerly adopted European technology and weaponry.

The "land wars" of the 1860s and 1870s which resulted, were not simply a
fight between white colonists and Maoris - they often involved conflicting
interests between the Crown, the settlers, and different Maori tribes (who
occasionally were also at loggerheads with each other). In some cases, the
Maoris defeated the British army in battle, or they defeated each other, or
they fought so hard the British retreated. Some controversy therefore
remained about who actually won the land wars. But, basically the Maori
tribes lost, especially in the sense that they lost more and more of their
land, whether through annexation or through dubious deals. The numbers
killed in the battles were not so great - but a lot more Maori died of
European diseases that were previously unknown, suggesting to many at the
time they would disappear or be completely assimilated.

By the 1890s, New Zealand was a fully self-governing country with its own
armed forces (previously local regiments had supported the British army),
although formally still a colony depending on a trading relationship with
Britain (imports of manufactures, exports of primary products). It
introduced the universal franchise (meaning women, who were no longer in
short supply, could vote) and important social legislation provided for
measures in public education, health, welfare and above all pensions,
funded primarily from taxes.

This was the era of autocratic Prime Minister Richard Seddon, known better
as "King Dick". Seddon was a strong supporter of the British Empire and
preferential trade between British colonies. He was also noted for his
support of New Zealand's own imperialist designs, and his hostility to the
Chinese. Seddon believed New Zealand should play a major role in the Pacific
Islands, as the "Britain of the South". He would have liked to conquer Fiji
and Samoa, but in the end, only the Cook Islands came under New Zealand's
control during his term in office (in 1901).

A French lefty called Metin wandered into New Zealand around that time, and
was astonished - he said, this is "socialism without doctrines" and he wrote
a book about it. The Webbs also paid a visit to this socialistic wonderland,
and the intellectual/parliamentarian William Pember Reeves waxed about
"state socialism in New Zealand". That was all exaggeration, an incipient
labour movement was only just growing up under the tutelage of a reformist
state, but nevertheless all this happened 50 years before Europeans thought
of the "welfare state" concept and suchlike. Real power was in the hands of
the local oligarchy and the propertied classes.

Mounted troops were sent off to the second Boer war in South Africa of
1899-1902, and at the outbreak of world war 1, the first thing the New
Zealand state did was to annex German Samoa. Next, New Zealand contributed
more than 100,000 troops and nurses to the imperial conflict, out of a
population of just over a million (42% of the soldiers were killed, and the
total casualty rate was 58%). It was during this time (1900-1914) that the
first socialist and syndicalist organisations appeared within New Zealand,
and the trade union movement began to grow strongly, particularly among mine
workers; a united Labour Party was formed in 1916 and a Marxian Association
was founded in 1918. There wer all kinds of radicalisms at that time.

In 1901 New Zealand did not ratify the Australian Constitution, and rejected
membership of the Australian Commonwealth. In 1907, New Zealand stopped
being a Crown Colony, and got British dominion status. In 1919 Prime
Minister Bill Massey co-signed the Treaty of Versailles giving New Zealand
membership of the League of Nations, indicating thereby that New Zealand did
have a degree of control over its foreign affairs. Massey like Seddon was
unequivocally an imperialist, and fervently supported the British Empire. In
1926, the Balfour Declaration formally gave New Zealand control over its own
foreign policy and military.

Significant changes came about in 1935 when a Labour government was elected,
which utilised the state apparatus to finance jobs for workers and
guaranteed prices for farmers (the real unemployment rate in the Great
depression was in the order of 25% of the workforce, and economic conditions
had been so bad even the old bourgeois parties wanted some state
intervention). The electoral system now favoured the working class. In terms
of its policies, the first Labour Government was the most left-wing social
democratic government anywhere in the world at the time, but it had also
completely reconciled itself to capitalism by then - very different from the
"glory days" of its foundation, when "the socialisation of the means of
production and exchange" was still seriously considered, plans were mooted
for land nationalisation etc. The great socialist speechifyer in the Labour
Party was Harry Holland, but he died in 1933.

