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Archive of Communist Workers Group of Aoteaora/New Zealand up to 2006

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From Class Struggle 48 December 2002/January 2003

Argentina goes from IMF ‘show case’ of economic development to’ basket case’. Is the same fate in store for New Zealand/Aotearoa? Here we put forward some ideas in the hope of stimilating a debate on this question. We make some further comparisons with Australia and South Africa which have similar origins. The solution we come up with is for Socialist Federations of the Pacific, Latin America and Southern Africa! We welcome feedback from readers aboiut where they think New Zealand/Aotearoa is going.

Some History

Some basic facts: Argentina 40 million people. NZ 4 million people and 40 million sheep. Both settler semi-colonies; dependent development based on pastoral exports in 19th and early 20th centuries and post WW2 economic insulation. NZ’s competitive advantage is agricultural – dairy production, meat processing, woool –textiles etc. The semi-colonial problem is dependence on exports to maintain imports of primary and secondary manufactures. NZ’s development was limited to import-substitution secondary manufacturing (eg car assembly, whiteware, electronics etc to serve local market)

Argentina has competitive advantage in pastoral production. Its balance of payments problem was lessened by protection. Argentina was able to substitute some heavy manufacturing, such as steel, petrochemicals etc. But it never became a big regional exporter of these commodities. Argentina’s heavy industry was highly protected and uncompetitive. Thus Argentina’s dependent-development was somewhere between that of NZ (which did not substitute heavy industry) and South Africa and Australia (who produced cars, electronics etc for regional markets). We suggest that the limits to dependent-development in each case are set by the extent to which a country has competitive advantage in the manufacturing of heavy machinery (i.e. capital goods).

Semi-colonial development and crisis

Dependent-development reaches its fullest extent with the export of a limited range capital goods on the world economy. Yet competitive advantage exists only during the periods of boom and fails during recessions as regional markets contract and the small-scale economies and higher costs in the semi-colonies cannot sustain competition.

Enter the MNCs to concentrate and rationalise production globally. This has been the story of so-called globalisation. In SA and Australia, the biggest operations were internationalised. In SA most of the major industries are Multinationals. In Australia minerals (BHP) General Motors Holden/Ford etc have been globalised.


In the case of Argentina where capital goods production could be integrated profitably it survived. But most was not competitive so Argentina was de-industrialised and its import substitution capacity in heavy steel and petro-chemical industry lost. Thus import volumes rose. Import prices were reduced as the peso was pegged to the dollar, but export prices rose with the US dollar, so that overall the trade deficit increased. The balance of payments was plugged with IMF borrowing until this exceeded the capacity of exports to pay and debt mounted.

So the crisis of a re-colonised dependent economy means bankruptcy and devaluation of assets which are then sold off cheaply to multinationals and big banks. Argentina’s plight is that of all semi-colonial economies whose capacity to develop independently has been destroyed by globalisation. But the severity of the crisis is directly proportional to the depth of restructuring in the primary industry sector. How does NZ compare?

New Zealand compared

NZ’s primary sector always involved foreign investment through banks and loan agencies and the export of profits. In agriculture (dairy, meat, textiles etc) production depended heavily on imported capital, technology and machines. New Zealand never substituted for heavy industry except in isolated, exceptional cases (NZ Steel based on Iron sands).

Thus NZ was always exposed to chronic balance of payments crises. The postwar development of import substitution in secondary manufacturing for consumer goods was a weak attempt to solve the ongoing dependency of the economy. This insulation reached its limit as soon as protected industry outgrew the local market.

So, unlike SA, Australia or Argentina, the neo-liberal reversal was less deep because it affected only the post-war import substitution in the secondary sector of the economy. De-industrialisation did not hit primary production as it was already partiallly globalised. Pastoral production has always been technologically advanced, and continues to be so. The primary agricultural sector (e.g. meat, dairy, wool etc) has become more internationalised with the giant dairy monopoly Fonterra, now a multinational in its own right. The problem with this however is that little of the rent from agricultural value-added production is available for redistribution inside NZ but falls into the hands of international capital.

