From Ben Wray of Common Weal in the Source Direct newsletter this morning:
Narratively, the Tories have dominated the politics of public finance ever since the 2008 crash, consistently forcing Labour to operate on its terms. Despite the Tories chucking all those rules out the window even before the pandemic, Labour has never sought to redefine the terms of debate on public finances, and under Keir Starmer and shadow Chancellor Anneliese Dodds they have even sought to out-flank the Tories as the party of fiscal responsibility.
It seems very strange to be talking about two parties set to compete over austerity narratives at a time of ballooning public spending, but that's where we are. There is another story Labour could tell about public finance, one which would put the Tories on the back-foot. It's one that talks about a revolving door state, where public money goes on corporate bailouts and contracts are outsourced to Tory donors, with little scrutiny or transparency. Tories' spending to help out their pals in the boardrooms, who happily take public money with one hand while signing off on redundancies and pay cuts with the other. Spending which paves the way for privatisation, creating a state that becomes dependent on private providers.
Instead, spend to end the client state; bringing services back in-house, ending the sell-off of our data to corporate vultures, and that any public contracts come with heavy strings attached on pay and conditions. At the same time, talk up how every pound the government spends on local services generates more money which stays in that community than if it goes to big corporates, which extract wealth out of the community. Make the issue what kind of spending, in who's interest, and for what purpose. If there is no serious attempt to re-define the debate, the Tory politics of spending constraint will dominate, and for that we will all suffer.
He's right. I have nothing to add.
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Hello Richard.
Why is it so difficult for the Labour Party to speak directly to the public with this “another story” about public finances?
When Jeremy Corbyn was leader of the Labour Party there was a huge swell in direct membership.
Presumably then, there is a large section of society that this “another story” would appeal to. Not enough to win an election, could be the argument.
Maybe they feel there are a greater number of voters for whom this would not appeal to. However, continuing to be Red Tories isn’t winning the Labour Party any elections.
Are Labour stuck in no man’s land? Can’t go left, can’t win right.
They need courage
It seems they have not yet found it
Richard, how right you are about Labour’s lack of courage. And now vision? Can’t say the “new management” is much of an improvement on that score. Indeed, the reverse is true, IMO.
Alastair Campbell, Peter Mandelson and Margaret Hodge have all now publicly voiced dissatisfaction with the weak voice and leadership of Starmer and the entire shadow cabinet. Unless Labour pulls significantly and consistently ahead in the polls from now on and does well in the elections next year, a leadership challenge from the right seems increasingly possible. Sadly this would only mean a continuation of the economic mince being talked now.
This seems to be much the same problem as the SNP leadership supporting nonsense like the No Growth Commission, and pandering to the Scottish Land Owners Federation. Independence for Scotland is not going to be won by how the rich and upper middle class vote. Simply because there are not enough of them if nothing else. So the prospectus and policies have to appeal to the bottom 60-70% of the income distribution. Improving wages, the Jobs Guarantee, Green New Deal, a radical shake up of land ownership, major reform of the tax system and similar is what is required. Independence is actually a once in a century opportunity to change everything. Iain Lawson, reporting on Estonia, says you have 18 months to two years to make your improvements before all the vested interests etc re-solidify and any serious change then becomes impossible again. The Estonians said “Don’t waste your chance”.
I think the problem is that all elected MPs and MSPs are be definition affluent and they find themselves in the top 20% of the income distribution. Many also acquire significant wealth (second homes in London, etc), and they sit at dinners (not so much this year unless you are Jeremy 🙂 ) with like minded affluent people. I think they quickly succumb to that sort of group think, for the most part. There was a survey done of a group of folk who earned around £200,000 pa and they were asked if they were: Average, Above Average or Below Average in terms of their income. Most chose Average. That is because the reference point is their friends and colleagues, who are completely untypical of the country as a whole.
Interesting article from Naomi Klein – last bit of the interview particularly on building from the bottom up, a new vision and a new movement.
https://tribunemag.co.uk/2020/09/naomi-klein-we-have-to-rebuild-from-the-wreckage-of-neoliberalism?fbclid=IwAR2HDDwlVxLNCQ8fP1zmrXyixf-XhqqozICPfy-W5g6ijlHq377WbttBkMw
Some on the left of this ‘under new management’ Labour Party have been talking about this.
