TimothyJCostelloe02249839148.721AssignmentNumber22008forDrGrantDuncan Thetwentiethcenturysawalonghistoricalcontestbetweenliberalideaswhich soughttopromotecapitalistproductionandfreetradeandsocialistideasthatsought toreduceorregulatetheeffectsofcapitalism.Whathasbeentheoutcomeofthis contest,intermsofthebasicassumptionswhichnowunderpinpolicymaking?

Theriseofglobalisminthe19thand20thcenturiesinitiatedaninterestingstrugglebetween theforcesofcapitalismandtheforcesofsocialism.Thevastmiddlegroundofcivilsociety wasthebattlefield,oftenliterallyinthisperiod,astheforcesofleftandrightcompetedfor hegemonicpower.Theseconflictsarestillbeingplayedouttodaybut,forwesternliberal democraciesatleast,acompromiseofsortshasbeenreached.ThissocalledThirdWay,is thestrategythatunderpinsthepoliticalstrategyofNewZealandPoliticsinthisearlypart ofthe21stCentury,andwilllikelysurviveachangeofgovernment,duetothecooperative natureofMMPparliamentarypoliticssince1996.

However,viewingthepoliticalprocessasoneoftwoideologiesisalittlesimplistic.One purposeofthisessayistoexaminesomeofthemythsofsocialistsuccessintheirself declaredstruggleagainstmoneyandcapital,reframingsomeoftheacceptedperceptionsof partisanpoliticsandideologiesinnewboundarieswhichfitmoreclearlywithobservations madeabouttheseconditionsfromamiddleperspective,whichisnowthenorm.Amiddle groundviewoftherealsituationasithasexistedthroughouttheperiodunderreviewwill beattempted,drawingfromthehistoryofliberalthought,asIinterpretit,toinformmy views.ThereadershouldbeawarethatIdisagreewithalmosteverystatementmadeby

TJCostelloep2 Marxistsandradicalsocialists,butequallyIwillalsodisagreewithconservativesand utilitarians.Eventheveryideaofalegitimatestruggleiserroneousinmythinking.Ithas beensimplyaconfrontationbetweenideologues,atgreatcosttothemiddle,including economicandsocialdestruction,forlittlegain.Thepoliticalsituationwillalwaysstabilise inthemiddle,thisisthenaturaltendencyofcivilsocietyandfunctioningsocietiesintimes ofpeace.Aftercostingmillionsoflivesandbillionsofdollarsinrealconflictsuntilan inevitablecompromisewasreached,theconsensusofpoliticswhichhasemergedin Westernstylesocialdemocraciessincethelate1990sismoreinclusive,ideologically correct,anddesignedtoreducetheneedforbipartisandisagreementsoverwhatneedsto bedone.Inspiteofthesocalledneoliberalresurgenceinthe1980sand1990s,western societiesarebetteroffandmorefairthantheywereatanytimepriortothe20thcentury.

Itendtodisagreewiththepropositionthatcapitalismisprimarilyatoolofexploitationof onegroupoveranother,thosewithmeansagainstthosewithout,andcoulddemonstrate insteadtheremarkabletenacityoffeudalismundercapitalismasanextremebehaviour encompassedandacceptedbybyliberallaissezfaireeconomics.This,Ibelieve,iswhat Marxwasreactingagainst.Theliberalprojectofhumandevelopmenthasoftenbeen controvertedbytheneedofpartisanstocontrolothersusingpoliticalandreligioussystems. Communism,asadoctrine,beganasareactionarymovementtotheexcessesoffeudal practitionersofcapitalandis,byitsnature,counterrevolutionary.MybeliefisthatMarxist socialismhasoftenretardedthecourseofhumanfreedominitsprolongedconfrontation withsocietyduringthe20thcentury.AnyachievementsSassoonetal.claiminthisarea

TJCostelloep3 wereoriginallydesignedbyliberals.Anygreatmovementisassimilatedandwatereddown byothersovertimeandliberalismisnoexception.Weshould,perhaps,betalkingabout neofeudalcapitalismratherthanneoliberalcapitalthroughthe1990s.Theliberalproject isaworkinprogress,hamperedalongitsjourneybycompromiseandmisinterpretation.

