Towards a New Monetary Policy (TNMP) is a 46 page glossy, setting out the Alliance's views. It is a serious, thoughtful contribution to the debate on the remedies needed to introduce sustainable economic growth and full employment, as an alternative to the current Reserve Bank policies. Although space is not available to discuss TNMP page by page, Struggle will comment on some major issues.

In modern economies, the supply and cost of money plays a significant role in economic growth and stability. Should the supply of money be excessive in relation to goods, prices tend to inflate. When money supply and purchasing power fall, an excess of goods develops leading to 'overproduction'. Profits fall; workers are sacked.

Under current legislation, the Reserve Bank has the responsibility for a monetary policy, which concentrates on keeping inflation in the 0 to 3% range.

The Reserve Bank (RB) influences the supply of money by supervising trading bank daily balances and influencing the cost of money through interest rates. The value of the NZ dollar, the exchange rate, is also affected by the ruling interest rate.

In class societies, monetary institutions and their policies defend the interests of the dominant class. The Reserve Bank's monetary policy favours the foreign and local billionaire and multi-millionaire investors at the expense of other classes.

The Alliance claims that the Reserve Bank policy is badly flawed. The Reserve Bank's "sole goal "is the "elimination of inflation" and depends on the " the market" to look after the rest of the economy. The TNMP quotes other facts:

• From 1992 to 1996, the value of the NZ dollar appreciated by 34 per cent, forcing the " tradeable sector to bear the brunt of fighting inflation".
• "CPI inflation in the domestic economy continued at 4-5 per cent per year".

• "Over the three year period, March 1995 to March 1998, Dwelling rentals increased by 17%; Energy by 16.3%; Health Care by 11.25%; Books, newspapers, stationery by 10.7%; and Education and Child Care by 28.6%"

(quoted from page 20, TNMP)

Regarding unemployment, the TNMP states that the Reserve Bank "has prevented any reduction (of unemployment) below 6%, by raising interest rates and the value of the dollar and slowing down the economy." This is a damning indictment of the Reserve Bank - and quite correctly so.

To quote from page 3 of TNMP, "monetary policy should be coordinated with social, environmental, fiscal and economic development policy". These interrelated goals would include full employment, an inflation rate of 1-4%, economic growth, equity in income distribution and protection of the eco-system.

The interest rate and the exchange rate would be managed to assist balance of payments stability and "a full employment level of economic activity".

These objectives warrant serious consideration. Because they challenge the current policy of the Reserve Bank, which is backed by very powerful financial and economic forces hostile to the Alliance's proposals, the following questions arise - Is the Alliance's monetary policy soundly based ? And should it be supported? The answers to these key questions are discussed below.

The Alliance proposed monetary policy threatens the control exercised by the comprador capitalists class of a state institution, the Reserve Bank. So, this class will strenuously oppose any limitation of its control , even though the Alliance's monetary policy does not interfere with their property rights or their right to exploit wage earners.

The Alliance over-emphasises the role of monetary policy and the Reserve Bank, to achieve the goals of full employment and sustainable development. It infers that the antagonistic contradictions within the economic system can be reduced or ignored, once its monetary policy is in place.

Moreover, the Alliance overlooks the source of the power backing the Reserve Bank and its current monetary policy. This power resides with those who OWN the banks, the major industrial , retail, construction, transport and communication enterprises. These owners are in no mood to have their power limited.

Supporting that OWNERSHIP, is the power of the State ( which includes parliament). Thanks to the 'cooperation' of various State agencies, the authority of the employer has been greatly expanded by the Employment Contracts Act and the SS(Work Test) Act 1998. A wage earner faces the economic lash of 13 weeks stand-down, should he or she become voluntarily unemployed, as decided by faceless bureaucrats.

Control of the State and Ownership are the decisive factors when considering significant changes to monetary or economic policy.

For the introduction of the Alliance monetary policy , the power and control exercised by the giant local and foreign corporations MUST be restricted, neutralised. and removed.

Return of former state assets to public ownership must be a goal. Without OWNERSHIP, the people have no power. Without their control of the State, they will not be able to defend their Ownership.

We must learn from these facts. Without their ownership and control of the State, the monopoly capitalists would have no power.

Extraordinary efforts are made to maintain the illusion that parliament is the source of power. Real power resides in the corporate boardrooms, here and overseas. Parliamentary parties get told what to do by those that finance them. Politicians only hold office.

The Alliance favours relying upon parliament as a means of introducing changes. Of course, some minor reforms may be introduced from time to time. But 1998 -1999 is not 1935. Aotearoa/New Zealand is enmeshed in an imperialist web, aided by a local ruling class bent on its own survival, whatever the cost to the people. To break out of this web, to introduce its New Monetary Policy, the Alliance will need to build an effective, militant people's movement, independent of parliament.

In history, major changes have only been made AFTER a determined movement by the people. Their action in the streets, at rallies and marches have played the decisive role. The success of the anti-nuclear movement is a notable example.

