“This young country will be proud of its identity and its place in the world, not living in its history, but grasping the opportunities of its future.” Tony Blair: Leader’s speech, Brighton, 1995.
Tony Blair and those associated with Blairism embraced globalisation and studiously ignored Labour Party history – except to denounce and disown “Old Labour”. Labour’s economic history was of very little interest to the Blairite generation. And it appears that the history of the 1930s is of little relevance to today’s leadership election debate.
Instead commentary repeatedly harks back to Bennism and the 1980s – when the relevant era is surely the 1930s. As most economists acknowledge, the 1930s and the great depression are widely and rightly understood as the only modern precedent to the great financial crisis that began in 2007, and that still dogs the global economy. Continue reading
While Labour and LibDem activists mourn, and political opportunists seize the moment, is the loss of the election such a bad thing? Might this be a good time to lose an election?
I think so. The reasons can be found in both domestic and global financial imbalances, in the advance of de-globalisation trends that are manifest in shrinking capital flows and growing nationalist movements; and in rising geopolitical tensions.
As I write, out in the big wide world there are upheavals in Eurozone and other sovereign bond markets. Whether this violent volatility will lead to a global bond market crash is an open question, but in just two weeks markets have already marked up almost €1tn of losses. Shares in booming stock markets have begun to slide, while currency movements are increasingly erratic. Continue reading
Official economic opinion from the IMF is that the US and the British are the only industrialised economies that are growing strongly and that their growth model should be reproduced generally. The reality is very different. Both recoveries are the weakest on record and are fuelled by an unsustainable (debt-fuelled) rise in consumption. The international effects of this are negative, acting to provoke further instability in the world economy. The Anglo-Saxon recoveries cannot possibly be widely copied without deepening crises. Continue reading
A complete understanding of great events will often have to wait until well after the shouting and the tumult die away and a longer perspective permits a more objective assessment of what really happened. Even then, though, greater elucidation proceeds at a glacial pace.
Today, we may well find ourselves again at the beginning of just such a process. Just as it took a decade and a Second World War to achieve a broad consensus as to what had really caused the Great Depression in the 1930s, we can now begin to survey the events that led to the Global Financial Crisis, and the response that has been made by orthodox policy to the recession that followed, and to assess them in the light of the accumulating evidence of actual outcomes since those events.
The evidence is surely mounting that the remedies to recession proposed by orthodox policy have failed. The German insistence on austerity, smaller government and eliminating deficits has led directly to the travails of the euro zone and the real threat of renewed recession, with the result that countries like Greece and Spain are in desperate straits and the continued viability of the euro itself is at risk. Continue reading
At a certain point in the next few months the recession in Britain will officially be over as the real level of GDP will finally exceed its previous peak in the 1st quarter of 2008. The media coverage will be generally very favourable, in the hope that this will boost the Tory vote and vindicate the austerity policy. In reality it will do neither. The economy was already recovering modestly when the Coalition took office and the austerity policy reversed that upturn. This is the weakest and most drawn out recovery since the 19th century.
Nor is the hoped-for political impact likely to materialise. One reason why the Tory vote in opinion polls has hit a ceiling fractionally above 30 per cent is precisely because of austerity. The policy is designed to transfer incomes from labour and the poor to capital and the rich. At the same time, the austerity policy of cutting state investment undermines any robust or sustainable recovery. The economy overall continues to stagnate and only a fraction of society feels any benefit from the recovery. During this ‘recovery’ most people’s living standards continue to decline. The political impact is that the Tory Party can shore up its core vote, but not add to it. Continue reading