Labour, spending and benefits: how to miss that open goal

Forget the funeral: this has been an atrocious week for the Con Dem economic experiment.  First, the UK’s credit rating has been downgraded by another ratings agency, thus demonstrating that even against its own success criteria – Osborne has repeatedly stated that his aim was to maintain the UK’s AAA rating – Coalition Economics is failing.

Second, the Reinhart-Rogoff debacle, in which the classic paper arguing that a deficit of more than 90% of GDP has a depressing effect on growth has been shown to be based on unreliable data.  If it has been the failure to spot basic errors in the Excel spreadsheets used to underpin the argument that has hit the headlines, the really damaging criticisms have surrounded the assumptions underlying the argument in the paper, which have been shown just to be plain wrong.  There’s an interesting case study here in which a paper whose conclusions and assumptions have been hotly disputed in academic circles has been presented by mainstream politicians as unchallenged gospel; and perhaps the way in which a paper so full of errors managed to survive the peer-review process. [Edit - since writing the above I have learned that there appears not to have been a peer-review process.  Which is in itself an indictment of the way in which economics and policy interact]  It’s a fascinating example of confirmation bias at work, but also begs questions about the objectivity of the profession of economics itself – questions memorably raised in Inside Job, the film about the 2007 crash that showed the cosiness of the business, political and academic economics establishments.

And, still hanging over all of this is the IMF telling the UK to rethink its austerity plan, accompanied by its work on the multiplier and the growing empirical evidence that the austerity cheerleaders relied on the wrong assumptions in assessing the impact of the austerity agenda – I’ve blogged about this before.

In other words, in the UK Labour should be making the case against austerity with renewed vigour, pointing to the way in which, both in theory and practice, the consensus behind austerity is unravelling.

But they’re not.

In the context of the past week, this report in the New Statesman is jaw-dropping.  Labour is still flirting with the idea of signing up to the coalition’s post-2015 spending plans: it apparently cannot make up its mind to ditch the rhetoric of austerity and commit itself to reversing policies whose effect becomes more obvious by the day.  It looks like a failure of courage; not only is Labour failing to challenge the narrative that overspending caused the 2007-8 economic crisis, but, faced with austerity failing all around it, fails to challenge that agenda. Along with the kind of “supply-side Socialism” eloquently advocated by Chris Dillow here and here it should not be difficult to put together an attractive and economically-credible and empirically-founded programme as an alternative to austerity.  It is already moving in the right direction with its commitment to build more social housing. But on the big economic issues, Labour still looks like a rabbit caught in the headlights; it needs to find the courage of its conviction (which in turn means looking beyond the Westminster bubble).

And it certainly needs to rethink its narrative on benefits, which looks increasingly desperate and, frankly, idiotic.  The latest idea – a proposal that the unemployed should be offered loans in place of benefit – really achieves new levels of imbecility in a debate that has not been notable for its cool rationality.  It was unsustainable private debt (not public debt and spending) that led to the crisis of 2007-8; more personal debt is not the answer.  And talk of restoring the contributory principle is just dishonest; people still pay National Insurance.  It is deeply ironic that Labour appears to be rejecting the responsible borrowing by the state that could unlock economic recovery while apparently encouraging private borrowing against an uncertain future for those who become unemployed because of … fiscal austerity.  It’s the utter incoherence of all this that is so frustrating – there must be few things more heartbreaking than being an economically-literate member of the Labour Party just now.

It is the stuff of legend that in Gordon Brown’s Treasury, the group of central advisers was united by its enthusiasm for football.  Now, presented with an open goal, the Labour forwards – many of them, like Ed Balls, part of Brown’s team – appear to be passing the ball backwards before shooting through their own net.  When will they recover their sense of political direction?

Labour and the Ashcroft poll: winning the war as well as the battle

There has been a certain amount of excitement over a poll of marginal constituencies by Tory donor Lord Ashcroft, suggesting that Labour is on course for a thumping win at the 2015 General Election.  While it is no doubt encouraging for Labour and indeed for anyone who wants to see the end of the Coalition, it should be treated with much caution, and in some respects begs far more questions than it answers.

