Category: Economy

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Regime transition sequencing.

I was reading a recent article in which the author wrote that the US has actually made the transition to democracy in Venezuela more difficult than it could have been by removing Nicolas Maduro and his wife from the country but leaving the rest of his regime intact. In the author’s words, “they took the dictator but left the dictatorship.” He went on to write that the usual order of things is to embark on a political regime transition (presumably to democracy if the starting point is authoritarian) followed by an economic regime transition (say, in simplistic terms, from communism to capitalism) or at least significant economic reform. In Venezuela’s case, the US has pushed for US-investor friendly economic reforms in the extractive industrial sector but left the Bolivarian regime otherwise intact and has not bothered with broader economic reforms that promote market diversification, income redistribution, decreased dependence on primary good exports (including but moving beyond petroleum), and more value-added domestic commodity and service production.

That got me to thinking about one major theme of the first generation regime transition literature of the (late) 1970s-1980s, which focused on the transition from democracy to authoritarianism in Europe, East Asia and Latin America in the 1960s and early 1970s and then the transitions form authoritarianism to democracy in the rest of the 1970s and 1980s. One theme that emerged was the sequence by which regime transitions occurred. We might call it a type of “chicken or egg” question.

Some argued that what was needed first for democracy to obtain was an economic transition from state-centric (e.g., Keynesian welfare or socialist) to free market models, which was believed would promote the civic freedoms needed for democracy to emerge as the corresponding political form (this was grounded in what was known as “modernisation theory,” which was a 1950s-era prescription for overcoming underdevelopment in the “Third World”). That was the “egg” answer, which was used as one justification for the US support for China’s admission into the World Trade Organization (WTO) in 2001. As with original modernization theory, the underpinning syllogism proved incorrect.

Instead, both in the PRC and in the Socialist Republic of Vietnam (SRV) as of the 1990s, communist party leaders engineered the move from a state-controlled command economy marshalled along what might be described as Stalinist or Maoist lines to a state capitalist economy in which investment and production was incrementally opened to private (including foreign) investment while the State controlled overall economic management decision-making and kept a stake in specific productive assets (e.g., telecommunications in both instances).

In effect, capitalism came but democracy did not. In both the PRC and SRV change occurred within the political regime, not of it, regardless of economic change. Communist Parties still control both countries and staff the leadership of the State. Their respective leadership architectures and other partial regimes within the larger whole have been subjected to reforms of various magnitudes, including those deemed required to accommodate the economic changes undertaken by the national political leaderships in question. The same is true, in another variation on the theme, in Singapore under the PAP regime: the overall regime remains and reforms (in Singapore’s case by “liberalising” when it comes to political and civil rights without giving up ultimate authority) while the economy changes (from post-colonial trading to techno-finance capitalism). In other words, rather than a transitional sequence, in some instances economic change can occur under the aegis of a stable political regime (at least if it is authoritarian).

Others have disagreed with the economic–>political change thesis, noting that political regime change was required before economic regime change could happen because economic policy is ultimately a political choice made by regime leaders. This is the “chicken” answer. The 1948 Chinese, 1959 Cuban and 1979 Nicaraguan revolutions are considered emblematic in this regard.

In both types of sequence, the key issue is one of parametric change: the boundaries of political and economic life are fundamentally altered as a result of the major institutional changes that define regime transition as a social phenomenon no matter which way the chain of causality proceeds.

Among other subtopics, one part of the debate about regime transitions in the 1980s centred on the preferred “regime change sequence” leading to democratisation. It was a simple, perhaps crude measure, but it had the virtue of forcing scholars and policy practitioners to address the linkage between political change and economic development and reform rather than just one or the other. It also broadened the “chicken or egg” question with regard to the linkage between economic development and political regimes, Was there a correlation or causal relationship between specific regime types and certain levels of development? If so, in which direction and of what specific type in both categories? Capitalist to socialist, socialist to capitalist or somewhere in between? Authoritarian to democratic or democratic to authoritarian and if the latter, what type of authoritarian? The possibilities of political-economic regime change are not as straight forward as might seem at first glance.

There is a third type of regime change that is also theoretically possible> It is simultaneous rather than sequential in nature. This is a situation where economic and political regime change occurred simultaneously, as part and parcel of the same transitional dynamic. This alternative was particularly of interest to students of the fall of the USSR and Eastern bloc regimes grouped in the Warsaw Pact as well as of the revolutionary transitions such as that of Nicaragua and Iran in 1979. In the former the hope was they would transition to both democracy and capitalism in short periods of time. In the latter the expectation was that with revolutionary overthrow of the Somoza dictatorship, socialism as an economic model could be rapidly imposed. The 1979 Iranian revolution represented a variant on that model, with many hoping that the post-Reza Pahlavi regime would be a theocratic democracy wedded to an Islamic market economy rooted in traditional Bazaari social relations of production.

Sadly, in both instances the 1979 revolutions eventually brought economic changes, but under a different type of authoritarianism than what existed before rather than the democracy that was promised. This may have been partially a product of the hostile reaction and pressure placed on the revolutionary regimes by the US and other Western states, but the fact is that be they simultaneous or sequential, the 1979 revolutionary regimes delivered something different than what was hoped (and fought) for.

The simultaneous transition possibility was also considered in the rise of Hugo Chavez and Bolivarianism in Venezuela in 1979 via electoral means, which presumably would have paved the way for a peaceful revolutionary change towards popular democracy and socialism, much in the way hope was previously raised along the same lines by the 1970 election of Salvador Allende in Chile. Alas, neither expectation was met: Allende was overthrown and killed in 1973 by a US-backed military coup d’état supported by rightwing forces while Chavez and his successor Maduro descended into authoritarian-kleptocratic rule culminating in the US military kidnapping of the Venezuelan leader in January of this year. As the author mentioned at the beginning of this post noted, the Venezuelan political leader has been forcibly removed but the regime has not.