To complete the comparison, Argentina was able to insulate itself from extreme economic dependence by setting up internal capital goods manufacturing. In some ways similar to the situation in SA where apartheid was like the military dictatorship in regimenting social production based on super-exploitation. Like SA, when the crisis came in the early 90’s, Argentina fell further and was more severly affected by the neo-liberal crisis measures than Australia or NZ.


Argentina’s dependency, more like Australia and SA, is acute. Yet all these are relatively large economies with a broad resource base where there is the potential to resolve the crisis by socialising the economy. In Agentina the collapse of industry leaves the majority of the population out of work or underemployed. Half are under the poverty line. 20% are hungry or starving.

The most similar case is SA, and it is no accident that in Argentina the masses are frightened of becoming “Another Africa”. Like SA, nationalisation without compensation under workers’ control of the large businesses and banks is the way to revive the economy and feed the people. This has to become linked to revolutions in the rest of the region, to establish a Federation of Socialist Republics of Southern Africa, and of Latin America, to create potentially powerful regional socialist economies.

NZ’s dependency is chronic

NZ is in reality a tiny US and Australian dominated semi-colony. Its capitalist future will see it integrating with Australia as part of a larger US client state. Even that won’t buy much time for the bosses. Australia is in a similar position to Argentina. Marxism is not an exact science and predictions have to be reviewed constantly. But we would suggest Australia’s prospects over the next tens years are that it is likely to suffer a similar economic decline to Argentina.

If this is correct, NZ’s relation to Australia will see it sucked into this vortex. Therefore, workers in NZ must prepare to unite with Australian workers for the nationalisation under workers control of the assets of all the big banks and businesses and to socialise the economy as part of a Federation of Socialist Republics of the Pacific.

Written by raved

January 3, 2009 at 9:30 pm


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Mass protests against the proposed Free Trade Area of the Americas (FTAA) in Quebec in April continued the upsurge of the anti-globalisation coalition around the world. The target this time was the re-colonisation or ‘dollarisation’ of Latin America. We assess the prospects for turning this rising populist protest into a revolutionary movement.

Seattle, Washington, Davos, Prague, Melbourne, Nice, Quebecand the list goes on to Barcelona, Genoa and beyond. These are the locations of past or future anti-capitalist protests of meetings of the world’s rich organisations and clubs such as the WTO, IMF, and World Economic Forum. At every protest a coalition of left groups, greens, anarchists, populists, and NGO’s have joined forces with some elements of the unions to physically confront and attempt to prevent these meetings of the rich going ahead.

Quebec was the most recent. So what happened in Quebec that made a difference? The authorities put up a wire fence and succeeded in keeping the protesters away from the venue. But the media focused upon the protesters and not the agenda of the rich club. We learned that the purpose of the meeting of all the Finance Ministers of North and South America (except Cuba which does not meet the US definition of ‘democracy’) was to establish a Free Trade Area of the Americas or FTAA.

The FTAA is modeled on NAFTA which was set up in 1992 to link Mexico, Canada and the US in one common market. Since 1992 the effects of NAFTA are clear. Mexico and Canada have been re-colonised by the US. NAFTA allows US firms to take Mexican and Canadian Governments to court if they pass legislation that limits profits. For example Metalclad Corporation got US$16 million from the Mexican Government because it was not allowed to dispose of waste and cause a public health hazard! FTAA will be the same only more. Today the US has a 75% share of the economy of the Americas. Under the FTAA it will gain an even larger share. The whole of the America’s will now become “Amerika”.

This means that as the US turns of the screws by re-colonising the America’s the class struggle will also become united across “Amerika”. Workers in the North and South will now fight alongside one another in one big class, rather than be divided by nationalist politics which weakens and destroys all progessive movements.

Already there are numerous examples of the formation of anti-free trade union and NGO alliances in the Americas. The first Summit of the Peoples of the Americas was held in Santiago Chile in April 1998. Since then many networks and coalitions have been built. Recently a top level coalition the Hemispheric Social Alliance was formed. However, these forces are still mainly international alliances of national organisations.