TheTwentiethCenturyConfrontationorCompromise?. NewZealand's20thcenturybeganwiththeelectionoftheLiberalGovernmentof1891. Thisisthebeginningofanumberofchangesinthestructureofsocialandeconomicaffairs finallyterminatedbytheFourthLabourGovernmentfrom1984andfollowedbythe extremeneoliberalpoliciesoftheNationalgovernment19911999.Between1984and 1999successiveNationalandLabourledgovernmentsbothchosetotryandadaptthe liberalagendatotheneedsofstatisminthecontextofinternationalsovereignty.This strategyrepresentsacompromisewithliberalthoughtwhichbestservesthepoliticalneed ofthehegemonicpower.Statismnormallyallowsnoonetobetotallyindependent. Governmentisananathematoaclassicliberal,butaninterestingexperimentinaliberally influencedapproachtominarchywastriedbybothwingsofparliamentbetween1984and 1999.Beingneithersustainable,realisticnorsociallyequitablethisapproachhasbeen replacedbyareturntostateinterventiononagrandscaleunderLaboursince1999.The electionofHelenClark'sthirdwaygovernmentendedNewZealand's20thCentury,108 yearslong.

TJCostelloep4 Theidentificationofcapitalismwithliberalthoughtisalsoacompromise.Somepractices andpractitionersoffreemarketcapitalismhavemoreincommonwithfeudalism.By extensionthisancientsocioeconomicstructurehashadtoaccommodateacompromise withtheriseandriseofliberalmovements,anddoessoundertheguiseofcapitalismand USstyledemocracy.Itisfeudalismonaninternationalscale,wheretheserfsarepaid enoughtolastfrompaychequetopaychequeandnomore.Itisnotliberalism.

Ineveryerathehegemonicpowersareopposedbycounterrevolutionaryagitatorsand troublemakers.Inthe19thand20thcenturiestheseplacesofagitationwerefilledby communists,extremesocialistsandfascists.Theyimposedthemselvesontheexistingorder anddemandedpower.Foratimeeachphilosophyhaditsheyday,seizingpowerindifferent countries,oftenusingviolentmeans.Theresultingcompromisewiththemiddlebecomesa realistsolutionspecificallytailoredfortimeandplace,butcaninnowaybecalledliberal. Socalledextremerightliberalsinlate20thcenturyasexemplifiedbytheACTParty,are minarchistsandstillbeholdentothecompromisewiththestate.Theveryacronym AssociationofConsumersandTaxpayersindicatessubmissiontothestatebypayingtax. Theprevailingpoliticalclimateisnowregulationandcontrolofbusinessbythestate,but inaliberaldemocracy,onecanbefreetodoasonepleasesaslongaswepayourtaxesand obeytheregulations.Theimperativeisforgovernmenttointerveneinthemarketto providetheframeworkforthesortofethicalcapitalismwhichwasachievedundertheFirst LabourGovernment19351949andhas,invariousforms,beenthestrategywhichhas underpinnedNZpoliticssinceatleast1891.Theconceptofethicalcapitalismpredates

TJCostelloep5 Marxism.WiththeelectionoftheLiberalsunderRichardSeddonin1891,auseful precedenttothelaterequalityof1935wasachieved.Yes,thereweresocialistsinthe LiberalParty,yestheyhadsomegreatideas.WeretheyawarethatMarxwasinfluencedby earlierliberalideasfromamovementinthe1820s?Liberallyprogressiveviewswere developedbythePopularEconomicsmovementinEnglandatthattime.Itistemptingto saythattheactivitiesofthiscliquehadadirectinfluenceontheelectionofLiberalsto powerinNewZealandbytheendofthe19thcentury,giventhatEdwardGibbonWakefield wasprominentamongtheircircle.Therewereanumberoffemaleswritingwiththisgroup. Theirphilosophyencompassedliberalism,freetradeandfreedomofenterprise.Theywere sometimesidentifiedasmoraltraders,forexampletheChristianEconomists.Themajor influenceofthisgroupwastoinfluencethatcuriousblendofsocialutopianismand economicrealismwhichwasknownasFabianismleadingtothefoundingoftheLondon SchoolofEconomics,andalsotolaythebasisforanargumentforclasspeaceto bridgethegulfofignoranceandclassexclusivenesswhichkeptEnglishmenatemnity,and toshowthemhowallthingscontributetothesupportandemploymentoflifemustbe producedandconveyedtoall.1PopularEconomicswriters,thoughinfluencedbyAdam Smith,wereremovedfromhimastheyweremoreorthodoxinmoraltermsandpreached classharmony.Itisthereforeimpossibletogeneralisethatliberalswere,bynature,opposed towelfare.2ThewritingsofMarxandEngelswereadirectchallengetotheinclusivenessof theliberalPopularEconomistsandwerepredicatedontheinevitabilityofclassconflict. Clearlytheywerereactionariesinrevolutionarydisguise.InthissenseMarxism,andby

