For workers around the world, May Day is not just a statutory holiday. It represents over a century of hard won rights, rights that in most cases were won in the face of considerable structural and political odds. It is also a reminder that without vigilance, solidarity and organisation, those rights can be lost in the blink of a legislative (if “democratic”) Â or blinkered dictatorial eye. Â New Zealand is an exemplary case in point, with the legacy of the Chilean-dictatorship inspired Employment Contracts Act still strongly felt in the labour market (and likely to be felt even more so if the National government is able to undertake its proposed reforms of current employment law).
Less people think I am exaggerating about the Chilean connection to the 1991 ECA, let it be noted that its inspiration was the 1979 Plan Laboral (Labour Plan) imposed by executive fiat on Chileans by the Pincohet regime. The author of the Plan, Jose “Pepe” Pineda, was a frequent guest of Roger Douglas and the Business Roundtable in the 1980s and 1990s, and his framework for acheiving what is known as “enforced” or “atomizing” pluralism in the labour market is the essence of the ECA (and one that was not completely undone by the 1999 Employment Relations Act). Atomizing pluralism is the forced decentralization of collective bargaining at the lowest productive levels. It mandates a mix of individual and collective contracts and the multiplication of bargaining agents on the shop floor. The stated intent is to achieve “labour market flexibility,” but the real intent is to destroy the union movement as an effective economic and political agent of the working classes by forcibly dividing worker representation. This has been achieved in New Zealand.
In a book co-authored with Kate Nicholls titled “Labour Markets in Small Open Democracies” (Palgrave MacMillan 2003) I compared labour movement responses to the double impact of globalization of production and market-oriented reforms (including labour market reform) in Australia, Chile, Ireland, New Zealand and Uruguay after 1990. We paired the cases based upon their similar location on the global production chain (Australia and Chile, New Zealand and Uruguay, with Ireland as an extra-regional outlier that served as a quasi-control variable). Among other things we found that the single most important factor that allowed the labour movement to resist attempts to reduce or break its collective power in the face of the dual threat posed by market globalization and neo-liberal inspired macroeconomic reform was ideological unity and independence from working class based political parties.
Let me rephrase that: ideological unity and independence  are the key to labour movement success in a market-driven age. Thus, Australian and Uruguayan unions, rooted in a strong blue collar ethos, ideologically unified and independent from Leftist parties, retained a considerable capacity to thwart the most noxious of labour market reform prescriptions such as enforced shopfloor pluralism. Conversely, Chilean and Kiwi unions, subordinate to the interests of Left parties and ideologically divided amongst themselves, were powerless to stop market-driven reforms, especially when those reforms were pushed by Left-centre governments they helped elect and in which former union bureaucrats held official positions. Successful betrayal of working class principles in favour of pro-capitalist reforms by the political Left in power was due, more than anything else, to the subordinate status of the union movement relative to the political Left. The political ambitions of professional politicians and union bureaucrats took precedence over the material interests of the rank and file, and the result was a relative decline in union fortunes.
There is more to the story, to include the impact of a working class debt culture and the role of popular diversions in eroding working class solidarity. But  the cautionary tale on this day is that workers need to remember that their political representatives on the Left should work for them, rather than the other way around. Contrary to Leninist principles of party vanguardism where the Party dominates the union movement, the union movement needs to control the Party if it is to be a genuine agent of working class interests. In this age of globalization in which the class “enemy” is diversified, flexible and fluid, social movement unionism and labour internationalism needs to be coupled with a reassertion of grassroots representation in union leaderships, which  in turn must lead to a reassertion of union authority within Left political parties. The stakes are simply too high for workers to allow union apparatchiks and party bosses to determine their fortunes for them.
UNITE is an example of such a new union. The NDU is known to retain a sense of responsibility to the rank and file, Beyond that, the New Zealand labour movement obeys the iron law of oligarchy, whereby the first duty of the organisation is to preserve itself, which means in practice that the interests of the agents rather than the principles is what comes first.
