I wondered if I was being unfair in LabourList and most commentators on the Left when posting about its commentary on bonds and their power over governments this morning, and then this nonsense, published by the supposed left-wing media publisher, Novara Media, this week, was drawn to my attention:
Many MPs will be looking for an end to the streak of savage cruelty that Reeves and prime minister Keir Starmer tried – and largely failed – to inflict on the country's poorest in an effort to balance the nation's books. Sweeteners in that direction already hinted at include, finally, the dropping of the two-child benefit cap.
But it's the response from the markets, which issued £117bn of new government debt in the first seven months of this year alone, that will likely decide whether Reeves, and indeed the entire Starmer regime, survives through next year.
And every indication is that those who've loaned the government money – once largely pension funds but now cavalier, profit-maximising hedge funds and foreign investors – want to see the chancellor significantly increase the Treasury's revenue on Wednesday.
Let's be candid. Even though I accept that the part of the article I quote was framing, and that the author then tried to backtrack from some of the implications, the article never really moved on from these upfront suggestions, and that means that is still typical of the uncritical recycling of the neoliberal superstitions that have captured Labour, the commentariat, and, apparently, the leftwing press as well, and worthy of criticism as a result.
All the basic claims in this passage are wrong, meaning they should never have been there.
First, the markets do not “issue” government debt, as the article claims. The government does that. The Debt Management Office auctions it. The price at which it is sold is a reflection of the interest rate set by the Bank of England. It is not a judgment on the government's political fortunes.
Second, the idea that “the markets” decide whether a government survives is a fantasy. Democracies are meant to do that. Yet this trope is now repeated endlessly, even by those who should know better and should want better. It is as if the left has forgotten that markets are human-made institutions shaped by regulation, law and political choices. And it is as if they have also forgotten that the only reason that bond markets enjoy their power is that politicians let them do so by maintaining their own ignorance about their purpose and functions.
Third, the statement that the government has “borrowed” money from these supposedly omnipotent market actors is simply untrue. As I have said repeatedly, the UK government does not borrow money in any meaningful sense. It issues gilts so the Bank of England can maintain its interest rate policy; so that pension funds and insurers have safe assets to hold; and so that banks have collateral to support their lending operations. These are issues to fulfil public policy objectives, not financial necessities.
To describe this as borrowing is as misleading as describing the issuing of train tickets as borrowing from passengers. Gilts are issued to meet their purchasers' needs, and not to fund the government.
Fourth, the idea that hedge funds and “foreign investors” are now the primary holders of gilts is also untrue. Pension funds, insurers, UK banks and the Bank of England itself – via the enormous stock of gilts it still holds from quantitative easing – dominate the ownership structure. Hedge funds do not run the gilt market. They trade around the edges. They speculate. They make noise. But they do not dictate fiscal policy.
So why is this narrative being spread? Why is the left repeating it?
That is because, for too long, the left has absorbed neoliberal framing without noticing, and it still does. It has accepted the idea that the government is a household, meaning that it agrees with the household analogy and all the mythology that goes with it. In addition, it believes that there is a fixed stock of “money” out there to be borrowed from markets, when nothing could be further from the truth (since the demise of the gold standard, and not even then) and that these markets sit in judgement on governments like gods on Mount Olympus.
None of this is true. But it is politically convenient for those who want to impose austerity, suppress democratic demands, and pretend that the state is helpless in the face of “market discipline” to perpetuate these myths, and for reasons that baffle me, much of the supposed left-wing commentariat in this country appears to want to be counted in their number.
The tragedy of all this is that the left has forgotten the most basic facts of all:
- The government creates the currency. The markets do not.
- The government sets the rules. The markets do not.
- And the government can always fund any programme denominated in its own currency, constrained only by real resources – labour, energy, materials, ecological limits – and not by the whims of financial speculators.
That is the argument that should be made. Instead, we get stories about how the coming Budget must “please the markets”, how Reeves must “raise revenue to survive”, and how investors must be reassured that the government will sacrifice the poorest to protect gilt yields.
If this is what passes for left analysis, or at least framing, in 2025, then no wonder Labour feels no pressure from its supposed allies.
