Jane Kelsey at the Crossroads: Three Essays

(Wellington, Bridget Williams Books, 2002), ISBN 1877 242918; $34.95

Review for AUS Electronic Newsletter. It was republished in New Zealand Journal of Tertiary Education Policy, Volume 1 Number 2, April 2005

Keywords: Globalisation & Trade; Political Economy & History

Students and the general public have found invaluable the sequence of books Jane Kelsey has produced on contemporary New Zealand society and governance, beginning with a study of how the Labour Government dealt with Treaty issues, working through the New Zealand experiment and now a couple on New Zealand in a globalised world, the latest of which is three essays in At the Crossroads (although, curiously, the cover shows a signpost at Bluff, the end of the country). Reviews of her books usually go to the extremes of the paean or condemnation. ….

… But the sequence of works indicates that Kelsey is in a dialogue with herself, and with others. What she most needs, and I hope welcomes, is the tough but sympathetic critique which this review attempts to provide.

Kelsey defines globalisation as ‘global capitalism’ not very differently from the London Economist. However this is a label – an outcome, not an analysis of the process. Without such analysis, any description of globalisation can only be a series of criticisms or commendations.

How the capitalist system survives is one of life’s great mysteries: it hardly seems a creation of the rationality that pervaded Western intellectual thought 200 years ago; many of its principles seem unethical; there are books and books which list its faults; terrible things happen in its name. For 150 years there have been predictions of its imminent demise. And yet – and yet, capitalism survives.

It is this mystery which forms the background to Kelsey’s book. The title of the opening essay ‘The Wobbly Bicycle: Globalisation on the Precipice’ echoes Supachai Panitchpaki, the next director of the WTO, likening of global capitalism to a ‘wobbly bicycle’. To which a citizen of Christchurch might comment that bicycles are wobbly, but they prove very effective means of transport and crash only very rarely.

Kelsey says ‘continued globalisation cannot be taken for granted, and retreat is a distinct possibility.’ She lists the opposition to globalisation and reports various critics. At the heart of her thesis is ‘the globalisation agenda operates on the fallacy that the unfettered concentration of wealth and power can continue indefinitely, irrespective of its economic, social cultural and political fallout – and that people, and the governments that depend on those people for their legitimacy, will continue to acquiesce in that outcome.’ The first essay lists these contradictions.

Well yes, but could not this largely have been said 150 odd years ago? Was not the poverty, the destruction of traditional ways of life, the environmental degradation greater then? Did not the Western world almost come to its knees in 1848 (and what about the terrible slump of the early 1930s)? Yet the bicycle wobbles on. Of course the next fall may be final – the rider not just grazing a knee and remounting, but breaking something and lying there on the road. That has been the critics’ promise for 150 years: one day they may get it right.

If I had to bet on what is different this time, I would do so by extending Marx’s notion of the changing role of money. He suggested that initially it was to intermediated between the exchange of two commodities. As he put it: C→M→C’. Then the making of money became the purpose of the exercise and the commodity a means of doing so, reversing the roles: M→C→M’. Nowadays the making of money seems to have bypassed production, so it is M→FP→M’, when FP is financial paper. Both Long Term Capital Management and Enron are examples of firms with only the barest connection with the production process. Their collapse may presage the Götterdammerung of this phase of capitalism. But the phoenix which rises is likely to be another form of capitalism, albeit (I infer Kelsey hopes) one which is more nation and human focussed.

Where the first essay misses out, is an account of why the bike has been so successful, and what is different this time. A series of criticisms, no matter how powerful, is not a critique. As much as Karl Marx got it wrong (and his followers misrepresented him) he had a compelling theory of how the inconsistencies internal to capitalism would bring it down. Because he has an analysis he does not have to rely on metaphors, such as wobbly bicycles.

With hindsight there were two major weakness in his theory. He underestimated the capacity of capitalism to adapt to social and political pressures, for today’s capitalism is very different from that of the nineteenth century. And he failed to recognise the impact of cumulating technological change. Although we think of capitalism being about profits, it actually seems driven by technological opportunities. It is as if the capitalist bike is wobbling on a long downhill run generated by innovations. If ever they cease, then so might capitalism.

This failure to look deeply at the fundamentals of capitalism also mars the second essay, ‘The Third Way– The Road to Nowhere’. Kelsey has the gravest reservations as to the usefulness of the Third Way strategy, which often seems little more than a grab-bag of half-thought through responses to poorly understood problems. Even Tony Blair joked that the German Chancellor Gerhard Schröder ‘was saying to me … I haven’t found the first two ways yet, so you tell me where the third one is.’ No wonder it seems a dying fashion.

Nevertheless its origins are fascinating and its development instructive. The story can be personalised in Anthony Giddens, who as a young sociologist, was deeply committed to a political economy paradigm which had evolved out of Marx, in which class was inextricably intertwined with capitalist development. Over the years he became increasingly disillusioned, because the reformulation did not tie into the world he saw developing. Giddens’ ‘Third Way’ may have an analysis as rich and as complex as his earlier writing, but it is yet to see the light of day, and thus far its foundations appear superficial and opportunistic.

Kelsey argues that the Third Way is not relevant to New Zealand, and decries the colonial mentality which adopts uncritically the latest overseas fashion. She rightly points out that the neo-liberals revolution suppressed alternative viewpoints, which has made the development of critiques and alternatives extremely difficult. (As a reviewer remarked, for Isaiah Berlin ‘the central paradox of modern thinking about liberty is this: that it is often those most attached to freedom as a political value who ended up supporting ideas or measures that reduced its sphere or sought to extinguish it.’) Moreover, many of the measures they took will persist, not only because rogernomes dug themselves into positions of influence, but because the structural changes weakened the ability to generate alternatives. (It is not accidental that the universities, the traditional critical base, are far less effective today than they were three decades ago, despite being charged with being a ‘critic and conscience of society’.)

So the third essay, ‘Taking the High Road – a Requiem for TINA’, turns to the possible alternatives to capitalism and the Third Way. But the earlier failure to provide a serious critique of modern capitalism now becomes a severe liability, for Kelsey’s alternative is not unlike the Third Way, a list of things that could be done without any integrating coherence except her passion for social justice. Kelsey acknowledges as much when she writes ‘such a transformation may seem unrealistic in the New Zealand of today. There is no alternative vision to inspire us towards a people style of nationbuilding.’ While they are more detailed than in her earlier works, their fundamental weakness is they do not centre around the critical issue: how is New Zealand to engage with the rest of the world? The answer in part
depends upon what the rest of the world is like: presumably the issue is how to design an engagement which is robust and flexible to the range of possibilities. That requires a deeper analysis about the nature of the modern world than is here.

If this review is tough, it is not so to discourage potential readers. Although it should not be used it as a primary source for many of its statements are less authoritative or reliable than they appear (unlike her earlier works there are no copious citations to check them), At the
should be read as the part of the debate about our – New Zealand and the world’s – future. That is why this review is a critical engagement.

Some readers may be deterred by the price of $34.95, which is high for 137 pages. But that reflects the limited market in New Zealand. There are few venues for essays of 10,000 plus words, yet we need more of them, and should be willing to pay the price. One hopes this will be the first of a series of such publications, which explore the issues that Kelsey raises, at both a deeper and wider level.