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The justification for Corbynomics goes far beyond re-nationalisation

Corbynomics1It is curious that the main charge thrown against Jeremy Corbyn – apart from all the bluster and hysteria – is that his policies lack ‘economic credibility’. The assumption presumably is that the economic policies pursued by UK governments, both Labour and Tory, as well as by the EU, were sufficiently credible and rewarding as to justify or even necessitate their continuing to be followed. Even a second’s thought shows that that is an absurd proposition. The business model of free market de-regulated capitalism which has been ruthlessly taken to extremes over the last 3 decades is patently bust. It led inexorably to the biggest global breakdown for nearly a century, followed by the longest recession and the slowest recovery since the 1870s – indeed a secular stagnation with still no recovery in sight.

We were told that the markets were self-regulating and that the role of government was to get out of the way. It turned out that the opposite was true, and that the economic system was only kept going at all by the constant drip-feed of government-initiated QE. We were told that the dynamics of capitalism would self-generate the levels of demand to keep the system constantly expanding. It turned out that growth was only achieved, if at all, by stacking up debt to prodigious levels, opening the way to the next financial crisis when the debt bubble imploded. We were told that giving a free hand to investors would ensure the maximum efficiency in the allocation of capital. What actually happened is that capital flocked to emerging markets which offered the best return, then flowed out again equally fast as soon as Western financial conditions improved, leaving emerging markets badly weakened and exporting deflation to the West.

The cataclysm of 2007-9 was a lesson that international policy co-operation was needed to increase global demand. It was a lesson that higher investment in infrastructure and skills was needed to increase productivity. It was a lesson that an economic model based on widening inequality was undermining the essential requirements of a successful economic system. It was a lesson that uncontrolled capital flows are both dangerous and counter-productive. It is clear that none of these lessons were learnt. Perhaps Jeremy Corbyn’s greatest contribution is that he is not accepting the status quo which is rotten: an over-sized financial sector, a neglected manufacturing industry, inadequate investment, flat productivity, huge and growing balance of payments deficits, ballooning inequality, and an economy mired in enormous permanent debt. He deserves credit for arguing that the fundamentals have got to be changed; it’s a debate we desperately need.

5 Comments

  1. Mervyn Hyde says:

    The unsustainable financial markets are crashing as we write and yet we are supposed to be the insane ones, that just want to regulate the economy in a manner that doesn’t harm people.

    Neo-liberalism has been allowed to run riot with the consequences that were predicted even back in the 1970s, but we still see politicians of the right defending the indefensible.

    Yvette Cooper attacked Jeremy as a printer of money whilst defending the Business interests that are the real printers of money. The private Banks print money out of thin air every time they make a loan, that is issued out of debt, Jeremy wants use debt free money to invest in the economy. Money is created out of thin air and destroyed by taxation and interest rates.

    Yvette Cooper doesn’t understand what she is talking about, yet shouts down someone that knows more about it than she does.

    1. J.P. Craig-Weston says:

      Cooper, Burnham, Balls, Eagle, (Miller, Laws……) middle class, middle brow, middle income, (they could almost all of them be matched against a very similar economic and social profile, which in another period less tainted by over 10 years of Blair and rotten new Labor would not necessarily have been an entirely bad thing; it is after all where we a country recruit most of our academics, political leaders and business people from, ) but as bent as a nine bob note, operating as simply as political Mafia these unpleasant and dishonest people are Blair’s real legacy and have become a cancer quietly eating away at body of our society.

  2. J.P. Craig-Weston says:

    Well done indeed; frankly, it’s taken you long enough but you seem to have finally got there in the end.

    What you and almost everyone else currently involved in this debate still continue to refer to, but completely misleadingly as free market capitalism, (in practice anything but, “free,”) or as neoliberalism, as though it were some kind of fundamental law of nature, although it is really nothing of the kind and this has become very apparent to almost everyone by now,

    The whole, almost religious or even moral concept of, “capitalism,” as it was always peddled to us by the late and unlamented Margret Thatcher for example and since by her equally unsavory associates and disciples including the Great Charlatan Blair is simply completely fraudulent, it’s neither free nor even, I would so argue, really capitalism.

    The notion that globalization, which similarly is just yet another conceited term for something far more mundane and sleazy, already very familiar to many people from the history of any period, (in our age it’s the brutality America foreign policy; described here recently and accurately as economic colonialism,) is somehow inevitable is equally unconvincing and becomes more inane by the year.

    Judged only by the huge increase in poverty here in th UK during my lifetime, by our growing desperation and inequality, as measured by say the number of sick, desperate and homeless people currently living, (and too often dying,) rough on the street of Manchester I’d have to say that the whole crackpot and socially grotesque American neolibral social experiment that was initiated by Thatcher 30 years has not been an unqualified success for most people and that almost all of those lucky few who have indeed prospered massively; have really only done so at the expense of the many, largely by robbing the rest of us and pillaging the system intended to support and protect the weakest and by gaining an endless advantages in the form of a never ending series of government handouts, subsidies and tax exemptions and unfavorable contracts to funded from the sale or gift of state assets and revenue streams to the point were people here in the UK, (particularity our disabled, our old and our poor,) are now dying in poverty and in conditions of neglect and of, “appalling abuse,” whilst Blair apparently remains as perfectly comfortable with people, (with people like, “us,” anyway) becoming filthy rich as he was with all the people who died and who are still dying daily as result of his policies in middle east and North Africa.

    Yet we’re still being browbeaten by his and by Thatcher’s apologists, too many of whom have indeed prospered; with 2 extremely facile, spurious and by now over familiar, (not mention just plain silly arguments,) that once, “we,” as a society have become reconciled to the hard necessity of poor people, things will magically start to improve for everyone, (by, “everyone,” we mean of course for, “us.”) and that what benefits, “us,” as individuals, particularly financial, benefits society.

    Anyone who really believes that pile complete and utter crap, needs to visit the US with their eyes open to take a bus to the end of the line in, (or so I suspect,) any major city to experience the kind third world poverty that is at the rotten heart of the American dream.

  3. Bazza says:

    A friend of mine who doesn’t talk politics much (but does likes Corbyn) had a wonderful suggestion (she has read a bit of Marx) and commented:
    “Why don’t we just get control of capital?”
    Now there’s some food for thought.

  4. David Pavett says:

    The cataclysm of 2007-9 was a lesson that international policy co-operation was needed to increase global demand. It was a lesson that higher investment in infrastructure and skills was needed to increase productivity.

    Is increasing global demand an imperative of economic policy? Likewise higher investment in infrastructure? Are there ecological limits to this? If there are then what becomes of such imperatives when they are reached? Have we reached them already?

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