On this May Day, confronted by a Centre Right government after 8 years of sold-out Labour rule, it may be a time for the intellectual Left as well as workers to reflect on these issues in order to effectively confront (if not reverse) the adverse tide into which they have been headed for nearly twenty years. Or as Lenin put it: “What is to be Done?”
PS: I have previously made comments along these lines in the comment thread on Anita’s earlier post titled “Worker Organized Resistance.” For those who have read it my apologies for the overlap.
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Hayek’s theories which is what Douglas was after in Argentina, are extremely reasonable. Commanding Heights from PBS is well worth watching to understand all of that.
If they’re less than perfectly implemented that’s not the fault of the theory.
The basis is market efficiency – stable and automatic price setting, low inflation, small stable govt. There is heavy reliance on well designed regulations and this is where sometimes idiots get it wrong: for example, in the leaky homes saga by permitting untanalised timber and unsuitable architecture to be used. Ever. I mean duh. Another example is in the taxi-deregulation, which hasn’t prevented the violent behaviour of some drivers. Again, duh.
Poorly implemented models include Bradford’s electricity reforms. Well implemented models include the telecom environment.
Another critical aspect of the model is living within one’s means.
All of this is entirely reasonable and is why Labour didn’t change it.
My question is, if the model is well implemented so to create a benign employment environment where everybody who wants to participates equally can do so, which is what we’ve always had, why then are Unions considered so necessary?
I mean, what value did they add that wouldn’t have been added anyway, all throughout Labour’s last term?
Actually reid, the problem with using the Chilean (not Argentine) model is that it was imposed by force by a dictatorship that killed and imprisoned its opponents. For a democracy to use such a model is dubious (I am speaking here solely about the labour market “flexibilization” aspect). Even Hayek would agree on that count, although Milton Friedman and Arnold Harberger (especially) were both willing accomplices in the unwilling imposition of their theory on the Chilean population (in fact Harberger was a paid consultant of the dictatorship). I happened to be studying at Chicago when these two individuals were at the height of their influence, and lets just say that there open disdain for different opinions or the give and take of democracy was palpable in and out of the classroom. Harberger, in particular was a nasty piece of work.
If the market-oriented theories can be discussed, debated and ratified by the electorate using standard democratic mechanisms of voice and redress, then I have no problem accepting them. But if they are imposed rather than popularly ratified, then their legitimacy is questionable.
My broader point is that all subordinate group collective action, class based or not, needs to retain the “principles (or rank and file) first” approach so as to prevent their agents and allied political parties from deviating from core membership interests so as to pursue and perpetuate their own. That, to me, was Labour’s worst sin (as a supposedly worker-based party).
OK, but how is the fact it was implemented in the context of a political dictatorship relevant to the efficacy of the theory?
If they don’t remove democratic rights or degrade living standards, what’s the problem?
The last nine years were not the Labour Party years they were Helen Clark’s Party years. Now it’s Phil Goff’s Party. Neither person has the integrity of Moore, Palmer or Lange, who all at various times faithfully attempted to recover real Labour roots.
I regarded the 5th Labour govt as venal when it was in power. I personally think it serviced the Unions not because it believed it was right but only because it was it was a very large natural ally.
reid: The Pinochet (and other) dictatorship (s) provided Friedman, Harberger and their students with a perfect laboratory setting–no opposition to worry about (jailed or dead), no strikes, no protests, no debate (all prohibited by law and punishable by death). In such enforced silence any economic program can work, at least for a while. The problem is that in a democracy people have a right to all of the above, and economists need to consider the impact of these externalities when calculating the relative efficiency of their models. To this day, few do.
As for the 5th Labour government, I tend to agree with you. I was personally attacked by the PM and her minions (although not Phil Goff, who I actually consider to be a talented and reasonable fellow) over the Zaoui case and my criticism of the NZSIS. Those attacks included HC openly questioning why I should be employed in NZ academia. Unfortunately, that became part of the backdrop to my forced departure from NZ once my academic employer unjustifiably terminated my services because of a well publicised indiscretion (one that, I might add, was not the real reason for the dismissal–it was just the excuse). There has been speculation as to whether the government or external agents in contact with the government influenced that outcome, to which I can only say that it would come as no surprise to me if such were the case.