This is the legacy of the nationalist reformist politics of the post-war period. On the Left the legacy has been to tail bourgeois nationalism. That is why the deadly patriotic front tradition of Stalinism, Maoism, and Guerillaism that accompanied the nationalist politics of the post-war period must now be countered by an increasingly internationalist struggle that has always at the centre of the Trotskyist movement. For not only is the FTAA an instrument for re-colonising the America, under the WTO, World Bank and other agreements, globalisation brings the same free trade regimes to Asia and Africa. The potential for a global anti-capitalist movement to fight to unite workers in many countries is now a real prospect.

This is a big happening. Most of the left has become caught up in the enthusiasm of this struggle. The SWP thinks it’s the biggest thing to hit the class struggle since the Vietnam War. The SWP has split from its sister organisation the ISO in the US because it claims the ISO does not recognise the importance of the anti-capitalist phenomenon.

The SWP thinks that this “new, new left” opens up the opportunity for a rapid regroupment of the left. To prove this is possible the SWP is having talks with the LCR in France, part of the International Secretariat, the main ‘Trotskyist tendency’. Both are prepared to ‘sideline’ their differences over the defence of the former SU and focus on the main tasks of today.

However, neither of these tendencies has a record of struggle that gives us confidence in their leadership of a new regroupment of the revolutionary left. They both have a history of jumping onto bandwagons and calling them new ‘vanguards’ to replace the traditional labour movement. The current bandwagon of the anti-capitalist movement is a ‘youth bandwagon’, which has come around several times before in the post-war period. Each time youth were backed as more revolutionary than workers. The most famous was the ‘new left’ of the 1960’s and 1970’s.

The ‘new left’ was more liberal than Marxist. Arising out of the post 1956 de-Stalinization it was a pacifist, humanist socialism, based mainly in the educated youth of the US and Europe. It protested the Vietnam War and rampant consumer capitalism, but it never joined forces with the conservative, established labour movement. Neither survived the austerity of the 1970’s nor the neo-liberal attacks of the 1980’s and 1990’s as a force for change. Some of the more colourful leaders of the new left became establishment figures but most dropped out of left politics.

If the new left failed to unite with workers and build a revolutionary party at a time when labour was relatively strong, what will the new new left achieve at a time when labour is weak, and the power of the US hegemonic apparatus is on the rise? The weakness of the old new left will be compounded by the absence of any strong labour movement and left politics to graft onto the new generation of youth who have no history of class struggle. As Trotsky said of the late 1930’s the crisis of capitalism is the crisis of revolutionary leadership. Today the crisis of capitalist globalisation is even more acutely the crisis of revolutionary leadership.

The class basis of resistance has to be re-created from the base up. The anti-capitalist bandwagon cannot side step rebuilding the labour unions by taking a cyberspace detour. Without the unions there is no ‘school for revolution’ (Trotsky). This is because only by fighting capital in the space of production is it possible to bring workers’ power to bear on capital.

Taking on the state machine on the streets and barricades can only win when workers control the military and state forces. This will not happen until workers build militia to defend their workplaces from strike breaking and state repression. Hyperreal fictions that reality is anywhere but production are scenarios for disaster.

So today as never before, the anti-capitalist movement needs revolutionary Marxist theory and practice. The new generations need to learn the lessons of successful revolutions and failed revolutions. That is why we have no confidence in the SWP or LCR as a new leadership. Both tendencies never learnt the lessons of the Bolsheviks and liquidated themselves as vanguard parties in the post-war period. The SWP rejected the defence of the SU the supreme test of Bolshevism. The IS rejected the working class vanguard for a number of non-worker vanguards. Neither can claim to even recognise the roots of their problems. So they cannot learn from their mistakes.

The basic lessons are:

class agency; class independence; and the democratic centralist party. Lets briefly define each of these.

