It wasn’t their finest hour. As Labour MPs filed through the no lobby Wednesday evening to vote against George Osborne’s budget surplus wheeze, 20 of our number sat on their hands. These included Liz Kendall, late of the Labour leadership contest, a couple of former front benchers, and backbench loyalists-no-longer like Mike Gapes. In all, their showing was fewer than expected as most noted 4.5%ers fell in behind the leadership. The question, not answered by our Jacobin Blairist tendency, is what on Earth were they trying to achieve? Why were they moved to vote, or not vote, as they did? Continue reading
Tagged with Fiscal Charter
Labour’s media strategy should be unspun but not unravelled
Labour has had a difficult week, politically. Though Corbynites will obviously want to support the leadership as far as possible, it is difficult to deny that John McDonnell fell right into the clumsy Osborne trap that was the Fiscal Charter. The Shadow Chancellor’s naïvety on this issue speaks to one criticism that has been levelled at Corbyn and McDonnell: that after a life on the backbenches, they are unprepared for the hard-nosed realities of front-line Westminster politics.
But there is a fairly massive contradiction in these kinds of criticisms. Those who call the Party’s organization a “shambles” and loudly proclaim how poorly it’s being run are the same critics who frequently and furiously predict that the Left will soon embark on a ruthless campaign of deselection, and use dirty tricks to steal the Labour Party from its social democratic roots. These arguments don’t match up. Corbyn and McDonnell can’t have a cunning plan to reshape Labour in their own image at the same as being politically inept. Continue reading
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Putting the Political back into Political Economy
The reaction to John McDonnell’s announcement that he would aim for a balanced current account, whilst maintaining borrowing for capital investment, revealed a recurrent fault line within left-wing economic thought. At its most banal McDonnell was accused of signing up to George Osborne’s ‘austerity charter’, whilst more sophisticated critics argued such policies would weaken demand and harm economic growth. This article will not address the technicalities of figures and whether Labour should borrow limited amounts rather than aim for a balance (see a critical account here). Instead we will focus on the key political division the fallout from this announcement has revealed, and what it says about the character of ‘Corbynomics’, and the barriers it faces. Continue reading
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How Labour should deal with the Fiscal Responsibility Act
Jeremy Corbyn and John McDonnell are frequently in advance of many of their supporters on economic matters, including their supporters in academia and economic commentators. They are correct to argue against permanent budget deficits and in favour of the central role of public investment as the path out of the crisis, identify People’s Quantitative Easing as a useful policy tool, and to question the ‘independence’ of the Bank of England. They have faced unwarranted and confused criticism on all of these from some on ‘the left’.
The recent indicators point to a slower pace of economic activity and the Tory government is about to embark on Austerity Mark II, in nominal terms exactly the same level of cuts and tax increases as the £37 billion George Osborne announced in 2010. As the Tories have little popularity (the second lowest popular share of the vote for any government) it has been necessary for this project that there is a pretence that this is not a return to austerity, after the boost to consumption that helped the Tories get re-elected. So, there was the fiction that recently there was a ‘One Nation’ Tory Budget, that Osborne was ‘stealing Labour’s ideas’ and similar nonsense. Continue reading
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Labour should be cautious of adopting Osborne’s fiscal charter
There is now a strange air of unreality about the handling of the deficit. Osborne has made it centrepiece of his political narrative, although his prime motivation is not to reduce the deficit, but to shrink the State and the deficit gives him the pretext to do it. Even if it was his prime objective, he has utterly failed to carry it out since in his first budget in 2010 he promised to cut it to zero by 2015, and it actually turns out this year it is still a mountainous £90bn. He now promises to cut the deficit to zero by 2018-19 and to have a surplus in the last year before the election. Does anybody believe anything that this man ever says?
But given how mischievous his declared intentions and given anyway his total failure to achieve them, it seems odd for Labour to be proclaiming that it will match Osborne. No doubt that’s for reasons of economic credibility, even though Osborne represents such a poor benchmark for that objective. But far more important than all the sparring over matching Osborne’s plans is whether there is the slightest possibility of their being realised by 2018-9, and it’s pretty obvious they won’t be, and by a very large margin. Continue reading