The first point, of course, is that this is a mid-term poll and should be treated as such.  Of course it focusses on marginal seats, which makes it more significant than polls that simply record voting intentions across the country as a whole; but with an election two years away, with the economy failing and with the omnishambles of the bedroom tax (a policy decision whose callousness shows every sign of  becoming an iconic symbol of Coalition inhumanity, not least because not even the DWP has been able to come up with a reasoned defence of it), it would be surprising if Labour were not ahead.

Hanging on to power is, after all, what the British (English?) Conservative Party does.  Following the scare at Eastleigh, and with the UKIP bubble clearly keeping Tory strategists awake at night, the Tories are already positioning themselves on the populist right on issues like immigration and human rights.  Expect more of this; the next election will be dirty, with a Lynton Crosby-inspired campaign designed to divert the undertow of anger in society against immigrants, Europe and above all into demonising the poor and vulnerable at home, with the populist Right claiming that failure in Government arising from being held back by the Liberal Democrats from doing what they want to do.  That’s one of the points about coalition – it allows populist politicians to by-pass the reality checks of reason and empirical evidence, by blaming failure on their partners.

But there is a deeper, more powerful problem.  It’s desperately important to distinguish between the battle and the war.  The 2015 election is the battle; the politics and economics of neoliberalism are the war.  By the time the 2015 election comes along, the neoliberals will have made enormous progress in the war.  Much of the NHS and nearly all schools, not to mention the provision of many policing services, will be in private hands.  The state will have been shrunk, real incomes of those who live by selling their labour rather than accumulating rent on assets will have fallen, and the balance of wealth and power will have shifted significantly.  And, above all, a mindset that economics – or to be more precise economic ideology – trumps democracy will have taken hold more powerfully; it is important to reflect that so much of Osborne’s Plan A is about taking economic policy out of the political sphere altogether, to a place where the language and practice of democratic accountability are no longer relevant.

And the big question remains – if the Tories lose the 2015 election, have they lost a battle or a war?  That depends on the will of a newly-elected Labour government to reverse the coalition’s changers.  It is heartening to hear Labour’s Andy Burnham commit Labour to reversing the NHS legislation on day one; less heartening to consider that on current plans – notwithstanding the reversal of Section 75 regulations – much of the former NHS will already be in the private sector by then.  And there is little comfort in Ed Balls’ commitment to keep Tory cuts, or in Liam Byrne’s “reinvention” of Beveridge which appears to combine an attack on universality with the appropriation of the language of Ian Duncan Smith.  Faced with the post-Eastleigh Tory rhetoric about immigration, Labour’s response was … triangulation, accepting the false premises of Tory rhetoric rather than challenging them..  And I have blogged before about how Labour’s One Nation language appears to skirt round the economic issues that define the battleground against neoliberalism.

So it is not an encouraging picture. I sense that there is fertile ground for a reasoned, passionate, cogent crusade against the neoliberal value system – but that Labour are not remotely close (yet) to that ground, and still use language and  symbolism that ties them into that value system rather than establishing them in opposition to that.  On the weekend after the 1997 election, when I was still in the Labour Party, I attended a post-election gathering at which I remember a strange atmosphere; excitement at the huge victory tempered by a sort of post-hoc rationalisation of how, despite the Blairite rhetoric, Labour would really change things – it came back constantly to the fact that “our people” were now in Government.  It was, with retrospect, a discussion rooted in avoidance, with, two days after an electoral landslide, an air of fear and mistrust; six years later, many of those same decent people were marching through London against war in Iraq.  Real progress means delivering something that brings conviction, not post-hoc rationalisation.

Now, outside the Labour Party, for me the issue is so often how badly the Left in Britain needs Labour to be better; to grasp the moment. In many respects the neoliberal project is on its knees, with the consequences of economic failure being visited on those least able to bear them; but that reality simply isn’t reflected in mainstream political discourse.  The war is still being lost; and Labour remains a party in which many of its activists know and understand at first hand those realities, but whose leadership still appears lost in avoidance.  Until Labour – and the left generally – learns to reconnect, the tide is not going to turn.

