Latest post on Left Futures

The truth about Labour and Austerity

Austerity is failingThe labour movement’s post-election battleground: Part I of II

Back in January, I was invited by Left Futures to provide a response to a post by Trevor Fisher.  Trevor considers Labour a lost cause when it comes to austerity. This is his conclusion:

The objective of the austerity movement is to destroy everything that Lloyd George and the political consensus that we have known for the last 90 years. A co-ordinated response can defeat the political objective of the neo-liberals to set up a new anti-state consensus.

So why is it not happening? The Labour Party cannot be changed in the near future. It has embarked as New Labour on a Titanic style voyage into the ice field, at high speed. Labour is part of the problem, not part of the solution. It is time to look for lifeboats. The solution has to be a people’s movement against austerity. The existing work of the People’s Assembly has to be boosted.

1  Introduction

Trevor’s analysis is not, of course, an unusual one. The idea that a Labour government will simply be ‘austerity-lite’ is now almost a mantra those who consider themselves left of Labour (within or outside the party). Here are just a few examples expressing, in varying ways, anger or hopelessness or (in Sunny Hundal’s case) simply incomprehension at Labour’s purported plans to mimic the Tories in government.

Trevor’s analysis – like most others in this vein –  is incorrect, for three main reasons:

  • Labour is part of the solution to the problems brought by five years of austerity, because it is actively planning for investment in public services;
  • The existing work of the People’s Assembly is, while impressive in many ways, misguided;
  • The idea that the best way to respond to the neoliberals’ anti-state consensus building is to support a return to the pre-2008 public service infrastructure of late capitalism is itself regressive.

In this essay, I present an alternative strategy for labour movement activism, which I contend takes us beyond these common errors of analysis by the Left. In part I, addressing the facts around Labour’s actual planning for government, before moving on to how and why so many people have misunderstood what Labour is about.   In part II, I look in details at what might be done for, by, with people like Trevor – no doubt a solid member of the labour movement, but who’s only recourse at the moment is another round of meetings and rallies calling, loudly but vainly, for the people to rise up against austerity.

2  What’s really being planned

Labour is seeking to portray itself as a party committed to ‘fiscal discipline’, and its central economic policy is now that it will never spend what it cannot save elsewhere. I think this is a misguided strategy born of a narrow-minded elite in the Labour party, panicked by Tory control over opinion polls in 2001-12 (see section 3), but it is too now late to change that messaging in the 60-odd days to the election.

Behind the scenes it is different. Labour HQ has calculators in the office, and they know perfectly well that they cannot make the cuts that the current profile suggests without collapsing parts of essential public services, and they know that this will cost them electorally; the new rounds of cuts will have to start to affect those beyond the vulnerable (e.g. social care eligibility) who to date have suffered more than other when their comparatively expensive needs have stopped being met, but who only vote once, and in relatively small numbers, so have been a calculated electoral write-off for the Coalition.

With a number of decent thinkers and planners – notably Jon Cruddas –  having fought a behind-the-scenes rearguard action against the fiscal conservatives, Labour is quietly planning to sustain and develop provision by borrowing/investing “off-balance sheet”, through mechanisms like the British Investment Bank (with an NS&I deposit) [1], which the Tott report commissioned by Labour makes clear is aimed at public services as well as SMEs, and through the development of ‘internal borrowing’ from Pension Funds [2], and through allowing local authorities to bring forward spend from later years in a five year cycle, effectively allowing them to borrow from themselves. [3]  This is in addition to the existing prudential borrowing regime, which is likely to see greater use in an environment where local authorities are not so afraid as they are currently about what comes next from the centre.

The condition for this investment from these sources is that as far as possible what is spent should create ‘downstream savings’, and it is from the “what should have been spent” pot that government, including local government and freed-up health economy organisations, will create the return for investors.   It will be, to a significant extent, a welcome foreshortening of the Social Impact Bond process developed and tested over the last 10 years, but which has proved to be bureaucratically difficult in the absence of political will.

A key unanswered question at the moment is to what extent these non-traditional routes to borrowing for investment will replace normal borrowing.

