Neoliberal Labour Governments and the Union Response

The Politics of the End of Labourism

J. Schulman

• Publisher: Palgrave Macmillan
• Year: 2015
• ISBN:
  9781137303172
• Topic: Politics & International Relations
• Subtopic: Comparative Politics
• Index: Politics & International Relations

A cross-country comparison of recent Labour Party governments in New Zealand, Britain, and Australia, and an exploration of how those countries' labour movements responded to their parties' neoliberal policies in power.

1

Introduction: The Transformation of Social Democratic Parties

Gerassimos Moschonas, the author of In the Name of Social Democracy, has argued that although the social democratic and labour parties of Europe were founded with the intention of transforming capitalism, their success in doing so pales in comparison to how capitalism has transformed social democracy.¹ This is indeed the case, not merely for the European social democratic parties but for their Australasian counterparts. It is rarely a surprise when parties of the right enthusiastically embrace neoliberal, market-oriented economic policies. But for parties of the left to do so, not merely as concessions in the face of objective economic conditions but at the ideological, programmatic level, indicates that a dramatic change has taken place within social democracy in general—indeed, a change in social democracy’s very ‘essence’. The question is, why has this occurred?

Over the last 25 years, virtually all social democratic parties have presided over some degree of market deregulation, commercialization, and privatization of the public sector, and at least the piecemeal implementation of welfare-state retrenchment. One might expect working-class parties, even ones with fairly autocratic internal lives, to be largely immune from an intellectual, ideological embrace of neoliberal doctrine. Workers and union leaders tend not to demand that austerity measures be imposed upon themselves. Yet social democratic parties have hardly inoculated themselves and are increasingly led by advocates of the free market, deregulation, and privatization. Social democratic parties have generally made no concerted effort to find alternatives to neoliberalism—their role in government in recent decades has been, at best, to slightly dull the sharpest edges of the market. This has been true both for the continental European social democratic parties and for the union-based labour parties of Britain, Australia, and New Zealand. In the case of the New Zealand Labour government of 1984–90 and the British Labour government of 1997–2007, the shift at the macroeconomic level has involved a radical refutation of traditional left policies. A similar shift also occurred in Australia under Labor governments between 1983 and 1996, but it was less radical and was accompanied by some renovation of the welfare state. Various explanations for this dramatic change have been offered.

Explanations

Globalization

The dominant explanation for the end of national Keynesianism and welfare-state retrenchment, whether under a party of the right or left, comes from the comparative political economy literature, which commonly argues that the globalized capitalist economy is universally forcing economic convergence. The culprit is the internationalization of goods-producing capital and rising public debt, which affects many countries but made small, export-oriented states—such as New Zealand in the early 1980s—particularly vulnerable.² The ‘wage-earner’ model of the welfare state, based in protectionism and common to both New Zealand and Australia, could no longer stand the pressures of a changing international economy.³

Yet the diverging records of the New Zealand and Australian labour parties, among other parties of the left worldwide, show that globalization does not dictate a uniform response. Differing state and union structures—in the case of Australia, a more effective collective bargaining arena and a more centralized labour movement—made the establishment of corporatist structures, the expansion of the social wage, and the redistribution of an expanded employment base possible. Changes were negotiated and more gradual than in New Zealand.⁴ In the Scandinavian countries, with their centralized bargaining arrangements, as well, it was possible for social democratic governments to resist significant rollbacks until the advent of a severe employment crisis, and even then it has been difficult to roll back entitlements drastically.⁵

It is hardly the position of this author that globalization is irrelevant. But as Pierson says, ‘Simple versions of the globalization story flatten national differences. If globalization creates a set of overriding imperatives, national characteristics decline in significance.’⁶ Moreover, national politics declines in significance. To follow such logic is to miss the real dynamics at work—the dynamics of class politics inside each country, and even inside each country’s main left-wing party, and how these affect national responses to the global economy.

