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Jeremy Corbyn is a common sense, mainstream Keynesian

Coprbyn and KeynesFormer UK Labour minister and  leadership candidate Bryan Gould has a long-distance view of the Labour leadership contest from the other side of the world, living in New Zealand

For New Zealand students of current affairs, the contest for the leadership of the UK Labour Party involves four names that will mean little – and, in that, they will not be too different from observers of the contest in the UK itself. Yet the emergence of one of the four candidates – Jeremy Corbyn – as the unexpected front-runner is worth a second look, not least for the lessons it might offer to left-of-centre parties around the globe.

Corbyn is a parliamentary veteran who has spent 32 relatively low-profile years on the backbenches – eleven of them, as it happens, while I was also in parliament. His reputation is that of an old-fashioned leftie – and he may have skeletons in his cupboard, especially involving his links with suspect overseas organisations.

Yet the polls show him leading his middle-of-the-road, “safety first” rivals by a substantial margin. His candidature seems to have enthused Labour voters, both actual and potential, to the extent that over 100,000 new members have joined the party, and his public meetings have attracted huge audiences.

His surprise success has produced an outraged reaction and dire warnings from the Labour party’s usual power-brokers. Tony Blair has predicted the end of the Labour party if Corbyn is elected. Other leading figures have tried to sabotage the election itself or have refused – without actually having been made any offers – to serve in a Corbyn cabinet.

These reactions reflect what are no doubt genuine fears about his likely appeal to the wider electorate – though, unexpectedly, the polls show he is now the most popular of the candidates, not just with Labour voters, but with voters generally.

What is surprising, however, is that the critics focus on the supposedly extreme nature of Corbyn’s policy prescriptions, especially in the realm of economic policy. Yet, as 40 reputable economists have declared this week in an open letter, Corbyn’s economic policy may be at odds with current orthodoxy but is really no more than common sense.

It seems, for example, that – shock, horror – Corbyn and his advisers do not believe that austerity is the proper or effective response to recession. This is more or less the position reached by the IMF and endorsed now by a growing number of (in some cases, Nobel Prize-winning) economists. It is in essence no more than mainstream Keynesian economics. We can see the consequences of its rejection in the problems faced by an austerity-ridden euro zone.

Corbyn also takes issue with the peculiarly British version of austerity – the insistence that the wealthy should be spared, with the help of tax cuts and quantitative easing, from taking any responsibility for recovery, while the burdens are heaped instead on the most vulnerable, whose job prospects and living standards have taken massive hits. Corbyn seems to assert, reasonably enough, that a serious effort to bring about a sustainable recovery requires that every shoulder should be put to the wheel.

A Corbyn government would also recognise, it seems, that there might actually be a case for government playing its proper role in achieving a fair, balanced and productive economy. It’s enough to make the blood run cold! Yet surely, it makes sense for a government to use – alongside the private sector – its powers and resources to do the things that the private sector cannot, or at least will not, do.

And, Corbyn asks, why is quantitative easing fine when used to bale out the banks yet not for investment in new productive capacity and jobs? The fact that questions and policies such as these create so much alarm and despondency among Labour’s erstwhile and would-be leaders tells us more about them and the current state of the Party than it does about the merits of the policies themselves.

Oddly enough, the one point about a Corbyn economic policy that should raise an eyebrow is his acceptance that priority must be given to eliminating the “deficit” – though, like so many others, he seems to confuse the government’s deficit with the country’s. We must assume that this commitment is there as a concession to the ignorance of an electorate that has never been told that to treat the government’s deficit in isolation is an economic nonsense. And getting the economy moving properly is, in any case, the most effective way of getting that government deficit down.

The Corbyn economic policy platform, in other words, is comfortably in line with what is fast becoming the new consensus – less doctrinaire and more common sense than the old orthodoxy. The other three candidates who have said nothing of consequence about the real issues of economic policy and have accordingly left a vacuum for Jeremy Corbyn to fill have no one but themselves to blame if they have been left floundering in his wake.