1 LarsMagnussonTheTraditionofFreeTradepp5774 2 LarsMagnussonTheTraditionofFreeTradepp5774;WilliamAPelzAgainstCapitalismp141144

TJCostelloep6 extensionpuresocialismorcommunism,retardedtheadventofliberaldemocraciesand resultedinunnecessaryconflict.ToclaimthatMarxbroughtaboutuniversalsuffrageand alltheotheradvancesforordinarypeople,associalistwritersinthecompanyofSassoon seemwillingtoimplyorassert,istobelittletheachievementsofliberalisminproviding thephilosophiesandsocialframeworkwhichenvisagedsuchconceptionsasgenerally acceptableideasandmadetheseideasachievable.

Fabianismrepresentedanimportantsynthesisofideas,andwasreallymoreliberalthan socialist,havingestablishedapedigreefromPopularEconomics.Inthiscontextthe introductionofuniversalsuffrageandameanstestedwelfaresystemundertheLiberal governmentof18911912wasinevitable,whereanattemptwasmadetosocialisethe conceptofwelfareinanethicalcompromisebetweenliberalsandlabour.Atbothendsof ourNewZealandcenturywewereinhabitedbyliberalcompromisegovernments.Aftera centuryofconflictoverideology,thestateofwelfareinNewZealandgovernmentand politicsofthe1990swassimilartothedawnoftheLiberalparadiserememberedinthe nationallore.LikethePopularEconomistsandFabians,JimBolger'sNationalgovernment weresocialutopians,albeitwithafeudalisticviewofutopia.Andliketheoriginalthinkers ofthe1820s,therewasaninclusivenessofgenderandagenuineattempttodemonstrate principlesofequality,evenifrelatedtoamodernversionofsocialcontractastriedafter NationalturnedtoJennyShipley,orbyaninsistenceoncolourblindpolitics.This inclusionofwomeninthedialogue,andtheattempttofosterclassharmonypredateand contradicttheopinionsofKarlMarxandFredrichEngels.

TJCostelloep7 Inthelightoftheupbeatmoralliberalphilosophyoftheearliergroup,theworksofMarx andEngelsarecounterrevolutionaryandcynical,possiblyaretrogradestep.Theyinsisted thatclassconflictisinevitableandthereforeviolentchaosisinevitabletouprootthe systemofprivateownershiptowhichtheyweresoopposed.Hisinsistencethatall capitalismwouldeventuallyfailandaworker'sparadisewouldensueisasignificantfactor inconfrontationinthe20thcentury.Itisimportanttonotethattheearlyproponentsofboth thePopularschoolandtheMarxistschoolwerefrompositionsofsomeprivilege,including Marxhimself.Radicalthinkingcamefromtheleisuredclass.Theveryideaswhichareso oftenidentifiedwiththecommunistsandlatersocialistsinregardtogenderequalityand equalityofeconomicopportunitythroughcommunalismandwelfarewerepresagedbythe veryliberalPopularEconomists,andPopularEconomicsistherealunderpinning philosophybehindethicalcapitalismwhichhasbecomealmostthecatchphraseofthe currentthirdwaypoliticalenvironment.ThephilosophiesofKeynesandtheLondon SchoolofEconomicswerefoundedonthissociallyutopianapproachtothedisciplineof Economics,whichincorporatedtheideasofsocialistsintoanexistingsetofideasabout socialequalityandmobility.3Theinterpretationsofcapitalismbyhardlinersleftandright whichlaidthegroundworkforpoliticalandeconomicchaosthroughoutthe20thcentury, havemoretodowiththebattlebetweenfeudallordandpeasantwhichhasbeengoingon centuriesandisstillbeingplayedoutinsomeforminvariouscountriesandeconomies.

