After preaching neo-liberal monetarist orthodoxy for over two decades, the current panic on world financial markets has seen both the Labour and National tripping over each other in their haste to propose new Keynesian-style government pump-priming measures during the lead up to next month’s general election.
In order to solve the problem of the disappearance of so much fictitious capital in the form of overextended credit and worthless junk bonds they propose to … create yet more fictitious capital! Except this time the government – not the banks or finance companies – will be the one to perform the divine task of creating fresh capital ex nihilo.
Thus we had National Party finance spokesperson Bill English proclaiming last week with all the fervour of St Paul in Damascus “…slamming the brakes on at this point would make things worse…National’s economic plan, to be detailed this week, will be focused on providing short-term stimulus to the economy in the current uncertain outlook…”
He later complained bitterly that when “…National laid out a package to borrow slightly more to fund desperately needed infrastructure and promote growth, Helen Clark labelled the plan as ‘reckless’. Now, Labour is promoting an even higher debt track.”
Not to outdone, Finance Minister today described National’s proposal to require the Government Superannuation Fund to invest 40% of its funds in New Zealand as tantamount to communism!
Of course the reality is that in ditching Von Hayek for Keynes all that Labour and National have done is exchange one crock economic theory for another. This is because neither the neo-liberal monetarist nor Keynesian economists recognise the fundamental law of classical economics, as upheld by both the “high priest of capitalism” Adam Smith and the founder of scientific socialism Karl Marx, that money cannot be simply created out of thin air since it is at the end of the day nothing but the expression in abstract form of actual human labour embodied in tangible commodities.
In the long run, no amount of tampering with the money supply can avert an economic downturn if the actual productive base is insufficient to support the amount of currency in circulation. This is why all political parties that focus on reforming the monetary system (from ACT to the “funny money” Social Credit brigade) are doomed to failure.
As such it is perhaps fitting that in the upcomnig election the National Party candidate standing in my local electorate should be none other than ex-Social Credit Party activist Terry Heffernan. In the last three decades Terry has managed to stand as a candidate for Social Credit, then the Alliance followed by NZ First. However Terry clearly feels that in these troubled economic times National is now a fertile ground for people of his political pedigree, and judging by National’s new-found passion for state-funded credit he would certainly seem to be correct in that assumption!
Tags: Keynesianism, Labour Theory of Value, Monetarism, Social Credit
October 16, 2008 at 5:24 am
btw … did anti-semitism play a role in the Social Credit movement in NZ?
October 16, 2008 at 11:18 am
AFAIK anti-semitism has never been a major feature of the Social Credit movement in NZ.
Wikipedia has this to say on the subject:
“While the early international Social Credit movement was associated by some people with anti-Semitism, it is far from certain the New Zealand movement displayed this aspect in any significant numbers or for any significant period of time.
The history of anti-Semitism and the New Zealand Social Credit political movement was unique to the history of the country. Anti-Semitism has largely been absent in New Zealand, even in the Victorian period, as evidenced by the election without comment of a Jewish prime minister in the 187os. The early Social Credit movement diverged from its international brethren. In New Zealand, Social Credit concentrated solely on the economic theories of the international movement without its attendant racial theories.
In a twist of history, the New Zealand faction of the League of Rights, unlike similar organisations in Australia and the United Kingdom, was structurally and historically unrelated to Social Credit. In the late 1960s and early 1970s, it began to infiltrate Social Credit in order to have a wider platform for their views. This attempt was curtailed when it became identified and those members of the party were purged by Beetham.
In further twist of history, after the purge, politicians with League connections were to be found not in Social Credit but in the National Party, notably cabinet ministers George Gair and Ben Couch in the Muldoon administration. Even these men’s connections with the League were transient, Gair indeed abhorred anti-Semitism and had not realised this undercurrent of the League when he first associated with it.
Indeed the autonomous existence of the League of Rights in New Zealand only occurred because anti-Semitism was not afforded a position within Social Credit.”
So the final verdict appears to be:
financially illiterate nutcases? – yes
anti-semites? – probably not
October 21, 2008 at 10:51 am
Don’t agree with that Tim. Anti-semitism and Social Credit have a close connection:
http://readingthemaps.blogspot.com/2008/10/incomprehensible-or-anti-semitic.html
October 21, 2008 at 1:44 pm
Obviously you have researched this subject in some depth Scott (as opposed to my 5 minutes searching on wikipedia) so I defer to your assessment of Social Credit’s links with anti-semitism.
I guess their older, mainly Pakeha support base might explain some of this – in my experience anti-semitism (bar the NF lunatic fringe) is very rare among anyone aged under about 50 in NZ.
On the odd occasion when I have run into a proponent of the “world Zionist conspiracy theory” while doing a stall or paper sale, invariably they have fallen into this older, white demographic.
November 9, 2008 at 6:32 pm
I dont care whether Social Credit was anti semitic or not. Infact it would be a nice way to dismiss it all,to readily accept others opinions/call them crazy theorists, and never look into the ideas.
If the system is more fair than the current ludicrous and unstable one,then il have it.
December 8, 2008 at 10:26 am
http://another-green-world.blogspot.com/2008/12/far-right-speaker-at-alternative.html
looks at the far right and monetary reform