The New 'Centre-Left' Establishment

Wednesday, 11 November 2020, 4:26 pm
Article: Keith Rankin

The Linear Political Spectrum

In both New Zealand and United States, we have just seen the political success of the one-dimensional political centre; perhaps a nudge to the left of centre.

By one-dimensional (or 'linear'), we mean the traditional left-right political spectrum, whereby the 'right' means private capitalism aligned with institutional conservatism and minimal income redistribution, and the left advocates substantial income redistribution, government-directed compensation for the disadvantaged, and institutions which fully reflect population diversity. The 'centre' is thus a balance of these two 'extremes' of apportionment. This centre is epitomised by what might be called the 'right' faction of the governing New Zealand Labour Party; or by the United States' Democratic Party (Bernie Sanders excepted).

For a while it looked as though 100 percent of MPs in New Zealand's new parliament would belong to parties that all fitted neatly on the linear spectrum: two stale 'left' parties which self-label as 'progressive' (Labour and Green); and two stale 'right' parties (National and Act) which conform to linear conservatism. Only the Māori Party's unexpected success has saved the new Parliament from this one-dimensional fate.

Centre Parties in past New Zealand Parliaments

New Zealand has had a number of small centre parties represented in Parliament in the 'modern era', which I date from the formation of the National Party in 1936: Social Credit, New Zealand First, United, Progressive, Māori.

Of these (Peter Dunne's) United and (Jim Anderton's) Progressive Party belonged on the linear spectrum. The Progressive Party fitted on the spectrum between Labour's left and Labour's right. United was a party whose leader neatly fitted true linear centre, and could thus practically align with either Labour or National to facilitate the formation of a centre-left or a centre-right government.

The other three centre parties all contained an additional dimension. Social Credit was/is a monetary reform party, the New Zealand variant of a movement which consolidated as a political force in the 1930s' Great Depression. Social Credit was a mainly rural radical movement, such as the Granger movement in the United States in the late nineteenth century. It emphasised the financial power imbalances faced by precarious farmers and other provincial small businesses, and the use of interest payments to transfer income from the poor to the rich. As a political party in New Zealand, Social Credit was a breakaway from the Labour Party. It gained 11 percent of the popular vote in 1954, 14 percent in 1966, 16 percent in 1978, and 21 percent in 1981. In 1992 Social Credit joined another left-wing party, the Alliance.

Social Credit's extra policy dimension was monetary reform. Financial reform is a project more important than ever this century, where capitalist economies have only been able to persevere with the help of ultra-low interest rates. The Modern Monetary movement has a (sort of) similar policy agenda (focusing on public finance); an agenda which requires both low interest rates and governments prepared to take advantage of them.

New Zealand First is an semi-liberal centrist party with a nationalist dimension. Indeed it could be classed as a mercantilist party, which makes it semi-attached to the new establishment, and not nearly as radical as it occasionally purported itself to be. It formed as a breakaway party from National in 1993, and, like United, was able to form coalition governments with either of the two larger parties (Labour and National) which occupy the linear political spectrum. Like the already mentioned Progressive and United Parties, New Zealand First was always identified with its political leader (Winston Peters) and will almost certainly fade from future relevance for the same reasons as those other two parties.

The Māori party has a clear 'identity' dimension, and depends on voters who prefer the linear-left of Labour to the linear-right of National. In its past tenure in Parliament it definitely 'punched above its weight', especially given that it never had the 'balance of power' that New Zealand First and United and (briefly) Social Credit have had. While its future political influence will be constrained by its supporters' distaste for National, it still offers an opportunity for the expression of policy ideas which do not fit onto the linear political spectrum. Voters hoping for something different this decade should definitely consider voting Māori in future elections, because it is the nearest we have to a radical centre party in Parliament, and not necessarily because they are motivated by identity politics. The Māori Party should be cherished as an independent voice; not in any way stale.

We may also note that the Green Party (and its predecessor, the Values Party) started as an iconoclast centre party. Gradually, however, the Green Party moved to the unidimensional political spectrum, on the left, and has been drawn into a worldview that itself is the larger part of the problem that the environmentalist movement is there to address.

The Opportunities Party (TOP)

New Zealand did have an explicitly 'radical centre' party in the 2020 election. Sadly – and mainly because TOP no longer had its founder leader (Gareth Morgan) – who was popular with the media networks, and who in 2017 made it onto the media television debates. Despite that, TOP got 1.5 percent of the votes in 2020, polling highest of all the parties which have never been represented in Parliament.

TOP's flagship policy is to convert to a Universal Basic Income funded mainly by a flat rate of income tax equal to the present top rate of 33 percent. TOP is a centrist capitalist party that effectively promotes the extra dimensional concept of 'public equity', and promotes equity principles (rather than redistributive principles) to address the searing inequality problems faced today in New Zealand and in other 'liberal democracies'.

The political centre does not have to be bland. TOP deserves to be thanked for giving New Zealanders an 'off the spectrum' option. Further, by gaining a significantly higher percentage of special votes than of preliminary votes, TOP showed that it was getting through to many of the younger people who were looking for an iconoclast option. And, thanks in part to TOP's efforts, at least one television journalist – Corran Dann I believe – was able to say that Universal Basic Income is now a mainstream policy option. I hope that TOP can survive, in one form or another, and continue to advocate for the radical centre.

