I am well aware that many people, most especially on Twitter, are surprised about my concerns about Labour and the prospect that it might form the next government of the UK.
As evidence to support my concern, I offer this tweet and video from Labour, explaining their approach to the economy if they were to get to power:
With @Keir_Starmer as Prime Minister and @RachelReevesMP as Chancellor, we'll build a fairer, greener future on the foundation of a growing economy.
We will end 13 years of Tory failure and make fairer choices to help families across Britain.pic.twitter.com/xP3nXKiEK8
— The Labour Party (@UKLabour) February 15, 2023
What Labour is offering is:
- A version of economics based upon the household analogy. It is saying that it will be the custodian of taxpayers' money.
- Fiscal rules which will be used to constrain its own activities to appease financial markets.
- Fully costed expenditure, which can be read as endorsement of a balanced budget, maybe excepting that on investment, with at its core the idea that government spending must equal taxation revenue.
- Sound money, which is a harking back to the gold standard.
- Fiscal prudence, which is the subliminal message implicit in the repeated references to Rachel Reeves' time at the Bank of England.
- A limited ambition, which is implicit in Reeves' comment that Labour will not be able to do everything.
Unsaid, but very obviously implied by these comments is a commitment to:
- Austerity.
- A limited role for government.
- The Bank of England and Treasury view of the economy, including their desire for high interest rates that are threatening so many household's finances.
- Managerialism.
- Maintenance of the status quo.
Unsurprisingly, I despair about this presentation of the politics of the centre right, which is the kindest interpretation that can be placed upon this agenda.
At a time when it is very apparent that the whole neoliberal economic approach, with its focus upon small government and austerity, has totally failed this country this austerity agenda is exactly what Labour is offering as an alternative to the Tory government that has delivered this programme for the last thirteen years. Instead of offering solutions to the problems that tht this country faces, Labour is instead seeking to deliver the Tory's programme, but just a little more competently than they did. Absolutely anyone with the slightest social democratic orientation, let alone socialist, egalitarian or green bias should, I think, be sharing that sense of despair, because none of that thinking is remotely close to that which Labour is now offering.
What is more, and to be clear, none of this is necessary. As a matter of fact:
- There is no such thing as taxpayers' money. The claim that there is represents one of the great neoliberal myths. The reality is that taxpayers do not have the means to make settlement of tax unless the government has spent the money that they pay into circulation in the first place by providing them with the goods, services, social safety net and other support that they require and vote for. To claim that a shortage of tax revenue is as a consequence a constraint upon government spending is absurd. Government spending is the source of tax revenue.
- There is not, and never has been, a reason for a government to balance its income against its expenditure. This is why they have not done so for over 300 years. The result of them not doing so has been continual growth, and the supply of a stable and reliable money supply, which is only possible when created by the government, which is only possible if it runs a deficit. Sound money only exists if it is created by government, and only government deficits can deliver it, but Labour appears wholly unaware of this fact.
- Fiscal rules do not exist. No Chancellor of the Exchequer has ever created one that they could not also change, and usually did change when it became clear that they could not meet the target that they had set for themselves. Fiscal rules are actually fiscal choices, and the choice that Labour is making is to run small government and so deprive people of the hope that they now so desperately need if this economy is to recover from the mess that it is in.
The last thing that this country needs is the perpetuation of austerity, but that is exactly what Labour is offering. Worse, it is expelling from its ranks anyone who does not agree with this policy in an extraordinary authoritarian move that is designed to suppress all left of centre thinking within it.
Despite this, it has the temerity to describe itself as the Labour Party, which party had its roots in the trade union movement, radicalism, feminism, the quest for equality and the drive for social reform. I can see none of those influences in what it is now doing. and that is why I will speak out against it and all that Starmer and Reeves are choosing to do which will, I think, be so disastrous for this country.
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“Labour is instead seeking to deliver the Tory’s programme, but just a little more competently than they did”
Any government that tries to deliver this agenda is not competent. 🙁
Agreed
This is also what Ed Miliband ended up offering in 2015… and was deemed too left wing by many party staffers.
