Labour, John McDonnell and the New Economics

John-McDonnell-red-flagOnce the surprise and the shock of Jeremy Corbyn’s election as Labour leader had sunk in, many (including me) became impatient for policy initiatives and membership involvement in policy formation to come to the fore. Clearly cutting through media hostility is a major task but I find it difficult to see that more could not be done. For a start, direct communication through Labour Party channels has so far, to my knowledge, not been much used – as far as I can see, looking at things from a branch and CLP point of view. A case in point is Emily Thornberry’s excellent defence discussion paper. This does not seem to have been promoted throughout the Party with a request that the issues be debated. I cannot understand why not. And where is Seamus Milne’s communications team in all this? Labour’s communications effort to be ramped up a notch or two. Continue reading

The crisis remains an investment crisis

investment, pic by 123rf.comPrior to the recent G20 meeting leading international economic bodies such as the IMF and the OECD made tentative calls for increased investment, although this was often confused with increased spending. This is a belated or partial recognition of the real source of the crisis in the advanced industrialised countries. In terms of actual changes to policy it seems to have made no impact at the G20 whatsoever.

As the world economy is once more slowing and there are again a series of spurious explanations offered for this, it is worth revisiting the actual causes of the ongoing crisis which first became widely apparent in 2007. In this piece the advanced industrialised countries as a whole will be the reference point, using aggregate data for the OECD. But each individual economy within the OECD simply provides its own unique combination of these common factors, including Britain. Continue reading

Is Labour ready for another economic crisis?

a man pushing over the word "crisis"Ellie Mae O’Hagan writes that the Tories are politically prepared for another economic crisis, should one hit. Looking at the lack of profitable opportunities for capital presently, the ongoing investment strike, stock markets that went up and then came down, and the inflating credit bubble you’d be daft to rule one out with certainty over the coming years.

Ellie talks about how she felt the left response to the crash(es) of 2008 were bland and complacent. My experience was different. I wrote at the time that there was a bit of energy and excitement about, even though we knew the government would strive to make a crisis of private capital into a question of public spending. For our part (I was a Socialist Party member up until early 2010) it was a spur for activity, of trying to raise questions about the crisis-ridden character of capitalism and get people to take our analysis seriously. Never mind that the SP’s theory of crisis was premised on the underconsumption of the working class, and therefore was both wrong and owed more to Keynes than Marx, and that it had confidently predicted 15 out of the last three recessions, we felt we were right and that our ideas had been vindicated after 30 years of neoliberal consensus. Continue reading

Brexit, in or out, is far less important than investment to end the UK productivity crisis

BREXITThe latest official data show how far the UK economy is lagging behind other industrialised economies in terms of productivity, in this case output per hour worked. There is too a long-standing discussion amongst economists in Britain about the so-called ‘productivity puzzle’. There is a genuine crisis of productivity in Britain. But in reality there is no productivity puzzle at all. It is easily explained by the weakness of investment. In particular, the recent fall in in the stock of capital in the British economy explains the almost unprecedented decline in UK productivity.

Currently, debate in Britain is dominated by the possibility of ‘Brexit’. This is an error. Under current circumstances, whether Britain is in or out of the EU is a trivial matter in economic terms compared to the crisis of productivity. This is because, contrary to George Osborne (and those on the left who are confused and echo him) it is not possible for consumption, or wages to lead economic recovery. Sustainable increases in consumption require sustainable increases in output. Unless that is achieved by more people simply working longer hours, then it must come via increased productivity. Without it, living standards will fall. This will be the case in or out of the EU. Continue reading

Labour’s economic alternative should centre on a national investment bank

investment, pic by 123rf.comLabour is now carrying out extremely effective campaigning against Tory policies – on tax credits, on the sweetheart Google taxation deal, in support of the junior doctors and pinning the responsibility for the crisis in the NHS squarely on the Tories. This excellent work needs to continue and be strengthened.

But in the forthcoming budget Labour must also set out the framework for a comprehensive macro-economic alternative to Osborne’s austerity. This article argues why the centre piece of this should be to reinforce the existing pledge to increase infrastructure investment with the establishment of a National Investment Bank. Continue reading