Here is what the left should say:
First, the government does not need to raise taxes to fund spending. It needs to tax to control inflation, inequality, and the corrosive concentration of wealth and power. That is the real purpose of taxation in a sovereign currency system.
Second, spending should be determined by need. And the need is overwhelming: health, education, housing, local government, climate, energy, and care.
Third, the idea that the UK is in a fiscal crisis is untrue. The real crisis is political: an unwillingness to challenge the myths that sustain austerity.
Fourth, the bond market is a creature of the state. It does not govern the state.
If the left-wing media cannot say these things, then it is not surprising that Labour is drifting ever deeper into the neoliberal cul-de-sac that created our current mess.
That, ultimately, is the problem with the Novara article. Not that it is wrong, but that it recycles the very logic that has constrained progressive politics for forty years. It cannot imagine a world in which the government leads rather than pleads, in which democracy trumps bond traders, and in which we judge a Budget not by “market confidence” but by whether it improves people's lives.
If the left wants to matter again, it has to break with this framing. It has to stop echoing the very myths that destroy the prospects of the people it claims to support.
And it has to start telling the truth: the markets follow the government, and not the other way round. Until the left says that it is always playing on the opposition's turf. No wonder it's not winning.
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I think they need to interview you and get some re-education!
Things may have changed but back in the day the “house economist”of Novara was James Meadway. Just saying.
The man who cannot abide MMT because there is “no theory of class in it”
As a Yank, I cannot understand why the ENGLISH cling to the “Theory of Class” and the “Class System”.
Footnote: I will concede that to some degree there is a “Class System” in the USA but it nothing remotely like the “Class System” in England.
Have you ever met our Marxists (so called, in all their many varieties)?
I am a big supporter of Novara generally but on this issue they seem to have a collective blind spot. They have interviewed both Stephanie Kelton and more recently Steve Keen but it seems to go in one ear and out the other.
They did me once.
Ditto.
“The Novara Media Question” ?
Why do the left wing media still drink the right wing economic KoolAde?
🙂
That could be the James Meadway question
If I could bring myself to do it
James Meadway joined the Green Party recently and I believe he is a member of the party’s Economy Policy Working Group.
I hope the PWG, which I am a member of, will make explicit its commitment to MMT and it, or at least its principles will appear in the Green party’s next manifesto.
He is walking economic disaster and will be as dire for the Greens as he was for John McDonnell. He is economically illiterate, blinded by his crass faux Marxism.
I, for one would really welcome you addressing James Meadway’s criticism of MMT (however painful). I have tried repeatedly to understand his argument because in so many respects, James is an important voice on the implications of climate chaos, the economic/environmental impacts … and of course, his involvement with the Greens.
The same is true of Grace Blakely and Gary Stevenson who also reject MMT. Is it really that they cannot completely escape the paradigms that they absorbed at university (as suggested by Steven Hail, the Australian based economist)? Or is there something fundamental that I am missing?
Personally, I don’t want to throw the baby out with the bath water. I think they are insightful in communicating their analyses of the current world but their solutions (such as they are) feel lacking and not very convincing.
By contrast, MMT makes coherent sense and you, Steve Keen, Michael Hudson, Stephanie Kelton etc. offer workable radical solutions which could be implemented fairly easily…. just as Keynes and FDR did with the New Deal (caveats notwithstanding).
Be careful what you wish for…
I was working on one last night.
It may happen, but not until the Budget is over.
Novara had Steve Keene on the other day. The interviewer nodded along but kept reverting to questions suggesting he wasn’t really getting it.
Lefty pundits often parrot that govt borrowing isn’t like household borrowing, before revealing that they do actually think govt borrowing is like household borrowing.
I think Steve was very frustrated by the interview.
I saw the interview. I think it demonstrates that without a commitment to truthfulness, we are all liable to succomb to the temptation of power. Legacy media has their own problems and at the moment alternative media isn’t in position the be a real viable alternative. It is only academics that are keeping our democracy alive.