  • Class Agency: only the working class can lead an anti-capitalist revolution. This is because the working class produces surplus-value and can use its power to stop production. Thus workers must build workplace organisations and united unions across international borders to control production.
  • Class Independence: the working class must lead all other oppressed classes (e.g. peasants) and groups (poor, unemployed, gay etc) in the struggle for socialism without making any concessions to the bourgeoisie or other hostile classes. The united front is counter-posed to the popular front.
  • Democratic centralist Party: the working class becomes an agency for revolution only when it is led by a revolutionary vanguard party organised on a democratic centralist basis. Democratic centralism in Lenin’s view allows the party to unite theory and practice in the struggle and constantly test its program for revolution.
  • Each of these lessons/principles of Bolshevism can be applied to the anti-capitalist movement today in the following way:

  • Class Agency: Many in the anti-capitalist movement do not see capitalism as about classes. They see it as a coalition of social movements that cut across classes. (e.g. the famous reference to the Zapatistas being viewed as gay, feminist, union, indigenous, black etc depending upon which aspect is identified with by any given social movement.) This pluralist concept of oppression/social movements has be critiqued by class analysis and a coalition built based upon working class leadership.
  • Class Independence: Working class independence becomes the basis for building the movement. Instead of confronting MNC capital at conventions and on the streets, workers should unite internationally to fight capitalism on the job. The target of free trade can then be replaced by the target of the MNC’s plants in a number of countries. Instead of entering popular or patriotic fronts (eg Mexico) to fight ‘free trade’ (which is only a symptom of the weakness of workers to reject low wages and conditions) international united fronts to win concessions from MNC’s in every country can be formed.
  • Democratic Centralist Party: Within the united fronts in which workers organisations take the lead, there has to be a no holds barred fight among revolutionary tendencies to create a revolutionary party on the model of the Bolshevik party. Patriotic frontists, reformists, nationalists, opportunists, ultralefts etc. have to be confronted and defeated in the struggles in the same way the Bolsheviks defeated the Mensheviks and ultralefts.
  • Turn the anti-capitalist movement into a
    Revolutionary Communist International!
    From Class Struggle, No 39 June-July 2001


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    Why read Capital they said.It’s unintelligible and boring. Besides Marxism is dead.Wouldn’t it be better to throw everything into the anti-capitalist movement against the WTO and big business?

    No we said. You should take Capital with you on demonstrations for something to read between police riots. It might have something to say about what kind of capitalism you should be anti. Besides it makes useful padding stuffed down your shorts.
    What, all three (or is it four) volumes?You could make a suit of armour out of them – six books in all.
    They thought we were joking but we said No never more serious. Marx said that we had to turn the idea of weapons into the weapon of ideas. You’re never better armed than with at least Volume 1 of Capital preferably the hardback edition.

    Vol 1 is the best weapon because this is where Marx brings out his heaviest ideas.This is where he explains that the origin of surplus value and profits is in the labour time of the working class. That is a powerful idea because it says outright that capitalism lives off the surplus-labour of the workers.

    It’s also a revolutionary idea which motivates us to go all the way to abolish wage labour and capitalist property and fight for socialism. There can be no half measures favoured by middle class greens and/or parliamentary cretins (to use Lenin’s term) bishops and social workers who are anti-bad capitalists and for kindly, caring ones.

    Then we add Vol 2 to our armoury.Marx shows that capitalism has to build up a huge banking and state apparatus including the cops and army just to keep the capitalists profits rolling in. So there’s no point just being anti- the World Bank or big governments because they are merely the paid lackeys of the giant MNC’s.

    The most powerful weapon of all is in Volume 3 where Marx proves that capitalism cannot survive without massive destructive crises that force the capitalists to destroy wealth, attack jobs and drive down workers’ living standards, health and life expectancy.

    So there is no way that capitalism can be tamed, humanised, reformed, prettified or Blairised.To survive the workers have to unite, fight back and take over the ownership and control of the global economy.

    If you don’t read Capital and understand it you won’t know this and your ideas will be those that the bosses pay to have drummed into you from childhood by your teachers, Hollywood, Rupert Murdoch, Tony O’Reilly and all.

