Archive for ‘Economy’ Category

Reading between the choices of spin

datePosted on 16:01, June 18th, 2009 by Anita

When National leaked and then announced the home insulation fund they had a choice about how to spin it. I can easily think of four options they had (I’m sure there are others):

  1. Environmental/climate-change: home insulation reduces energy consumption, thus reducing the amount of generation required, thus reducing the use of thermal generation (read thermal as burning stuff :) which in turn reduces CO2 emissions which in turn reduces the effects of climate change. 
  2. Environmental/sustainability/primary-production/innovation: NZ businesses are doing some really interesting work in sustainable home insulation using NZ’s primary products rather than imports. A nice photo op with a company making home insulation from wool and voilà, the story is about innovation, sustainability and government support for agriculture and primary production in a recession.
  3. Health/education/social-development: Insulated warm dry homes improve family health and child education outcomes by reducing sickness and deafness. Photo op: Minister visits family in recently insulated home, since insulation went in the kids are much more healthy and doing much better at school, little Moana might even trundle over to the Minister with a picture book and read it to him. PR gold – government cares for families and kiddies!
  4. Traditional-infrastructure/building sector: Insulating homes means the existing builders, insulators and contractors will have more work and will weather the recession.

National chose option 4 – why? It’s not the best PR option and it’s not the most on message, every other option had clear weathering the recession messages plus something forward looking and visionary. Instead they chose the staid dull message which appeals only to the traditional infrastructure industries.

The only explanation I could come up with is that traditional infrastructure is where National’s traditional funders and backers have come from, perhaps they wasted a golden opportunity for positive spin for a little old fashioned pay back?

This post was, in part, inspired by Zetetic’s post about National’s current lack of attention to the concerns of female voters. A couple of  their options would’ve been great options if they cared about women voters, instead they chose the spin best suited for the Fletcher Building board.

Deconstructing Democracy: Introduction.

datePosted on 19:38, May 26th, 2009 by Pablo

Anita’s post below on raising democratic children was meaningful to me because I was primarily raised in authoritarian societies, was involved in anti-authoritarian activities in my youth and first got to vote when I arrived in the US to attend university (under Nixon!). Later as a single parent I worked hard to raise my kids in what I liked to call a “triangular” social democratic family (Dad and two kids with a reasonably equitable sharing of household rights and responsibilities given our respective life positions). Although we do not agree on many issues, I can confidently say that they are both politically engaged.

I spent a large part of the Reagan years living on and off in Latin America studying processes of authoritarian demise and democratic (re)constitution, spent the early 1990s working in and out of the US government, then decided to emigrate to NZ once the kids were old enough to fend for themselves. In NZ I initially found one of the two freest places I have lived in (along with Uruguay), but then unhappily watched the corrosion of democratic values in both political and civil society over the next decade. I am now again involuntarily living under yet another authoritarian regime (not quite as murderous as the ones of my youth), and having written previously about the dilemmas of democratic consolidation in post-authoritarian societies, I have time to reflect from afar on what the term means to me, with specific reference to NZ.  Once I finish the current book project I am working on, I intend to write a book about the subject of democracy in transitional societies, and to that purpose have begun to deconstruct my thought on what democracy involves.

Over the next few blog posts I will sketch out my preliminary thoughts on the issue (these are too long for one post). The reason I do so is not so much as a self-indulgent attempt to see what the thoughts look like on paper, but because I think that sometimes people who have lived their entire lives in a democratic society lose sight of what that really means and what it involves. Perhaps it takes someone who has experience with both dictatorial and democratic systems to cast fresh light on the latter. That is my purpose here.

To begin with, we must separate “democracy” into its procedural and substantive dimensions. Procedural democracy refers to the means (procedures) by which political power is acquired and maintained. Substantive democracy refers to the three dimensions on which democratic societies are reproduced: institutional, societal and economic. I explain each in turn.