The Future of the National Party

TOP's policy agenda could be taken up by a National Party seeking a future as a genuine alternative to an establishment Labour Party that sits astride the one-dimensional centre. TOP, as a capitalist party unconstrained by one-dimensional conventions, may have achieved its main purpose if, looking back from the future, it proves to be a policy feeder to National. It is normal for ideas once regarded as 'fringe' to become mainstream; the conservative policy gatekeepers cannot keep out a good idea forever. In the case of Labour, this process of policy evolution has mainly taken place in the 'identity politics' space. It is now up to National to take a few risks, and to inject multi-dimensional thinking into the 'economic capitalism' policy space.

The Liberal Mercantilist Consensus

The new 'Centre-Left' establishment is a liberal mercantilist consensus – conservative, as just about all consensuses are – which buttresses an establishment worldview that predominates in academia, the finance industry, the mainstream media, and the public bureaucracy; as well as in New Zealand's four linear-spectrum political parties. This worldview requires much unpacking that goes beyond the scope of this present essay (but see the checklists below). I should note that at least one academic publication suggests that liberal mercantilist philosophies may underpin key aspects of the European Union project.

Both the New Zealand Labour Party and the United States Democratic Party are fully committed to this entrenched normative political economy, without any awareness of other options, and insensitive to the stresses that liberal mercantilist assumptions place on the planet and the people. A good way to start would be for adherents of the new 'leftish' political mainstream to empathise with the people of the world who vote for the likes of Donald Trump, and to appreciate that the received truths of liberal mercantilism fail to gel with the realities of their lives. Donald Trump – an unreconstructed mercantilist himself – was never anything close to a solution to the concerns of American voters who aligned themselves against the Democratic Party worldview. But he tapped into a real concern about the evolution of 'politically correct' politics, and the new centre-slightly-left establishment ignores these concerns at its peril.

In New Zealand and elsewhere, the existential problems of economic inequity, environmental cost, and phobic public finance will only get worse. The new political establishment has no conceptual tools to address – or even properly acknowledge – these matters.

Memes

Liberalism is an essentially European political and philosophical project that dates from the second half of the seventeenth century. It is neither true nor false. Rather, it's a lens which may be associated with the following conceptual icons:

• private property rights
• small government
• market discipline
• meritocracy (though 'merit' is ambiguous)
• rules-based international order
• strong enforcement of property rights and other rules
• balanced government budgets
• monetarism, with money understood as a kind of commodity
• permissive
• freedom to … (as distinct from 'freedom from')
• equality of opportunity
• inequality of outcome
• compensation
• Glorious Revolution (England, 1688)
• John Locke (English philosopher)
• globalisation, in the ideological rather than the technological sense
• mechanism that's largely self-adjusting, like clockwork
• predictable, in a Newtonian sense

Mercantilism is for social science what alchemy is for physical science. Thus, mercantilism is false. While both alchemy and mercantilism represent stages in the development of science, mercantilism (unlike alchemy) continues to cohabit with social science. Economists do not learn about mercantilism, in the same sense that chemists and physicists do not study alchemy. Global historians know about mercantilism and its historical importance, but tend to compartmentalise it as an historical antecedent to economic and political theory rather than understanding it as an ongoing component of contemporary business, finance and politics.

These are the conceptual icons of mercantilism:

• economic nationalism
• exports good, imports bad
• balance of payments (current account) surplus as a measure of national success
• zero-sum competitive national rivalry, with winners and losers
• economic imperialism, power, struggle
• government-business nexus
• business worldview
• economic activity is 'supply-driven' (as opposed to 'demand-driven')
• money and its tradable derivatives considered to be wealth
• bitcoin (and similar) as new commodity money
• making money as the economic purpose of life
• holding onto money, miserliness
• cost understood as the giving up of money
• government aversion to 'fiscal risk'
• ascription of magic-like qualities to money
• living to work; glorification of work
• employment maximisation (as quite distinct from low unemployment)
• maximisation of economic output
• the third quarter of the second millennium as the age of mercantilism

Finally

Liberalism – in 1776 in the guise of Adam Smith's classical economics – supposedly dealt to mercantilism, once and for all. But it only exposed the narrow more obvious fallacies of mercantilism (those zero-sum trade fallacies to which Donald Trump subscribes), while reinforcing some of the more intractable myths surrounding money, work, and wealth.

The United States, in 1776, was conceived by liberalism and born out of its mercantilist exploitation by Great Britain. New Zealand – as 'New Zealand' – was born out of mercantilism in 1642 (in the middle of the third quarter of the second millennium) as part of the explicit global business imperialism as conducted by the Dutch United Provinces (now the Netherlands).

Donald Trump is a shallow mercantilist, who became illiberal in order to fit the profile ascribed to him by his supporters. Angela Merkel, soon to retire as Chancellor of Germany, is a deep mercantilist and a liberal; modern Germany is the epitome of liberal mercantilism. The centrist grand coalition which has dominated German politics this century is the likely role model for the new New Zealand government, and also for the new United States government.

© Scoop Media

Keith Rankin

Political Economist, Scoop Columnist

Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s.

Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like.

Keith retired in 2020 and lives with his family in Glen Eden, Auckland.

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