Downgrading the UK’s credit rating: it’s about politics, not economics

The announcement that credit ratings agency Moody’s has downgraded the UK’s credit rating from AAA to AA1 has caused something of a political storm.  George Osborne has repeatedly described the UK’s AAA credit rating as totemic, a touchstone by which his performance as Chancellor should be measured.  It is difficult to avoid seeing it as the Gold Standard of our time; its loss is a major embarrassment for the Coalition, and some voices are arguing that for Osborne as Chancellor, it should be terminal. Even his traditional media supporters are after his blood.

Its economic significance is less clear.  Evidence that Coalition economic policy is failing on its own terms has not exactly been hard to find – an economy that remains in recession (the so-called triple dip really being a function of the fact that the once-in-a-lifetime Olympics gave a mild boost) and rising borrowing from a Government that rationalises taking vast quantities of demand out of the economy in the name of debt reduction.  At one level the downgrade is simply a statement of the bleeding obvious.

Moreover, one definition of a credit ratings agency might be an organisation that gave Lehmann Brothers an AAA rating on the eve of its collapse: I’ve blogged elsewhere about the catastrophic failures of ratings agencies.  In terms of the real economy, this downgrade seems  likely to make little difference – it was not exactly a surprise and markets are likely to have priced it in already.

Politically it is important because it exposes the real austerity agenda – which is ideological rather than economic.  It is about the transfer of wealth away from wage-earners to holders of assets – a process that has been under way for many years but, in the UK, is accelerating dramatically as real wages fall; about shrinking the state and reducing the “burden” of welfare.  Osborne has already claimed that this downgrade shows that the Government needs to continue on the same course; one conclusion from the downgrade – no doubt shared by many in the City and the Conservative Party and in economic think-tanks – is that the UK needs to cut harder and faster. The impact of this downgrade really lies not in the economics but in the political reaction; Osborne’s is to brush off his humiliation and to continue the project.

And where does this leave Ed Balls?  Labour remains deeply conflicted – on the one hand bemoaning the economic effects of austerity, but on the other wedded firmly to an austerity agenda, with Balls vowing to keep the Coalition cuts and – potentially – to add more of his own.  As I’ve argued before, Labour’s One Nation trope is strenuously avoiding engaging with economic issues at all.  Rationally, the Moody’s downgrade makes Labour’s precarious seat on the economic policy fence appear even less tenable.  The commentariat might want to reflect that the political fallout from this downgrade damages Balls as much as it does Osborne.

In other words, this is about politics.  It’s one more piece of evidence  - and in the context not a particularly significant one – that austerity is failing on its own terms; but the political agenda remains unchanged.

Ed Balls and workfare – still following Osborne’s agenda?

Ed Balls has announced that Labour plans to introduce a compulsory work scheme for those  over 25 who have been out of work for more than two years – in addition to its existing plans for the under-25s.  The proposal is being spun in two ways – both as giving “opportunities” but also as a demonstration that Labour is not “soft on benefits”.  Balls is quoted as saying:

“A one nation approach to welfare reform means government has a responsibility to help people into work and support for those who cannot, but those who can work must be required to take up jobs or lose benefits as a result – no ifs or buts.

“Britain needs welfare reform that is tough, fair and that works, not divisive, nasty and misleading smears from an out of touch and failing government.

“Day after day, we see Tory and Lib Dem ministers claim they are targeting the workshy and benefit ‘scroungers’. But it’s no wonder even cabinet ministers have told the newspapers they are uncomfortable with these smears. Because the truth is very different.”

And he goes on to argue:

“Of course we need spending cuts and tax rises to get the deficit down but, with the flatlining economy sending borrowing up by 10% so far this financial year, it’s clearer than ever that you cannot get the deficit down without a plan for jobs and growth which works.”

There’s some nice triangulation there.  Balls is trying to play both sides of the street on welfare and benefits, and manages to get in a bit of One Nation rhetoric as well.  But the point is that his underlying assumptions are both wrong and, in my view, counter-productive.