National Savings and Investments (NS&I) is not a bank and cannot simply create money for investment, so will presumably be constrained by the amount invested in NS&I, currently around £105bn [4].  While there is some good practice emerging around the use of Local Government Pension Funds to fund public spending where there is clear social value, to date these investments have been limited to capital schemes where the rate of return back to the Funds has been easy to determine because income streams are produced by the investment.  It is more difficult to persuade Pension Fund trustees, who must abide by their fiduciary duties [5] to protect those funds, to invest in ‘social infrastructure’ which creates savings downstream, as these savings must then be converted into returns [6].

My current view is that these non-traditional routes will not replace traditional deficit spending to the extent needed, though that it’s a good start. Given this, the further, vital question arises of what level of investment need can feasibly be packaged as social investment (and therefore open non-traditional funding) rather than simply additional spending on public services [7].  In any event, and as I go on now to explore, this is a question which the Left should be addressing for its own sake.

3  The two orthodoxies

What I have set out above may be the quiet reality of preparation for government, but it’s one known about by very few people in the labour movement, largely because of the strategic decision by Labour’s strategists (on which more below), to avoid challenge to the prevailing ‘deficit fetishism’, and instead to try and gain power by focusing on other policy areas e.g. the NHS.

This strategic decision requires a commitment to cost-neutral spending promises i.e. any spending commitment must be paid for by cuts/savings to other areas of current spending.  In order to know what’s really being planned, it’s necessary to (a) talk to people closer to the actual development work (which I’ve done); and (b) read the whole of policy documents, not just the summaries (which I’ve done).

In the absence of wider understanding of what is really being planned, most actors and organisations who self-identify as Labour and/or the Left have split into two broad ‘orthodoxies’, with a seemingly unbridgeable divide between them.

On one side of the ‘fault line’ are those who say an incoming Labour-led government must be ‘realistic’ about the public finances, and cannot therefore afford to reverse Coalition cuts, and those who subscribe what I will refer broadly to as the ‘anti-austerity movement’, who think a Labour-led government’s first duty is to reverse the cuts and reset public financing and public service to circa 2009.

Both sides are wrong, as I shall go on to set out, because establishing why and how they came to be so wrong, and what impact this wrongness has had to date,  is essential if the labour movement is to bridge the divide (which I address in part II).

The realist orthodoxy

The ‘realists’ are wrong for fairly obvious macro-economic reasons.  There’s no need here to go over now fairly established consensus that fiscal consolidation didn’t work, and that the way to boost growth (and pay down the deficit sensibly) is through a wage-led recovery, with a major lever for this being public investment.  The ‘realist’ support for fiscal consolidation and continued austerity has never been driven primarily by economics; calls for fiscal prudence have largely (from about 2011-2 onwards) been about a political messaging that Labour ‘can be trusted’ with the public finances, and the view (actually a self-fulfilling narrative) that the British public will never be able to conceptualize standard Keynesian economic management as anything other than spendthrift.

Left without a Future book coverThis is evidenced most clearly in Anthony Painter’s [8] at times excellent (2013) Left Without a Future: Social Justice in Anxious Times.  In a book devoted to ideas about how a future Labour government can create a more socially just society in times of continued fiscal restraint, Anthony sets out the need for that fiscal restraint in just a few short paragraphs (pp. 75-77), some of which are in themselves arguments against restraint.  All of the reasoning is contestable, especially the notion that “two or three years of very low growth, barely moving deficits and political impotence” might lead to a real danger of default (p.76), [9] but in any event he lets the cat out of the bag when, after this short justification he reveals its post-hoc nature:

It was in response to this debate that Cooke et al. [Anthony is one of the al.] wrote In the Black Labour: Why Fiscal Conservatism and Social Justice go Hand-in-Hand which was published in 2011 and created something of a stir in Labour circles.  Its core argument was that a reputation for fiscal responsibility was fundamental to any party aspiring to national leadership (p.78)

The realists’ economic rationale, then has never been anything much more than cover for short term electoral strategy, forged at a time when many in the Labour elite were concerned about the intractable opinion polls, which continued to show that the Coalition’s strategy of blaming a worldwide financial crisis on profligate public spending by Labour, was working remarkably well.  At that point, it made sense to this fairly small group of insiders, close to or within the pressure group Progress, that Labour should simply adopt a ‘balancing the books’ approach, because the battle for what economic common sense looks like had been lost. [10]