This is much worse than Miliband, now the most left-0wing member of the shadow cabinet
As I have mentioned a few times, the only way to get rid of the Tory incumbent in our constituency is currently to vote Labour. Yet, they are giving me absolutely no reason to vote for them.
It’s desperately sad, worrying and scary. Where are the difference makers?
Craig
It’s staggering that we’re in this situation, with no political Party willing to be honest about money. To paraphrase Noam Chomsky, the willful and unnecessary cruelty of this is beyond comprehension. I cannot fathom the absolute lack of care, kindness and compassion in the political choices being made. It sickens and saddens me. I note, too, on your blog, the need for a democratic revolution is often stated. This cannot go on indefinitely without exploding in some way, as millions of people are sinking. What’s staggering is that your blog seems to be an almost lone voice stating clearly the facts of our economic system.
I try
I know it makes me uncomfortable to many
“…no political Party willing to be honest about money. ……… the need for a democratic revolution is often stated. ……….almost lone voice stating clearly the facts of our economic system.”
Fair points, but sometimes facts are not enough – the emotional case needs to be made – witness (witless) Brexit. I will not start on electricity markets (where religious principles and the sale of indulgences seem to rule). The link below/article is relevant to many of the points made by commentators:
https://www.opendemocracy.net/en/keir-starmer-labour-general-election-2024-need-radical-change-green-left/
I would be willing to fund, very very substatially, the software mentioned by the writer (Hinds). Sadly Mr Hinds appears to be uncontactable – odd that people that write interesting stuff can’t be contacted. Anyway, in the unlikely event there are people with means reading this, contact me – I’m sure we could raise a big lump of money to give Starmer and Liebore a real rough ride. Who knows, maybe even a hung parliament.
It just so happens that Dan Hind is an old mate of mine
I will mail you Mike
Labour may well win the next election at a Tory-lite party – much as Blair did in 1997, although I think that comparison is a little unfair, given the change that the Blair/Brown government wrought over time – but they themselves admit they could have done more and faster if they hadn’t tied their own hands by committing to Conservative spending plans for two years.
The 1997 manifesto still reads well. http://www.labour-party.org.uk/manifestos/1997/1997-labour-manifesto.shtml
It will be interesting to see what the next Labour manifesto looks like.
But the acid test will be whether Labour can win two general elections on the back of an uninspiring and unambiguous managerial approach, or whether the Conservatives can get themselves reorganised to challenge the next time with promises they won’t keep, and bugger things up again.
If Labour delivers Tory policy people will prefer the Tories deliver it by 2029
So who do we vote for to change the austerity/housekeeping narrative?
As yet, maybe the Greens
But only maybe
I’m finishing Clara Mattei’s ‘The Capital Order’ (2022), probably the best history and exposition of austerity ever (no disrespect to Mark Blyth, but Mattei looks at the politics of this bad idea in more detail using comparative studies too and goes a lot further), and your conclusions basically mirror that.
Make no mistake – Labour is the ‘austerity continuity party’ we have no choice to vote in at the next election.
And again, its the language of fiscal policy – ‘deficit’ spending is just investment!! Why label it so negatively when it can do so much good or just because it is government spending. And therein lies the clue!
All I see in austerity is fiscal perversion. Pay less for labour, disable people to buy stuff but talk up productivity!! Then use the productivity to sell stuff abroad (austerity at home, cheap goods for the world – but at what domestic cost to society?) and then we walk straight into BREXIT and the uncontrolled markets for basics, when discretionary purchases are already being retarded!!! And what do you create – a new market for credit which we know is fundamentally unstable!
It makes no sense at all from a money management point of view. But if you are an issuer of credit or an investor in it, it makes PERFECT sense. And that is still the problem.
As for Labour, I wouldn’t *** on any of them even if they were on fire. Talk about useless………………………..
It looks like that politically, we’ve been abandoned to the markets.
