Having commented from time to time on politics and the elections, I found it fascinating to see the rather muted response to John McDonnell’s speech at the Labour party conference. Reaction to the appointment of Jeremy Corbyn as Labour leader has mostly focussed on things he said in the past and terrible things he would surely do in the future, rather than involved actual critique of what he is now proposing—in part because that has been slow to emerge. Without too much analysis, these are the things that I noted of significance.
1. He protested against the mistreatment of disabled people through mistaken assessments carried out by third-party contractors. It is surprising to me that more weight has not been given to this issue outside disabled interest groups. A story about Michael, who suffered from mental health and committed suicide when he lost his benefits, opened McDonnell’s speech.
2. His major piece of argument was that austerity is a choice and not an economic inevitability—it is possible to close the gap between national expenditure and income through growth of revenue rather than cuts. It is quite hard to see how one can question this assertion. As McDonnell points out, austerity did not deliver what was promised in terms of deficit reduction in the last five years, and there are no signs it will deliver in the next five years either. It isn’t working elsewhere in Europe, and in the past it was not the answer—which came instead through investment and growth.
3. A key commitment is to close down on tax avoidance by big corporations. I confess to find it baffling how, when I order a book online which is sent to me living in the UK from somewhere else in the UK, that this is not counted as a UK business transition subject to UK business taxes—and I suspect the rest of the population is equally baffled about this. What possible argument is there against this—and why hasn’t it happened before now?
4. He would like to introduce the Tobin Tax, a very low level tax on financial transactions. Apart from revenue raising, many believe that this would dampen the volatility of the financial markets, and could have ameliorated the effects of the financial collapse of 2007–2010. It has a surprisingly wide base of support amongst European leaders, including Angela Merkel of Germany, and economists—and is in fact currently in place in some of the fastest-growing economic centres of the world.
5. McDonnell is going to establish an Economic Advisory Committee which includes some of the biggest global names amongst economists who question the current neoliberal agenda. The BBC’s Robert Peston calls this ‘Corbyn’s Thatcher moment‘:
One criticism levelled at Jeremy Corbyn and his shadow chancellor John McDonnell both by the Tories and centrist members of his own party is that they are left-wing dinosaurs. They’ve today gone some way to answering that charge by recruiting some of the world’s most influential left-wing economists to an advisory panel. The panel includes Joe Stiglitz, the US Nobel prize-winner, Simon Wren-Lewis, Mariana Mazzucato, Danny Blanchflower and Thomas Piketty.
These are economists who’ve written powerfully about the need for new taxes, especially on the wealth of the rich (Piketty most famously) and on the role that governments can play in sparking wealth-creating innovation (a tour de force by Mazzucato). And they are all opponents of austerity, or public spending cuts in a recession (Wren-Lewis in particular has been waspish about Osbornomics)…
For the first time perhaps since Margaret Thatcher became leader of the Tories, when she sought intellectual ballast for her policies of controlling the money supply and shrinking the state from the likes of Friedman and Hayek, a leading British party is trying to establish an economic ideology outside the mainstream.
6. McDonnell wants to see the state have an important role in encouraging enterprise, rather than leaving it to the market. There are three areas where this could be significant. First is in encouraging longer-term infrastructure investment. Britain has a shockingly poor record on infrastructure, and it is seen as a major weakness compared with our global competitors. I am in Weymouth as I write this, and the train line to Weymouth is very slow (I could not actually get here from Nottingham on a Sunday in a realistic time) simply because the power on the train line drops off once you pass Poole.
The second is in housebuilding. Britain has simply never delivered enough housebuilding through the private sector alone. Never.
The third is in national ownership of utilities and transport, such as the railways. This is massively popular—and for some strange reason the current Government thinks it should not own utilities but is happy for foreign state agencies to do so.
7. He would like to see greater employee involvement in businesses. This is the case in countries like Germany—though it would need a move away from the conflictual employer/employee dynamic that marked British industry in the past.
8. McDonnell wants to set up a review of the role and function of the Treasury and the Bank of England—though not end the independence of the Bank which was perhaps Gordon Brown’s best decision as Chancellor. Why should the Bank of England only concern itself with inflation and interest rates, when questions of investment and growth are at least as important? And why has the Bank not acted recently when we have been outside the desired inflation rate in the last few months (at 0% instead of in the 1%–3% range)?
This strikes me as a fascinating list of issues. The one thing it does not look like is a collection of wacky, leftist and unrealistic policies dreamt up by a loony Marxist—despite what you will have read in the press. These policies (as far as they are developed) look to be asking just the kinds of questions that many people feel need to be asked, and not a few of them will be very popular. They clearly do not conform to the current lines of discussion about the economy and government, and a jolly good thing that is too.
I wonder if Margaret Thatcher’s greatest political triumph was summed up in one word: TINA—there is no alternative. The idea that one party is not giving you a particular choice, but is offering you the only acceptable choice. That has been the mantra of Government for the last five years—there is no realistic alternative to the policies we are pursuing, so if you vote for someone else you are just being unrealistic. But I wonder if Corbynomics might in fact prove how wrong this is. And perhaps David Cameron might come to regret his support for Jeremy Corbyn’s election as leader.
Follow me on Twitter @psephizo
Much of my work is done on a freelance basis. If you have valued this post, would you consider donating £1.20 a month to support the production of this blog?