In their view, this was much more important than the longer term real-world impact of commitment to the In the Black doctrine largely, I suspect, because they simply didn’t consider real word impacts on the more vulnerable in society as being of themselves, important [11], even though it was clear by then that they, along with lower paid public sector workers themselves were facing the greatest direct burden of public sector cuts [12]

This all took place back in 2011-12.  Since then, Labour has, within the constraints it imposed upon itself by its commitment to no extra borrowing, brought to bear two broadly effective electoral responses to the Tories (while also playing Lib Dem Whack-a-Mole for light relief).  First, they have managed to articulate (in the Hall sense) the continued incompetencies [13] of the Tories in government with their elite background and narrowness of outlook (‘out of touch’ being the common phrase).   Second, they have managed to side step the Tories continuing lead on ‘economic competence’ by focusing on how improving figures at a national level of not translating into feelings of security and hope for the future amongst ‘real’ people.  You could even argue that Labour has managed to articulate all of these together, so that people think they are insecure and lacking in hope because Cameron is posh.  This has the added advantage of being true.

This is a good thing in the short term, and it is why a Labour-led government remains the most likely outcome despite a continuing poll lead for the Tories on economic competence.  The downside, though, is that what does or does not constitute fiscal responsibility – whether investment is actually better than  austerity – has become a taboo area within Labour, at least in public.  When Ed Balls committed to budget surplus in January 2014, leading In the Black Labour proponent Hopi Sen was simply able to tweet that the debate had been won.  To a large extent, he was right, although he underestimated the rearguard action that was mounted (see Part II for more details).

The effect of this, understandably, is that many of those who understand what actually fiscal responsibility is have now come to regard Labour as cowards and traitors.  A good case in point is Howard Reed, a decent economist, who penned White Flag Labour for Compass as early as January 2012 [14].

It could of course be argued that people like Howard should have spent a little more time looking at the kind of investments, set out above, which Labour is planning behind the scenes, rather than just the press statements, and that to effectively turn away from engagement with Labour over what it is getting right because it’s not getting everything right is actually very unhelpful to us all; indeed, this is pretty well Simon Wren-Lewis’ recent argument.

For myself, I don’t think such a blame game is helpful in the long run either; while I’ve tended towards it myself in the past, on reflection I think it’s more honest to hold myself to account for not having helped organise the forces of anti-austerity well enough back in 2011-12, not least because learning from what went wrong then is important for the new battle we face after the election.

I’ll come to this in detail on Part II, but the point to stress here is that many on and to the left of Labour attached themselves to the anti-austerity movement – to the extent that some former Labour activists are now standing against Labour in the general election – not because of actual pro-austerity policy from Labour, but because the fiscal conservatives within Labour, themselves driven by narrow political considerations rather than economic ones, created an environment in which plans for investment have remained largely hidden from view (e.g. in the IPPR Condition of Britain report (June 2014), the media and Labour’s own coverage of which failed to notice/deliberately declined to mention the chapters on innovative investment).

The anti-austerity orthodoxy

The ‘anti-austerians’ are wrong because simply returning public sector financing to the levels it enjoyed in the mid to late 2000’s, without further consideration of how public services should be reformed, would be an utter disgrace, and a betrayal of ordinary people who depend on those services.  Yet this is apparently what is being proposed by an anti-austerity ‘movement’ backed by public sector unions who, understandably enough, are keen to defend their members’ terms and conditions in the narrowest sense of the term as best they can, but who appear to have rejected any responsibility they ever had for the quality of service provided.

The sad truth is that the quality of many public services has declined hugely in the past 20-30 years, and the pace of decline has increased, not simply because of the cuts but because of the way public servants do their work.  Journalist Kate Belgrave, for example, has recorded the transition of what we used to call employment services from a relatively harmless bureaucracy to a vicious institution which actively dehumanizes benefit claimants, and in which specific targets for inflicting misery on the already poor and powerless are implemented without challenge by trade unions.  In the NHS and care sector, the scandals at Winterbourne and at Mid-Staffs did not arise directly from public spending cuts or from privatisation, but from a decline in service standards which set in long before the Coalition came to power.