I say this simply to note that I have personal reasons to believe that all was not kosher at the top of the Labour Party during the last nine years. On the other hand, I have little faith that the ethical standards of the current government will be much of an improvement, which is another reason why workers and other subordinate group members need to reclaim control over their collective agents.
One could argue that with stronger unions and with a government more cognisant of their right to represent workers effectively throughout the 1990’s – we would have allowed the minimum wage to increase, maintained apprenticeships, re-trained workers laid off and focused company tax cuts on encouraging reinvestmemt back into the business.
Instead the model chosen allowed downward pressure on wages, less responsibility from the company towards workers, and an absolute focus on either shareholder value and or profits paid out in dividends. All without noticeable improvement in productivity (lack of reinvestment or upskilling of the workforce).
Yeah but who cares about where it was tried first in the context of NZ? We haven’t lost any democratic freedoms, no-one has been imprisoned, why would implementing those reforms ever make it any easier to do that, even if they wanted to?
The lack of productivity improvement was Labour’s exclusive fault. It had the opportunity to improve it and it didn’t.
Remember the power of the regulatory regime, also the agility of it. This combined with the Reserve Bank’s ability to throttle the economy gives any govt great opportunities. Unfortunately, throughout its nine-year term, Labour used it for its own venal vote-gathering purposes. To imagine it was ignorant of advice re: the right course at the time, is rather naive.
reid: I assume that you are joking about the loss of democratic freedoms in NZ. The loss of economic rights for the majority came in the 1990s, the loss of civil rights for everyone came after 9/11.
reid,
Aside from Pablo’s rebuttal, you’ve got the issues reversed. The point is that if the model didn’t work well, properly and sustainably in a totalitarian regime with all the wheels pre-greased, how on earth can it possibly be expected to work in a democratic regime?
L
I agree Pablo re: the civil rights loss but was it Hayek’s theories that bought that on or something else?
Lew or Pablo, point me to a single loss of democratic freedom directly arising from the Hayek reforms within NZ.
The UN Declaration of Human Rights – makes mention of the idea of “economic rights”.
I suspect some do not see these as “democratic freedoms”.
Is there a “right” to organise to realise a living wage, is there a “freedom” to organise to undermine the ability of others to realise a living wage.
SPC, my point is, unless you’re someone who believes Dickensianism is still alive and well in NZ, the application of Hayek in NZ has seen no suppression of these objectives.
Point me to a specific example, if you disagree.
Can “small government” (if this is seen as a necessary part of the market mix) result in a low wage first world economy delivering affordable housing, free health care, education and over 65 tax paid super?
In the 1990’s there were cuts to Super, health care charges, interest bearing student loans, market rents … all while organised Labour was rendered so vulnerable that the minimum wage could fall substantially in real terms.
The result of all this was that the society subsequently rejected the market first small government model (1999) and the current government is operating within a public demand for a more moderate bi-partisan consensus (including no privatisation).
The catch 22 for the right is that the model is more acceptable (democratically) where there is an adequate wage (or enough people on an adequate wage who can accept the discomfort of those not so fortunate) for all. Where the wages are low (or are low for too many) it is more likely to be a regime imposed without consent, than one chosen democratically.
As a long time unionist, Pablo’s accurate and timely piece has real world application for me and thousands of other New Zealanders. “Positively engaging†with a hostile government was not a happening thing in the 90s ala KG Douglas/Foulkes era NZCTU and is not going to work now either. Unite and the NDU indeed recognise this. Other unions, particularly the PSA need to wake up and perhaps dust off, or actually write, a manual on ‘organising defiance’ (commensurate with their organisational ability of course). Ongoing organisation is the only answer.
May Day 2009 marks the first full day of Chrysler’s bankruptcy, which was brought about by hedge funds holding less than 30% of the company’s debt. As a result, the day that should celebrate workers’ rights marks an uncertain future for Chrysler’s employees, retirees, and their families.
While I realize this blog post, and the comments, are focused on a different circumstance and political agenda, the workers’ plight is not so vastly dissimilar. There is a broader perspective that is often overlooked.