Procedural democracy is characterised by free and open competitive elections between self-constituted political actors awarded equal legal status and free from interference from the state, with an unencumbered right to vote shared by the entire adult population of citizens (and in the case of NZ, permanent residents, of which I am one).  This much is the obvious procedural minimum–there is more with regard to how the selection of incumbents of political decision-making positions is accomplished. But the key points are the freedom of expression, preference and competition embedded in the concept of procedural democracy; and the fact that elections, in and of themselves, have no intrinsic worth. By themselves elections are just a procedure, or as a Chilean observer once commented, a type of “secular communion” held at regular intervals by the electorate to consecrate their commitment to the political form as well as to select those who shall temporarily rule.

That is where substantive democracy comes in. Elections without institutional, societal and economic underpinnings are all procedure and no substance. Ferdinand Marcos held (and won) regular elections, as did the PRI regime in Mexico and Brazilian military regime of 1964-1985. The country where I am currently living has regular elections as well, but the outcome is pre-determined: the ruling party always wins. Thus, what matters most for the constitution and consolidation of democracy is not holding elections, but the substantive reproduction of democracy in its institutional, societal and economic dimensions.

Institutional democracy refers to the organization of the state apparatus and collective actors, the rules that bind them, and the forms of interaction they engage. The guiding principle of institutional democracy is transparency, equality and accountability. Institutions, both public and private, big and small, operate in away that minimizes preferential bias or ascriptive intrusions in their governance and outputs. The notions of polyarchy and pluralism apply here. Good representation of the concept is the notion that “justice is blind” or that collective agents and public officials are responsible (effectively answerable) to their principals. Needless to say, even in an advanced liberal democracy like NZ, the reality is somewhat less than the ideal.

That may be due to difficulties at the societal level. Societal democracy refers to the inculcation of notions of consent, concession, compromise, collective interest, equality, solidarity, individual rights, mutual consideration, egalitarianism and legitimate exchange. This promotes general belief in tolerance, respect for difference, non-hierarchical outlooks and negotiated solutions in the pursuit of mutual second-best collective outcomes (as opposed to self-interested first choice maximization of opportunities). It also promotes a (relatively) high degree of public participation in politically-oriented activity (including participation in the type of demonstrations seen in Auckland the past few days). This is what distinguishes democratic from authoritarian societies. Yet here too the ideal is not matched by reality even in the most mature of democracies–but it remains an aspirational objective.

Part of the reason societal democracy is less than perfect is due to failures to achieve economic democracy. At an economic level substantive democracy involves a general agreement within society that favours political guarantees for maintaining a minimum standard of living and just compensation for productive labour. It includes acceptance of minimum health and welfare standards for those who are structurally unemployable (i.e., through no fault of their own). The means of achieving economic democracy are much debated, but the fact of its necessity is not.

There is a fair bit of argument about what dimension should come first. Does procedural-institutional democracy precede societal and economic democracy (as liberal theorists claim), or, as Marxists argue, is the process the reverse? Can it be imposed by external actors, and if so, on which dimensions? (I would argue that in most cases it cannot). The degree to which a society has moved towards achieving procedural and substantive democracy helps distinguish between liberal, illiberal, exclusionary, delegative and radical democratic systems. As an example, let us imagine that we can “score” democratic “value” points based on a continuum from least to most (please note that this is my subjective rating for heuristic purposes and does not use Freedom House or Transparency International scores). Generally speaking, arrayed on a scale of 1-10 (1=undemocratic; 10=democratic utopia), countries are considered democratic if they score above 5 on all dimensions (a minimum of 20 points). Moreover, that score is not static or immutable–it varies over time depending on socio-economic, demographic and political conditions. Thus, when I arrived in NZ in 1997 I scored the country as a 8 on a procedural level, 8 on an institutional level, 9 on a societal level and a 7 on an economic level. By 2007 my scores for NZ were 7.5, 7, 8 and 8 ( a net decline of 1.5 democratic “value” points). In contrast, I had the US scored in 1997 as 6, 6, 8 and 7, moving to 5., 5.5, 7.5 and 6 under the reign of George W. Bush. As for the country I am currently living in, the scores are 1.5, 5, 6.5 and 1.

