Such is the magnitude of the event that the definitive account of the financial collapse of September 2008 and its consequences has surely yet to be written.
I do not mean by stating that to deride numerous worthwhile attempts at a first draft of history. Journalistic efforts such as Paul Mason’s Meltdown, Elliott and Atkinson’s The Gods That Failed and Gillian Tett’s Fool’s Gold all do a reasonable job in explaining approximately what went wrong.
There are even works by economists, such as Crisis Economics by Roubini and Mihm and Keynes: the Return of the Master by Robert Skidelsky that are accessible for those without a background in the dismal science.
Offerings from politicians include Alistair Darling’s Back From the Brink, which I have yet to tackle, and Vince Cable’s The Storm, which I have just completed four years after publication, after picking up a hardback copy in virginal condition for £2.49 at Islington Oxfam. Well, these are tough times, right?
The book was pretty much what I was expecting, being both well written for its genre and grounded in the mainstream Keynesian that the Coalition’s business secretary has long propounded.
Yet what struck me at once is the sheer disparity between the ideas Cable sets out and the practice of the government in which he serves. For instance, after usefully making the point that The General Theory is a context-specific work that does not offer prescriptions for all times and seasons, he stresses:
But in a slump, Keynesian remedies … involve a calculated additional injection of purchasing power through deficit-finance tax cuts or spending, or both. That is what is needed – and is happening – now.
Note that in this instance, ‘now’ refers to the fag end of the Gordon Brown’s time in Number Ten, routinely slammed by the Coalition as the font of Britain’s economic woes. And then there’s this:
I have taken the view that in the current circumstances it is on balance right to attempt a fiscal stimulus, recognising, however, the risks. The alternative – prolonged and deepening slump – would be worse.
Stances such as these have led one rightwinger around David Cameron outlandishly to deride Cable as a ‘socialist’, even though any politically literate reader will at once discern that he remains the social democrat he always has been.
Such thinking places him formally to the left of many in New Labour, of course. That said, those of us who really are socialists will find his substantive proposals insufficiently radical, unable to transcend the quasi-religious belief in the free market that has dominated recent decades.
My question for Cable is rather this; if you genuinely believed that deficit-finance tax cuts, higher public spending and fiscal stimulus were they way to go four years ago, what has changed in the interim to render these measures no longer apposite?
We all understand that coalition inevitably involves a degree of compromise. But how is it possible for someone who proclaims himself intellectually opposed to austerity honestly to serve in an administration committed to precisely the reverse course?
And if you are still nurturing hopes to lead the Liberal Democrats, and possibly serve as chancellor in a future coalition government with One Nation Labour, what prescriptions will you be offering at that point, given that consistency may not be your strong suit?
If you dig back into Vince Cable’s speeches in the Commons between 1997 and 2005 (when I was often obliged to listen to him), I think that you will find that he was then more of a free market freak than a Keynesian. So perhaps he finds it easier to stick with the Coalition than his more modern writings seem to indicate.