Roger Douglas Has a Lesson for the Left
It is time that the left took some notes from the neoliberals on how to transform society. If we don't, our economy will only ever move in one direction: ever-higher levels of inequality.
Originally published on the System Change Aotearoa website — 23 August 2024
“According to the Douglas doctrine, you move in quantum leaps. By the time your opponents catch up with what you’re doing, you’re on to the next thing.”
That’s how Toby Manhire summarised Roger Douglas’ approach to economic reform in The Spinoff’s podcast series Juggernaut, which marked the 40th anniversary of the Fourth Labour Government.
Roger Douglas, the most revolutionary Finance Minister in the postwar history of Aotearoa, knew how to change more in three years than most governments do in three terms. Rogernomics transformed the structure of our economy with dizzying speed, from protectionist welfare state to neoliberal free market.
Inequality soared across the world in the 1980s as neoliberal reforms were enacted. Poverty rose as union-busting and unemployment ravaged working class communities. Privatisation and deregulation unleashed an explosion of corporate profit. The domination of society by the super-rich, accompanied by low wages and unaffordable housing, is the enduring legacy of this decade.
The radical change experienced in Aotearoa between 1984 and 1993 stood out from what occurred in most other OECD countries in three main ways.
Firstly, these free market policies were initiated here by a Labour Government. In most countries, it was conservative torchbearers such as Margaret Thatcher and Ronald Reagan who spearheaded this agenda. In Aotearoa, it was David Lange’s election which led to what the Prime Minister later described with sorrow as “a juggernaut of the New Right.”
Secondly, no one voted for this devastating agenda. Labour was supposed to be the party of the working class, and had stood in the 1984 election on a social democratic agenda. Once Roger Douglas unleashed the neoliberal juggernaut and National signed up to the same policies, voters did not have a choice. When they voted Labour out in 1990 and elected National on a promise of a return to “a decent society,” they got more of the same — Ruth Richardson took over as Finance Minister and continued an agenda of radical reform in the first three years of Jim Bolger’s government. Rogernomics was followed by Ruthanasia.
Thirdly, the speed and scale of the reforms imposed by Douglas and Richardson was ferocious even compared to the likes of Thatcher and Reagan. There is a reason why Aotearoa experienced a faster increase of inequality in the 1980s and 1990s than any comparable OECD country.
Four decades on, Douglas is still preaching his doctrine of moving in quantum leaps. He has long complained that Lange sacked him before he could implement his agenda in full. He and his allies created the ACT Party to finish the job.
It is high time that the left took some notes from Douglas on how to transform society. If the left leaves it to the right to move in quantum leaps, our political economy will only ever move in one direction: ever-higher levels of inequality.
Douglas’ “quantum leap” approach is what left-wing activist and intellectual Naomi Klein called the Shock Doctrine. In her 2007 book by that name, Klein outlined how neoliberal governments exploit moments of crisis when the public is in shock to ram through unpopular policies. Klein is not making this up — she merely had to draw attention to what neoliberal ideologues themselves were saying to come to this conclusion. In 1982 Milton Friedman, the economist dubbed “the most-revered champion of free-market economics since Adam Smith” by the Wall Street Journal, wrote that:
“There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”
This insight has been seized upon to devastating effect by the neoliberal right. Their dreams of rolling back the welfare state and breaking the power of organised labour seemed impossible in the 1960s; by the 1990s they had become common sense across the world. Once implemented, they sold their vision as inevitable — Margaret Thatcher famously proclaimed that There Is No Alternative.
Neoliberalism has failed for the vast majority of people. Climate change threatens all life on earth; extreme inequality is tearing society apart. The free market has no answers. An alternative economic system is not only possible, it is desperately necessary.
This alternative system must involve a fundamental and irreversible shift of wealth and power away from the corporations who have been colossally enriched by neoliberalism, and back towards working people. It must uphold Tino Rangatiratanga and Mana Motuhake; and it must involve moving rapidly away from reliance on the fossil fuels which are destroying our planet. But we won’t be able to change the entire system without moving, as the right has moved, in quantum leaps. It is the only way to turn back the tide.
A Constant Rightward Drift
It was argued by many academics and pundits that the introduction of the MMP electoral system had replaced the era of radical change with an era of ‘moderation.’ After sacking Richardson in 1993, Bolger led the Fourth National Government in a more moderate direction. The 2008-2017 government of John Key and Bill English pursued a mild, centre-right agenda. The right was consolidating its gains, not wanting to provoke further societal conflict after its application of the Shock Doctrine in 1984-1993.
Since the Fourth Labour Government went down in flames, Labour has won power again twice — for three terms under Helen Clark, and for two under Jacinda Ardern and Chris Hipkins. Neither of these governments followed Douglas in implementing radical right-wing reforms; both Clark and Ardern defined themselves in opposition to the neoliberal free market era. Yet both governments left the fundamental reforms of the neoliberal era in place, and as a result, both failed in their stated missions of tackling our country’s “unacceptable” levels of inequality.
The centre-left held to the notion that MMP had put a permanent break on radical change. The message was that only incremental progress could succeed: maybe one day we would return to a more equal society like what existed before Rogernomics, but it would be a long, slow process.
The Coalition elected in 2023 is shattering that myth. ACT today has a record number of MPs, and as the second-largest party in government it holds more power than ever before. Douglas is urging the party he helped found to take the same approach he did 40 years ago.
In recent years, ACT has moved in a right-wing populist direction, seeking to win votes by appealing to racist sentiment rather than economistic libertarianism. Since the pandemic, NZ First has joined ACT on the populist right — today, both parties align themselves with extremist anti-Treaty groups such as Hobson’s Pledge.
