- Philip Ferguson
This is the second of a two-part feature; the first looked at how a capitalist economy works (and doesn’t work), while this part looks at trends in the NZ economy, government policy and the February 28 Jobs Summit
The state of the New Zealand economy today, like that of the global economy, is best understood in the context of the end of the post-WW2 boom (around 1973-74), the onset of a protracted period of capitalist economic crisis and the failure of counter-crisis measures (both Keynesian and neo-liberal) to solve the problems that came to the fore with the end of the boom, let alone open up the road to a new period of dynamic growth on the same kind of level as the postwar boom.
As we noted in last month’s paper, the end of the boom and the onset of a new period of crisis was the result of the working out of the law of the tendency of the rate of profit to fall, a process which is built into capitalism. In New Zealand, the crisis was exacerbated by the loss of traditional markets, dependence on imports such as oil and the use of Keynesian policies to try to escape the crisis. None of these latter factors were causal, but they did make the problems worse.