"Events on a world scale are moving at breakneck speed. The new coronavirus (COVID-19) has set in motion a chain reaction, which is upending any semblance of stability in one country after another. All of the contradictions of the capitalist system are coming crashing to the surface."

Hamid Alizadeh, Coronavirus pandemic opens a new stage in world history., 13 March 2020

The breakneck speed of events was evident here in New Zealand. On 1 March we had one confirmed case of COVID-19, a NZ resident returning from Iran. Two weeks later, we had 10. Then over the space of a week, the number of cases soared to more than 100. On the weekend of March 21-22 the government closed the borders to all but returning NZ citizens and residents. Finally, on 25 March the country was put into a complete lockdown. All worksites are now closed except for an approved list that provides essential services, such as food and medicine. Apart from essential workers, no-one can travel more than 2km from their place of residence. People can buy groceries and go for a walk to get fresh air. They must observe social distancing and interact only with people in their 'bubble', the handful of people in their immediate household.

Decisive action

The Labour government moved early and decisively to lock down the country and stop community transmission of COVID-19. This seems to be paying off, with the number of new positive cases for the virus levelling off over the past week. On 9 April there were 29 confirmed new cases of COVID-19, down from 50 new cases the day before, despite the increase in testing. The total number of cases by 9 April was officially 1,239 of which there were 317 recoveries and one death. There are good signs that the virus is being stopped in its tracks, and the number of active cases could remain below 1000.

NZ general Wikicommons



Jacinda Ardern's Labour-led government stands out for its success in the fight against the pandemic. Stamping out the virus and saving lives has been the priority - in contrast to other Western governments who baulked at the idea of shutting down the economy until it was too late. The government has also moved swiftly to underwrite workers' wages. Billions of dollars have been thrown at the economy to keep it on life support, as the government directly subsidises wages for up to a quarter of the workforce. In the process it is "racking up a hell of a lot of debt", according to economist Cameron Bagrie. On top of that, it was just announced today (9 April) that the government will put a blanket quarantine on the border. Everyone entering the country will be isolated for 14 days in an approved facility subsidised by the government. A number of hotels in Auckland will be used to quarantine new arrivals.

Although we are still not out of the woods, New Zealand seems to be on track to get out of the pandemic with a negligible number of deaths. The dominant feeling in the country is that "we are all in this together" and doing our bit to eliminate COVID-19. Jacinda Ardern's communication to the public via Facebook videos, emails and the daily press conferences with the Director General of Health, Ashley Bloomfield, has, for the time being, swung the majority of the country solidly behind the Labour government.

Temporary measures

In other Western countries such as Italy, Spain and the US, governments are being rapidly exposed in the eyes of workers for their inadequate handling of the crisis. By contrast, the way the government is handling the situation in New Zealand is drawing mass support. The drastic measures taken by the government were reinforced by a group of business leaders (Stephen Tindall of the Warehouse, Sam Morgan of Trade Me, and others) who also lobbied strongly for a lockdown when they saw what was happening in Europe. Waiting any longer could have cost the country ten times as much - "By stamping it out early, we can get back to work early".

The lockdown is a temporary state of affairs. What next? Bourgeois commentators, economists and politicians are preparing for the flow-on effects, and advising the government on what should be its next steps. These can be broadly summarised as follows: bail out essential companies with state funds; let others go bankrupt; spend the next 2-3 decades paying off the debt. In the long run (it is hoped!), the economy will pick back up, with less reliance on tourism, and return the country to some semblance of normality.

Economic crisis

With COVID-19 somewhat under control and new cases starting to drop, focus is shifting towards getting businesses up and running and sending people back to work. Over the past few days, a number of bourgeois commentators and journalists have been pressing the Government on the possibility of lifting the lockdown as soon as possible. The longer it drags on, the bigger the economic hole. This is the gist of Stuff political editor Luke Malpass' column on 5 April, titled "The cure can't be worse than the disease", which finishes with a quote from NZ First MP Shane Jones: "Medical triumphalism is great but not at the cost of an economic carcase."

In her press conferences, Jacinda Ardern has continued to maintain that saving lives is the number one priority, and has ruled out the possibility of lifting the lockdown earlier than the full four weeks. A decision on whether to lift the lockdown, or extend it, will be made on 20 April. On 9 April, Ardern exhorted businesses to start planning for how they would implement social distancing and other safety measures to mitigate the spread of COVID-19 when they open back up again.

Billions of dollars are being spent on wage subsidies during the lockdown, and further billions will be thrown at companies to keep them solvent. Businesses based on international travel and tourism will be particularly hard hit, and many will go to the wall. Others are too important to fail; in particular, there is talk of fully nationalising Air New Zealand.

New Zealand may dodge the worst of the pandemic, but there is no sugarcoating it---the economic outlook for the NZ working class in the short and medium term is dire. Temporary workers and those on short-term contracts are already being let go. Unemployment will skyrocket as companies fold and workers lose their jobs. As for all the government debt that is rapidly piling up---the only way to sort it out on a capitalist basis will be a painful combination of increased taxes and deep cuts in government spending down the line.

But after all that, then what? The most optimistic scenario (which no-one seriously believes) is that the economy recovers more or less to what it was in 2019---a year in which teachers and nurses went on strike for higher wages and to protest the chronic underfunding of education and health. It was also the year in which Labour was forced to reset its Kiwibuild programme, which had failed to make a serious dent in the housing crisis.