TheEthicalDimensioncurrentlypopularinthirdwaypolitics,therefore,hasexistedsince atleastthe1820sandpredatesbothcommunismandsocialism.Thefactthatthebasic
3 LarsMagnussonTheTraditionofFreeTradepp5574

TJCostelloep8 axiomsofbothMarxandSmitharevirtuallyidenticallendscredittothisview.Their fundamentallydifferingviewsonthevalueoflabourandthesourceofprofitprovide variationsonthesametheme,butareinformedbythesamepresumptions.4Extremesof FascismandAnarchismatfarrightandfarleftareinfluencedbyotherwriterssuchas NietzscheorKropotkin.ButitistheEthicalDimensionthathasemergedtoinformthe thirdwayofearly21stCenturypolitics,whichseekstopromoteconsensusandsocial harmonyinawaynotenvisagedbythepartisanstrugglersofthe20thcenturyand specificallydisavowedbyMarxandhismoreextremefollowers.

ThePopularEconomistsofthe1820s,TheFabiansofthelate19thcenturyandtheLiberal Governmentof18911912aregoodexamplesofthepowerofthemiddleandrepresent earlyincarnationsofthethirdwayphilosophy.NewZealandisagoodexampleofthe evolutionofcompromiseasaguidingprincipleinpolitics.Fromthetimetheestablishment ofrepresentativecentralisedgovernmentinthelate1870sandfollowingtheendofthe LandWars,NewZealandhashadremarkablylittlepoliticalturmoilandpoliticsareusually pursuedinanonviolent,conversationalway.Thesortofconflictswhichhavecaused massiveproblemsinothercountrieshavebeenresolvedrathermoreamicablyhereinan ongoingnationaldialoguethatunderpinscivilandpoliticallife.TheWorldWarOne coalitionofMasseyandWardandtheReformCoalitionjustpriortotheFirstLabour GovernmentfurtherdemonstrateamoodforbipartisanconsensusinNewZealandpolitics whichfindsitslogicalculminationintheMMPsystem&theThirdWay.

4 GDuncanLecturenotesMasseyUniversity144.7212008

TJCostelloep9 Forsocialiststoclaimcreditforideasofgenderequalityoruniversalsuffrageisabitofa stretch,giventheagendaofthePopularEconomistsandotherearlyliberalswhoforesaw andpracticedutopianharmony.ConverselySocialiststhoughtintermsofconflictand struggleagainstothersocioeconomicgroupstoachievesocialequalitybyforce.Within thecontextofarecentlyglobalisedsocioeconomicsystemwithsubsequentmassive internationalconflictsandchaoticbusinesscyclesduringthe20thcenturyastructural adjustmentofgovernment,businessandpoliticalphilosophywasnecessarytobring competingsystemsintoline.TheGreatDepressionofthe1930sandtheprotectionismof theinterwarperiodwhichleddirectlytoWorldWarTwo,alsoprovidingamajorcatalyst forsocialchangeandanadvancementinEconomicstoensurethattheexcessesoflaissez fairecapitalismwouldnotdestroycapitalismitself.Thisledtointernationalreorganisation ofbothcapitalandsovereignty.Hereinliestherootsofcertainchecksandbalances betweenthetwowingswhichhasresultedintheThirdWaycompromise.Asalready stated,thedifferenceineconomicfundamentalsbetweenSmithandMarxisnegligible,the twowingsareeconomicallycompatible,andthepoliticalimperativehasmovedfrom liberalcapitalismtoethicalcapitalismasasocioeconomicandenvironmentalnecessity. Forexamplecapitalisteconomistsnowattempttobuildinthecostofnaturalresources whicharefiniteandfromthecommonwealth,wheretheenvironmentwaspreviously assignednocommercialvalueasapublicgood,freelyexploitable.