The point is not to argue for the precision of these scores. The point is that democracy is a living, breathing entity, one that reproduces dialectically across the above-mentioned dimensions, and one that is susceptible to decline if it does not reproduce a minimum threshold of democratic “value” across them. In subsequent posts I shall elaborate on the five factors that need to be reconciled for this to occur. These are consent, uncertainty, contingency, entitlements and self-restraint. In the next post I shall address the issue of consent as the foundation of hegemonic rule, and of  democracies specifically. 

For the moment suffice it to say that I endorse Anita’s insightful remarks about the early political socialisation of children, as that constitutes a precondition for the achievement of societal and institutional democracy.

PS: Please feel free to weigh in. All reasoned views welcome–after all, I have a book project in mind!

Weldon: not very reassuring

datePosted on 12:23, May 10th, 2009 by Lew

Perhaps sadly, the highlight of my week is sometimes Mediawatch on Radio NZ National, due largely to interviews by Colin Peacock such as this one about Media Biz 09 (on which I blogged here), and the one with Mark Weldon which aired this morning (interview starts at 06:40).

In it, NZX CEO Mark Weldon doesn’t so much defend the stock exchange’s acquisition of rural publisher Countrywide Publications as attack those who dare to query the conflicts of interest which arise from the acquisition. Rather than accepting that there are perceived conflicts of interest from the fact that the NZX makes a lot of revenue from argicultural market data, and that Fonterra chairman Henry van der Heyden is a director of the NZX board (among other issues), he responds by alleging a conspiracy:

“I think that’s completely bonkers. That’s the second time today I’ve heard that actually, so someone’s doing a reasonably good job of getting that around, and I’ve got a reasonable idea who it is.”

In almost the next breath, he accuses those raising questions of van der Heyden’s conflict of being wide-eyed and credulous:

That’s just nonsense. I think it’s just typical conspiracy theorist tall-poppy crap.

… before going on to emphasise how CPL is a good down-home NZ company, and that the NZX is holding its Christmas party at their HQ in Feilding this year, as if that’s relevant. This echoes his tone in response to similar questions by Fran O’Sullivan. It gets worse: he then resorts to indignant sarcasm when answering the sort of questions which any credible journalist would rightly be criticised for not asking:

Peacock: Have assurances been sought or given to Farmer’s Weekly and other publications, Dairy Exporter, that they will be entirely free to carry on reporting and publishing as they have been in the past?
Weldon: No, I myself actually am going to write all the articles for these farmer’s weeklies, because I’m an expert in all of this stuff.

Essentially he’s trying to argue that the NZX and the people who lead it are above reproach, beyond being held to accountability by the media, and should simply be allowed to get on with their business without having to answer pesky questions like this. He seems to completely misunderstand what the media is for by arguing that businesses – and especially regulators – should not need to be held accountable by them. Not a very reassuring position for someone who now is part of the media to take. Even less reassuring, as picked up by Peacock from O’Sullivan’s article linked above, is his attitude toward commentator Alan Robb, whose work is published in CPL titles and who has been publicly critical of the decision:

There is, I have to say, a fair degree of disappointment from myself and internally that we’ve got this person Alan Robb whom we now pay who apparently has issues with presuming what our level of integrity about editorial is.

Subtext: “Why are we sponsoring criticism of our decisions?”, and perhaps an answer to the question of who Weldon thinks was “putting about” the idea that conflicts of interest exist, as if it takes a rocket scientist to see that they do. Not very reassuring at all.