As for former Soviet states, the record is very mixed. Russia has reverted to authoritarianism with a state capitalist/oligarchical hybrid economic model grounded in fossil fuel extraction and modernised Soviet-era industrial production.. Some former Warsaw Pact states have gone both democratic and (mostly) market capitalist. Others have gone autocratic and state capitalist/kleptocratic. Some have gravitated towards the European Union and even NATO. Others have remained within the Russian orbit on both political and economic grounds. This is especially true for Central Asian former Soviet republics (the so-called “Stans”), which have not undergone appreciable political regime change except to use elections as legitimation devices while economic control of extraction-based primary good production remains in the hands of nepotistic political elites and politically-connected interests.

It can be argued that simultaneous regime transitions cannot happen simply because of the turmoil and complexities involved in attempting to manage profound political and economic changes all at once. The cases cited above support that view regardless of what eventuated after the old political regime was displaced or the economic model substantially altered. But the issue of transitional sequencing remains an important one, not just conceptually but also as a matter of policy practice, especially if the goal is to restore or revive democratic governance.

As an example, my stay in the Pentagon in the early 1990s was based on a successful fellowship application that was centred on a proposal on how to democratise civil-military relations in post-authoritarian Latin America. I had noticed the difficulty with which new civilian elected governments were coping with entrenched authoritarian traditions in the (sometimes Prussian) military cultures of several Latin American nations, and so outlined in the fellowship proposal ways in which US non-lethal military aid, weapons sales and peer-to-peer training programs, coupled with legal and normative changes to the institutional relationships between the armed forces and civilian government, might help “democratise” the relations between political leaders and the military hierarchies of the time.

This was just one part of the political regime transition from dictatorship to democracy in that region–what was called “partial regime change,” where the sum of a number of reforms in the constituent parts of an electoral democracy (civil rights, election procedures, interest group intermediation systems, inter-agency accountability, policing authority, budget-setting agendas, federal-state relations, and even the relationship between civilian and military authorities)–were reformed, reconstituted or revitalised with the purpose being to provide institutional underpinnings that would support, then sustain and eventually reproduce democratic governance structures.

Again, the results were mixed but for the most part I am pleased to see that in places like Argentina, Brazil, Chile and Uruguay, the changes that my colleagues and I proposed seem to have stuck.

Getting back to the subject of Venezuela and now the attempt at forced regime change by the US in Iran, the folly of the move becomes clearer (as if it was not already). Not only were the “decapitation” strikes simply instances of state-sanctioned murder (by proxy, since the Israelis did the actual bombing of targeted leaders like the Ayatollah Khamenei), the Islamic regime and its constituent partial regimes remain intact, albeit with a stronger military influence replacing a weakened clerical caste headed by Khamenei’s badly injured son Mojtaba (something that is more the result of Revolutionary Guard (IRGC) dissatisfaction with the cleric’s enforcement of theocratic social policy prior to the US/Israeli attacks rather than the US/Israeli strikes themselves). If anything, what political regime change might be underway is, by several accounts, one from a theocratic to a military-dominated regime, conveniently reinforced by the foreign aggression waged upon Iranian society.

Lines of succession, promotion, policy and operational authority remain in place. So do the underlying civic structures, including the Bazaari social networks that even if now in opposition to most of the hard-line elements in the regime, remain fiercely anti-Western and Persian nationalist in orientation. In other words, the partial regime mosaic that when taken together constitutes the institutional edifice of the Islamic regime continues in place and functioning. Like in Venezuela, some former leaders are gone (dead) but the regime remains even as it evolves from within. Nor has the economy changed–although porous sanctions and the Revolutionary Guard toll booth blockade of the Hormuz Straits has strengthened the Islamic Republic regime’s control over it.

In effect, we have seen leadership change without regime change, little significant economic change other than a shift in beneficiaries in the Venezuelan case, and no real transitional sequence at all. This demonstrates the shallowness of what passes in the US for strategic thinking, comparative political analysis and foreign country expertise, to say nothing of the ahistorical ignorance of the MAGA elites in and outside of government who enable and support US foreign adventurism under Trump.

In fact, it might do well for scholars, politicians and economic interests alike to return to that literature on authoritarian regime demise to develop a US-focused idiosyncratic conceptual and practical framework for studying the late stage dynamics of the second MAGA administration. Because it is quite feasible that its demise will more resemble that of dictatorial collapse rather than that of democratic decline even if certain electoral trappings and procedural niceties cloak the entire process. The question for the US then is: if the transitional sequence begins with political change away from MAGA, will it a) result in its elimination from political society? and b) what if any economic and other partial regime reforms will come from the anti-MAGA political change if it occurs?

Without both, regime (or at least government) change in the US away from what exists today will not happen. Depending on one’s perspective, that may or may not be a good thing.

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A Fool’s Pied Piper.

For a while I have mentioned that too much of NZ political “thought” is re-hashed and often washed up ideas brought in from abroad. Both neo-liberalism and “Third Way” Labour positions were imported rather than organically generated from inside the NZ body politic and/or academia. With importation of foreign political ideas all too often comes stripping of the original ideas of any intellectual depth and nuance, particularly in the fields of public policy and political debate.

The latest example of this is ACT’s pimply-faced Ann Rand adolescent devotee’s use of libertarian thought as the basis for its policy approach. In recent years its leader, an Alfred E. Newman look-alike with serious racist and misogynist inclinations, has taken to exalting the virtues of the incestuous gnome that is currently president of Argentina, a Trump-loving mutton-chopped heavy metal grunting, formerly cross-dressing evil munchkin who takes advice from his cloned dogs, thinks orphaned children should be sold on open markets, denies that the Argentine dictatorship engaged in a “dirty war” that resulted in 30,000 deaths and countless tortured and disappeared people, believes blue-eyed people are more aesthetically and intellectually superior to brown eyed people, and who is now embroiled in a crypto currency meme fraud and a narco-trafficking scandal, all while his “chainsaw” approach to public sector reform has resulted in increased poverty, lower health and education standards, increased basic good prices like those of groceries and electricity, a hollowing out of the nation’s productive base and resultant wide-spread public unrest that is answered with indiscriminate police repression. Yep, that guy.