Very much agree. The interviewer kept nodding as if he understood, but then immediately reframed questions back to Steve from a ‘tax payer’ perspective. I felt Steve should have bluntly corrected him.
I think I would have done.
I’ve been so incensed by Novara Media’s acceptance of the antisocial structures of the past 45 years of late I no longer follow them. I thought maybe they were trying to provide a balanced view but have become convinced that they are just as ignorant and deluded as all the other mainstream commentariat. Made me quite angry to be honest.
I keep hearing the colourful phrase “bond vigilantes” to describe the threat to the economy. Who are these people, and just how do they go about bringing us down? And why does no-one ever ask that question, not just on the mainstream, but obviously on social media too?
I think the glossary entries on bonds address this. Might you have a look?
Thank you for this. I will, unless you object, append it to my Green Party group chat. The fact that Meadway is involved with Green Policy is problematic. I personally have concerns about Novara, given the experience of similar media back in the day, where dogmatic lefties turned out to be spiteful righties within a decade.
You are free to use it.
You have not been hard on anyone.
The Left simply wants power, so it goes along with the lies to ensure that it gets the right sort of support to get into power, the right exposure in the MSM, the right funding and the right endorsements from the theatre of lies that is political economy.
This may be ok at the party level; but for the country it is a disaster. This is one of the insights I initially got from John Warren.
The central problem on the Left in the UK is that like the Right there’s no understanding that if a society is going to use money then “the governor needs to use governors.”
This means that if a nation is going to optimise well-being for all a variety of “governor devices” are required chief among which is the government needs to have the discretionary power to be able create money debt-free. This enables demand to be optimised because a nation can be faced with both constant and infrequent circumstances.
Constant ones are that the market rarely optimises demand because of profit uncertainty, private sector saving will withdraw demand from the economy, global trade is subject to cheating, and now the effects of global warming.
Examples of infrequent ones are financial crashes, pandemics, and wars both internal and external. There are other regulators of course, mandating minimum wages, equitable taxation, perhaps a fully funded job training guarantee, etc., etc.
Clearly believing that government operates on a credit card like a household is shutting down the discretionary use of a vital governing device. There is never a black hole in a government’s finances simply the discretionary need to claw back some of the discretionary debt-free money for other purposes or to avoid triggering inflationary pressure.
https://en.wikipedia.org/wiki/Governor_(device)
If you think about “governor devices” in a wider context than addressing economic issues life uses them in the sense that we all use each other as “governing devices” from bacteria upwards to human beings. What else could you call the “golden rule” instruction in various religions such as the Christian instruction book the bible which tells us to “love they neighbour as thy self”? What else can you call the point of pair-bonding in human beings outside of the reproduction urge?
http://ankara.lti.cs.cmu.edu/11780/sites/default/files/BacterialLinguisticsandSocialIntelligence.pdf
http://ndl.ethernet.edu.et/bitstream/123456789/42836/1/380.pdf#page=546
Ian Lovegrove says:
“James Meadway joined the Green Party recently and I believe he is a member of the party’s Economy Policy Working Group.”
Which is presumably why, after a good start promoting some of Richard’s Taxing the Wealthy policies, he seems to have reverted to the ‘tax a percentage of the wealthy’s assets’ idea. Demonstrated in a woeful interview in the Observer on Sunday and his comment in the Ch4 interview posted on here today. (though I haven’t watched all of it, he may have said more, in line with Richard’s proposals)
Incidentally, I was amused by this on the Guardian Letters page yesterday,
https://www.theguardian.com/uk-news/2025/nov/23/guardians-budget-game-has-easy-answers-for-reeves
Amusing letter
I remain baffled as to why The Guardian continues to peddle the myth that taxation funds government spending.
Hardly anybody asks in this “Consciousness of Sheep” land where the government “shortfall” actually goes and the amazingly simple answer is into the pockets of the private sector because “the market” rarely optimises the economy and private sector saving further removes optimisation. The rich move heaven and earth to avoid the sheep understanding this!
Here’s a re-posting of the above answer in a more elaborate form:-
https://consciousnessofsheep.co.uk/2025/11/24/broken-by-design/
Hi.