The stupid thing is that Weldon gets it. He understands the media ecology well enough to know why the CPL publications must be, and must be seen to be scrupulously independent from the NZX, van der Heyden and anyone else. Carrying on in response to Peacock’s ongoing questions:

We have no interest whatsoever in writing for Farmer’s Weekly or Dairy Exporter. What we do have an interest in is ensuring that the most information can be distributed the most broadly, because that’s how everyone is better off and that’s ultimately how markets work … It would be absolutely stupid on a monetary and financial level for us to prevent anything like [criticism of Fonterra, etc] because all it would do would be immediately undermine the brand which undermines the value of the franchise. There is no economic alignment whatsoever in changing the approach that is currently taken. The second thing is, readers are incredibly astute, we’re very aware that the media will look at this with a reasonable amount of cynicism and anything that we did try and do like that would be picked up in a second and would become a story in and of itself, as I can tell, and even my brain can figure out from this interview that that’s sort of what’s on the mind. So it would be incredibly stupid for us to do that because it would be seen for what it is.

Quite some self-awareness, all of a sudden; he’s dead right on both counts, and it would undermine the credibility of the NZX as well. CPL is a small fish in this ecology. So why, instead of trying to make out that the NZX should be above reproach and assumed to be doing things right and properly – in the same way that those responsible for the current financial crisis were assumed to be infallible and benign – would Mark Weldon not have welcomed the media scrutiny on the basis that he, the others at the top, NZX and CPL had nothing to hide and were quite prepared to be subjected to the full gaze of the press? Such a response would have resulted in people saying “this Weldon chap understands the role of the media in the economy, and his company can therefore probably be trusted to own some of them”.

I suppose there’s one good thing come from it. By protesting too much at the fairly gentle going-over the acquisition has received to date, Mark Weldon has ensured that the watchful eyes of people like O’Sullivan, Peacock and others (perhaps including the Commerce Commission) will not stray far.

L

A May Day Reminder.

datePosted on 20:31, May 1st, 2009 by Pablo

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”)  or blinkered dictatorial eye.  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.

pirate-jail-thumb-230x130-2644-fBackground
The Pirate Bay is a BitTorrent tracker – one of the world’s largest, most popular and best-known. Four of its co-founders were yesterday convicted of “assisting in making copyright content available”, sentenced to 12 months’ jail each and required to pay 30 million Kronor (about NZ$6.3m) between them. The offence was not the same as actually distributing the copyright material – the torrent files hosted on TPB are not themselves subject to copyright, but they enable a user to easily access material which is. For a quick backgrounder, see The Guardian’s FAQ, and for exhaustive coverage, see Threat Level’s archive.

I’m very interested indeed in the roles which intellectual property mechanisms play in the world. This verdict has complex and possibly profound political, social, technological and economic implications. I won’t argue its legal merits, but, despite their claims, I don’t think this case or verdict is in the content owners’ best long-term interests, because it perpetuates a business model which has been proven unfit for its purpose.

pirate-bay-guilty-mass-protests-followSocial and political implications
The social and political implications of this verdict seem likely to result in a sort of Streisand effect where by winning a battle, copyright owners may galvanise opposition to their business model and enforcement practices. This verdict was never going to be the end; as defendant Peter Sunde said it was to decide nothing other than which side would file an appeal. [Video in two parts here and here. The first five minutes or so is in Swedish; the rest is in English.] So as much bad-will as there is against the content owners, there’s plenty more time for it to build.

Online media consumption (sanctioned and otherwise) is largely the domain of the two generations born since the baby boom – quite distinct from those in control of the legal, business and political systems which produce that media and constrain its usage, who are middle-aged and older. There exists a significant disconnect between these generations, and the Pirate Bay verdict seems like it could crystallise that disconnect into an outright generational divide along political and philosophical lines. Those in their thirties and forties have been heavily involved in shaping the internet into the phenomenon it is, nurturing fledgling technologies (including filesharing) to meet their own needs and building cultures and identities around different types of participation. It’s theirs; they created it. The generation now in their teens and twenties have known nothing else, and they are the driving force behind its constant recreation, and are if anything even more strongly engaged. The content industry is currently trying the ‘stick’ approach – trying to dictate terms to two generations who’re used to having things their way and are more than capable of making it so. As those generations displace their pre-internet elders, and as the developing world begins to participate more strongly in traditionally-Western information communities, content owners will find themselves less able to dictate terms, not more so. Those in charge of intellectual property realise this and have been busy over the past few decades establishing and extending copyright, patent and trademark systems, conditional trade treaties, anti-circumvention legislation, privacy infringements under the guise of cyber-terrorism prevention, and other such measures under the auspices of TRIPS, the DMCA, the PATRIOT Act, IPRED and plenty of lawsuits, including this one – all in order to retain their existing, inferior business models rather than be forced to compete on the open market of ideas in order to develop better ones.