There are two main reasons for the decline in the quality of public services, and they form a duality.  First, the growth of managerialist ideology, itself a corollary of neoliberal economics, has created which are target-driven rather than value-driven, and in which every level of management holds the next one down accountable for reaching targets (often now called ‘outcomes’) while often preferring not to know how they are achieved.   Only last week, when earning a living tendering for a public sector contract (for a social enterprise) I was told by a senior manager that with the contract in question there was ‘no room for quality’; this was said with no hint of surprise.

Second, there has been a massive de-professionalization of the public services workforce.  Initially this de-professionalization was a conscious outcome of managerialism [15], as trade union and professional association concerns for the maintenance of quality were pushed to one side as impediments to competition-driven progress, but 30 years on most unions and associations simply no longer see it as their job to concern themselves with the quality of the service they offer to their fellow citizens; their sole role,  as they now see it, is to defend the terms and conditions of their members [16].

In my own profession, nursing, such a view of a trade union role has become institutionalized to the extent that when the Francis report recommended that the Royal College of Nursing (RCN) be formally split into a ‘trade union side’ and a ‘quality of provision’ side, there was barely a murmur of protest from the RCN.  Even more revealingly, Francis did not even feel the need to recognise a possible role for Unison (the other main union/professional association for nurses) in ensuring or campaigning for quality of care.

The now endemic failure of the labour movement to care about the quality of services they provide damages it, of course; while would the non-unionised public support public servants’ industrial action in defence on terms and conditions if those same public servants don’t seem to care about them?

The anti-austerity movement is, frankly, an anachronism.  Its calls for a return to 201o spending, in the absence of proper reform, are in their own way as a regressive as the ‘realists’ call for continued austerity.   Now, I know to my cost [17] that such a bald statement, while perfectly defensible, is likely to be unhelpful to efforts to develop consensus around how a more progessive ‘post-austerity’ Labour might be organised for and won.  So let me be clear, even at the risk of repetition:  the vast majority of people who would now, if asked, hold to the anti-austerity orthodoxy position critiqued here, will be decent Labour (and ex-Labour) activists, members or supporters.

The fact that they support what I call an anachronistic position public services is not something for which they should be blamed, because the primary faults lies with a) a trade union movement which has overly narrowed its functions; b) those within the Labour party who, for the reasons set out above, have stymied a proper debate within the Labour party about what public service reform should and can be about [18].

There’s one more point to make about the anti-austerity movement as it’s developed to date, before I move on to how I think its members/supporters should think about the post-election period, and one which connects to those proposals.  This is that, while the anti-austerity movement has achieved precisely nothing of what it set out expressly to achieve, a good deal has been achieved as an unintended consequence.   While the primary ambition of retaining jobs and services by forcing councillors to spend up reserves then pass illegal budgets remains a pipe dream, the organisational and personal links forged at local, city and regional level, between grassroots trade unionists, service user activists and others such as engaged journalists and those who might self-define as anti-capitalists has been a very positive development.   As I’ll go onto suggest, it is through the emergence of an updated form of the Trades Council, properly allied to the appropriate power structures within the Labour party, that an effective working class post-austerity movement stands the greatest chance of success, and the fact that such organisational links have already been forged, even in a losing cause for now, offers promise.

Conversely, should the current anti-austerity movement move in the opposite direction, away from the Labour party power and resource that will make it effective, both it and those within Labour who believe in good quality public services and wider institutional development towards democratic socialism stand to be marginalised and alienated from each other even further than they are at the moment.

3  Developing a post-austerity movement

This is what I’ll turn to in part II.  I’ll argue that, while these two camps of orthodoxies currently seem poles apart, not least because of personal animosity and mutual name calling on both sides (and I’ve been guilty of that two), there  exists a substantial common ground between the two around which ideological and, more importantly, organisational consensus can be built.   Such a consensus, I will argue, might be built around seven core ideas, to which many can subscribe.  These are

