Independence and Foreign Policy: New Zealand in the World since 1935

By Malcolm McKinnon | Go to book overview

5. New Zealand in the Commonwealth economy, 1935-65

Discussions about foreign policy frequently leave economic relations to one side. This is particularly true of much of the writing on Labour foreign policy. It may be an accurate reflection of the interests of the writers but it is not an accurate reflection of the world in which Labour governments operated.1 Economic issues were more central than war and peace issues to the survival of governments in New Zealand and neither the first Labour government nor its successors could afford to ignore the external aspects of such issues even if they had wanted to. On the whole they did not. Through the 1930s, 1940s and 1950s there was vigorous debate about New Zealand's external economic relations. This debate provides us with a story which complements our discussion of independence in foreign policy generally.

The Depression had radicalised thinking about economic relations, both domestic and international.2 In New Zealand this took the form of a greater readiness to contemplate industrialisation and protectionism as solutions to the country's unemployment problem. The Labour Party for its part also looked to balanced trade agreements and state trading to ensure the full employment of New Zealand's resources, particularly its human ones.

It was natural at a time of intense economic dislocation and uncertainty that ideas about limiting the connections between the New Zealand and the

____________________
1
It is not so much that writers leave out what should be covered, as that scholarly attention has focused on the political rather than the economic aspects of Labour's time in office. The two major biographies, Gustafson, Cradle to Grave and Sinclair, Nash, do address external economic issues, especially the latter. It is not possible to comment on the relative weightings in respect of National governments because no monographs have been written: Gustafson's biography of Muldoon, when published, will make a big difference.
2
And set the tone for a generation, until the 1960s: 'Since the onset of economic depression at the end of the 1920s, there had been in the Western world a progressively greater acceptance of the aims of the welfare state. Governments had intervened much more extensively in economic affairs when the ideal of a largely self-regulating economic system no longer seemed adequate. Scarcity and maldistribution of the material means of life led governments to act to ensure justice and more even distribution.' Smith, South Pacific Commission, p. 11. The crisis in the welfare state in the 1970s had the opposite effect.

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