pirate-party-membership There are political implications for all of this, as well – the Pirate Party of Sweden, formed to reform copyright law, abolish the patent system and strengthen privacy rights, claims to have gained 3,000 new members in the seven hours following the verdict, giving it a larger membership than four out of seven current parties in the Swedish parliament (and if their online membership graph can be believed, it looks like they were up above 5,000 new members within 12 hours). Candidate Christian Engström said:

“The ruling is our ticket to the European Parliament,” concluded Engström, who expects a populist backlash against the ruling to help his party’s chances of gaining a seat in the EU’s primary legislative body. [source]

Now, single-issue parties have a particularly hard row to hoe (even TPB’s Peter Sunde doesn’t vote for the Pirate Party), and in terms of realpolitik few countries can afford to deviate from the intellectual property line established by TRIPS. Nevertheless there are big philosophical issues at stake here. Politicians ignore those two generations at their peril.

Technological and economic implicationspirate_bay
Technological and economic implications are linked because technology dictates the means by which content may be distributed, and without distribution there is no revenue. The Streisand effect mentioned above will likely manifest initially in the market for media as a short-term (and possibly short-lived) , but its long-term implications are much broader. Many of the content owners’ arguments against groups like TPB rest on the flawed premise that demand for content is static and copyright infringement is zero-sum (that is: every copy downloaded represents one less copy bought). The fall in revenue, they claim, is because of copyright infringement, so reducing copyright infringement will necessarily cause revenue to pick up again. There are two problems here: first, the genie is already out of the bottle, and two generations are now accustomed to consuming media on their own terms. They will not be forced to consume media in only the ways which content owners want them to, and whoever applies the stick in an attempt to make them do so will suffer as a consequence, because the content industries depend upon their consumers for survival, not the other way around. Second, and this is critical: by engaging in an aggressive game of whack-a-mole to safeguard a broken business model, the content industry has hastened the destruction of that business model by ensuring that only the fittest filesharing systems survive. Cory Doctorow makes both points better than I:

If The Pirate Bay shuts down, it’s certain that something else will spring up in its wake, of course — just as The Pirate Bay appeared in the wake of the closure of other, more “moderate” services.
With each successive takedown, the entertainment industry forces these services into architectures that are harder to police and harder to shut down. And with each takedown, the industry creates martyrs who inspire their users into an ideological opposition to the entertainment industry, turning them into people who actively dislike these companies and wish them ill (as opposed to opportunists who supplemented their legal acquisition of copyrighted materials with infringing downloads).
It’s a race to turn a relatively benign symbiote (the original Napster, which offered to pay for its downloads if it could get a license) into vicious, antibiotic resistant bacteria that’s dedicated to their destruction.

Content owners, by enforcing the discipline required to survive in a hostile environment, are granting clandestine distribution systems an enormous advantage: those systems evolve and improve while their own system stagnates. There are a few exceptions: Radiohead and Trent Reznor are at the forefront.

Of much more grave seriousness, however, is the chilling effect this verdict could have on the internet – search engines, ISPs and end users. Roger Wallis, Emeritus Professor of Media at Sweden’s Royal Institute of Technology (and an expert witness for the defence) warned:

This will cause a flood of court cases. Against all the ISPs. Because if these guys assisted in copyright infringements, then the ISPs also did. This will have huge consequences. The entire development of broadband may be stalled.

