“The unpalatable truth” : a critique of the Council of Trade Unions Alternative Economic Strategy

The Spark July 2010
Philip Fergusson
Over the past quarter century, workers in New Zealand have been working longer, harder and faster for less pay and in worse conditions. For instance, as Unite union’s national director, Mike Treen, calculated, using official government figures on wages, in the period from the early 1980s to the mid-1990s, real wages – what your wages can actually buy – declined by 25 percent. This decline was the result of the policies of the fourth Labour government and the first term of the fourth National government. Since then, wages have not recovered and remain only three-quarters of their 1982 level. (See: http://www.unite.org.nz/?q=node/704)
The transfer of wealth upwards is also revealed in the fact that corporate profits as a share of GDP rose from 34% in the mid-1980s to 46% in 2005, while wages as a share of GDP fell from 57% at the end of the Muldoon era to 42% in 2005.
Much longer hours
About 36% of full-time male workers and nearly 19% of full-time female workers now work 50 or more hours a week. Almost 16.5% of full-time male workers and almost 8.5% of full-time female workers actually work more than 60 hours a week. Over half of agricultural and fisheries workers and about 35% of plant and machine operators and assemblers work more than 50 hours a week and a majority of both these groups working more than 50 hours are actually putting in more than 60 hours a week.
By far the largest number of male workers plus the largest number of female workers work 40-49 hour weeks (see chart). Instead of life getting easier, it’s getting more filled up with work. Over a century after winning the 40-hour week, most workers are working more than 40 hours, while many other workers are under-employed through being in part-time and insecure jobs on low wages or are unemployed and struggling to get by on the measly dole.
Workers forced backwards
At the same time, workers’ basic defence organisations, the trade unions, have been drastically weakened. Trade union membership over the past decade has hovered around 21-22% of wage and salary earners, down from over 50% before the 1991 Employment Contracts Act (ECA). At the end of 1985 unions in New Zealand had just over 683,000 members; today they have about 388,000 members in a much-expanded labour force.
These facts are the result of a largely one-sided class war waged against workers and trade unions by the employers, backed up by successive Labour and National governments and the power of the
state. Since the top union leadership sabotaged workers’ fight to stop the ECA, industrial struggles in this country have been at a low- point, as have the expectations of much of the working class.
What can be done about it?
What is to be done to turn this situation around is, clearly, a very difficult and complex question to answer. One response has come from the Council of Trade Unions (CTU), in the form of a suggested
Alternative Economic Strategy. The AES was put forward at last year’s CTU conference, an amended draft was then discussed at a National Affiliates Council meeting in May this year and the final version is about to be released as we go to print.
The CTU paper argues that “principles. . . (of) “fairness, participation, security, improving living standards, and sustainability” should guide economic policy and create “an economy that works for everyone”. At the same time, they “accept that efficiency, productivity and return on investment are vital characteristics of a functioning and effective economy.”
But, already, there is a serious problem. The New Zealand economy is not of some indeterminate type; it’s a specifically capitalist economy. A small class of capitalists buy the labour-power (ability to work) of a large class of workers who are paid a wage (for the capitalist, in Marxist terms, this is variable capital); the workers then produce goods and services of a greater economic value than the combination of what they are paid and the other costs of the capitalists. This extra value – surplus-value – produced through the labour-power of the workers is then the source of capitalist profit.
The greater the difference between the outlay of variable capital and surplus-value, the greater the profit for the capitalists. So we have a fundamental contradiction, right at the very heart of the economy – the production process.
In other words, in a specifically capitalist economy, there is no such thing as a fair wage or fair profit; there can’t be fairness for everyone because the existence of private profit itself is the result of exploitation.
The productivity scam
Moreover, this contradiction permeates all aspects of a capitalist economy. Take the issue of productivity, for instance. Both the employers and the CTU leadership advocate increasing this, but what does it mean within the context of a capitalist economy?
Increases in productivity can come about in two basic ways. The main one for three decades after WW2 in developed capitalist countries such as New Zealand, was expanding investment in new machines and technology. This means more goods can be efficiently produced in a shorter space of time and makes each worker more productive. This is the most effective form of increasing productivity. While this form of increasing productivity is generally accompanied by less wear and tear on workers, it still means that they end up with a smaller share of the total wealth they have created than before.
The other way is simply making workers work longer and harder, through methods such as extending working hours and speed-up, for instance. In recent years, this has been increasingly used by capitalists in New Zealand. As the NZ Ministry of Economic Development has noted PME investment in NZ (plant, machinery and equipment) has been nearly 25 percent lower than the average in OECD countries in recent years – 7 percent of GDP here, compared to 9 percent of GDP on average in the OECD. Total investment, excluding residential investment, as a proportion of GDP has also been nearly a fifth lower in NZ than the OECD average. (See http://www.med.govt.nz/irdev/econ_dev/growth-innovation/progress-2003/benchmark/benchmark-08.html#P419_80590)
Bosses viewpoint
Several years ago, the CTU attempted to encourage the government and employers to promote the first method of increasing productivity. They launched a campaign, complete with glossy promo material, to do this. While Business New Zealand’s Phil O’Reilly welcomed the CTU’s initiative, he argued, naturally enough from a capitalist viewpoint, that an even more business-friendly economic environment in New Zealand (lower company tax, even less union power, fewer resource management controls, etc) was necessary to encourage productivity-boosting investment (see: www.businessnz.org.nz/…/050825%20remnet%20conference%20productivity%20pay.ppt).
And there, of course, is the rub.
The capitalists always understand that their profits are dependent on exploitation and on maintaining the best possible conditions for that exploitation to proceed smoothly. In times of falling profitability, this will mean they need to attack workers’ pay, living conditions and rights. Capitalism is inherently hostile to “an economy that works for everyone”.
An alternative economy
The unpalatable truth is that there are no solutions under capitalism. This is a difficult and unpopular argument to advance; people very naturally would prefer to hear that this or that proposal in the here and now could substantially improve things. Close examination of capitalism’s workings shows otherwise. Strike action can win temporary gains, but, as our recent history shows, those gains can be quickly lost.
For workers, the only real alternative is one that starts from taking possession of all the wealth and wealth-producing processes and puts them at the service of the mass of humanity. A better deal for the mass of workers requires not an “alternative economic strategy” but an alternative economy.