National’s McJob Creation Scheme

The Spark August 2009burger
Byron Clark

The government has made a deal with fast food giant McDonald’s in which young people receiving the unemployment benefit will be sent to jobs in McDonald’s restaurants, and have their ‘training’ subsidised by the state. Every beneficiary McDonald’s hires will get the company up to $16,000 which is the equivalent of about 8 months wages for a McDonalds worker. Social Development and Employment Minister Paula Bennett is citing the relationship with the golden arches as an example of “the Government’s commitment to getting beneficiaries into jobs,” but while the growing number of unemployed certainly need jobs, McDonald’s needs workers a whole lot more, and this is what the scheme is really about.

Fast food is a growth industry during this recession, as people who would have previously eaten at more up-market restaurants lower their budgets. McDonald’s in New Zealand is continuing to build on its profits, enough to open a number of new outlets. They need to employ an estimated 6,000 workers over the next few years. The reason? Those workers are where their profit comes from. The company can provide an investment to build a new store with all the cooking and food preparing equipment that requires, but it can’t see a return on that investment until labour (ie, workers) is added. A McDonald’s worker doing an eight hour shift for minimum wage will be paid $100, but by turning raw materials (buns, meat patties, frozen Happy Meals, that worker could produce $200 for the company. Without the worker, McDonald’s couldn’t realise a profit. [Read more…]

Recession scenarios

Philip Ferguson

In the past couple few weeks the Reserve Bank governor Alan Bollard, prime minister John Key, and other commentators have been talking about the recession, or at least the worst of it, being over. 

 Bollard is a fairly level-headed and reasonably sophisticated bourgeois economist and Key is a fairly level-headed, reasonably sophisticated capitalist political manoeuvrer. So their view of the current state of the recession is worth some consideration and can’t just be dismissed as capitalist propaganda.

 The evidence, such as it is, that has been presented to suggest NZ is coming out of recession is pretty flimsy, however. A news item that featured what they were saying on the subject showed a case of one house that had been sold in five days, whereas last year the same house hadn’t sold in months. That is hardly evidence for much at all.

 Harcourts’ real estate blue book in early July contained an ‘informational’ sheet in which Harcourts declared the recession, or at least the recession in house prices, over. Their evidence was improved house sales for the past two months. This verdict on their part seemed rather unconvincing – especially since it came in a blue book that was at least 1/3 smaller than the size of the blue books last year. If the housing market was really jumping back up, then the Realtor and the Harcourts blue book wouldn’t be the slimmed down volumes that they are at present.

 More importantly, a real recovery couldn’t be judged from house prices. No new value is created in the sale of houses – all that is involved is prices going up and down. If they go up, above the actual value of houses, these boosted prices simply draw money from elsewhere in the economy – and, usually, also involve the extension of more credit. [Read more…]

Working class resistance and the economy

John Edmundson
The  Spark July 2009

The sub-prime crisis and credit crisis have finally brought an end to the “good times”. As trade has slowed down, unemployment has begun to rise and in some countries, large scale demonstrations have occurred in anger against the collapse of the economy and the attacks on workers that have followed.

If workers do not fight back, the recovery when it comes will leave workers worse off than before. As always, workers’ wages and working conditions will be cut in response to the recession and unemployment. [Read more…]

“That capitalism is in crisis.”

 First in Victoria University Debating Society 2009 series of public debates on topical public policy issues.  (Rutherford House, 6.30pm, 11 May 2009)

 Third affirmative speaker Don Franks

 Unfortunately capitalism is not on its deathbed, but it is in a state of crisis.  You don’t have to take the word of a communist union organiser – just listen to the despairing of senior capitalist mouthpieces.

 “Our world is broken—and I honestly don’t know what is going to replace it. The compass by which we steered as Americans has gone. The last time I saw anything like this, in the sense of disorientation and loss, was among my Russian friends when the Soviet Union broke up.” So said Bernie Sucher, Merrill Lynch operations head in Moscow, in the March 8th  Financial Times.

 In the same edition of the Financial Times Associate editor and chief economics commentator Martin Wolf despaired: “It is impossible at such a turning point to know where we are going… Yet the combination of financial collapse with a huge recession, if not something worse, will surely change the world. The legitimacy of the market will weaken. The credibility of the US will be damaged. The authority of China will rise. Globalization itself may founder. This is a time of upheaval.”

 In the midst of this time of upheaval, Wolf continued clinging to the old capitalist mantra: “no credible alternative to the market economy exists…” [Read more…]

Shorter work-hours: They say less pay, we say more pay

Jared Phillips The Spark April 2009

Resulting from the Job Summit in February, the government has now announced the introduction of the Job Support Scheme. At the time of writing, between 20-30 companies have taken up the government’s offer. Who benefits from the 9-day working fortnight?