I see the ‘most commentators on the left’ as being part of the encouraged ‘lively even vigorous debate’ within an allowed frame of reference that Noam Chomsky described.
I think it suits these commentators too, as they don’t really want to have to think about real problems or understand and communicate solutions. They’ve a career to think about…! Heaven forbid they chance sacrifice of that by stepping outside that allowed frame of reference to explain reality.
It’s wrong though. The public deserve better from the left.
It does.
Agreed.
But gar too many on the poeft are comfortable, career activists with little knowledge on the issues they campaign on, and a desire that nothing changes as then they might have no career left.
Gary Stevenson has suggested that the post war era was a time of prosperity for the working classes because the government of the time had indeed taxed the rich. I wonder is this true?
Partly, yes.
But entirely? No. Why? The real difference was the govermnment spent us to prosperity. Spend comnes first, always, and tax second. He still has it the wrong way round.
The antisocialist (a.k.a. neoliberal) framing accepted by much of the “left” is, as you continually point out, flat out wrong.
But I do wonder if railing against it is the most productive approach. I fear that neoliberal framing, the household analogy, the full funding rule, markets are the masters, is so deeply embedded that that challenging them has no effect.
It seems to me there is a, more subtle, approach. There are vast swathes of wealth that can be taxed. You have mentioned, amongst others, £20 billion from tiered interest on central bank reserves, £10 billion form restricting ISA tax relief, and £70 billion from restricting pension tax relief. To me a left wing government should simply reduce these state giveaways and take in/reduce it’s outgoings by £100 billion/annum. I know that’s not necessary to find the government but antisocialist are screaming for more tax (and reduced spending) to balance the budget. So call their bluff and give it to them.
Increasing these taxes will not harm the economy because it’s savings, “dead money”, it not circulating. But it will give the government licence, from the antisocialist, to spend more. And these taxes are needed anyway to reduce inequality.
I definitely am not suggesting lying about this and saying that such tax increases pay for increased spending. That would not be true and would undermine a government’s credibility. I’m saying just do it.
Once done, and whilst the antisocialists are still reeling, then make other necessary changes such as instructing the Dept of Debt Management to forthwith “borrow” from the BoE, not by selling gilts, and such as telling the BoE to write off the gilts that it holds (which should have been done as soon as they were repurchased).
This, I think, would give a government space to reframe the narrative without giving grounds for antisocialists to be doom mongers.
OK, it radical. But we need radical action, and we need to change the narrative.
You were misrepresented by Novara Live yesterday (or was it Monday?). A comment was made that Richard Murphy’s solution was to just print more money. Suggest you storm Novara Towers and make them interview you. You’d be a good candidate for their Sunday downstream offering.
This really is very boring of them, and so obviously wrong it is hard to take them seriously. It is also very hard to work out how a channel claiming to be left of centre can be so committed to maintaining the neoliberal hegemony. Is the answer that they actually want nothing to change because they are very comfortable where they are?
Sadly, I see in this week’s New World (Formerly the New European) that Paul Mason, the ‘Economics Commentator’ has bought into the entire neoliberal narrative. He’s even given you a mention, as ‘the heterodox economist’, and finally characterises MMT ideas as ‘bollocks’. Very disturbing in a publication that I have admired since it first published.
I noticed
He is another one of those supposed left wingers who are terrified of the power of the state and want the City to stay in charge.
Paul Mason?
I stopped taking him seriously many years ago. I personally don’t trust his “left” credentials.
Whether this Grayzone article from 3 yrs ago is accurate or not, I couldn’t say, but it seems I’m not alone in my personal mistrust.
https://thegrayzone.com/2022/06/13/paul-masons-collusion-british-intelligence-agent/
Sorry, forgot the link.
What is lacking is courage. The courage of confident politicians to stand up against the current false macroeconomic orthodoxy. You have supplied them with all of the weaponry they require and your credentials are impeccable. Somewhere out there is such a person, perhaps an MP at present, who understands and supports your work. As they say: cometh the hour, cometh the man. Where are they?
Right now Zack Polanski. Who else? No one.