Whether these factors will actually produce a Corbyn leadership remains to be seen, but he has certainly re-vitalised the Party and enthused potential Labour voters. By opening up a long overdue debate, he has re-defined the political landscape and offered new hope to those who have been conditioned to believe that “there is no alternative”. Labour leaders elsewhere, not least in New Zealand, will – or should – be watching closely.

This article first appeared on Bryan’s own blog

7 Comments

  1. swatantra says:

    For once I agree with Gould.
    We should have no fears or worries about where JC is coming from and where he will be taking Labour.

  2. David Pavett says:

    I think that we are supposed to be reassured by the idea that Corbyn’s economic policies are based on a common sense Keynesian approach. I don’t find that at all reassuring.

    Once we accept the idea that government borrowing and or printing money can, in certain circumstances, be a good thing (not and idea unique to Keynes) then things get complicated. If we imagine that we can find our way through those complications with a good dose of “common sense” then we are on a road to failure. Common sense economics only works for those who want to keep things essentially as they are. We need to see a proper discussion about what Keynesian solutions mean for socialists.

    Keynes saw himself as a defender of capitalism. He believed that he had found a way to control capitalism’s inherent tendency to produce economic crises. He was certainly no socialist. His ideas tuned with the economic mood of the post war period although it is legitimate to ask just how much governments actually followed his policies in that period.

    His solutions certainly tuned with the non-socialist policies of post-war social democracy but whether they can lead to solutions that would face a left government in 2020 is quite another matter.

    This all requires a full discussion.

  3. David Pavett says:

    The lack of interest in debating economic issues is a great weakness on the left. Very worrying.

  4. SANDRA CRAWFORD says:

    Tomorrow Bill Mitchell, the MMT economist, Richard Murphy and Anne Pettifor are going to be discussing economics for Corbyns team in London (27th August).
    I think there will be a video.
    It should be interesting.
    In the interim, the “billyblog” is an excellent source of economics for the left. It is brilliant.

    1. David Pavett says:

      Insofar as they have any idea of class antagonism the MMT theorists, like Keynes, see the problem as Industrial/commercial capital with labour against finance capital. Is this really compatible with a socialist analysis? (It is worth noting in passing that it is a view often embraced by the extreme right.) Beyond that economic problems are reduced to purely technical problems in which class antagonisms play no part. In other words the MMTers are yet another school of thought claiming to have found a way of making capitalism work, without crises and in the interests if the great majority.

      Ann Pettifor, apparently an economic advisor to Jeremy Corbyn, in her book Just Money, puts it very clearly.

      I have always believed that an alliance between Labour and Industry is important if Finance is to be effectively challenged. … There are makers and creators out there who resent the bullying of financiers…

      We do not have to reinvent the wheel. We do not need a social revolution. We simply have reclaim the knowledge and understanding of money and finance; knowledge that has been available to society for many centuries.

      Is this really the sort of analysis with which a transformation of society can be guided? Or is it a case of the left following the lead of the right and deciding that capitalism really is the only show in town?

  5. David Ellis says:

    I have to agree with David. Corbynomics is largely nonsense although it makes more sense than austerity if you are poor or working class or a middle class striver or small businessman on the verge of bankruptcy but it will end in the eventual return to an even more right wing government when it fails. If New Labour were cynical realists (There Is No Alternative) the Labour Left can often be described as cynical idealists (simple technical fixes and a nice attitude are all we need – Keynesianism, pacifism, reformism).

    No it is important that whilst we support whole heartedly Corbyn’s leadership bid that we counter pose our own programme for working class power and the transition to socialism to an economic programme based on the impossible smoothing out the contradictions of capitalism. Unless the working class seizes state power and ends private appropriation of the social surplus there will never be socialism.

  6. […] from Corbyn not actually being a threat to your financial security (his economic policies are rather moderately Keynesian), your national security (have we been invaded recently?), or the […]

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