Which is why I say again, we are currently being governed by a crazy clown posse pushing a dumpster fire of anti-social, foreign inspired ideological garbage disguised as public management best practice. Stuff that.

But do not take this just from me. Have a look at this:

https://www.currentaffairs.org/news/this-is-why-you-dont-let-libertarians-run-your-country?fbclid=IwY2xjawNaSotleHRuA2FlbQIxMQABHrKnIv4av64qdH339gFOGvGkGitLcQD-i6TN5dvgzWwXKTzCETs-JBy8FVUw_aem_6RfYz1vosbUC6-WP9FIxxg

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A Return to a US Gilded Age?

I have been trying to figure out the logic of Trump’s tariff policies and apparent desire for a global trade war. Although he does not appear to comprehend that tariffs are a tax on consumers in the country doing the tariffing, I can (sort of) understand that he may think that this is a good way to protect US manufacturing and employment. But because the evidence that tariffs wind up hurting domestic consumers and do not necessarily bring back manufacturing, farming or employment in those or other sectors, I found myself somewhat mystified as to why Trump is determined to push them through.

I realise that he is using them as a form of leverage to obtain concessions in non-trade areas like illicit drug interdiction and immigration. But he seems to want to go further than forcing neighbouring countries to tighten their border controls in exchange of a lifting of tariffs or reduction in the amount of them (both in terms of reducing tariff costs–say from 25 percent to 10 percent–as well as the range of goods subject to tariffs). He truly does appear think that tariffs are good for the US, all evidence to the contrary.

Because of his intellectual limitations (remember my empty vessel argument of a couple of weeks ago), I then thought about his economic advisors and how they may see the issue. Here is where I think I have found the answer to Trump’s obsession with tariffs. It has to do with the so-called Gilded Age.

Readers may recall Trump speaking of president William McKinley and the “Gilded Age” when the US was prosperous, expanding and turning into the global superpower that it eventually became. He even restored the name “Mount McKinley” to the mountain in Alaska known as Denali by indigenous people and has otherwise extolled the virtues of the 25th US president even though McKinley was assassinated while in office in 1901 (Vice President Teddy Roosevelt succeeded him). As it turns out at least one person (an anarchist) was not happy with his policies. Yet it seems that Trump seeks to return to a new US Gilded Age in light of what he and his advisors see as the failure of capitalist globalisation.

Needless to say, there have been global trade systems since ancient times. Notions of Riccardian and competitive advantage were eventually developed around them to explain and justify the commonweal benefits of global trade. This accelerated with the technology-driven globalisation of production, consumption and exchange that emerged as of the 1990s and grew exponentially in the following two and a half decades. While all economic boats would be lifted by this rising tide, the argument went, the expansion in trade was expected to benefit the US the most because it was the core of the global capitalist system, including finance, advanced manufacturing, information and high-tech services, logistics and even value-added primary good extraction.

For its adherents, the post-Bretton Woods moment was the US’s oyster and free trade under standardised monetary exchange conditions was considered to be so universally positive that theories (known as “neo-modernization” theories after the original 1950s variants) were advanced that posited that joining global systems of trade would lead to rising middle classes and eventually democracies in poorer authoritarian countries that adopted the export-import logic and other development models such as the so-called “Washington Consensus.” The Consensus (by industrialised nation’s finance ministers of the time) married neoliberal domestic economic theories based on the primacy of finance capital in determining a country’s investment opportunities in a macroeconomic environment characterised by the reduction of the State’s role as both manager and direct producer of national goods and services, on the one hand, with an abject faith in the invisible hand dynamics at play when national markets were opened up to unfettered foreign competition.

As it turns out, things did not go as planned. Rather than benefit the most as the core of the globalised system of trade, the US saw significant declines in domestic manufacturing, mining and other extractive enterprises as well as a number of value-added business sectors (textiles, shoes, ship-building) when US firms migrated abroad in pursuit of cheaper labour and supply chain inputs. Even service sectors saw business move abroad–think of off-shore call and computer service centres–something that in the aggregate saw the economic decline of the so-called Industrial Age-originated “Rust Belt,” growth of increasingly precarious labor markets and the rise of a host of social pathologies associated with that decline (the book Hillbilly Elegy by JD Vance sums them up pretty well even if it is a fictionalised account of his own life story pre-politics).

Put bluntly, instead of being at the top of the globalized pile, when it came to many US domestic businesses, profits were prioritised over patriotism, they moved their businesses abroad and the benefits of globalisation went to them (in terms of re-patriated profits), not their former employees and the communities that depended on their livelihoods. When it comes to free trade and open markets, businesses acted as capitalists first, and that made them globalists rather than nationalists.

The bottom line is that while the US remains the core of the global economy, the location of where globalisation impacted negatively the most within the US and the perception of its general decline as a result is a strong component of the economic nationalist discourse that propels the modern US Right. From Pat Buchanan to Rand Paul to Steve Bannon, US economic nationalists see US decline as rooted in two main things: 1) the migration of industries away from the Heartland to foreign countries which do not adhere to the overly restrictive environmental, labor, welfare and taxation standards of the US; and 2) the “woke” cultural transitions associated with granting equal rights to everyone regardless of merit while opening admission to immigrants from foreign cultures that are inherently anti-Western in orientation and yet upon which the US was increasingly dependent for both skilled and unskilled labor.

This is where economic nationalists on Trump’s staff like Peter Navarro come in. It is he and his colleagues that put the thought of the McKinley Gilded Age into Trump’s otherwise adderal-addled head. For them, a global trade war suits the US because as the biggest economic bully on the block, others will fold their cards before it has to. The belief is that although there will be short-term pain in the US domestic economy, eventually foreign countries and businesses will, for their own political as well as economic reasons, bend a knee and comply with US demands on trade and non-trade issues. Some manufacturing and other businesses may return to the US but even if they just adjust their bilateral export pricing and other trade measures in line with US demands, the view is that the US will eventually win and ultimately prosper because the advantages it has when it comes to complex economies of scale.