  1. that public services should have investment in human beings at their foundation;
  2. that such investment is as worthwhile, or more worthwhile, than capital investment, and that the ‘rate of return’ problem can be overcome;
  3. that public services are best when truly co-designed and co-produced, and that modern trade unions and trades councils have a key role to play here;
  4. that the institutional developments which allow for co-production will be most successful where they develop at a local level;
  5. that while public service quality can be improved through intelligent, co-designed investment, such developments can and should act as a bridgehead to similar labour movement developments in the wider economy;
  6. that in order to facilitate all this, the Labour party will need to go beyond its Refounding Labour initiative and either open itself up to genuine labour movement direction, or risk becoming an irrelevance;
  7. that the window of opportunity after the election will be short, because if the two groupings described don’t coalesce organisationally around common interests, existing power interests 0 notably the narrow ones of the existing narrow trade union leadership and the Blairite right, will re-exert their power, and threaten the long-term future of the labour movement itself.

 

 Notes

[1] Of course this borrowing is already happening via NS&I, via the Coalition’s 2.8/4% fixed term bonds for people aged over 65.  As, Chris Dillow points out, the other word for this is corruption, because of the particular choice of investor, but that doesn’t mean that using the NS&I as an investment mechanism is in itself a bad thing.

[2] Tott’s report indicates this form of borrowing can be even cheaper than conventional borrowing through the sale of bonds by the government’s Debt Management Office.

[3] This is not likely to be introduced in year 1 of a Labour government, as local Public Accounts Committees may be a condition of such an internal investment mechanism (see Chapter 10 of IPPR’s June 2014 Condition of Britain report, which was effectively a Labour party report (a fact later confirmed by the Charities Commission, who reprimanded IPPRfor being too overtly political.

[4] NS&I does not manage its own funds (and sadly, ATOS manage NS&I).  The funds are passed over to the National Loans Fund managed directly by the Treasury, where it is already used to fund roughly 10% of public borrowing.   There would presumably have to be a change in this arrangement if a proportion of NS&I funds were to be allocated direct to a British Investment Bank.

[5] The key obstacle to pension fund investment in social infrastructure has long been the fiduciary duty on trustees to maximise financial return to members, which has been taken as overriding all other factors and led pension funds to invest ‘safely’.  While there has been some movement towards a wider understanding of what members’ interests are, so as to allow invest in social and environmentally sound activities, and while there has been some very good local innovation in local government pension fund use, the recent Law Commission guidance remains very conservative in its approach, and there is still some way to go before we see a real rise in social investment by this route.

[6] Even when it comes to capital infrastructure, Osborne’s grand 2011 proclamation about tapping pension funds has so far turned out to be a damp squib, and Labour will need to re-energise this.

[7] I have been seeking to ‘crowdsource’ more extensive research, including a quantification of how far these new mechanisms will fill a more traditional borrowing gap.

[8] In my view, Anthony Painter is by far the best of the movers and shakers in the realist orthodoxy camp, and his Left without a Future (2013) is certainly worth a close reading.  While it is ultimately let down by the ill-conceived parameters of continued ‘tough choices’ Anthony provides for himself (as set out above), it is insightful both about how ‘investment’ should be seen in its widest sense, and in the need for the development of a range of new institutions aimed at delivering social justice (though I disagree with how his implicit suggestion around who should be responsible for designing these institutions, a matter on which I touch on in part 2 of this essay).  As I shall also set out in part 2, it is to Anthony and some of his like-minded colleagues at RSA and IPPR, as well as to people like Jon Cruddas, that the (ex-austerity) labour movement will need to reach out to if it is to develop a truly effective post-austerity movement in the shortest time possible.

[9] Aside from the invalid short-shrift that Anthony gives to what he call the “ultra-Keynesian” argument – that there is real no barrier to deficit spending as long as it takes place within a functional economy – the other policy idea he dismisses all too easily is that of engineering inflation at around the 4-6 % level through quantitative easing (not the same, I should stress as deficit spending/investment on public services/infrastructure).

[10] That is not to say that countering the Tories credit card imagery was ever easy.  Such a metaphor fits neatly with Lakoff’s concept of the two central metaphors contesting the grounds in US politics:  the strict father vs. the nurturing father.  In these terms, it might be argued that Conservatives currently have the upper hand because the strict father metaphor has a hold, and it may be that Labour has to deliberately develop nurturing metaphors of its own as a way to ‘sell’ investment as a social good rather than a profligacy.