The National Party may be the most moderate element in the government, but it too has allowed itself to be pulled rightwards. The Coalition is thus mounting the most vicious attack on Te Tiriti o Waitangi and indigenous rights that we have seen in a very long time. The Government is further attacking tangata whenua through its law-and-order populism, a thinly-veiled dog-whistle for locking up more Māori, who are disproportionately incarcerated by the colonial prison system.
This racist agenda is accompanied by harsh austerity. Finance Minister Nicola Willis is taking a sledgehammer to the public service in order to pay for tax cuts. ACT’s Brooke van Velden has been appointed Minister for Workplace Relations, and is predictably using this position to attack workers’ rights. Environmental protections are being watered down, with the repeal of the ban on new offshore oil and gas drilling and the dangerous Fast Track Approvals Bill allowing for an aggressive expansion of fossil fuel production.
The Coalition set out its intentions by using parliamentary urgency an unprecedented number of times in its first 100 days. Douglas’ doctrine is being applied. After 30 years of moderate National and Labour Governments, we are back to the era where change happens in quantum leaps — and the pressure on the National Party by its more right-wing coalition partners means that MMP is enhancing the rate of change, not slowing it down.
If a Labour-led Government moves the needle one or two inches to the left, and is followed by a National-led Government which moves the needle five, ten, twenty inches to the right, then overall politics has moved to the right. Zoom out 40 years, and this is the path Aotearoa has taken. Ever since 1984, we have experienced a seemingly-inexorable rightward drift.
The cautiousness of centre-left leaders such as Ardern and Hipkins will never be a match for the ruthlessness of neoliberal leaders prepared to move with speed and ferocity. The approach of the Coalition, inspired by Douglas and Richardson, is to move so quickly from one reform to the next that social movements are left dazed and confused, unable to build resistance against one devastating attack before being faced with another. The left needs to push back on all fronts at once.
A Democratic, Popular Agenda for Radical Change
We live in an era of crisis. Inflation has given way to recession and unemployment. The housing crisis is not going away. Ordinary people work long hours for low pay while the rich get richer. Attacks on Te Tiriti are polarising society; the social division we have recently seen overseas has arrived on our own shores. The climate crisis threatens all life on earth.
This situation is urgent. As Friedman knew, in times of crisis “the actions that are taken depend on the ideas that are lying around.” The left needs to put forward its ideas without equivocation, else the ideas that are enacted will be the ideas of the populist right.
The incrementalist centre-left parties who have failed time and time again to turn back the tide on neoliberalism will never implement radical demands of their own volition, let alone lead the charge towards an alternative economic system. These parties must be pressured from below. At the same time, new organisations must be created that are committed to truly transformational change, including a political party committed to dismantling the entire capitalist system.
We need to organise and demand transformational change to occur in quantum leaps. But the agenda of the radical left — redistributing wealth from the 1% to the 99%, repealing anti-union laws, phasing out fossil fuels, and Tiriti-based constitutional transformation — will encounter fierce opposition. The neoliberals understood that such opposition cannot be reasoned with. It must be overwhelmed.
Douglas’ agenda was completely undemocratic, and, once the outcomes of Rogernomics started to become clear, deeply unpopular. A programme of left-wing transformation would be neither. Such a programme would favour the vast majority of the population. It cannot and would not be a secret agenda, kept hidden until being sprung upon the electorate to exploit a moment of shock. The left needs to discuss ideas and strategy openly and honestly, publicise our ideas as widely as possible, and win a democratic majority for change in the interests of the many, not the few.
The main opposition faced by neoliberalism was the labour movement — trade unionists which represented the majority of society. Resistance to left-wing reform will come from the super-rich — people with extreme wealth and power who will stop at nothing to protect their interests. This makes it even more vital that a left-wing programme is implemented with speed and scale.
The right moves with speed in order to disorientate social movements. The left must mobilise unions and social movements in order to win power, and then keep people mobilised in workplaces and in the streets for as long as possible. The power of the right comes from elites; the power of the left comes from the people. If movements are demobilised or demoralised, a transformative left-wing agenda will get bogged down. Therefore the left needs to move even faster than Douglas did, demonstrating that the will of the people will not be ignored, however much it is resisted by the wealthy few.
The government of Michael Joseph Savage and Peter Fraser transformed Aotearoa in the interests of workers from 1935-1949. Its programme of change began at pace in its first three-year term. The modern left in Aotearoa can take inspiration from the determination shown by the First Labour Government. However, this historical example must not limit us, as we must move further — a transformational agenda today must move beyond the colonial capitalist system, something the Labour Party has historically failed to do.
You can change more in three years than in three decades. Roger Douglas knew this, and the current Coalition knows it too. The modern left needs to wake up and learn the same lesson. The incrementalism of Clark, Ardern and Hipkins has failed. It is time we built a democratic majority to move Aotearoa rapidly towards a system that favours workers, indigenous rights and the future of the planet over the interests of corporations.
A better world is urgently necessary. If the left relies on the power of the people, and moves in quantum leaps, then that better world will become not just possible, but inevitable.
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Welcome to my Substack! Thanks for reading.
My name is Elliot Crossan, and I am a socialist writer and activist based in Tāmaki Makaurau Auckland. I am the Chair of System Change Aotearoa, an ecosocialist campaign group. This article has been republished from our website, which you can check out here.
I am a freelance writer, and I intend to make all posts on this Substack free. The goal of my writing is to help bring about political change — to contribute to the movement for workers’ rights, indigenous rights and climate justice. If you are able to support me financially, any contribution would be greatly appreciated — but I have no plans to publish anything behind a paywall.
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Thank you for the boldness - it is missing from the parties of the left.
Substack has certainly showed that my knowledge of our political history is nowhere near adequate.
Very valid points following an unlikely headline. Who would have thought Douglas had any lessons for the left? Well done!