We need to underscore that many trade globalisation supporters did not see the US as necessarily benefitting more than others under the modern trade framework. Instead, they saw all nations receiving some benefit in excess of what they would accrue if they did not join the network, and within that “limited gains” perspective the US would still do well even if it lost uncompetitive businesses to foreign markets that held comparative and competitive advantages like lower wages and costs and proximity of raw materials, rising educational standards etc. They believed that the US would simply specialise in higher-end production and services that used advanced technologies and value-added capital goods while continuing to domestically supply most consumer non-durables like food staples and the like.

This is different than what the economic nationalists envisioned, and whereas the globalist economic vision is an integral part of the liberal internationalist perspective and institutional order codified in the likes of the IMF, WTO and World Bank, economic nationalists see the entire combine as inimical to US economic supremacy and hence an existential macroeconomic threat that increased US economic dependency on the whims of others such as the PRC and EU. Where globalists see trade interdependence and mutual benefit, economic nationalists see trade dependency and economic vulnerability The latter is the dominant rationale in the White House at the moment.

With Navarro and other economic nationalists back in the West Wing and the liberal international order in disarray for more than just economic reasons, the in-house consensus is that the time is ripe to push for another Gilded Age on the back of a tariff-based national economic restructuring. Coupled with a new version of gunboat diplomacy and carrying a foreign policy Big Stick, Trump is offered as the champion of and vehicle for that metamorphosis.

The trouble is that US capitalism today is not the capitalism of a century ago, nor is the nature of its connections to a globalized capitalist world with multiple centres of economic gravity. Think of the Middle East, the Arab oil oligarchies and their sovereign hedge funds. Think of the reach of the PRC’s Belt and Road initiative. Think of the rise of the Global South and emergence of the BRICS as an economic bloc. All of this suggests that while Trump may see himself as McKinley bringing in a new US Gilded Age, he is just a real-time protagonist in his economic advisor’s pipe dreams. What may have worked at the turn of the 20th century in terms of tariffs benefiting the US is unlikely to work in the early 21st century, at least not in the measure envisioned. So even if some countries cave to US demands on a host of issues, the chances of the US “winning” a truly global trade war seem long at best, and even if the US “wins” the economic contest, the political costs of subjecting the US electorate to consumer price hikes and supply chain disruption through the 2026 Congressional midterm elections and 2028 presidential vote may spell serious trouble for Trump, MAGA and the GOP regardless of who may or may not succeed him. The political fallout of the tariff moves, in other words, may yield negative dividends even if it is “successful” because the short-term economic pain that Musk and Trump talk about as necessary may not be tolerable for many voters, including those in Red States.

If that is the case, all the tariff-led economic gilding project may just turn into political rust.

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Scholarly Link: The Comparative Notebook.

I am pleased that the under-recognized scholar (and previous co-author of mine) Kate Nicholl has decided to join Substack and publish her thoughts on comparative politics. By using Substack she wants to bridge the gap between scholarly articles and opinion editorials (op eds). Her gift as a writer is to make the complicated seem simple.

Her stack is free so please check it out. Knowing her work as well as I do, I can confidently say that she deserves to be read by wider audiences. In her first Substack essay she briefly explains why comparisons between NZ and Ireland or Singapore are largely spurious from both a methodological as well as a policy standpoint.

Check her out here

Also, coincidentally, she has a piece in The Conversation on a related yet different topic.

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Political societies and economic preferences.

Much discussion has been held over the Regulatory Standards Bill (RSB), the latest in a series of rightwing attempts to enshrine into law pro-market precepts such as the primacy of private property ownership. Underneath the good governance and economic efficiency gobbledegook language of the Bill is a desire to strip back regulations in order to give capitalists of various stripes more latitude of action.

The RSB is interesting for two reasons. One, it is the type of omnibus bill that is designed to supersede other legislation in the policy enforcement chain. It is a “mother of all laws” or foundational stone type of legislation that its proponents hope will serve as a basis for future legislative reforms and policy-making and to which all existing laws must be retro-fitted. Although it varies in its NZ specifics, it emulates the “Ley Omnibus” (later named “Ley Bases” (Base Law) pushed through by Argentine president Javier Milei last year, which basically allows for the dismantling of the Argentine State bureaucracy, reform of labor and environmental laws, slashes the public budget, and opens the economy to foreign investment.

As a result, although the inflation rate has been drastically reduced and some foreign investors have taken interest in the Argentine economy, the poverty rate now reaches nearly 60 percent, health indicators (and facilities) have cratered, pension and social welfare plans have been decimated, unemployment and crime have risen, and basic public services are on life support (including power and water provision in some areas). Despite these deleterious effects, Milei’s “chainsaw” approach has been celebrated by the ACT Party, sponsor of the RSB and its predecessors, so here again we see an example of NZ politicians borrowing concepts from similarly-minded foreign governments.

They are not alone: the incoming Trump administration’s Project 2025 and Project 47 copy aspects of Hungarian president Viktor Orban’s authoritarian-minded constitutional reforms (since it centralises power in the Executive Branch and restricts civil liberties and opposition rights). More ominously, because it is an omnibus bill that redraws the NZ constitutional map in a preferred image, it echoes the Nazi “Empowerment Law” that Hitler pushed through in the German parliament after the was named Chancellor in 1933, albeit without the repressive powers later confirmed upon him. As in the case with Milei and his Base Law (and Hitler at the beginning of his legislative campaign), the RSB depends on securing a slim parliamentary majority in order to to pass into law.