Agreed
I’ll take this a step further. I’m listening to a recording of recent talk by Martin Wolf, on his new book. https://www.lse.ac.uk/Events/2023/02/202302081830/capitalism
You get a flavour of the contents from here: https://www.washingtonpost.com/books/2023/02/09/capitalism-crisis-book-martin-wolf/
This is the chief economics commentator at the Financial Times – dozens of his close family perished in the Holocaust incidentally – warning us that open capitalism and a pluralist liberal democracy can support each other and help each to thrive, but both are imperilled by financialisaton, by crony and rentier capitalism, by a corrupt and unaccountable elite who look with disdain on their less fortunate fellow citizens, and by creeping authoritarianism. If too many people are left behind, society can collapse into authoritarianism where a popular leader eradicates independent checks and balances in favour of his (or her, but usually his) supporters and family (which Trump almost managed, and I’d also mention Johnson here, but there are plenty of other countries where the leader has succeeded with embedding their power), or Chinese-style party/state/corporate directed capitalism under the control of a ruling elite (although Xi seems to be collapsing China back into authoritarian rule).
Thanks
I am told it is worth reading
I’d read some of the reviews on Amazon if I were you – it seems that Wolf is good at stating the problem (who isn’t) but then goes on to deride some of the possible answers and seems to prefer orthodoxy.
I still think that Clara Mattei’s ‘The Capital Order’ is THE book to read at the moment.
My view is that we’ve had austerity in this country for most of the 20th century and have begun the 21st with it as well.
HM Treasury has an austerity addiction problem. In doing so, it also has a bias towards the wealthy in this country which is quite undemocratic and needs to be eradicated.
The BoE is also in on this and Labour should in my view sack Andrew Bailey and have a good clear out of the austerity addicts and Neo-liberals in the Treasury.
Does Wolf have anything to say on this I wonder?
Is it the system, the people within it, or the place?
The Times had a good interview with Andy Burnham last week in which he acknowledged from his time in Westminster the London establishment antipathy (and ignorance) towards the north
Treasury officials I’m sure live a gilded life in the south east. They might have a different mindset and different policies if they were based in cities such as Bradford or Middlesbrough and see the deprivation and poverty around them.
@robert dawkins lets hope the move of some treasury staff to Darlington helps upend the Treasury View (albeit I don’t hold out much hope)
Token gestures don’t change things
I hear what you say about solutions, PSR (I’ve not read Wolf’s book, just listened to the LSE podcast) but I think it is encouraging that a bastion of orthodoxy – the chief economics commentator at the Financial Times, for heaven’s sake – correctly recognises that our economy and our democracy are in peril, so “business as usual” is not an option.
What to do instead is the open question, and the trick as usual is to find a policy proposition that (a) delivers wellbeing for as many people as possible and (b) is attractive enough to achieve popular and political support sufficient for it to be implemented in practice, whatever government is in power. Creating a new consensus, if you like.
That is why after 45 years of Labour Party membership I gave it up this year, the drift to the right by the leadership had me in despair. Whilst many ordinary Labour Party members are beginning to discuss MMT the leadership will not go near the subject because it will open a ‘Pandora’s box’ full of inconvenient questions.
At its heart, this boils down to the FPTP system.
The potentially more radical Labour vote is concentrated among the urban young….. and getting more votes in this group is not a priority. What Labour is trying to do is chip away at (small “c”) conservative voters that they need to win swing seats in the smaller towns and rural areas. This group are suspicious of any new ideas.
I am afraid that residents in “safe seats” are, effectively disenfranchised.
As a strategy to win it makes sense. As a programme for government it is depressing.
What to do?
Keep making the case for better policy anywhere and everywhere…. particularly with Labour Party members and Leaders.
Agreed
That is why I think the glossary and then what builds ion it may be so important
Will Never Vote Labour Now,,They Lost My Vote When Smarmer arrived.
Even if your characterisation of Labour’s policy as a continuation of austerity is exaggerated , it is a real condemnation of our politics that they seem to be getting away without having to answer a direct challenge of the sort you are offering. Where are the BBC’s and other economics correspondents, and where are politicans who understand this?
I assume Labour’s front bench haven’t dared even to think about this – and just prefer the economic battle ground to be defined for them – around the ‘household balanced budget’ model .