The shrinking proletariat

The shift of social democratic parties to the right is often explained with reference to the shrinking of the traditional, industrial working class. Perhaps the most important theorist to discuss what the lack of a majority industrial working-class means for social democracy is Adam Przeworski. Przeworski asserts that the working class has always been a minority in society. The working class consists of ‘manual workers employed in mining, manufacturing, construction, transport, and sometimes agriculture’, and at no point has this section of the population ever surpassed 50 per cent in any country.⁷ This definition is certainly narrower than the traditional Marxist definition of the working class or proletariat, which consists of all of those who must sell their labour power in order to survive and obtain an income for themselves and their families. Such an extended definition incorporates white-collar, salaried employees and blue-collar labourers. Yet white-collar workers, Przeworski notes, ‘neither act as proletarians nor think like proletarians’.⁸ Salaried employees have not identified as working class and hence have frustrated Marxist predictions.⁹ Craftsmen, small merchants, and peasants did not become productive manual workers and hence did not become easily ‘captured’ by social democratic appeals. Instead, they were ‘transformed into a variety of groups the status of which is theoretically ambiguous … nonmanual workers, ouvriers intellectuals, service workers, technicians, “the new middle classes” ’.¹⁰

Przeworski argues that, to win elections, social democrats were forced to appeal beyond their core base of industrial workers to potential middle-class allies. As a result, from a movement to do away with capitalism entirely, social democracy changed into a party committed to nothing more radical than political democracy and ‘the pursuit of efficiency, employment, and equality—a second best and the best that was possible’.¹¹ The lack of a proletarian majority made such a shift objectively necessary, lest social democracy be permanently excluded from political power. Moreover, the share of the electorate that consists of industrial workers has continued to shrink since 1960, so rapidly that ‘we now speak of “deindustrialization” ’.¹² As a result, in order to govern, social democratic parties must appeal to ‘middle-class values’ and stress social issues to the exclusion of class.¹³ The implication is that the economic programmes of social democratic parties must move to the right and become more pro-market.

It is true that the industrial working class has never constituted a majority of the population in any advanced capitalist society. It is also true that all social democratic parties have been forced to respond to deindustrialization and the corresponding drop in the blue-collar workforce. Much of this new work—in food and catering, health, and business and information services—has been ‘beyond the established reach of the labour movement and its cultures and institutions’.¹⁴ The impact of post-Fordism—characterized by flexible working patterns, new management techniques, and the decline of primary industries—has led to a loss in the collective strength of workers via the weakening of their unions.¹⁵ (In Britain, deindustrialization was a deliberate strategy of Margaret Thatcher’s Conservative government—a means by which to break the unions.¹⁶) By the early 1980s, the New Zealand Labour Party (NZLP) found its core working-class vote to be concentrated in urban districts, particularly in low-income areas; in the more multi-class suburban and hinterland districts, the National Party held the advantage.¹⁷ According to the logic of the shrinking working-class argument, the ever-smaller number of real workers in New Zealand is the primary reason for Labour’s shift to the right. In order to retain office, Labour had to enact market-friendly policies in order to ensure the vote of affluent business and professional people in marginal districts that would otherwise go to the newly formed, free-market NZLP.¹⁸ The Australian Labor Party (ALP) and New Labour in Britain have simply acted according to the same logic.

However, there is no evidence that the shrinking of the industrial working class correlates with the electoral history of the left. The real problem that many social democratic parties have had has been one of the loss of the allegiance of their traditional core constituency, not the shrinking of that core constituency.¹⁹ Moreover, the minority status of industrial workers does not automatically require social democratic parties to turn against their traditional policies. There has long been a constituency for social democracy among salaried employees, who benefit substantially from welfare-state policies, particularly if they are universally available.²⁰ In Sweden, there has long been strong white-collar worker support for the welfare state; indeed, in the middle of the twentieth century, the traditional working class allied with the emerging white-collar sectors to form a coalition in support of the welfare state. With white-collar support, the Swedish Social Democratic Party remained committed to expanding and improving welfare-state services throughout the 1980s and early 1990s.²¹ Seeking the white-collar vote, then, does not automatically equate with moving rightwards on economic policy.

It is notable that in New Zealand the Labour Party’s policies in power did not reflect the programme that it ran on in 1984. That programme gave the impression that a new Labour government would be as economically interventionist as the right-wing National government that preceded it. There was no visible indication that Labour was planning on implementing radical neoliberal policies far to the right of the National programme; there was no public programmatic shift of the sort that is ostensibly necessary in order to attract the middle-class vote. Moreover, the shrinking working-class argument does not explain why labour and social democratic parties have made appeals not only to the middle strata but to big business. For example, the support of business was an important element in New Zealand Labour’s election in 1984. The party leadership had carried out considerable lobbying of business, much as Tony Blair’s New Labour would later do. In 1985–86, it went so far as to appoint ideologically right-wing businessmen to the boards of state-owned enterprises, the Bank of New Zealand and the Reserve Bank.²² The ALP also courted the business community in the run-up to the 1983 election, though its administration of retrenchment was quite restrained in comparison to that of its New Zealand counterpart. It is not at all clear why a shrinking industrial proletariat makes this sort of appeal to capitalists—themselves a far smaller minority of the population—objectively necessary.