What is important to note is that such omnibus legislation is most often used in democracies by authoritarian-minded politicians who are afraid that they cannot get their policy reforms passed and accepted otherwise. It is a soft form of constitutional coup whereby the “rules of the game” are stacked via legislative reform in favour of a specific set of interests, not the public good. It is a “soft” type of coup because it uses lawful/constitutional means to achieve its ends. In a perverse way it is a sign of weakness that its proponents do so, as if they know that their preferred policy prescriptions will be rejected by the electorate in the absence of an overarching law forcing the public to follow them.

To be clear, here the focus is on omnibus or foundational laws, not more specifically drawn laws that follow from them. For example, commercial and environmental law cover aspects of social and economic life but are not “foundational” in the sense that they do not provide cornerstone underpinnings to civil and criminal law, which in turn address detailed and specific rights and obligations regarding various aspects of social life, including enforcement of those rights and obligations by an independent judiciary. “Penalties under the law” refer to this level secondary of judicial oversight, which in turn is governed by foundational principles enshrined in omnibus legislation (which is the province of constitutional law).

There is a second, more fundamental problem with this approach. It involves the distinction between political society and economic society and why they should not be intertwined.

Political societies are aggregations of people within given physical boundaries who agree upon or are forced to accept certain universally-binding rules regarding representation, leadership and collective decision-making. Because NZ is the subject of this post, we shall leave aside for the moment various authoritarian political communities. As a liberal democracy, NZ has a form of rule based on majority contingent consent to the system as given, formally expressed through elections but more granularly in the everyday actions of voters who accept their positions in the social order. People go to work, play, attend school, have relationships and generally comport themselves as members of society in accordance with commonly accepted notions of acceptable behaviour (e.g., “live and let live,” “due onto others as one would do onto oneself,” respect difference and the rules of the road, etc.). But that majority consent to any given democratic rule is contingent on public expectations being met, both materially as well as politically. Political and economic societies are formed to address (and shape) those expectations.

Economic societies are aggregations of people operating within a given productive structure, making things and generating surpluses from their labor and labor-saving inventions while exchanging goods and services. “Homo economicus” is non-political. S/he maximises economic opportunities in order to pursue material interests. The ways of doing so are many and can involve collective as well as individual effort, which is often determined by the type and modalities of production (industrial, agricultural, mixed, etc.) and the material goods being pursued.

Vulgar structuralist thought holds that the type of economic society determines what type of civil and political society emerge from it. To this day, proponents of things like (neo)modernisation theory adhere to this belief. But such views offer a simplistic read on the interplay between economic and non-economic factors, so claims such as “free markets lead to democracy,” and ” political parties are the political equivalent of economic agents in the productive process” are overdrawn at best. A more nuanced take is that civil and political life may have a grounding in economic life but are not reducible to or epiphenomena of it. In some instances, say in the cultural sphere, human behaviour is not a surface reflection of an underlying economic reality or framework.

Political society is about collective governance and civil engagement. In democracies it involves a “legal” agreement, compact, or contract about the way in which the political order should be governed, which involves ostensibly neutral institutions and processes, As such, it can co-exist with a number of economic arrangements and is not inherently linked to any one. For example, over the years democracy has coexisted comfortably with varieties of capitalism and socialism. Authoritarianism has also co-existed with capitalism and socialism. The particular combination of economic framework and governance structure defines specific variants of regime type: NZ is a “liberal” democracy because it is based on a capitalist economic foundation (first settler colonialist, now primary good export, real estate ownership and services dependent production). North Korea is a Stalinist country because it combines one-party authoritarian rule with State control of the mixed industrial/agrarian economy.

What this means is that laws in a democracy are basically a means of adjudicating disputes, avoiding collective conflicts and regulating individual and collective behaviour regardless of economic status (think of the “justice is blind” adage). Ideally, they should be agnostic or neutral with regard to economic preferences because it is possible that future generations of voters will elect to support different types of economic arrangements that they believe suit their collective and individual material interests better than current schemes.

But that is not what has happened. In NZ and elsewhere in liberal democracies, things like private property rights have been enshrined in law and thereby protected by the State. The evolution of this marriage of political and economic societies is complex but the bottom line is that NZ is a capitalist society governed by a democratic capitalist State that enforces the primacy of capital above all other things. To be sure, much lip service is given to civil liberties, human rights, equality before the law, even adherence to the principles of Te Tiriti o Waitangi. But the foundation of the modern NZ State is not based on a contract between interested parties such as the agents who signed the Treaty, or on respect for the rule of law per se, but on the structural dependence of NZ society on capitalism. The role of the NZ State is to help resolve the contradictions that inevitably emergence in a political system where a minority of voters control major parts of the productive apparatus but rely on the labour of others (wage labour) in order to generate the material surpluses (profits) that allow them to exercise (indirect) political as well as (direct) economic control in NZ society.

The RSB seeks to further deepen that structural dependence of NZ society on capital by giving certain capitalist fractions more leeway in the conduct of their self-interested affairs. When fully implemented it will atomise wage-labor both in and out of production while consolidating specific types of capitalist structural control. In that light the RSB codifies the State’s role (or non-role) in facilitating capitalists’ (aka businesses) self-interested pursuit of profit. From then on self-interested maximisers of opportunities, individual and corporate, will seek comparative advantages in the deregulated marketplace.

The problem, again, is that enshrining a specific set of economic preferences or biases in a political charter interferes with voter’s freedom of choice when it comes to their own economic interests and desires. Depending on their circumstances and structural location in the productive apparatus, not everyone may be a fan of capitalism or accept the primacy of private property rights. Some may even prefer socialism, however that is defined. Prioritizing and facilitating the pursuit of specific economic preferences contravenes the commonweal (public interest) basis of democratic political charters such as that governing Aotearoa. Instead, it rigs the societal “game” in fair of a select few.