So depressing if they think this is the easier course – since it rules out any chance of being able to expand the economy, reduce inequality, invest in renewables to the extent needed to limit climate change.
I wish it were exaggerated
I do not think it is
I’ve not seen too much evidence of any thinking from Labour’s front bench most of the time.
It’s why they have been selected for the roles – just there to be bodies doing as they are told.
The classification of ‘New’ New Labour as a centre-right party is entirely correct and they’ve got their hands on the levers of power to ensure that nobody with much in the way of left-wing views will ever get themselves near the front line of politics.
The bullet point on ‘There is no such thing as taxpayers’ money’. Is there somewhere I can learn more about this? I’m not quite following.
Try this https://www.taxresearch.org.uk/Blog/2021/11/25/note-to-nadine-dorries-there-is-no-such-thing-as-taxpayers-money/
There will be a glossary entry soon
Even setting aside your well made point about all money being created by government, the term “taxpayers money” irks me.
It seems to assert that only tax payers have the right to decide how it is spent. NO – taxpayers may contribute the money but it is for ALL citizens to decide how it is spent.
Precisely
What irks me is that when I pay a shop what is due to them I don’t then claim that they money I have then paid them is still, somehow, my money.
Why when I owe tax is the situation somehow different?
And that’s even before reflecting on the fact that the government made the money in the first place, so it was always theirs, if it was anyone’s because the debt they created had to be repaid.
Those who believe that Starmer – if he gets into power – will suddenly transform into a socialist have neither read the statements, followed what is happening in the party, followed Starmer’s trajectory and backers, or progressed intellectually beyond the bot message of ‘Tory enabler’.
He and his apparatchiks are busy killing off party democracy, and any possible avenues of policy change, as he suspends and expels with no regard to the party constitution or rules (the stuff about Corbyn is unconstitutional). This has met acclaim from those elements of the old party machine that keep a stranglehold on CLPs and have been given a hold on the party committees, local and national, by selective suspension.
How might such a person govern, given the power?
I don’t understand your point. Whole CLPs have resigned because of the way they have been treated by Starmer and his friends. Whole CLPs have been kicked out by Starmer for being socialist. Jewish members who support Palestine have been suspended by Starmer.
His latest, telling them if they don’t like what he is doing, they know where the door is, omits to say how many have already left through that open door.
But those CLPs still exist. They are just Starmer clones now.
376 CLPs have passed motions in support of PR. That’s not being Starmer clones.
@CLIVE PARRY
Good afternoon
Is “taxpayers’ money” not “for ALL citizens to decide how it is spent” but for the government to decide how it is spent?
As I understood it, once my taxes are paid the money belongs to the government to do as it wishes, whether it’s to pay for tax cuts for wealthy people or to build new schools and hospitals.
Apologies if I’m misunderstanding it?
Yes
But there is a democratic process, ultimately
Unless the destruction of all and any opposition to Tory policy is their specific aim, one has to wonder why Labour’s front bench don’t simply cross the floor and have done with it.
Clive Parry says:
“It seems to assert that only tax payers have the right to decide how it is spent. NO – taxpayers may contribute the money but it is for ALL citizens to decide how it is spent.”
The fact that gets conveniently forgotten in the ‘taxpayers money’ issue is that practically all the adult population are tax payers. Income tax, (which is the only tax immediately associated with the phrase) is *not the only tax*. Pointing this out on social media is very dimly received, though. However, internalising this fact might just help them to make better political choices
Also, in my, albeit limited, experience of interacting with other voters on SM, MMT scares most of them witless. The idea that our money is created by the state sends them into a vortex of fear of rampant inflation and currency devaluation. They cling strongly to the belief that it is their (income) tax that enables state spending. What politician is going to try to re-educate them in the face of this belief and a dominant right wing media constantly asking ‘How are you going to pay for it?’
OTOH, the current tory government has demonstrated that they are absolutely cognisant of the fact that they can create however much money they please… Why would Labour be different?
The glossary is ultimately intended to help people answer the question ‘How are you going to pay for it?’