The culture shift and decline of the relevance of class

Some scholars have explained the shifting politics of social democratic parties as a result of the increasing importance of non-economic, or not directly economic, issues. In New Zealand, for example, by the late 1960s, economic concerns became increasingly displaced by foreign policy (the Vietnam War in particular), environmentalism (reflected by the creation of the Values Party in 1970), Maori rights, feminism, and gay and lesbian rights. Such issues fit into the postmaterialist paradigm that has supposedly supplanted the old, predominantly class-centred mass politics, as posited by Inglehart. At high levels of economic development, public support for traditional leftist economic policies diminishes, and political conflict based on social class is replaced by cleavages based on non-material values.²³ With the abandonment of class politics, presumably, comes the end of the growth of the welfare state and even its retrenchment, not to mention market deregulation and pro-market reform of the public sector.

In the case of New Zealand, it is true that the bipartisan ‘liberal social democratic consensus’ was broken in the late 1960s by ‘a series of highly emotional non-economic issues’.²⁴ And while some of the more radical participants in these movements joined the Values Party—the world’s first green party—or remained in direct-action pressure groups, the more mainstream and ambitious activists joined the Labour Party, thereby leading to a change in the party’s class composition. Some Labour members from this generation who later opposed the government’s neoliberal programme said nothing against that programme because they wanted to avoid damaging Prime Minister David Lange’s campaign against nuclear power.²⁵ The new politics thus took precedence over the old politics. And it is also true that New Labour in Britain has appealed to what might be called the postmaterialist constituency: an examination of Labour Party manifestos in the 1990s shows a declining percentage of references to social class and an increasing percentage of references to postmaterialist issues. For example, by 1997, there were 44 references to environmental protection in the Labour Party’s Election Manifesto, but none to socialism.²⁶

But other research defies the thesis of a generalized decline in class-based voting in the advanced industrial world, putting much of the postmaterialist paradigm into question. Bean argues that, given a sufficient sample size and regional coverage, one can determine that ‘there has been a decline in class voting in New Zealand since the 1960s’, but he acknowledges that ‘social class remained the socio-political cleavage, albeit in a milder form, into the 1980s’.²⁷ For New Zealand in particular, in his multi-country study of 1994, Lijphart sees only the socioeconomic class cleavage operating in New Zealand; Barker and McLeay found that voters still overwhelmingly chose political parties based principally on socioeconomic issues in the 1996 and 1999 elections; Boston, Levine, McLeay, and Roberts also believe that Labour and National ‘still derive their distinctiveness primarily from socio-economic and related issues’; and just over half of the respondents to Brechtel and Kaiser’s survey of experts in 1997 classified New Zealand politics as unidimensional, with the survey as a whole giving the left–right dimension a ranking of 4 out of 5 (i.e. high) on a scale of relevance.²⁸ Evans argues that only in Scandinavia, Norway in particular, is there ‘consistent and robust evidence of declining class-vote relations … generic theories of the decline of class voting and class politics in industrialized societies are empirically unsupported, as by extension are theories that claim that all social structural bases to politics are in decline’.²⁹ Ironically, beginning in the 1970s, a populist-sounding, state-interventionist National Party under the leadership of Robert Muldoon was able to win over traditional Labour voters—the party of the New Zealand right won over workers by appealing to their class interests.³⁰ Subsequently, even if Labour was obtaining a smaller proportion of its votes from its traditional base by the 1980s, even if 36 per cent of manual worker trade unionists in three Auckland electorates had not voted Labour for three consecutive elections, and even though the party increased its support among the middle class, most of the working class still voted for the Labour Party in the 1984 election.³¹ Even when Labour lost older working-class voters to the ...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Acknowledgements
• 1. Introduction: The Transformation of Social Democratic Parties
• 2. The New Zealand Labour Party
• 3. The British Labour Party
• 4. The Australian Labor Party
• Conclusion
• Notes
• Bibliography
• Index