[11] I remember well Hazel Blears castigating me in a CLP meeting for being too focused on the needs of the poor and the vulnerable.

[12] Of course, cuts to public spending also have indirect effects on the same group, by sucking money out of local economies and delaying recovery, and the weighting of cuts towards deprived areas has made this even more significant when it comes to regional inequalities.

[13] To blow my own trumpet for a second, I’ll add that I was amongst the first to advocate an opposition strategy of focusing on the details of incompetence, and it was my researcharound the maladministration of the Regional Growth Fund which created the ammunition for an early hit of this kind on Cameron at Prime Minister’s Questions.  Unfortunately, while there have been other successes, the strategy was never deployed consistently.

[14] Howard Reed did engage with my reading of Labour’s investment plans, although he suggested I was over-optimistic.   Richard Murphy declined to engage, and continues to hold the view, reflected in Trevor’s Left Futures piece above, that Labour is Tory-lite.

[15] This is a conventional leftwing view. It is arguable that the legitimation of managerialism actually started earlier than this, and is as much a product of the socialist response to technological innovation in mass production as of neoliberalism.  As Peter Hain notes in his new book, Back to the future of Socialism, Tony Crosland’s The Future of Socialism is marked by a dismissal of GDH Cole’s proposals for a modern ‘guild socialism’, on the grounds that these are incompatible with mew technologies and mass production. While Hain seems happy to take Crosland at his word, my own view is that the side-lining of the whole guild tradition is at the roots of today’s mega-unions’ compliance with de-professionalization, especially in public services.

[16] There are vestiges of the old commitment to public service quality.  Ironically, in the face of what came next from the PCS, in 2011 the union asked election candidates to sign up to a pledge heavily focused on the quality of public services.  By 2012, that emphasis appeared to have been lost, as the Workfare programme was critiqued not for what it did to people on benefits, but solely for the effect it had on the workforce.

[17] When the Liberal Conspiracy version of the first part of this two part post appeared, I was called a wide selection of unpleasant names for my supposed treachery, but there was little or no actual counter-argument.  While that’s unimportant in itself, I accept that the provocative tone I adopted in the piece was more about my self-righteousness than any attempt to help forge a better strategy for opposition.

[18] That is not to say that there has been no debate within mainstream Labour about what ‘proper’ public service reform should look like.  The Progress pamphlet Reform in an Age of Austerity (February 2014), for example, is actually quite good on some of the crucial aspects of reform – particularly that it will need to be ‘relationa’ and personalised, but like the IPPR report Condition of Britain (see above) it remains hampered by the self-imposed fiscal straitjacket, within which these worthy ideals are mostly undeliverable.

This article first appeared at Though Cowards Flinch

6 Comments

  1. Robert says:

    So you say, and the fact is I do not believe you, I think labour is blue not Glasman Blue but small Tory Blue.

    With labour saying we will not bring back legal aid for the poor, makes your statement which is way to long, a waste of breath.

    I think labour as a socialist party are way to dead to be considered even socialist it’s laughable that labour can offer us anything.

    1. john reid says:

      well rejoin Labour and oust those form the party who have a view you don’t like, you use to like labour 32 years ago remember

  2. David Pavett says:

    If this is the response to Trevor Fisher’s doubts about Labour then it seems to me that it is a case of game, set and match to Trevor.

    Just why Left Futures asked Paul Cotterill to provide a response to Trevor is something of a mystery to me given that his anti-anti-austerity line is inconsistent with nearly everything else appearing in this blog.

    This rambling and excessively wordy response would have us believe that Labour is developing some smart forms of social investment behind the scenes but isn’t telling anyone for fear of being acused of fiscal irresponsibility. Believe that if you will.

    According to PC Labour’s anti-austerity critics have been misled but could have been saved from their errors by following the “actually quite good” ideas coming from Progress. This gets weirder and weirder.

    My overall impression from a first reading is that PC’s proposals are entirely predicated on market mechanisms. PC seems to be suggesting some kind of overarching PFI framework for new social spending.

    The word “investment” seems to lose all economic content in this argument and is reduced to a purely financial concept. (To borrow a phrase from Costas Lapavitas finance capital is a case of ‘profiting without producing’. The meaning of “investment” as applied to production and services is entirely different.)