FollowingWorldWarTwoabipolarworlddeveloped,withasignificantperiphery.The housesofCapitalism(theWest)andCommunism(theSovietBloc)wereinideological

TJCostelloep10 oppositionandeachhadtheirsphereofinfluence.Ablocofcountriesalignedasanon alignedmovementinwhichpostcolonialIndiawasamajorsponsor.Thisnonaligned peripherybecameknownasTheSouth.CountriesintheSouthwereactivelycourted andmanipulatedbythepowercliquesoftheUSandtheUSSRaseachsoughttoextend theirrespectivespheresofinfluence.Throughthemiddleofallthismanycountries developedsystemsthatincorporatedaspectsofeachextreme.InNewZealandweadopted milderformsofleftandright,thespacewheremiddlepartiesdeveloped.Associal democrats,alittlesocialistandalittleliberalatthesametime,theywereableto compromisetopromotesocialvalueswithnodirecteconomicvalue,whichwerenot cateredforinthelaissezfaireeconomicssoprevalentbeforebeforethe1930s.

TheOriginofSocialDemocracy. InSwedenin1926,thefirstSocialDemocratscametopower.Contrarytopopularbelief, socialdemocracyisnotaproductofKeynesianthinkingbuthadbeenmediatedin Scandinaviabythosewhodecidedtomakecapitalismworkbetterwithseriousness,a senseofresponsibility,andasenseofthepublicinterest.5ThroughouttheWest,socialist partieswereinstrumentalinhelpingtobringabouttheconsensusnecessaryforsocial democracytobesuccessful,preciselybecausetheyhadrejectedtherigidanalysisofclass conflictpropagatedbyMarxandsoughttoworkwithinthesystemtohelpbusinessand societybecomemoresociallyresponsible.ItcouldevenbesaidthatFDR'sNewDealwasa radicalexampleoftheturntosocialdemocracy.ByexaminingtheNewDeal,itcanbe demonstratedoncemorethatsocialismandMarxwerenotanecessarypartoftheprocess
5 Freiden:GlobalCapitalismp241242

TJCostelloep11 ofthesocialisationofbusiness.Therealimperativewasthevirtualcollapseofcapitalism in1929duetotheexcessivebehaviourofsomecapitalistsandthesubsequentdesireby governmenttopromotemacroeconomicmanagementataregulatoryleveltoensure ethicalityandstability.6Inthe1920s1930sasbusinessboomedandthenfailed,two competingideologiesemerged,socialdemocracyandtotalitarianism.Totalitarianismwas furtherdividedbyextremeleftorextremeright.Bothcampsoftotalitarianssoughtto establishanewhegemonybasedoncompetingviewsofeconomicrationality,eitherusing extremenationalismorextremeanticapitalism.Bothwereopposedtotheexistingorderof thingsrepresentedintheWestbytheemergingliberalsocialdemocraticexperiment. Whethertheywerefascistorcommunist,thesegovernmentshadtheirheydayandthen weredestroyedorcollapsed.EvenChina,theremainingcommunistpower,hasembraced themarketbecauseofeconomicimperatives.SocialDemocracyrepresentsthe incorporationofsocialresponsibilityintothepublicsphere,anditsgeneraladoptionisa directresultofthespacegiventosocialiststowinpowerintheaftermathoftheGreat Crashof1929.Inthe1930sitlookedasifMarxwasright.Onlygovernmentintervention wastoprovehimwrong.ThefactthatChinaisnowonboardprovehowfarcapitalismhas progressedasasocialforceforanequableinternationalsociety.Inpartithasachievedthis byincorporatingethicalvaluesmissinginthefirstpartofthe20thCentury.