A little under half of the UK’s tax revenues are accounted for by income tax and NICs (which is a second income tax in all but name). Income tax is about a quarter, and NICs about a fifth. Another fifth or so is added by VAT. That gets us to about two thirds. And the other taxes (corporation tax, fuel alcohol tobacco and other excise duties, customs duties, capital gains tax and inheritance tax, business rates and council tax, etc) account for the last third.
People who are not paying income tax will be paying VAT and duties and probably council tax.
See https://ifs.org.uk/taxlab/taxlab-key-questions/where-does-government-get-its-money
Thanks
Might an answer to the behaviours of both major political parties be found in research by Warwick University?
“A new study reveals the growing influence of wealthy individuals in political affairs, particularly in the affairs of the Conservative party. The report also highlights a growing inequality between the financial resources of the two leading parties.”
Might the Labour Party leadership be playing “Catch up”?
https://warwick.ac.uk/fac/soc/economics/news/2022/11/almost_half_of_uk_political_donations_come_from_private_wealthy_super_donors_new_research_finds/
It’s time the Labour (workers, not the Party) Representation Committee was revived, in my opinion.
The aim being, not to found a new socialist Party, but to find local politicians seeking to further a career on green, socialist and democratic principles, and work to get them into the HoC as Independents. The new bloc may eventually be the Party we need. I think the LRC of the 1900s went from 2 MPs to 25 to 40 to government.
I admit it will take time, but I don’t see any hope of surviving and thriving otherwise. I wish I was 50 years younger – which is why I think the LRC would appeal to youthful voters.
I wonder where the Labour Assembly Against Austerity stands?
http://labourassemblyagainstausterity.org.uk/
Their uptodate messages are on twitter. None of the MPs are on the front bench, and many of them are on picket lines.
https://twitter.com/labourassembly?ref_src=twsrc%5Etfw%7Ctwcamp%5Eembeddedtimeline%7Ctwterm%5Escreen-name%3ALabourAssembly%7Ctwcon%5Es2
I wonder how many will be de-selected?
I don’t know why the unions continue to support Labour when it is not reciprocated. I’d have thought they’d consider a new party, that promotes core socialist values, combined with the Greens, and an understanding of MMT, and a pledge of proportional representation. Would they be electable?
Yes
Blimey!
‘New Labour’.
‘Blue Labour’,
‘Lib-Lab’.
Can’t we just have ‘True Labour’?
Please?
Peace and Justice Party?
Using the KISS principle I want to remind every one that (Government debt) = (Government spending) – (Tax). Note the following:-
* Government spends first (It gets the money from it’s own bank which by law must always provide the money).
* The government uses tax to pay off the expenditure.
* The government has full control of tax collection so if there is any debt at the end of the year then it is because the government planned it.
So where does the untaxed money end up, peoples and commercial savings?
If the above logic is correct then when the government says it wants to reduce it’s debt then it really means it wants to reduce our and commercial savings.
You over simplify the process, including on tax
You also refer to debt and mean deficit
Interesting article here
https://www.theguardian.com/commentisfree/2023/feb/15/sunak-labour-keir-starmer-labour-party
Looks like someone pressed the ‘self destruct’ button
George, on the money (pun intended)
We all may agree that everybody deserves a deckchair but don’t we also need to be on the lookout for the iceberg?
https://www.cell.com/one-earth/fulltext/S2590-3322(23)00004-0
Hi Richard.
Agreed, this is worrying and depressing. In an effort to try and influence things in an opposite direction, I was wondering if you’ll be submitting evidence to this inquiry into QE and QT: https://committees.parliament.uk/committee/158/treasury-committee/news/185837/mps-launch-inquiry-on-impact-of-bank-of-englands-quantitative-tightening/
The deadline is 17th March, 17:00.
The whole QT effort, together with the adoption of PSND ex boe as the target measure of debt, seems like an attempt to “game” us into permanent austerity. One that I’m terrified the people around and behind Sir Starmer may go along with. There’s more here: https://gezwinstanley.wordpress.com/the-quiet-plan-to-add-an-extra-trillion-to-public-debt-and-justify-eternal-austerity/
Your contributions are, as ever, very much appreciated.
Danny Blanchflower and I are discussing submitting evidence