The Labour Party stance on this seems to be dire. I sent Keir Starmer and his team some papers and a long letter about how MMT would be a more appropriate approach to the public finances and could gain them public support. I even mentioned Kelton’s book. I received a reply that said that they had heard what I had said and sent the material to the appropriate people. Well, it looks as though it has had no effect whatsoever.
The only option left it seems is for some rich person to set up an advertising campaign on MMT + critiquing austerity programs via various media. It looks as though nothing less will work.
Agreed – we need a credible alternate vision.
Hi, sorry this is unrelated to the post. I’m filling out the online government form for a Covid-19 test after feeling unwell and developing a continual cough. After you give all your details they demand you allow them to hand all your personal information over to a consumer credit reporting agency called Transunion, a U.S. based coporation. The reason they give is: “This will help prevent fraudulent use of testing services.”
I looked up Transunion and it was apparently apparently aquired by Goldman Sachs capital partners and Madison Dearborn partners in 2010. It’s biggest shareholder is Vanguard group.
My understanding of these organisations is that they are essentially financial criminals and I do not want my personal information handed over to them.
You have no choice about handing this information over and if you refuse you can’t get a postal test and have to go to a walk in centre.
It is a despicable requirement that this must be done
Utterly unacceptable
I’ve had mild Covid symptoms for the past few days. I won’t be having a test because of this form – I’m damned if I’ll allow corporate bandits have any access to my financial and private details.
So I’ve contacted everyone with whom I’ve been in contact for the last fortnight (not many – I’ve been in purdah because of a positive case encountered while travelling back to my home) and warned them. It’s now up to them if they decide to self-isolate – I have asked them to.
Have never understood why none of Brown, Miliband, Corbyn, Starmer, tried to change the terms of the debate .
Brown’s ‘we saved the world’ moment with his G20 initiative after 2008/9 was never used to explain the increase in the public deficit from 2.5% to 10% . They simply never challenged successive Conservative leaders’ charge that it was over spending on public services, justifying the destruction of services over the last 10 years – at the same time hobbling the economy (eg Martin Wolff).
Was Corbyn afraid of to say ‘Labour saved capitalism’?
Basically it seems a failure to understand how the economy works and could be made to work differently – so there is no confidence in Labour’s ability to change the terms of the debate.
Someone posted recently, something like – ‘there is only conservatism now’.
Hegenomy?
The Labour Party in 1945 inherited a level of debt in real terms of more than double (in fact treble if you discount what the BoE owns) what we have now, and in a fixed exchange rate / semi-gold standard era. That meant that you were also tightly constrained by the balance of payments. Despite that they did not have undue difficulty in nationalising the Bank of England, the railways, coal mines, and more. Nor did they hesitate to nationalise all existing health care and establish the NHS, and nor did they fail to establish the welfare state. Just to round things off they embarked on a huge council house building programme. Meanwhile also spending a lot more than we do in real terms on defence and having problems pop-up like the Korean War and Berlin Emergency. Strangely this started off two decades of unprecedented prosperity and reducing inequality. Actually not strange at all since that is what Keynes and MMT would predict. So it is a total mystery to me as to why the left is now for the most part more neo-liberal than the neo-liberals.
The Tories quietly re-nationalised the railways a few weeks ago as all the franchises were terminated exercising the force-majeure clauses. Did the World end? No.
I have the sense that the labour party will not endorse MMT until other major governments of advanced countries have endorsed it.
Even Ed Balls is more progressive on monetary issues, than the labour party has been for the last 5 years. He concedes the point that evidence has defeated the theory that central bank independence is good for the stability of the economy.
I come to the conclusion that on fiscal policy and finance governance, labour have taken a few steps backwards form 2014. And Corbyn didnt advance policy forward in any way, only treaded water. They have become followers not leaders.
@Andrew Broadbent
I’ve posted this elsewhere, maybe even here, and have certainly shared this directly with Richard via email, but someone who did understand this was that skilled campaigner, John Prescott.
Here he is, giving his view of Ed Miliband’s failure in the 2015 General Election:
http://www.mirror.co.uk/news/uk-news/labour-lost-election-5-years-5671406#ICID=sharebar_twitter
The two Eds brushed off Prescott’s advice, arguing that obsessing about the past was to be backward-looking, and they wanted to look forward.
They, and it would seem every Labour Leader and prominent Labour politicians disregarded Big Brother’s observation in ‘1984’
“HE WHO CONTROLS THE PAST CONTROLS THE FUTURE; HE WHO CONTROLS THE PRESENT CONTROLS THE PAST”
Failure to have done this allows the farcical response of Cleverly in a recent interview, that, after 10 years in power, the Tories are still only clearing up Labour’s mess!!