Outcomes Thenetresultof100yearsofstrugglebyextremiststooverturnthemiddlehasledtoone resoundingoutcome,failureontheirpart.Thesuccessfulintegrationofsocialisminto

6 Freidenp244245

TJCostelloep12 mainstreampoliticswasachievedbythosewhorejectedconfrontationalismandembraced gradualism,oftenworkingincoalitionwithothermoderatesofdifferentpoliticalcloaks. Thisisthenaturalorderofthingsandisalsotherationalebehindfreemarketideologies, andthereforetheprocessinbusinessandinpoliticsisaimedatachievingequilibrium. Leavingasidetheextremists,whatwenowseeisanemergingtrendtowardconsensus politics,whereallcanseewhatneedstobedoneandoftencooperateacrosspartylinesto ensurethebestoutcomeforanationorgroup.

Oftenneglectedinassessingtheintegrationofsocialistideasintothemainstreamisthe mannerinwhichconsumerismormarketcapitalismhasbecomealsoassimilatedto mainstreampolitics.Thereisnolongergenerallyacceptedbygovernmentsorsocietythat themarketcanregulateitself,somelibertariansstilltrumpetthisline,butpolitical manoeuvringbygroupssuchastheBusinessRoundtableisdesignedtolobbygovernment togoasfarinthedirectionofbusinessaspossible,withoutseekingtooverturnthebasic premiseofthedutyofgovernmenttointerveneintheeconomytoensuremacroeconomic stability.TheGreatDepressionputpaidtotheideaofunregulatedbusiness.So,evenifthe marketis,intheory,afreelyoperatingmarket,governmentsmustinterveneinthemarket byregulation.Marketsareheavilycontrolledinthiswayatlocal,regional,nationaland internationallevel.ThisistheacceptednorminWesterndemocraciesandisenshrinedin twoterms,socialdemocracy,andethicalcapitalism.Thisisthenetresultofthestruggle betweenleftandrightinthe20thcentury.Neithersetofextremistscouldhavetheirway, eachsetwroughtchaosandeitherinthemarket,onthebattlefieldorwithtotalitarianism.

TJCostelloep13 Inspiteoftheseexcesses,wenowhaveaworkablepoliticalsystemwherethedivergent politicalviewshavefoundawaytocoexistthroughcompromisetoensuretheneedsof societyasawholearebalanced,fairandsociallyresponsible.Wehavenowreachedthe typeofsocietyenvisagednotbyMarxorNietzsche,butperhapsbythePopular EconomistsandtheFabians,asocietywherebusinessisrequiredtooperateinanethical mannerandthattheneedsofconsumerismarebalancedbyasocialresponsibility.InNew Zealandweliveinasocialdemocracy,enhancedbytheneedtocooperateunderMMP.We havearrivedatthethirdway,consensusgovernancefromthemiddleground.Thethirdway isreallythefirstwayand,havingtriedtheothertwo,wehavereturnedtoequilibrium.

TJCostelloep14 BIBLIOGRAPHY Beliharz,P(1997)SocialisminEurope:AftertheFallInternationalJournalofPolitics, CultureandSociety,Vol.11No.119974962 Duncan,G.(2007)SocietyandPolitics:NewZealandSocialPolicyAuckland,New Zealand:PearsonEducation Freiden,J.(2006)GlobalCapitalism:itsriseandfallinthetwentiethcenturyNewYork, USA:Norton Gomes,L.(2003)TheEconomicsandIdeologyofFreeTrade:AHistoricalReview Cheltenham,UK:EdwardElgar MacKenzieN.&M.(1977)TheFirstFabiansLondon,UK:Weidenfeld&Nicholson Magnusson,L.(2004)TheTraditionofFreeTradeLondon,UK:Routledge NewZealandEncyclopaedia(1966)retrievedfrom http://teara.govt.nz/1966/p/politicalparties/LiberalParty/en8July2008 Pelz,W.(2007)AgainstCapitalism:TheEuropeanLeftontheMarchNewYork,USA: PeterLang Sassoon,D(2000)Socialisminthetwentiethcentury:anhistoricalreflectionJournalof PoliticalIdeologies(2000),5(1),1734 Semmell,B(1970)TheRiseofFreeTradeImperialismCambridge,UK:Cambridgeatthe UniversityPress Short,J.(2001)Space,PlaceandtheContemporaryWorldLondon,UK:ReaktionBooks Stubbs,R&Underhill,G(2006)PoliticalEconomyandtheChangingGlobalOrder DonMills,Canada:OxfordUniversityPress