Managerialism and the Economics of the Firm

Abstract

These words, by the author of Competitive Advantage of the Shop Floor, were not written with New Zealand in mind. Even so, they serve well to provide a critical perspective on what has been going on in New Zealand in a decade and a half of managerialist, free-market reforms, during which economic growth has been erratic and income distribution has become markedly less than egalitarian. New Zealand was once a prosperous but insular society in which subsidies and protection from global competition permitted an egalitarian ethos amidst what looked, in terms of international productivity benchmarks, to be a state of widespread disguised unemployment. In this ‘prosperity consensus’, as James (1992) has labeled it, the work environment could be low in stress, whilst the wages of relatively unskilled workers, engaged in producing (often merely assembling) goods traded on world markets, did not get pushed down to the corresponding levels found in developing nations. At the same time, there was a view of New Zealanders as diligent, hardworking people who would ‘give anything a go’ with minimal resources and a colonial pioneer’s ability to improvise solutions.

[T]he prevailing faith that market flexibility will set the economy back on track reflects at best an extreme ignorance of the dynamics of capitalist development and at worst a means for those with economic and political power to open up more avenues for ‘free marketing’ that permits them to extract value from the economic system without contributing to the value creation process. (Lazonick, 1990, 331)