Other, more astute minds have already voiced their opposition to the RSB on a variety of grounds. Here the point is to remind readers of why omnibus bills are inherently anti-democratic even if they are legally constitutional, and why democratic political society is distinct from and should remain “above” economic society however construed. The former deals with universal values and interests; the latter involves specific sectorial interests and their material objectives in a system structurally based on the pursuit of profit. Although they may be overlapped in fact because of NZ’s history of structural dependence on capital, the public good is best served when the political/legal framework is agnostic or neutral when it comes to sectorial interests. That is what democratic collective bargaining systems are for and why political lobbying needs to be tightly regulated. Instead, the RSB seeks to tilt the game board in the direction of a specific set of interests, not the public interest at large.

Alas, although it is not meant to be, the rightwing NZ economic and political twain have met, and the outcome is the RSB. For the reasons outlined above, that is why it should be opposed.

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Article Link. “South America’s Strategic Paradox” in MINGA.

The Latin American multidisciplinary journal MINGA just published my article on “South America’s Strategic Paradox.” I was surprised that they wanted to do so because they have a very clear left-leaning orientation and my article was pretty much a straight-forward geopolitical analysis. This was the article that an editor of the New Zealand International Review felt was too broad in scope to publish. Go figure. Judge for yourself (the article is in English, with translation pending).

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Benign Strategic Nostalgia.

It has been interesting to observe reactions to the release of a cluster of national security-related documents by the NZ government last week. They include threat assessments and forecasts, defense capabilities and priorities, and areas requiring upgrades and reform, and much more. Among the issues being considered is one that I have discussed here before, the question of whether NZ, if it is invited to participate, should join “Pillar 2” of the AUKUS agreement between the US, UK and Australia on submarine and related high technology transfers. NZ is not part of the submarine (Pillar 1) component, where the US and UK will begin to rotate nuclear attack submarines through HMAS Sterling outside of Perth in a few years, then help Australia acquire and eventually build nuclear-propelled attack submarines based on US and UK models now in service. Given its non-nuclear status, NZ is not party to that aspect of the agreement although it will eventually benefit from AUKUS submarine patrols off of its Eastern seaboard and EEZ as well as from the improved signals intelligence collection streams these platforms provide to the 5 Eyes intelligence network that NZ is part of through the GCSB electronic intelligence agency.

Pillar 2 is about establishing local high technology defense industry hubs in Australian locations and perhaps NZ. These would focus on developing indigenous and shared quantum computing, cyber security, artificial intelligence and an assortment of signals and technical intelligence capabilities relevant but not limited to submarine warfare and intelligence collection and which could have trickle-down benefits for commercial and other non-military enterprises. These technologies may not be available from other countries, as they a are part of high security collaboration between close military allies. The Australian federal government has already apportioned billions of dollars to several states so that they can engage in Pillar 2-related industrial development, promising to create thousands of jobs and spin-off business opportunities by doing so. Although I do not see why Australian business interests and local governments would want to share the employment and the short-term as well as trickle-down profit benefits of the Pillar 2 pie with non-nuclear NZ, NZ authorities and businesses have expressed an interest in being included in the non-nuclear aspects of the deal.

That is where the reaction in NZ has gotten interesting. Although the specific details of any participation in Pillar 2 have yet to be announced (in fact, everything so far has consisted of vague declarations of interest on the part of the NZ Defense, Intelligence and Security Minister, Andrew Little), there has been a strong pushback from certain sectors of the foreign policy community, including Foreign Minister Nanaia Mahuta, former Prime Minister Helen Clark, and prominent academics such as Robert Patman. They all think that it is a bad idea, and while they offer a variety of reasons, their arguments against NZ participation in AUKUS Phase 2 appear to boil down to three beliefs: 1) trade dependence makes it dangerous to annoy the PRC because of the risk of economic retaliation (since AUKUS is clearly designed to counter Chinese military expansion and influence in the Southern Pacific and beyond); 2) there is moral equivalence between the PRC and US or the PRC is seen as a benign actor when compared to Western imperialists; 3) NZ must remain neutral when it comes to Great Power competition in order to remain “independent” in foreign affairs. All of these assumptions should be tested in any debate about NZ’s potential role in AUKUS Phase 2 (should it eventuate).

Until the specifics of any invitation for NZ to participate in Pillar 2 are outlined in detail, I remain agnostic on the proposition. I can see the benefits but also remain concerned that the nuclear propulsion component of Pillar 1 of the agreement is a violation of the 1997 Treat of Rarotonga that declares the South Pacific to be a nuclear free zone. Contrary to what some may think, the Treaty prohibits not only nuclear weapons but the presence of nuclear power and storage facilities on land as well. That means that AUKUS nuclear maintenance facilities, should they be constructed at HMAS Sterling, will likely be in violation of the Treaty. It appears that by basing the AUKUS subs on an island outside of Perth in Indian Ocean waters, the AUKUS signatories believe that they have circumvented that prohibition, but if one looks at the original maps that are attached to the Treaty declaration one will see that the coastal waters of Western Australia are in it. That means that practically speaking, AUKUS provides a precedent for the forward basing of other nuclear-powered naval vessels in the region, including from the PLAN (e.g. the PRC Navy, but others as well). That augers poorly for the Pacific remaining nuclear-free even if we acknowledge that nuclear submarines, including those that carry nuclear weapons, in all likelihood already transit Southern Pacific waters on a regular basis.

Although arguments by knowledgeable and reasonable people such as Patman are couched in neutral, objective language, there is also an internal political aspect to the discussion. Helen Clark was the PM when NZ signed the first Western bilateral Free Trade Agreement (FTA) with the PRC, which many NZ trade advocates consider to be the “gold standard” of NZ FTA’s. Clark has a personal stake in that agreement, which was expanded by her successor John Key, so she certainly does not want to see her government’s crowning foreign policy achievement undermined by subsequent Labour governments with different perceptions on international security affairs and the role of the PRC within it. Remember that Clark was very much on the Left of the Labour Party before pragmatic centralism pushed her rightwards once she became PM. Remember also that she eliminated the air combat wing entirely when her government renegaded on the purchase of second-hand F-16s from Pakistan that would have replaced the obsolescent A-4 Skyhawk squadron. At first her government starved the NZDF of resources and delayed replacement of ageing equipment (although it accepted delivery of the completely oversized purchase of 105 LAV wheeled armoured vehicles signed by the previous National government, which then were largely kept in storage, deployed in small numbers and/or damaged in accidents and in operations until recent on-sales to Chile. There are still a few dozen left, most surplus to requirements). In fact, in the early days of her stint as PM, she downplayed the need for robust military forces because, in her infamous words, NZ existed in a “benign strategic environment.” That was before 9/11.

