There are two capital Cs, even in the world of realpolitik. One is communism and the other capitalism.
I think we can all agree that every representation of communism that we have seen, of which Stalinism and Maoism are the two main examples, has simply not worked. What then of capitalism? Let us first see if we can have a basic understanding of what capitalism means in an everyday sense.
It is a system of government which espouses the maxim "let the market decide". It is a system which decries rules and regulations because these interfere with the free market and it posits that in the place of rules and regulations, competition will rule supreme.
Competition will be the guiding light for the economy and to the populous in general. So no rules, or more to the point, competition rules.
Competition is the very essence of the capitalist system. It ensures a distribution of wealth, that competitors rise and fall, and efficiency as competitors fight to survive. It is a simple and attractive formula.
The formula is, however, fatally flawed. Market-driven, regulation-free economies do not become competitive systems; they become monopolistic systems. There is no pure capitalist system where competition has not been slowly strangled to death by bigger and bigger companies until only the apex predators survive and a small number of immensely wealthy monopolies rule.
It is childish to imagine that regulation-free competition results in anything other than monopoly. Just ask yourself: how many businesses you know of deliberately go around encouraging their competitors and hoping they will do well because competition is good for the country?
That might sound a little trite, so let’s look instead at one of the world’s newest capitalist states — Russia. Under Mikhail Gorbachev’s dual policies of glasnost (openness) and perestroika (restructuring), he completely revolutionised the Russian economy. He sold off the huge government-controlled enterprises (i.e. everything) and let the free market reign.
The result? The biggest example of oligarchic, monopolistic criminality the world has ever seen. Led by Vladimir Putin’s own personal band of kleptocrats and supported by what we now call the "oligarchs", Russian wealth passed rapidly through the hands of the Russian people into the hands of the few.
Or perhaps we should look at Russia’s nemesis the United States. Capitalism in the US rapidly slipped into monopoly with the growth of the rubber barons in the late 1800s and early 1900s.
Carnegie, Rockefeller and Ford all made their businesses as monopolistic as they possibly could. For a brief period central government fought back. Anti-trust and anti-monopoly laws led to a period in which some monopolies were dismantled, AT&T being one of the biggest.
But capitalism does not take such assaults lying down and it fought back — today we see the massive monopolies of the tech industries. They are so big, so monopolistic and so powerful that when a major first world country such as France has the temerity to suggest that they have to pay taxes in France for business done in France, it is France that is forced to back down.
Looking on an ever wider horizon, is it possible to name 20 major petrochemical companies or 20 major pharmaceutical companies or 20 major online retailers? In general it is not. We all start to run out of names after about five or six. All the world’s major industries are monopolistic in nature.
If you want a trite example of the all-pervasive nature of monopoly capitalism ask yourself have you ever sat down and played a board game called "let’s share our wealth" or "make a million and then see how many others you can share it with"? Or, like me, did you play a game called Monopoly where the idea was to drive others into bankruptcy so that you could get super rich?
Leaving the esoteric realms of boardgames and Russia’s oligarchies to one side, let us instead look at our own country and see how we are faring. Let me just say two words — banks and supermarkets.
The ASB, BNZ and ANZ have a virtual stranglehold on New Zealand. They control the housing mortgage market, the farm mortgage market and the long-term and short-term investment markets.
And we all know they make an egregious profit, which they shift offshore to Australia. Supermarkets are a duopoly and they maintain a stranglehold on consumers’ ability to access food and household supplies.
I don’t wish to enter into a rant about banks or supermarkets. What I want to do is hold up to the light of day the inbuilt contradictions in the non-regulated, free market capitalist system which our government aspires to.
We do not have a country that is entirely dominated by major monopolies. We do not have a country where 1% of the people own 90% of the wealth. But we are unquestionably heading in that direction.
I think we all have reasons to be greatly concerned the government seems to be committed to hastening New Zealand descent into the mire of unfettered monopolist capitalism.
I find it hard to believe that this is actually what most people want. In fact I don’t think most New Zealanders would support a politician who stood up and said "I want 1000 super rich people to own 95% of everything in New Zealand".
This of course is the problem. The people who do actually believe this don’t actually publicly espouse this view; they simply find other less offensive ways of selling their philosophy.
They decry regulations and say we must have fewer rules. They decry the government’s public service and say they must be slashed, they accumulate gate keeper power in the hands of a few ministers and prevent public service oversight of many major financial transactions.
Capitalism is and has been a great force for good in much of the world. It has helped to lift much of the world out of grinding third world poverty and it has helped to spread the benefits of wealth across much wider groups of people.
The problem is that this is now changing and the monopolist and oligarchic nature of unfettered capitalism is now destroying the systems of checks and balance that were once in place and replacing them with deregulated structures aimed only at wealth accumulation.
There is nothing wrong with aiming to build up a wealthy and commercially vibrant nation. But, the most fundamental question must be "for what purpose?". Are we going to struggle and work to make the nation rich just so a few of the super rich can get even richer and competition can drive bankruptcies so that only monopolies survive? Or do we have some goals for the nation itself?
Do we want a nation where there are regulations that ensure everyone has food, housing, education, access to good healthcare and a meaningful job?
The point is that those things are diametrically opposed to the form of deregulated free market economy we are heading towards.
• Bill Verrall is a Fiordland writer.