The first Labour government had not heard much of Keynes, but they did
everything Keynes said you should do, and much more, and the economy
revived. The New Zealand Communist Party however advised in 1935 not to vote
Labour or screw up the ballot paper, because Stalin had trained them in the
idea that Labourites were "social fascists"... and their Comintern delegate
did not return in time for the 1935 election with the new "United Front
policy" from Moscow.

The military trend continued in world war 2, when 140,000 soldiers were sent
off to battle by the Labour Government, and about 12,000 were killed, the
Malayan Emergency and then the Korean war, where a volunteer force involved
about 3,700 soldiers (very few were killed, i.e. about 30). Since that time,
New Zealand troops (with many Maori serving) have been involved in numerous
international conflicts, often under the aegis of the UN but often in a more
minor supportive role.

The Statutes of Westminster 1946-47 allowed the New Zealand Parliament full
legislative powers, extra-territorial control of the New Zealand military
and legally separated the New Zealand Crown from the British Crown. In 1948,
the New Zealand Parliament passed the British Nationality and New Zealand
Citizenship Act 1948, changing New Zealand nationality law. From 1949 all
New Zealanders became "New Zealand citizens". However, New Zealanders
remained British subjects under New Zealand nationality law, until the
Citizenship Act 1977 came into force. In 1953 NZ stopped being a Dominion,
and became the Realm of New Zealand.
The Constitution Act 1986 removed any residual power of the United Kingdom
Parliament to legislate for New Zealand at its request and consent.

The post-war economic strategy in New Zealand (already starting during the
war) was one of promoting indigenous industrialisation, an internal market
for locally produced manufactured goods, through state incentives and
regulation, import and price controls, guaranteed prices, tariffs, deficit
financing and the like. The idea was basically to use a portion of earnings
from farm exports to stimulate a local manufacturing sector, shielded from
foreign competition, that would provide jobs for a growing urban working
class. The great intellectual defender of this strategy was William Ball
("Bill") Sutch, from 1951-1965 the secretary of the Department of Industries
and Commerce. It worked fairly well during the "long boom" of the 1950s and
1960s, even although the terms of trade for primary products tended to
decline (for each imported tractor, you had to produce more and more sheep,
cattle and dairy products etc.). In fact, unemployment fell to near-zero,
meaning that employers competed for employees, and that wages strongly
increased, causing considerable "featherbedding" and absenteeism.

The "golden years" came to an end in 1973 - Britain joined the EEC, there
was a recession, profitability fell sharply, and Keynesian pump-priming
mainly had the effect that producers raised their product prices - that led,
with an "investment strike" from about 1977, to stagflation and sharply
rising unemployment. This caused a lot of workers' strikes and industrial
disputes for a whole decade.  The Muldoon government tried to combat this by
increasing state controls and by ambitious state-led industrial investment
projects to develop natural resources (the "Think Big" projects), financed
by foreign loans and joint-ventures. However the projects did not create the
jobs promised, and their costs escalated. Muldoon was a shrewd politician,
and he introduced many state policies to keep his voter base (including a
state-funded universal superannuation scheme) but his authoritarian style
eventually alienated the middle class and a lot of workers. By 1983, there
was a rent freeze, a price freeze and a wage freeze, the economy stagnated,
and the public debt had grown considerably.

The Labour Government (the fourth) ousting Muldoon in 1984 then embarked on
the most radical neo-liberal shock therapy in the OECD, deregulating and
privatising everything in sight following IMF guidelines, abolishing most
subsidies, and completely overhauling central and local government
functioning, with full support of the big corporations that had emerged in
the previous decades, and an important part of the urban middle class, who
made big profits from it. In addition, they completely overhauled industrial
relations legislation to wreck union power. This was called "Rogernomics",
and it went into history as the "Silent Revolution" (Colin James's term). It
was silent insofar as the amount of protest against it was very limited,
stifled and rather incoherent. It wasn't a real revolution, insofar as the
elites stayed where they were and got richer (many parliamentarians also
became millionaires), but the cultural changes were enormous. Marketisation
continued under subsequent governments, who negotiated more free-trade
agreements, for example with Thailand and Singapore, Brunei and Chile. More
such deals are in the making with China, Malaysia, Hong Kong and some Gulf

The effect so far was basically that 1/3 of society was better off, and 2/3
of society were worse off. A gigantic transfer of income took place from the
poor to the rich, and from New Zealand workers to foreign investors.