Capitalism was already failing to deliver the goods and disillusionment in the Labour-led government was growing. The global capitalist economy was also showing signs of a slowdown, as growth in China was beginning to stall. The truth is that the world economy was headed for a slump in the coming period. None of the fundamental problems of the 2008 global financial crisis have been solved. The COVID-19 pandemic simply sped things up.

The way forward

Rather than trying to save capitalism, the situation calls for bold socialist policies. Essential industries currently under private ownership must be nationalised---the entire banking system; water, power and telecommunications; transportation, freight and food distribution. Nationalised industries should be run under democratically-controlled workers' committees in a coordinated national plan; these committees must ensure safe working conditions. Complete control and ownership of the main levers of the economy under workers' democracy is needed to plan production going forward and provide everyone with the basic necessities. Smaller businesses can be integrated into the national plan; they can be given debt relief and subsidies to pay their workers a living wage, as long as they completely open their books to track where the money is going.

A general outline of policies is described in the IMT statement of 20 March, which can be adapted to our local NZ conditions.

Such policies are of course diametrically opposed to the advice being dished out by most experts. At bottom, the reason is simple: the experts are trying to think up ways of saving capitalism, when it really needs to be overthrown. This is in the interests of the working class. When the workers are inevitably forced into struggle to defend their livelihoods, they will move instinctively in the direction of socialism.

The class divide

Opposing class interests have been evident from the early stages of the pandemic. A number of companies have tried to force workers to use up their annual leave during the lockdown. The Labour-led government has also had to tighten up the wage subsidy after widespread complaints. Rather than simply handing money to businesses and trusting them to do the right thing, applying for the subsidy now involves the "publication of company names, explicit requirements that employment law must be followed and funds paid to employees as well as acknowledgement that audit action could follow." (CTU Economic bulletin, March 2020).

Companies have also been cutting wages, citing hardship due to the pandemic and lockdown. Fletcher Building gave its workers pay cuts of up to 70%; but the top executives, who earn hundreds of thousands of dollars, were only given a 15% pay cut. This was a bitter pill to swallow. CTU President Richard Wagstaff released a statement calling on Fletchers to "be a good employer". A few days later, ex-PM Sir John Key got in on the act, chastising Fletchers and telling businesses to smarten up: "Something all companies need to think about is that reputation really matters." The Fletchers executives duly upped their pay cuts to 30%.

Working class leadership

The CTU has launched an online tool in which workers can report employment issues during the COVID-19 lockdown. According to the website, "large systematic lawbreaking" (whatever that means) from a single employer will be followed up with the employer, and with regulators if necessary. Large systematic lawbreaking across an industry will be followed up with government ministers. Unless it is part of a serious campaign involving workers on the ground, the tool will be as useless as any other online petition. Its main purpose appears to be that of showing workers that the CTU is listening to their concerns.

The most effective way workers can protect themselves is by mobilising at the grassroots. As the number of active COVID-19 cases declines further, the Government will be under increasing pressure to get everyone back to work as soon as the four weeks is up. While businesses are pushing the PM to confirm exactly when they can reopen, the CTU ought to be lobbying the government hard for health and safety to remain the top priority - peoples' lives are more important than profit! Decisions about whether to move between different levels of lockdown need to be based solely on medical and scientific criteria.

Union leaders should be encouraging the formation of local committees to ensure that appropriate safety measures are being implemented in the workplace. Any workplace should remain shut down until all safety concerns have been addressed. In fact, the CTU ought to have been leading the way already with workers in essential industries, lobbying hard for all nurses and caregivers to be given proper protective equipment as soon as possible. But workers should take the initiative and start organising themselves, without waiting around for their leaders.

Perspectives - class struggle

The (50 billion dollar - or more) question to be answered down the line is, who will pay for the crisis? Opposing class interests will give way to an explosion of the class struggle that has not been seen in a generation. This is the perspective opening up over the next few years.

In the midst of the great Depression, the 1935 Labour government of Michael Joseph Savage enacted bold policies that benefitted the working class. It is important to note that Labour was thrust into power by a landslide election victory on a socialist programme, during a period of intense class struggle. Although large swathes of the economy were nationalised, capitalism managed to survive the great depression and World War 2, reconsolidating itself on the basis of postwar reconstruction. However, for over 40 years NZ had a generous welfare state and one of the most centralised economies outside the Eastern bloc.

Over the past 3 decades the welfare state has been systematically dismantled and nearly all of the major state-owned industries have been privatised. Now, we find ourselves staring down the barrel of the biggest economic crisis in history. The situation is similar to that of the 1930s. Attempts by the Ardern Labour-led government to address workers' problems with piecemeal reforms, that avoid making inroads into capitalism itself, are doomed to fail.

For their part, the union leaders are trying to paper over the cracks, sowing illusions in class collaboration: "We will get through these difficult times, but it will require everyone to pull together including government, business, working people and their unions," says Richard Wagstaff. Over the coming years, as the depression drags on with no end in sight, these illusions will dissipate.

What is needed is a fundamental change. Some commentators are floating the idea of an economic "reset". Indeed, the economy must be reset, but not in the interests of the big banks and monopolies. NZ's workers will have no choice but move into struggle to defend themselves as a class. When they put themselves at the head of the nation, it will open up opportunities to carry through the socialist transformation of society.