    We are not pacifists. We read Capital every week at:

    Labour Forum, Avondale Community Centre. Mondays 7-30/9-30 pm. Next to Avondale Library, Rosebank Rd.

    From Class Struggle No 37 February-March 2001

    Written by raved

    August 27, 2007 at 9:43 pm

    What’s wrong with APEC? [February 1999]

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    The recent APEC meeting in Malaysia was notable for its failure to push free trade in the face of the so-called Asian crisis. Instead it got into a spat about “Asian values” and “human rights”. NZ’s Jenny Shipley joined with the US vice president Al Gore to attack Dr Mahathir’s jailing and prosecution of his former deputy Anwar Ibrahim. Since the US is the world’s worst offender on human rights, what really motivates Gore’s attack is Dr Mahathir’s retreat to economic nationalism to protect the Malaysian economy from the harmful effects of economic liberalisation. Yet neither free trade nor economic nationalism in any combination can end human rights abuses. Both are against the interests of workers. We explain why.

    APEC (Asian Pacific Economic Council) is widely seen to be a threat to workers everywhere. This is because APEC is designed to extend ‘free trade’ among the Asia Pacific states. Free trade is seen to be in the interest of the major powers and against the interests of the ‘developing’ states because it will drive down prices and wages in these states. It is also feared that APEC will reinforce regulations like the MAI that put severe limits on the ability of weaker states to protect and benefit from their own resources.

    The alternative is posed as economic nationalism – i.e. to reject ‘free trade’ and to regulate trade and capital flows for the national benefit. This means breaking from the model of APEC and following the example of China in tightly regulating Direct Foreign Investment (DFI). Malaysia is today seen as opting for this alternative after having its economy destabilised by volatile capital flows. Japan too has turned its back on demands to free up trade in timber and fish. In a recent article in the New Left Review #231, Robert Wade and Frank Veneroso argue that the Chinese model is now seen as the solution to the so-called “Asian Crisis” by insulating the region from the worst ravages of chaotic world capitalism. The Asian economies provide half of the world’s savings so they don’t need to agree to the destructive free trade policies of the IMF or World Bank in order to get funds.

    Like the Korean students we call for the IMF to get out! We are against IMF austerity and debt for equity measures as the means by which US capital gains control of semi-colonial and weaker imperialist economies. However, we do not see a retreat to economic nationalism as the real answer because it does not change the root cause of the problem – capitalism. We argue here that both free trade and protection are merely different ways of managing capitalism and that neither of these ‘alternatives’ is in the interests of workers. What we want is workers control and a planned economy that is integrated into an international socialist economy where production is for need and not profits.

    What’s wrong with free trade?

    The fear of free trade is well founded. The large protests that have met APEC meetings since its start, sure to continue in New Zealand in 1999 testify to this real fear. (See article on ‘APEC Security threatens democratic rights’). ‘Globalisation’ is the swear word that expresses this fear. Under the capitalist world economy, NAFTA, the WTO, MAI and APEC, are all designed to regulate super-exploitation and unequal exchange between the imperialist powers and the poor colonies and semi-colonies. Free trade under these rules disadvantages the poorer commodity producers who have almost no control over prices of exports or imports.

    What is produced is determined by competitive advantage under the ownership and control of MNCs. If costs are competitive DFI will flow in and super-profits will flow out. While this arrangement has the advantage of cutting costs of production, it also depresses living standards and expands the surplus population of unemployed or under-employed. Any attempt to deregulate or interfere with these arrangements will lead to punitive law suits for breach of contract, and/or economic sanctions, and ultimately political and military intervention. The fate of Iraq during and after the Gulf War is a good example.

    Is Economic Nationalism any better?

    Most of the left, especially the eco-left and the Maoist left, advocates national economic controls against free trade. That is, instead of the free reign of MNCs, nation states must impose social constraints on DFI and the extraction of profits. Usually this means some form of tax on DFI that can fund a social dividend to subsidise the social downside of globalisation.

