This is the moment for the right wing – because they may never get another one

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A commentator on this blog has asked if I really think the Tories are stupid.

My answer is that all the evidence is that they are. Take as example a piece in the Telegraph today – the favourite read in the Tory shires. They say:

David Cameron was embarrassed after being accused of planning "brutish" cuts by the Left-wing economist he appointed to head a pay review only a month ago.

Will Hutton, a leading liberal commentator, was a surprise choice to head the commission - which will look at ways to close the gap between the highest and lowest-paid public sector workers - given his long-term antipathy to the market economy.

Will Hutton is, I guess, what might fairly be called centre-left. That means in broad terms pretty much in the middle of the Labour party, even if not a member of the party. In other words he’s a proponent of  mixed economy. As I am. As, incidentally, all Tory governments have been in living memory.

And yet there is now a collective right wing madness out there in Toryland that is gripping it like a fever – and driving it into the far right – into a world that believes the state is the enemy, that all who believe it has any role are to be subject to McCarthyesque abuse, and who seem, I admit genuinely, to believe that anyone to the left of Ken Clarke has to be treated as being an advocate of state central planning (actually, they probably think Ken does that too – which is why he got sent to the Ministry of Justice).

The madness in question is, of course, much like that which grips many of the Republican think tanks to be found in Washington DC. It is absurd, out of touch with reality, driven mainly by young staffers who have never done a real job (who go on to be Chancellor and Prime Minister in the case of Osborne and Cameron) and is entirely dogmatically driven. That dogma in question emanates from Chicago but predates the 1930s crash. It has a basic premise, which is that  Say’s Law works. Says Law, in essence says that the total supply of goods and services in a market economy will equal the total demand during any given time period. As Keynes therefore concluded from it, large scale involuntary unemployment cannot, according to this law, happen. Except, of course, it did.

The logic of Say’s law flows into neo-classical economics, where as David Ruccio has recently written that “neoclassical microeconomists assume that prices move to clear markets and that the auctioneer calls out price vectors until general equilibrium is achieved”. What is more, the Chicago school assumes that this happens without any time delay. Neo_Keynesians assume this happens with a time delay (broadly speaking). Keynesians simply assume this does not happen.

Put in plain language the neoclassical assumption is that the economy will go back to full employment after a shock, all by itself. The market will solve the problem. True Keynesians don’t believe that.

And that this logic is what underpins Osborne’s thinking is apparent. Take this from the FT, which says today:

Official forecasts will show George Osborne’s emergency Budget hitting growth and costing jobs in the short term, government sources said last night, but the austerity measures will also create a brighter climate for the economy by the end of the parliament.

In a tough Budget that seeks to overachieve on plans to eliminate the deficit, Treasury ministers accept that the new and independent Office for Budget Responsibility will mark down the growth and jobs forecasts as government spending falls and taxes rise.

But insiders who have seen the forecasts said that because the OBR will assume this is just a temporary shortfall of growth, the effect will be to increase spare capacity in the economy, creating room for a faster growth forecast just before the next election.

In other words: the market will automatically correct for the mayhem caused now. And the pain during the correction will be worthwhile. 1.5 million extra unemployed, 4 million in all: that pain is worthwhile. Massive poverty: that is worthwhile. Blighted education: that is worthwhile. Needless deaths as health care will suffer: that is worthwhile. Social disorder due to cuts in policing: that is worthwhile.

Of course, none of it is worthwhile. There are two reasons for saying that. First, there is no evidence that markets do correct for imbalances. Say’s Law does not work: the market does not ensure the economy balance at full employment and there is absolutely no reason ion earth why it should. So the assumption behind this pain is completely wrong.  There will just be pain, but no gain. And the mayhem will be enduring.

Second, there is no evidence that the ‚Äògrowth’ the market might generate will meet need. People want law and order, health care, good education, and all those other things the state provides and which no market mechanism could provide with anything like the same efficient. Remember, US health care costs twice as much as UK healthcare for overall worse outcomes, although it is fantastic at promoting the social inequalities the right wing really desire. In other words: there is no evidence at all people would be better off if services are cut and market growth could fill the void.

So, let’s think what all this is about. It’s about the right wing think tanks having their one and only moment to inflict the change towards a more unfair society on the UK. They’ll never get a second chance. Osborne knows that. As the FT also notes this morning:

Mr Osborne [may cut heavily] in the Budget on Tuesday so he can minimise the chances that he will have to come back with another austerity Budget at a midterm stage when the government might have become unpopular.

That’s why the Right’s calls have been so extreme and from so far beyond the boundaries of political acceptability at any normal moment. They intend this budget should be a coup d'?©tat. It is their intent to overthrow society as we know it and the welfare state. They will sacrifice the lives of millions to achieve that – as if they were First World War generals standing behind the lines (as of course they will be – secure in their own incomes).

But just as throwing humans at machine guns was no solution to the impasses of trench warfare nor is cutting now the solution  to the problems inn our economy. Both ideas were based on wholly mistaken belief dfrom another age that show utter contempt for human life.

The Generals were wrong and history despises them for it.

The ConDems are wrong and history will also despise them for it.

It’s a disaster it’s going to have to be so bloody on the way.