The problem with Ed Balls really lies in that second quote, where he continues to use the rhetoric of austerity.  Austerity is failing, and there is an increasing body of evidence to show why that is the case – I’ve referred to the IMF’s evidence about the multiplier before.  The evidence is increasingly showing that we need precisely the opposite of spending cuts, and that any tax increases should fall overwhelmingly on the wealthier, for reasons of both equity and to ensure that they do not damage demand (Balls’ argument that his scheme should be paid for by reducing the pension tax advantages of those on the highest incomes is very welcome, but misses the point – more spending and an end to austerity would increase tax revenues across the economy as a whole).

And Balls remains mired in the idea that you can create subsidised jobs without reducing pay for others, and that it is is somehow acceptable to subsidise big businesses willing to participate in such schemes without damaging smaller, more local businesses.  Workfare is not just a form of exploitation of those involved in the schemes; insofar as it is dominated by big businesses like chain retailers, it is sucking money away from local businesses and local economies, which is where sustainable recovery will be generated.  And the effect of these measures, by subsidising pay budgets of big businesses and providing them with what is in effect a flow of free or cut-price labour, is to bid down wages – in sectors in which low pay, often below the living wage, is already endemic. There are far more efficient and equitable ways of creating jobs; Balls seems intent on taking the low-pay, low-productivity route, at a time when austerity is ensuring that the productivity of the UK workforce is actually falling far and fast.

But most of all, he continues to allow the neoliberals in Government to set the terms of the debate.  He remains caught in the rhetoric of an economic theory that is visibly, palpably failing.  And it seems to me that not only does this illustrate a desperate lack of ambition; it fatally constrains Labour’s ability to offer a real alternative at the next election, and leaves the political initiative in the hands of the more explicitly neoliberal Coalition parties.  It not only means that Cameron and Osborne are setting the terms of debate, with all that implies for Labour’s electoral prospects; it begs the questions – what is Labour for? What real difference would electing a Labour government in 2015 make?   To be fair to Labour, there have been some encouraging signs lately – the clear opposition to the 1% cap on benefits (in reality a 4% cut) being one.  There are indications that the rhetoric is changing.  But Labour continues to give the impression of a party that is running scared of the Daily Mail, and that lacks the confidence to capture the growing intellectual and evidential swing against austerity economics.

If Labour is serious about looking like a credible alternative government there comes a time when triangulation has to stop – and when the deployment of vague and ultimately pretty meaningless slogans like “One Nation” and “predistribution” – the latter a classic piece of market defeatism which starts from the distinctly neoliberal assumption that the state can’t make a difference –  don’t cut it any more.  There is an evidenced alternative to the politics of austerity that is gaining ground by the day. When will that alternative break into the Westminster mainstream?

Fuel prices: why Labour has got it wrong on indexation

Finding oneself potentially in agreement with George Osborne is disconcerting.  But, watching the debate over the indexation of fuel duty, it’s difficult to avoid the conclusion that Labour, in calling for a further delay in the proposed 3p per litre indexation of duty, are calling this one badly wrong.

Labour’s concern is that people will be hit by increases in fuel duty at a time when household costs are already rising.  It would be wrong to deny that they have a point. The recent announcement of a 10% increase in domestic energy costs has hit people hard.  More generally, living standards for all but the wealthiest in society are falling; a significant increase in household expenditure on motoring – especially for those who have to use their cars – has the potential to be painful for many middle and lower income families.

Economic issues

However, I’d argue the overall economic effect of a freeze is likely to be regressive, for a number of reasons.

First, it is overwhelmingly the case that expenditure on motoring, and on fuel in particular, is closely linked to income.  Essentially, the more people earn, the more they spend on fuel.  Fuel duty is, by its nature, a progressive tax.  (It’s also very cheap to collect and, apart from around the Northern Ireland land border, very difficult to evade – reasons why the Treasury under Governments of all colours is keen on it). And – in a media world that is overwhelmingly geared towards the views of what might be described as the aspirational middle – it’s often forgotten that a third of the population have no access to a car at all.  And these are very often the poorest and most vulnerable people of all. The 2011 ONS report on the effect of fuel duties on household income shows that while those in the lowest income groups pay more in terms of proportion in income in fuel duty – where they have a car – they pay less in cash terms than those in the higher income groups who are far more likely to have a car. (I’d argue that rather than holding down tax rates for the better-off, the impact on lower-income motorists should be offset through general tax rates and benefits).

