Jane Kelsey, Economic Fundamentalism, Pluto Press, London, 1996, vi +407 pp., £14.99 paper.

Abstract

The book's subtitle – The New Zealand experiment – a world model for structural adjustment? is more revealing of its contents than the title. The New Zealand experiment was a rapid and radical liberalisation of the economy incorporating: substantial freeing-up of financial, labour, external trade and foreign exchange markets, large reductions in the direct government intervention in every economic and social sphere, all combined with general fiscal and monetary restraint. Specific elements have included: substantial cuts in nominal levels of welfare benefits; removal of trade protections and subsidies; an Employment Contracts Act which emasculated the unions and thence collective bargaining; privatisation of most state enterprises (including all the utilities, railways, forestry and the HMSO-equivalent government publisher); corporatisation of hospitals and government research organisations; and statutory independence for the central bank (which was legislated to focus thereafter on inflation control only). So in just a decade New Zealand, one of the original homes of the welfare state, went from having a more regulated and subsidised economy than Britain, to being more like a stereotypical USA of the South Pacific. What may also surprise JSP readers is that the programme was initiated by a Labour government (1984–90). The National, traditionally Tory government (1990–present) did however significantly accelerate the process.