In the past socialists have successfully fought for a shorter working week for the same pay. This has happened in the construction industry in Australia and in the meat industry in New Zealand. We need to raise these arguments again and also raise them at a higher level. Continual productivity gains make it possible for us to move to a society in which workers can consciously organise and limit the amount of time spent working while increasing their leisure time. Oppositely, under the capitalist system, the lives of the working class are organised by the rhythms of production. This is clearly the case when we look at the way hours of work are currently being re-regulated. [Read more…]

“We won’t pay for their crisis!”

Mike Kay

In Europe, the capitalist crisis has hit the working class much harder than it has so far in New Zealand. But in many countries, the victims are fighting back. A single slogan has found universal appeal – “We won’t pay for their crisis!” Here follows a brief survey of some of the highlights of the past few months:


Britain has seen its biggest upsurge in class struggle since the start of the Great Miners Strike, 25 years ago. Waves of unofficial strikes over union-agreement coverage on construction projects spread through power station and refinery sites across the country in early February. The strikes were in defiance of the anti-union laws, and not under the control of union leaders. At the early stages of the dispute there was a worrying element of nationalism, with the slogan “British jobs for British workers” appearing on some picket lines, and picked up gleefully by the bourgeois media.

 However, as the movement gained coherence, more class-based demands came to the fore, such as: for all workers on site to be under the national union agreement for the engineering construction industry. The debate is still raging on the British left as to how much of a role anti-migrant worker sentiment played in spreading the dispute, but revolutionaries clearly have a vital task of confronting an undercurrent of nationalism, whilst relating positively to a spontaneous outpouring of working class rage. [Read more…]

For a real summit

Don Franks

The worth of the recent Jobs Summit can be summed up in one word – Sealord.

The first major employment incident after the government sponsored summit was an announcement of imminent job losses from the aptly feudally titled company.

Sealord, owned jointly by Nippon Suisan Kaisha of Japan and Maori tribes via Aotearoa Fisheries, intends to cut 180 land-based jobs in Nelson and is not ruling out the closure of its plant there.

The Service & Food Workers Union (SFWU) said the company wanted to cut the pay of remaining workers by $70 a week.

Prime Minister John Key said:

“I think in the case of Sealords they’re actually restructuring their business.

“One thing we have to be realistic about is the recession will ultimately drive some of those changes, it’s not to say we’re not hugely sympathetic to those who have lost their job, we understand that there will be change,” Mr Key told TV3’s Sunrise.

In other words, when it comes to day to day business decisions, the summit means zilch. [Read more…]

Making the state sector more profitable

One area of reform proposed by post-neo-liberals such as Skilling and Weldon which has the potential to involve some serious upheaval is the state sector.

A problem for capitalism is that all kinds of activities – some standard industrial and commercial activities as well as ‘public good’ activities like health and education – require a significant state-owned sector within the economy.  In New Zealand, the state has been a major player since capitalism first arrived here in the nineteenth century.  Without the state, little of the infrastructure would have been built, for instance.  The inability of private capital alone to create a modern capitalist economy, complete with infrastructure (from banking to railways to mass communications), meant the state had to pick up the slack.  The state could do this because it had access to chunks of surplus-value through direct and indirect taxation, could borrow on a massive scale and did not need to make a quick and substantial profit.  The state could, in fact, produce goods and services outside the operation of the law of value – in other words, it could produce and provide goods and services without profit being built into the price; in fact often goods and services were produced and provided below cost.  Private capital could make use of these goods and services without paying a price which reflected their actual value.

[Read more…]

Where to for the New Zealand economy?

– 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.

[Read more…]

How capitalism works – and doesn’t work

workersresistance09poster1Philip Ferguson

The Spark February 2009

(The following article is the first in a two-part series on the present economic crisis. This part explains how the system operates; the second part, in our March issue, will be an examination of what’s happening right now – and what workers can do about it.)

According to, “In every economic system, entrepreneurs and managers bring together natural resources, labor, and technology to produce and distribute goods and services.” They do qualify this by claiming, “But the way these different elements are organized and used also reflects a nation’s political ideals and its culture.” (They also note Marx’s description of a capitalist economy as one in which a small group of people who control wealth make the key economic decisions.)

It’s important to understand that the idea that every economic system has, or requires, “entrepreneurs and managers” in order to operate is factually wrong. For most of the time that human beings have existed we lived in collective societies, without entrepreneurs and managers. Different social classes only arose about 10,000 years ago and it’s only in the past few hundred years that capitalism has been the dominant global system. Facts, however, have never been allowed to get in the way of capitalist ideology – that is, the set of ideas which seek to justify the present system and usually do so by making it appear that capitalism is ‘natural’ and eternal.

[Read more…]