Economic Fundamentalism: A World Model For Structural Adjustment

In 1984 the New Zealand Labour government, previously respected for its social democratic system, became the first developed Western economy to make a systematic attempt at "structural adjustment". This volte face has had devastating consequences. An obsession with low inflation resulted in rampant unemployment, soaring interest rates and chronic economic instability. Labour market regulations forced workers onto individual contracts and removed any reference to unions in the law. State activities were privatized or subjected to market forces. Restrictions on foreign investment were abandoned, domestic industry was sacrificed to free trade, and the universal welfare state reduced to a wholly inadequate safety net. Despite its failure, this experiment is being hailed by the OECD, the World Bank and others as an exemplary prototype of structural adjustment for the developed and developing world. In 1992 New Zealand realized the need to extricate itself from this economic tangle but has, as yet, failed to undo much of the irreparable damage. This book examines the profoundly anti-democratic process through which this experiment in structural adjustment took place; how the "fundamentals" of rigid monetary policy, labour market deregulation, limited government, free trade and fiscal restraint were cemented in law, and what this has meant for economic, political and cultural life in New Zealand today.