Thanks Andrew
Very true, and you still get the comment…’..well if you think the finances are bad now imagine what it would have been like if labour were in power!’
“However, it is also worth being sceptical. Public finances in the UK were very good in 2007; by comparison with the past 100 years, we were near a record low”
https://www.economicshelp.org/blog/14006/economics/can-labour-be-blamed-for-the-economic-crisis/
Hadn’t realised Prescott wrote this – spot on, but how did Labour, from left to right, manage to stay more or less united on never challenging the devastating narrative that they overspent on services – when it was actually on rescuing the banks – ‘their’ banks?.
Seems a total failure to analyse, to develop an understanding, and to have the confidence to persuade the public.
Is this what hegemony is: there is only one truth – the rulers’ truth, and we have to work within that?
These remarks are from Jason Hickel’s twitter stream. The second paragraph seems, to me anyway, sensible.
“The fact that most Left parties buy into growth-ist narratives is an extraordinary coup on the part of capital. As long as growth is the prime objective, it’s tough to argue for anything (labour rights, climate goals, taxes, nationalisation) that might pose a barrier to profits.
If the left abandons growthist narratives and sets new objectives (human and ecological flourishing), they will find it much easier to argue for the progressive reforms for which we have fought for so long.”
https://twitter.com/jasonhickel
He is very good
Worth following
I must do a post on his blog on MMT and degrowth
It’s looking increasingly true there aren’t the brains in the current Labour Party leadership to ask why the Tories are always attempting to apply a “throttle” to government spending let alone government money creation (if they understand that process) which clearly gets abandoned when a crisis crops up either in financial or war form:-
“Although the Act required new notes to be backed fully by gold or government debt, the government retained the power to suspend the Act in case of financial crisis, and this in fact happened several times: in 1847 and 1857, and during the 1866 Overend Gurney crisis.”
https://en.wikipedia.org/wiki/Bank_Charter_Act_1844
https://bankunderground.co.uk/2017/08/08/your-country-needs-funds-the-extraordinary-story-of-britains-early-efforts-to-finance-the-first-world-war/
https://www.bankofengland.co.uk/-/media/boe/files/archive/ww/boe-1914-1921-vol1-chapter3.pdf
See pages 9 and 10 in Chapter 3.
This new Labour leadership looks like another dud in a long line of Labour Party leaderships. The temerity of pretending they act in the interests of the ordinary working man and woman is wearing very thin for those who take a serious, as opposed to a superficial or cultish, interest in the workings of their country’s democracy!
I’ve said on this blog before, this was the biggest failing of Corbyn’s Labour.
The fact they were so close to winning in 2017 was also a curse because it made them think they were on to a winner with a fully-costed manifesto, when in reality it was likely the simplicity of what was on offer, plus the fact there was no dementia tax included which appealed to people.
Maybe they just concluded that challenging the economic status quo would be too difficult. People’s acceptance of tax and spend is almost absolute, their expectations of the state to have a positive impact on their lives is rock bottom. But how can they have seen these two things as not being interdependent?
Yes we need more MMT in the mainstream but it is too radical an idea to be sold explicitly. It is about selling it implicitly, and some techniques for that are detailed in the quoted article.
The shame is that Labour has had a masterclass in how to do it over the past few years by AOC, and didn’t act on it.
No one needs to seel MMT
It is just what is
What needs to be said is what it makes possible
Even if it is what is, it’s still radical to the layperson. Government can create all the money it needs? Sounds suspicious. What I was meaning was, the way to refigure people’s expectations is difficult. But a good way to start is to challenge the contradictions of the current system.
Noted!
Kelton p, 232
On seeing the light of MMT Congressman Reverend Cleaver said on illuminating Congress
” I can’t say that ”
As my dad used to say ” They can’t punch a hole in a wet Echo “–( a Liverpool evening newspaper )
The Labour leadership-too timid ,too weak, too frightened
¬
What mitigates against people understanding MMT is they fail to see money as a flow that needs to be maintained. In particular they don’t regard savings as a temporary restraint of that flow but an amassing of things. In the old days the preference was for those things to be gold coins and too some extent still is today in times of crisis. This seeing money as things gives rise to concepts such as the Quantity Theory of Money and government’s need to balance their books just like private sector banks always aim to do conveniently forgetting in times of crisis there’s always a demand government turn itself into a “Flow Financier of Last Resort!”