If the Alliance relies upon parliamentary wheeling-and-dealing to introduce its New Monetary Policy, and ignores building a peoples' movement, it will never be introduced. Since the Parliamentary Labour Party accepts the excessive level of foreign ownership, it is most unlikely that the PLP will support it.

The Alliance is in possession of a New Monetary policy, the thrust of which will clip the wings of the New Right, the collaborators, the betrayers, the Business Roundtable and Act. This policy will give more breathing space to small and medium business sectors.

But to get it introduced, they will need to mobilise the people, and build a movement independent of parliament. But the Alliance is mainly geared for work to elect its candidates. There is the dilemma. Confine the New Monetary policy to election time or work to build a peoples' movement demanding a new monetary policy. ?

In addition, how can the Alliance influence the conservative members of the parliamentary labour party, who would hold high office in a new government without such a widespread peoples movement?

To answer the question - should the Alliance Monetary Policy be supported? - the answer is a qualified "Yes". In addition, as stated above, former state-assets need to be re-possessed and returned to public corporate ownership and management. The re-possessed BNZ, if not the Reserve Bank, should ensure that low preferential interest rates are made available for all small and medium business enterprises, which are independent of overseas control.

To avoid fluctuations in the exchange rate, caused by currency speculation, the Reserve Bank must be empowered to safeguard the exchange rate with appropriate regulation and supervision of speculative trading.

The general thrust of a New Monetary Policy must be to weaken the power and control by foreign banks and the comprador capitalists, and increase the well-being of workers, self-employed, and small to medium business sectors.

The Alliance's Monetary Policy represents the class interests of the non-monopoly classes, of small and medium business sector. They have suffered from "market forces" and the expansion of foreign transnationals. Insofar as the Alliance's TNMP aims to reduce the power of the New Right, it is helpful to workers. The TNMP allows the working class to find common ground with other classes and build united action with them, primarily outside of the parliamentary processes.

This possibility is recognised by Act and the Business Roundtable, resulting in their 'squeals' being louder than stuck pigs. While acknowledging this common ground, the view must be expressed that the TNMP should be strengthened. Former state assets must be returned to public ownership. And that the TNMP be endorsed by a people's fightback - on the streets and jobs - where workers and the people have real strength.

Marxists regard monetary policies and institutions, such as the Reserve Bank (RB) as part of the superstructure of society. In turn the superstructure, has a definite economic foundation or basis. Karl Marx explains the connections.

The reader is invited to excuse the use of a lengthy quotation from the Preface to the Critique of Political Economy by Marx:

" In the social production of their life, men enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material productive forces. The sum total of these relations of production constitute the economic structure of society, the real foundation on which rises a legal and political superstructure and to which correspond definite forms of social consciousness".

Within the relations of production, there are a minority, who, as owners of the means of production , exploit the majority . This majority, comprising the working people, must sell their labour power to survive. Among the "owners", the strongest sectors are the foreign and local monopoly capitalists.

On that foundation, there has evolved a "legal and political superstructure" which protects the class interests of this dominant sector. Such institutions as the Reserve Bank, Income Support, or the Fire commission can be readily identified as serving the interests of the monopoly capitalists, the international bankers, insurance companies and investors.

"Definite forms of social consciousness" emerge as part of the Superstructure , who task , in turn is to protect the "economic structure, the real foundation".

The policies of the Business Roundtable, Act, the National and Parliamentary Labour Party promoting the sale of state-owned assets, market forces, and the Multilateral Agreement on Investment corresponded to the dominance of US transnational corporations in the "relations of production" .

The present monetary policy is one form of "social consciousness" whose role is to enable foreign corporations and speculators to make greater profits at the expense of workers AND sections of the middle class.

Within the economic structure, or the foundation are many small to medium capitalists. They also contribute to the make-up of the superstructure. The Alliance with its new monetary policy represents the interests of the left-wing of the middle class - a definite form of "social consciousness".

As sellers of their labour power in the relations of production, wage earners have also created "definite forms of social consciousness". This consciousness develops through personal experience in, often intense, political and industrial struggles.

At present, the views of class collaboration and reformism, representing a highly paid strata of the working class prevail within the trade union movement. The revolutionary views of Marxism corresponding to the interests of most working people are also part of the superstructure.

To free the economic structure in Aotearoa/New Zealand from the stranglehold of US imperialism, the advanced workers are confronted with the task of becoming the leading class within the superstructure. Only when "definite forms of social consciousness" of the working class prevail over the small number of minority of monopoly capitalists, can changes be made to the economic structure.

This is why Marxists stress the necessity of the working class taking control of the State, the chief elements of which are the army, police, courts and establishing a democratic state system. To achieve that goal, workers need a revolutionary party guided by their own ideology of Marxism-Leninism.

Current events show that the existing foundation and superstructure dominated by transnationals, is making the rich, richer at the expense of the majority. The Fight Back is on. #