Real wages declined absolutely, and then stabilised at a lower level, partly
compensated for by imports of cheap consumer articles (cars, furnishings,
appliances etc.) from East Asia etc. Real GDP growth stayed at 0-2% level.
Public debt was reduced, but private debt (corporate debt and household
debt) increased astronomically. The average household's debt is now close to
160 per cent of annual disposable income, and debt servicing now takes up 12
per cent of disposable income. That debt is owed mostly to foreigners. Total
debt to foreigners is about 87 per cent of GDP. The current account balance
is about 9 per cent of GDP in deficit. The private banking system is now
owned/controlled mainly from Australia.

Foreign direct investment (FDI) assets have risen about 700% since 1989
(mostly takeovers, not newly established enterprises), and in most of the
main branches of economic activity, the big companies are now all
foreign-owned or controlled. They employ about a fifth of the workforce. The
foreign owners reinvest only about a third or so of their profits in New
Zealand.  In rough order of importance, the main foreign owners are
Australia, USA, UK, Singapore, Japan, Netherlands, Hong Kong, Germany,
Switzerland and Italy. Foreign owners now control 40-50% of the share
market. Foreign-owned land in New Zealand now takes up a million hectares,
or about 7% of the commercially productive land area, including a lot of
commercial forest and farm land. Foreigners buy up land in scenic spots and
build mansions and hobby farms on them, or golf courses etc. New Zealanders
are supposed to be glad that foreigners are willing to invest, but many do
like it much.


It is this contemporary situation which shapes the current debates about
"New Zealand as a nation", "re-colonialisation", "imperialism" and so forth.
The petty bourgeoisie and the new middle class are often very proud of New
Zealand as a nation, and of "kiwi ingenuity", they write about it, and there
is much more of a market these days for indigenous cultural products if you
have the money. But the working class is very concerned about where the
money is going to come from, since a lot of their lifestyle is based to a
large extent on credit, and their fixed costs rise while their wages don't -
bank fees and interest charges, telephone bills, power charges, rates,
rents, necessaries etc. If you get lucky, you own a house or a mortgage on
it, in which case you have an appreciating asset. Or you have a job that
pays well. If not, you might have to hustle. There is a lot more hustling,
swindling, corruption and screwing money these days. Being unemployed in New
Zealand has not much point, unless you have kids, you're better off in
Australia. Paradoxically the newfound "nationhood" (also blaring through in
media propaganda) combines with one of the most purely capitalist,
globalised economies in the world - really, New Zealand is more cosmopolitan
than it was ever before, more attuned and sensitive to international trends
than ever before. At the same time, it is very impressive how New Zealanders
have humanly coped with economic adversity, and made the best of it.

How the political debate will evolve depends partly on the state of the
world economy. If there was a serious international recession for example,
New Zealand is very vulnerable and would feel the effect immediately and
severely, because there are few buffers in the society anymore against
external shocks. On the one hand, one imagines there would be a frenetic
spate of buyouts, on the other hand there would be a strong protest from
local people whose lives are stuffed up, and who cannot emigrate. The New
Zealand government aims to keep everything going, through promoting clever
trading, and through promoting New Zealand as a country to do business in.
It is hoped, for instance, that through closer economic relations with East
Asia many problems can be prevented or resolved.

But how the debate will go, also depends on the ongoing cultural
controversies and on political organisation. The Labour Party, originally a
broad, democratic workingclass party, mutated into a middleclass bureaucracy
which really "screwed" the New Zealand working class over with its policies.
The working class in New Zealand nowadays has no political representation.
The mass political parties there are, are the parties of the wealthy (except
perhaps the Alliance Party). Some critics feel New Zealand sold off its
birthright as an independent nation for a mess of pottage, and see the
clever "kiwi kulchur" marketing as just a facade. At any rate, New Zealand
is slowly becoming "Asianized" and "Pacificised", meaning also people are
less open about what they really think and feel.

One New Zealander suggested to me: "really we have come full circle; we
started out as a part of New South Wales, and that's exactly where we
are going".


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