His point is that TPB’s technology meant their servers never hosted copyright files – those were hosted on its users’ home computers, and TPB simply provides a search engine to find content and a service which tells one user’s computer where to find files hosted on another user’s computer. If that makes one criminally liable, then those who are doing the actual distribution (te end users) and a whole lot of other people and organisations whose computers provide similar assistance including search engines and ISPs, are also criminally liable – and could even be more culpable than TPB were, since those computers actually host and distribute the copyright files themselves. Due to the highly robust, distributed, fault-tolerant nature of modern content-distribution systems made fit by nearly a decade’s worth of fine-tuning, there is simply no way to beat filesharing without targeting end-users and ISPs on a case-by-case basis. Any reluctance to roll out or use broadband internet services will have catastrophic flow-on economic effects, and given that media consumption is a major driver of broadband, content owners are in a catch-22 situation: either they aggressively prosecute ISPs and end-users or they fail to beat filesharing. In the former case, they get to keep their business model, at the cost of making criminals of their consumer base and ensuring that yet more complex, robust and powerful distribution mechanisms are developed – and possibly at the cost of the internet as we know it. In the latter case, they have to develop systems which are fit enough to survive on their own. The longer they delay, the harder it will be.

An upcoming post will look at the battle for hearts and minds which will fundamentally determine the winner in this contest.

L

Rethinking market socialism.

datePosted on 20:15, March 28th, 2009 by Pablo

The crisis of the latest incarnation of market -driven economics, particularly in its financial sector, has raised the possibility of political-economic alternatives not so much as remedies but as significantly different approaches to the structuring of national economies in a global system of production and exchange. One of these is a revamped–as opposed to resurrected–market socialism. For those who are not familiar with the concept, a quick synopsis is found here. Although current conditions are different from those that led to the original formulation, some basic tenets can be discerned and elaborated upon. Basically, within a market system of supply and demand, the state operates as a macroeconomic manager (not just a toothless regulator) by obtaining majority stakes in strategic assets (be they primary good or value added). In parallel, at a mircroeconomic level it moves to promote significant (be it as a majority or as part of a tripartite arrangement with the state and capitalists) worker ownership in strategic industries (such as through employee stock option programmes  (ESOPs) or by encouraging the formation of cooperatives) in exchange for wage restraint and greater productivity. The logic is that with workers as co-owners of the industries in which they are employed, they will understand managerial rationales as well as the conditions on the production line, thereby promoting what could be called “equitable efficiency” in production.  Non-strategic components of the economy can be encouraged to follow suit but will not be forced to engage in such “socialising” programmes, but will be taxed at a higher rate if worker participation schemes are not incorporated. All sectors will follow the laws of economic efficiency followed by private firms–that is, the market logics of supply, demand and prices. Hence, the object is to prevent rent seeking behaviours usually associated with state ownership of the means of production–to wit, no “make work” or ghost worker schemes, no padding of employee roles, no patronage or clientalistic networks etc. Needless to say, unions may see a threat in this, but their self-interest as agents should not detract from the potential benefits of ownership accrued by workers as a class as well as principals of unions (where they are organised). Union shareholding schemes might be one way to reconcile the interests of agents and principals in such an event.

Under such a market socialist approach a restrained individual taxation rate that increases the amount of discretionary income to wage-owners as well as as capitalists can be complemented by a differential corporate rate that rewards worker ownership with lower rates while maintaining a higher rate for “traditional” firms–i.e. those that appropriate the surplus generated by workers in the form of profits that are in the majority distributed to non-workers (be they shareholders or managers).

With a greater State macroeconomic presence as a stakeholder in strategic industries and manager of microfoundational (the orientation of specific  industry) policy, coupled with active promotion of worker participation in ownership of the industries in which they are employed, backed by a taxation policy that rewards those who see the wisdom of making workers co-owners and understand that the State, as representative of all sectoral interests, is better suited for macroeconomic management than individual capitalists or their associations, a new market socialist project can be advanced that will filter global market dynamics into a more nuanced, and fairer, distribution of wealth and income in society. In a small island trade-dependent state, socio-economic stability depends on this.

