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Economic credibility and radical alternatives

2nd March 2016

Economic credibility and radical alternatives

THE JOHN MCDONNELL COLUMN IN LABOUR BRIEFING

SINCE   LABOUR   PARTY   CONFERENCE,  LABOUR has been an anti-austerity party, rejecting the failed approach to macroeconomics that has done so much damage to this country and across Europe. All of us in the Labour Party should be immensely proud of that. But this is just the very beginning. We need to state clearly what our overall political objective is.

Our aim should be to create a society that is radically fairer, more equal and more democratic and based upon a sustainable prosperity that is shared by all. In developing our economic strategy our task now is to investigate every policy and institution operating in the British economy to assess whether they are fit for purpose in democratising and transforming our economy. I have commissioned a range of reviews by respected figures in their fields into the key institutions of economic decision-making - the Treasury, the Bank of England and HMRC. We need to understand the failed policies of the past and why they still dominate our economic debate. But most of all we need to begin to put forward a radical alternative. That’s why I have assembled our Economic Advisory Council (EAC). It brings together some of the foremost economists in their areas to advise us in their areas of expertise, which range from labour economics to shadow banking to monetary and fiscal policy. The EAC is the backbone of our New Economics series, which was launched last month to raise the level of economic debate and outline radical alternative thinking. Across the UK the members of our EAC, and others, are speaking to packed halls about the important economic issues of our day. It’s important that LRC members participate fully in these events which are all free and advertised on the New Economics website.

It is critically important that the left demonstrates the technical understanding and ability to transform our economy. However demonstrating technical competence is not enough to convince the electorate to trust us with the management of the economy. Osborne has been disastrously technically incompetent in managing the economy. He has missed and failed on every target he has set himself over the last six years - and yet the Tories won the last election because they were more trusted on the economy.  The reason is that since 2008 they were allowed to set the economic agenda and to define the economic narrative. In particular they successfully promoted the narrative that the crisis of the banking sector was a crisis of overspending on the public sector. Winning back economic credibility is the most important fight in a generation. Step by step we need to demonstrate that of course we can manage government budgeting effectively. This isn’t about accepting cuts but making sure our income from taxation and economic growth matches our spending. It also means recognising the importance of borrowing for investment, which lays the foundations for future economic prosperity. Investment in our infrastructure pays for itself by expanding economic activity and raising tax revenues. To support our investment programmes we also need a tax system which is fair and fit for the era of globally mobile capital.

At a recent LSE lecture I also gave notice that we will be looking at the fundamental questions facing our economy, for example:

» how assets are owned and shared   and how wealth is created and by whom;
» and   how   we tackle   the   profound challenges facing our society including climate change, rapid technological advance and an ageing population.

This coming period offers us the potential for the most creative discussion of economic policy since the paradigm shifting discussions, that set the policy programme of the Attlee government after the Second World War and produced the Welfare State. I urge   all on the left to participate inthe lecture and seminar series and attend the annual state of the economy conference we are convening on 21 May. In addition I urge supporters to encourage their CLP to organise a local economic seminar or to do so through their local Momentum branch.

Elaine Smith MSP: An Appeal for Support

Comrades will know how tough the forthcoming elections in Scotland will be. It is critical that we support our Scottish comrades in this campaign. One of those comrades is Elaine Smith. Elaine has been the convenor of the Campaign for Socialism and has been courageously at the forefront of every major working class struggle waged in Scotland over decades. She needs people to assist her constituency campaign on the ground and donations to help fund her campaign. I would urge members of the left to assist this excellent socialist all they can. You can send cheques to Samantha Byrne, Constituency Secretary, Coatbridge and Chryston CLP, 38 Orchard Grove, Coatbridge. ML5 3PL.

Labour Briefing is the magazine of the LRC