    I could say much more but will wait to see the reactions of others and also for Part II before commenting further than to say that so far it seems like support a contrario for Trevor Fisher’s view.

  3. This does require a serious response, but alas I am off to China tomorrow and can’t work on anything till I get back. I have no doubt the issues will not go away!

    Trevor Fisher

  4. David Pavett says:

    Having read this piece a couple of times and discussed it with a friend I think that comment on the main substance must wait until Part II.

    Whatever one thinks of Paul Cotterill’s proposals he is at least trying to open a discussion about economic/financial pathways which might be followed. There is all too little of such material on the left and the tiny response to any attempts to discuss is surely a measure of the readiness of the left to take on the all important issues of the economy.

    Having said that, I find Paul C’s analysis unconvincing. It strikes me that had he taken the time to write a shorter and more tightly argued piece without all the ‘knowing’ asides (what the hell is ‘articulacy’ in the ‘Hall’ sense?) we would have had a better basis for discussion. I hope that Part II will show that some effort has been made to deal with these problems.

    The main point that I want to make is that Paul falls down on the most basic requirement of serious debate: you should always take your opponent on using the most intelligent form of his arguments. If you only consider the most idiotic form of those arguments then victory is assured but it is also worthless.

    The central problem for me in Part 1 is that the anti-austerity argument which Paul seeks to reject is represented only in its most idiotic form.

    There may be anti-austerity campaigners who argue that all we need to do is to return to 2008 levels of public spending with no thought to reforming the services involved. But this is certainly not the whole story. I come across such people relatively rarely. On the other hand, I do come across campaigners who argue that we need to restore public spending but that the services must be run in a new way. For example in education it has been argued that schools should return to local authorities but that this be accompanied by structural changes to make the service open, transparent and subject to democratic involvement.

    Similarly Paul argues that public sector unions have given up on being concerned with the quality of the service that they provide in order to focus solely on there members conditions of service. To take the example of education again this is manifestly false. The education unions are very concerned with the broader picture. The NUT for example has issue an excellent manifesto for the next election in which it might even be argued that the very real problems of its members conditions of service is underplayed.

    This misrepresentations of the position of those who Paul criticises is is not at all helpful and rather reduces the hope that what we have is an opener to a mature debate.

    Beyond that I have real doubts about the various “off-the-book” forms of financing which are proposed but it is better to wait for the detail before commenting further. I hope that the second part will make more effort than the first to be clear about all the terms used and will not assume that phrases (e.g. “the existing prudential borrowing regime”, “freed-up health economy organisations”) have general currency when quite clearly they do not.

    I also hope that Part II will make it clearer than Part I what the overall benefit is expected to be of using sources like pension funds for investment through a British Investment Bank given that this will involve withdrawing them from the activities in which they are at present invested. I would like to know also what he feels about Tott’s proposal that the BIB should be quasi-independent of government and should operate according to the normal commercial criteria.

  5. Chris Wilson says:

    I don’t agree with all of this, but I think it goes to the heart of the problem that people on the left have with Labour. Personally, I think the discussion of public sector reform is off-piste but that’s up to you. I think the key thing is the argument that Labour is appearing to support austerity while in fact supporting some degree of Keynsean style demand management. However, my question (and its a genuine question, not a rhetorical move) is what about the mandate? Will a Labour government be trying to implement a policy that it has deliberately not explained. The press will be predictably hostile, and the reply “thats not what we actually said” wont be credible. Part of the problem is that the argument for austerity is joined at the hip to the argument for “welfare reform”. If unemployment isn’t caused by lack of demand it must be a moral failure on the part of the unemployed (I reducing a bigger argument to a sentence here, but I hope you see what I mean). If Labour won’t publically address lack of demand how can they address the real causes of unemployment, and then defend the welfare state. Our economic problems are caused by property linked to finance, not deficits to linked to benefits. The Labour party needs to be able to make both parts of the argument to have a mandate, and to build support for necessary reforms. Not talking about austerity/ demand entails not talking about welfare, property and finance. That’s pretty much all the important topics ruled out of court before we’ve started.

© 2022 Left Futures | Powered by WordPress | theme originated from PrimePress by Ravi Varma