There is actually a model for such a system, although it has yet to incorporate worker ownership schemes as part of its developmental project. That model is Singapore and the only reason it does not incorporate policies of worker ownership  into what is otherwise a state-dominated export-oriented economy that is successful is that it is a)authoritarian and thus can impose its will without worrying about the filter of mass consent;  b) foreign investors resist worker participation as a condition for investment; and c) as a result of the previous two factors, foreign workers on temporary visas unprotected by labor laws reserved for Singaporean citizens are used to structurally undermine any moves in that direction.

As a liberal democracy NZ can not emulate everything that Singapore does, but what it can do is note the commanding position of the State in its macroeconomic affairs, to include its use of  State holding companies as channels for public investment in a range of “private” industries as well as its use of taxation as an incentive for corporate investment and production, on the one hand, and household consumption on the other. Admittedly, the argument presented here is just a simplified sketch of the possibilities of market socialism in the present conjuncture, but the intention is to raise the point rather than fully elaborate upon it. The latter task is left to the readers.

Memo to SOEs:

datePosted on 10:53, March 19th, 2009 by Lew

Out-perform the private sector or join it.

This is the ultimatum I’m reading into Simon Power’s letter to SOE chairs.

I think it’s entirely right for the government to expect the most responsible and diligent business practice from SOEs – but I don’t think it’s reasonable to expect them to outperform the private sector which is unconstrained by the same responsibilities borne by a state-owned business. The private sector is responsible only to the profit motive of its shareholders, without the constraints of the triple bottom line and exemplary standards of conduct, transparency and long-term commitment.* Inasmuch as these constraints represent economic profitability traded off against other types of value, they require a SOE to operate at a disadvantage compared to private concerns when performance is measured purely in terms of the raw numbers.

If the ultimatum is delivered (as I expect it will be) in more certain terms during the 9 April meeting, it will mean two things: first, it should drive substantial changes in culture and efficiency, which is a good thing, and is the stated purpose. Second, if the different constraints under which SOEs operate are not taken into consideration and the performance evaluation is undertaken on strict terms of profit (and given the Prime Minister’s decree that electricity prices won’t rise) then they will be set a task at which they cannot possibly succeed, and their expected failure to outperform the market will prepare the groundwork for them to be sold during a second term.

L

* You might think that these constraints are a load of old bollocks, but that’s a different argument, since the government’s stated position is that they’re just fine.

The mythical “centrist” John Key government

datePosted on 07:33, March 17th, 2009 by Anita

When you look at the current government’s first four-and-a-bit months you see a right wing government implementing a swing to the right at high speed. Fair enough, they won the election, they reckon they’ve got the mandate. Even Key has stopped describing himself as “centrist” and now says “centre-right”.

Yet when you read the mainstream media the word “centrist” is still firmly attached to Key’s government. Well the New Zealand media anyhow, overseas they recognise a good old fashioned right wing market economics agenda.

So, what will it take for the media to stop believing it’s own commentary on last year’s election (carefully prepared for it by the National campaign team) and recognise that we elected, and now have, a right wing government? They’re making right wing choices: tax cuts for the rich instead of tax cuts for the poor; business own profits over staff wages and jobs; and an authoritarian state over human rights. We can argue about whether they’re the correct choices but they are the choices of the right.

We have a right wing government, that’s all.

Greatest good versus least harm, and the money proxy

datePosted on 23:12, March 11th, 2009 by Lew

It seems to me that the main difference in principle between Labour and National-based governments in NZ is an old question of utilitarianism – whether one should work toward achieving the greatest good or toward ensuring the least harm. The two philosophical positions are sketched out reasonably well in the wikipedia article on utilitarianism.