    Despite its apparent progressive thrust, there are some clearly reactionary political aspects to this. Any attempt to appeal to nationalism against globalisation runs the risk of subordinating the working class to the national bourgeoisie. That is, it isolates workers in each country, separates and alienates them from their working class brothers and sisters in other countries, and gives priority to an alliance between workers and bosses in which bosses are dominant.

    Logically the downside of globalisation cannot be defeated by national solutions without reimposing trade and capital barriers that lead to trade wars and ultimately military confrontations in which workers kill workers.

    Second, this ‘solution’, unless it breaks free of the capitalist world economy, can be easily sucked back into the ‘new’ state form widely promoted as the ‘new middle’ (see ‘Who Runs the German Economy? Economist, November 21), the ‘third way’ or the ‘radical centre’ (See article on the ‘Smart, Wired, Zero Sum State’ in Class Struggle #24).

    Under this model the local state becomes a direct agent of globalisation, as the manager of investment, and of social control. Yet because the social fund available to correct the social downside cannot be more than a token contribution without raising taxes and driving out DFI, there is no real counter to the harmful effects of globalisation upon society.

    Workers internationalism

    So it seems that neither alternative can escape the effects of globalisation upon the masses of workers and peasants in the ‘less developed countries’ or those impoverished sections of society in the ‘developed’ world. The answer then must be to transform those progressive struggles to limit the negative impact of globalisation on local populations, into a successful transition to socialism.

    How to do this? First, we have to recognise that free trade is contradictory. It has both progressive and destructive aspects. The trick is to neutralise the destructive aspects by advancing the progressive aspects. Under the free reign of the MNCs, ownership and control is rapidly concentrated into the hands of a few powerful MNCs and their imperialist states. This amounts to a progressive ‘socialising’ of the means of production as the world economy becomes increasingly interdependent.

    In that sense the world economy becomes internationalised, and along with it, the working class. So while on the one hand MNCs that span a number of countries can attempt to evade attempts at nationalisation in any one country by capital flight, on the other, MNCs cannot evade a potentially powerful international labour movement if it is organised and united.

    Therefore instead of trying to break up MNCs by nationalising them in any one country, which can only lead to isolated struggles and defeats at the hands of sanctions and military offensives, it is important for the international labour movement to ‘socialise’ them further. This means giving up on the reformist idea that the capitalist state can be used in the transition to socialism, and taking up the idea that workers integrated into the global division of labour unite internationally to progressively ‘socialise’ these massive combines. By this we mean imposing the interests of labour onto the owners by extending workers control over production and planning. The solidarity that has emerged around the recent struggles of Korean workers and the Australian ‘wharfies’ is a sign of what could be possible once workers recognise that their strength in unity is must be turned into international solidarity.

    Progressive nationalism?

    This does not mean that some of the more progressive demands of economic nationalism should be junked. Privatised assets should be re-nationalised without compensation, and all state assets put under workers control. Similarly, progressive taxes on profits and speculation should be increased to fund social spending. Taxes on profitable industry rather than subsidies to unprofitable industry should be the basis for funding social spending. Where these social costs drive capital out of the country, capitalist property should be socialised and put under workers control.

    Such demands upon the capitalist nation state would meet with rejection by the capitalists on the grounds that they would destabilise the economy by threatening the rights of private property. That’s why to be successful these measures would require a much higher level of political organisation of workers capable of supporting a Workers’ Government based on workers militia. Moreover, the success of a Workers’ Government in any given country to resist attempts by imperialist states to smash it would depend upon the strength of the international workers movement and the capacity of workers in the imperialist countries to put a halt to such armed interventions.

    So whichever way you look at it, there can be no successful transition to socialism without overcoming the reactionary nationalisms that divide and rule the international working class, and putting the development of the progressive socialisation of the world economy that is rapidly occurring under globalisation, under workers’ control.

    NZ out of APEC!

    For Workers Internationalism!

    From Class Struggle, No 25, Dec 1998-Feb 1999

    Written by raved

    August 26, 2007 at 10:36 pm