Then things changed. After 9/11 the Clark government saw the opportunity to ingratiate itself to the US (after the freeze in security relations occasioned by the 1984 non-nuclear declaration that ended ANZUS) by offering support for the so-called “War on Terror.” Along with disgraced former SIS Director Richard Wood (now still feeding at the public trough as Chair of the NZ Environmental Management Risk Management Authority (ERMA). He is also Chair of the NZ/France Friendship Fund, a nice sinecure for a former ambassador to Paris and Algiers), Clark was front and centre in orchestrating the malicious framing and railroading of Algerian asylum seeker Ahmed Zaoui as an al-Qaeda linked terrorist. Although Zaoui was less dangerous to NZ that any number of Christchurch skinheads, he was imprisoned in a maximum security prison for several years until a team of dedicated advocacy lawyers proved his innocence, including that the SIS under Woods’s direction and at the Clark government’s behalf had lied and produced false evidence of his alleged crimes (the Vietnam “scouting” trip video being the most ludicrous of them). She also ordered the NZ intelligence community to focus its resources on the anti-jihadist crusade in Aotearoa and elsewhere (which may well have included NZSIS complicity in the US extraordinary rendition and black site operations against suspected al-Qaeda terrorists and supporters, the details of which remain suppressed), and to top things off attempted to use the newly-minted powers of the Terrorism Suppression Act (TSA) to arrest and jail the so-called Urewera 18 band of leftists and Maori sovereignty activists (charges were dropped against all but four defendants, and the remaining were convicted of minor weapons charges after years of costly litigation, as had been the case with Zaoui).

Terrorism became the foil for Clark’s turn to security toughness even if the jihadist threat, both before and after 9/11, has been more talk than walk (no Muslim has been involved in an ideologically-motivated violent attack in NZ before or after 9/11. The 2021 supermarket stabber was, as I have written before, a lonely and homesick mentally ill person with a blade fetish and no effective counselling support, not an ideologically committed extremist). Sensing the tenor of the times, Clark dropped her progressivism on both domestic and foreign policy issues and turned rightwards out of political expediency (remember her opposition to cannabis legalisation while in office? She now supports it), thereby setting the stage for a change in NZ’s security perspective and assessment of threats.

At the same time she was polishing her anti-jihadist bonafides on the back of an innocent man and settling scores with pesky activists, she authorised NZDF deployments to Afghanistan and Iraq (even while not formally supporting the US-led invasion of Iraq in 2003). Not all of those deployed, shall we say, were NZDF engineers, and those deployments turned into a longer-term engagement in both countries that did not end until the end of the 2010s/early 2020s. In the end both countries reverted to form once the NZDF vacated the premises, leaving as a result 10 dead soldiers, several more wounded, credible accusations of war crimes and a cost of millions of dollars.

The turn towards revitalising ties with Western security partners began with her government. Under her watch NZ negotiated the core of the bilateral Wellington and Washington Agreements on US-NZ defense cooperation (later signed into force by her successors). NZ also deepened its ties within the 5 Eyes signals-technical intelligence network involving Anglophone partners. That makes it pretty rich of her to now claim that NZ has become too ensnared in the 5 Eyes “vice” and has adopted too much of a Western-centric security perspective. In fact, it appears that beyond her obvious hypocrisy, Clark has returned in retirement to her lefty roots in order to burnish her tarnished progressive credentials with certain domestic and foreign audiences. But that does not make her right when it comes to NZ’s national security and contradicts her actions on the security front while in office.

Beyond her personal foibles, the Clark interjections in current NZ security debates is evidence that she clearly is out of the loop when it comes to current NZ intelligence and defence threat assessments, but more importantly, is more proof of a significant fracture within Labour Party circles (the domestic aspects concerning tax policy and other issues having already become public). For example, Foreign Minister Mahuta has been demoted within Cabinet and appears increasingly confined to ceremonial roles rather than substantive engagement with foreign policy formulation. Minister Little has clearly assumed a dominant role in foreign policy decision-making as well as in security affairs, having repeatedly stated that NZ “no longer operates in a benign strategic environment” in a pointed message for Clark to pull her head in (and to be sure, the rightward drift in Labour after Jacinda Ardern’s tenure as PM is palpable this election year).

He, of course, is objectively correct on that score. NZ has to adapt its strategic posture to the times, and these times are not those extant during Clark’s tenure as PM. She and like-minded others need to stop living in the past, clinging to outdated notions of foreign policy “independence,” and treating the PRC as a benign global actor. As I have written before, NZ operates with bounded autonomy in our foreign affairs, something that gives it flexibility but which does not allow it complete freedom of choice or action when it comes to things like Great Power competition. But for NZ to be flexible in light of existing constraints, it must clear-eyed about what is and what is not in its medium to long-term interests. That is because in these fluid transitional times re-shaping the increasingly multipolar global order, trade opportunism is just a short-term solution, especially when it runs counter to longer-term international security trends.

If I were to be charitable, I would simply say that Clark and her fellow travellers need to understand that the PRC of 2008, when the FTA was negotiated, no longer exists. Gone is the relative openness and transparency of the CCP regime led by Hu Jintao and in its wake has risen the repressive and expansionist regime led by Xi Jinping. Clark and others may wax nostalgic for a past where the PRC would adopt liberal internationalist principles when it comes to foreign affairs and join the community of nations as a democratising Great Power, but that sadly has not happened. Instead, Xi has consolidated his grip on power, increased authoritarian powers against civil society, moved to culturally extinguish restive minorities like the Uyghurs, and de facto annexed Hong Kong while sabre-rattling against Taiwan and usurping the maritime territory of its littoral neighbours around the South China Sea. All while expanding its military capabilities (including its nuclear arsenal) and conducting global political influence (United Front) and espionage campaigns that include large-scale as well as focused cyber intrusions, intimidation of diaspora populations and industrial-size patent and copyright theft. That in turn has reconfigured the threat environment in which NZ is situated. The recently released package of NZ security documents pointedly make reference to these facts, among other things.