In principle, the difference boils down to a strategy of positive ambition versus negative mitigation. The former sees achievement as the highest goal, and failure as a necessary collateral effect of attempted achievement. They grade a society by its upper bound, by how much success its leading members achieve. In this regard, the ideology emphasises ambition, celebrating that qualities as the most beneficial to society while disregarding the worst consequences of its failure – destitution, disease, starvation, etc. The caricature of an ambitionist, if I may coin the term, sees the world as humanity’s oyster, and humanity in positive terms – as potentially successful and satisfied and healthy and secure, and considers that anyone who does not achieve these things has simply not tried hard enough, or for long enough, or lacks the innate characteristics needed to achieve those things and is therefore not entitled to them. Entitlement accrues to a person on the grounds of their success. In symbolic terms, the way to appeal to these people is in terms of opportunity, advantage, individuality, and the idea of just desserts for effort rendered.

On the other hand, the caricatured mitigationist (to coin the opposite term) grades society on its lower bound, by the extent to which the least successful members of the society are allowed to suffer by the more successful. They see the world as a dangerous, inhospitable place in which the default state is abject meanness, and humanity in negative terms of limiting those inhospitable forces, keeping out the cold and the hunger and the disease, while anything else is a bonus. Entitlement accrues to a person on the grounds of their humanity alone. The way to appeal to these people symbolically is in terms of compassion, brotherhood, sacrifice, cooperative achievement and that principle that none should suffer needlessly.

Although it may sometimes seem so, the world is not made up of caricatures, and this is my round of defence against complaints of false dichotomy. Both of these two broad positions hold some resonance for each of us, and it seems plausible that the balance of that resonance has a strong determinant effect on our political preferences. The problem, as always, comes with implementation, and the primary problem of implementation in the society we have is that money is used as the main measure of success and therefore as a proxy for a person’s innate value. This is perfectly acceptable to the ambitionists, whose ideological basis enables them to embrace money just as easily as they might embrace any other measure of human importance, but it’s not so attractive to mitigationists, who argue that entitlements accrue to a person on the grounds of their innate status as human beings and members of society, regardless of their achievements.

Push comes to shove at times like this, when things (in terms of that prevailing measure of success, money) are tight. When many people are deprived them, the human necessities of health, comfort and dignity can more readily be achieved by an idea of the common good than by the burning desire of ambition. However, when things get good again, it’s a terribly hard ideological position to peel back, and inasmuch as the common good can constrain the urgency of effort required for success it can be counter-productive, entrenching mediocrity. Indeed, without the incentive of individual reward for ambition, it could be argued that society would never pull out of any trough. But contrary to what the Randroids say, this isn’t an absolute constraint. In good times it’s easy to emphasise the greater good because a reasonable minimum standard can be expected to exist or be trivially provided for the few who need it. None need suffer except by a relative standard. In hard times, however, when raw success is less achievable, mitigating harm at the temporary expense of ambition becomes more valuable by its easy achievement.

The case in point is the Key government’s recession strategy, which gives a great deal of consideration to maintaining ambition but little to mitigating harm. It’s a tacit acceptance of a certain amount of harm in service of a longer-term good. If not from the policy itself, you can tell this from the terms used to talk about it. That’s a complicated philosophical and utilitarian question for a supposedly non-ideological government to be tackling.

L

Not a very practical cycle way

datePosted on 06:17, March 9th, 2009 by Anita

The government’s plan to build a cycle way the length of New Zealand encapsulates two key themes of this National administration.

  • It’s for wealthy tourists, not New Zealanders – it won’t get us to work or study, but it’ll allow wealthy western tourists the clean green NZ experience well insulated from the reality of our car dependency.
  • It’ll provide work for the construction industry – mostly men, mostly larger business, returning good profits to wealthy shareholders.

Of the two it’s the first that bothers me most (the second is just business as usual for National), building cycle ways to get people to work or study would make a real difference in our real lives. Whether you’re planning for peak oil, a recession, an ETS or carbon tax, or reducing obesity making it safe for people to cycle commute would have been a huge step forward.

Instead we’re green washing the exhaust fumes to look good to the rest of the world.

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