Even if we agree that rising Great Powers like the PRC have to do what they have to do when it comes to expanding their power, and recognising that Western countries have done similar things and worse well up to the recent past, it is nevertheless clear that the PRC is not operating as good international partner on all fronts, and that its behaviour is very much inimical to the rules-based order that NZ professes to uphold in the international system. In fact, the PRC under President Xi explicitly rejects the premise of liberal internationalism citing, perhaps at least partially correctly, that the international institutional status quo was built by and for Western imperial and neo-imperial powers and their allies, not for the Global South.

In that light AUKUS may not be the solution to the changes in the South Pacific strategic landscape and in fact it might make things worse if it serves as a precedent for the erosion of its non-nuclear status and catalyst for further militarisation of the region. But resorting to knee-jerk objections based on a rosy vision of some ethereal past does not help advance the debate about where should NZ situate itself in the equation and what moral, ethical, and practical utility AUKUS rests upon, especially since as far as the AUKUS partners are concerned, it is a fait accompli whether NZ is involved or not.

In that light, assessments and arguments based on nostalgia for a benign strategic past where issue-linkage could be abandoned and trade and security could be decoupled now seems naive at best and foolhardy at worst. But then again, I do not have skin in the game when it comes to past foreign policy decisions that have, in a path-dependent way, led us to where we are today.

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A word on post-neoliberalism.

I recently read a critique of the market-oriented economic theory known as “neoliberalism” and decided to add some of my thoughts about it in a series of short messages on a social media platform dedicated to providing an outlet for short messaging. I have decided to expand upon those messages and provide a slightly more fleshed out appraisal here.

“Neoliberalism” has gone from being a monetarist theory first mentioned in academic circles about the primacy of finance capital in the pyramid of global capitalism to a school of economic thought based on that theory, to a type of economic policy (via the Washington consensus) promoted by international financial institutions to national governments, to a broad public policy framework grounded in privatisation, low taxation and reduction of public services, to a social philosophy based on reified individualism and decontextualised notions of freedom of choice. Instilled in two generations over the last 35-40 years, it has redefined notions of citizenship, collective and individual rights and responsibilities (and the relationship between them) in liberal democracies, either long-standing or those that emerged from authoritarian rule in the period 1980-2000.

That was Milton Friedman’s ultimate goal: to replace societies of rent-seekers under public sector macro-managing welfare states with a society of self-interested maximizers of opportunities in an environment marked by a greatly reduced state presence and unfettered competition in all social (economic, cultural, political) markets. It may not have been full Ayn Rand in ideological genesis but the social philosophy behind neoliberalism owes a considerable debt to it.

What emerged instead was societies increasingly marked by survivalist alienation rooted in feral capitalism tied to authoritarian-minded (or simply authoritarian) neo-populist politics that pay lip service to but do not provide for the common good–and which do not adhere to the original neoliberal concept in theory or in practice. Survivalist alienation is (however inadvertently) encouraged and compounded by a number of pre- and post-modern identifications and beliefs, including racism, xenophobia, homophobia and social media enabled conspiracy theories regarding the nature of governance and the proper (“traditional” versus non-traditional) social order. This produces what might be called social atomisation, a pathology whereby individuals retreat from horizontal solidarity networks and organisations (like unions and volunteer service and community agencies) in order to improve their material, political and/or cultural lot at the expense of the collective interest. As two sides of neoliberal society, survivalist alienation and social atomisation go hand-in-hand because one is the product of the other.

That is the reality that right-wingers refuse to acknowledge and which the Left must address if it wants to serve the public good. The social malaise that infects NZ and many other formally cohesive democratic societies is more ideological than anything else. It therefore must be treated as such (as the root cause) rather than as a product of the symptoms that it displays (such as gun violence and other anti-social behaviours tied to pathologies of income inequality such as child poverty and homelessness).

As is now clear to most, neoliberalism is dead in any of the permutations mentioned above. And yet NZ is one of the few remaining democratic countries where it is still given any credence. Whether it be out of wilful blindness or cynical opportunism, business elites and their political marionettes continue to blather about the efficiencies of the market even after the Covid pandemic has cruelly exposed the deficiencies and inequalities of global capitalism constructed on such things as “just in time production” and “debt leveraged financing” (when it comes to business practices) and “race to the bottom” when it comes wages (from a labour market perspective).

I shall end this brief by starting at the beginning by way of an anecdote. As I was trying to explain “trickle down” economic theory to an undergraduate class in political economy, a student shouted from the back seats of the lecture hall “from where I sit, it sure sounds more like the “piss on us” theory.

I could not argue with that view then and I can’t argue with it now. Except today things are much worse because the purine taint is not limited to an economic theory that has run its course, but is pervasive in the fabric of post-neoliberal societies. Time for a deep clean.

PS: For those with the inclination, here is something I wrote two decades ago on roughly the same theme but with a different angle. Unfortunately it is paywalled but the first page is open and will allow readers a sense of where I was going with it.

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Media Link: “A View from Afar” on NZ security strategy and the end of neoliberalism in South America.

I have not had much time to blog in recent weeks but continue the weekly series of podcasts with Selwyn Manning. This week we discussed efforts to develop a comprehensive national security strategy for New Zealand that goes beyond Defense White Papers and annual reports from various security agencies, then turned to recent elections in South America as an indicator that neoliberalism is well and truly dead as an economic policy approach and, perhaps more importantly, as a social theory. You can find the episode here.