According to the RAC Foundation, in 2008 approximately 14% of average household expenditure goes on transport – 88% of that on motoring costs.  The average household expenditure on fuel is about 4%.  Clearly that will vary widely – that figure will be higher in rural areas, and traditional family units have higher expenditure.  But over the long term, the real cost of motoring has fallen enormously – by 17% between 1997 and 2008, at a time when public transport costs rose steadily.  As I’ve argued here before, the so-called War on the Motorist is a pernicious fiction; and it’s important to remember that the external costs of motoring – in terms of pollution, safety and community severance – fall overwhelmingly on the poorest in society.

Moreover, the pump price of petrol has fallen by 10p per litre since the spring; and crude oil prices fell by nearly 5% in one day last week.  If there is ever a good time to index fuel taxes, this is it; in a competitive forecourt market it is quite likely that much of the duty increase will be absorbed, meaning that the hit is taken by oil companies rather than motorists.  None of this is to trivialise the impact of even small increases in prices on people who are on the financial edge; but there are much bigger issues in play here, like domestic energy prices and benefit cuts.

And recent thinking from the IMF and others is that the multiplier – the multiple by which public expenditure is more stimulating than tax cuts – is higher than Government has assumed.  In other words, the economic cost of cutting taxes is higher than has been recently assumed.  If the failure to index fuel duty is offset by additional cuts in expenditure, the effect will be to suck more demand out of the economy.

The political consequences

Labour’s decision may be dodgy economics, but looks like quite good politics; it looks like a party standing up for that politically iconic section of society, the squeezed middle.  But is it? The problem for Ed Balls is that, in overall terms, the effect on household spending is likely to be relatively small and unpredictable (especially if oil prices continue to fall): but that, in the longer term, the failure to index taxation effectively undermines the tax base.  Failure to index fuel tax (and remember, this is about maintaining the tax level in real terms, not increasing it) means that as an incoming Chancellor, Balls would have less revenue to play with.

It also binds Labour further into the rhetoric of low taxation and – by implication – more cuts.  Ed Balls is no stranger to that rhetoric; and I’d guess that George Osborne – a Chancellor who appears to see his role as political activism rather than keeper of the public finances – is quietly satisfied at the way that Balls is reducing his room for political manoeuvre as we pass the mid-point of the political cycle.  One of the interesting aspects of the ONS report I cited earlier is that the proportion of the fuel price accounted for by duty is in decline – and that it itself an indicator that the fuel tax base is declining and that indexation is needed.

In conclusion, it looks as if Labour could be boxing itself further into a tax-cutting and expediture-cutting agenda when all the economic evidence is pointing the other way, in pursuit of a measure that is likely to benefit the 4×4 owner on the school run far more than the poorest and most vulnerable society. It reinforces the impression that Labour has bound itself into the same economic assumptions as the coalition.  And it makes it far easier for Tories and Liberal Democrats to attack Labour’s economic position as inconsistent.

Lions led by donkeys: October 20 and the sheer dysfucntion of British politics

Yesterday, around 150,000 people marched through central London to protest against austerity and job cuts.  Similar marches took place in Glasgow and Cardiff.  In almost every respect, the marchers represented everything that is decent about Britain; people cutting through the political and media narratives and responding to the reality of austerity and the direct effect it has on people’s lives.  Many of them would have been public sector workers, forced to implement austerity every day while working desperately against mounting pressures to protect the dignity and wellbeing of those they serve.

And yet, at the heart of the event, there was a  morass of conflict and inconsistency that showed clearly how British democracy has lost its way.   The most obvious was of course Labour leader Ed Miliband addressing the rally; leader of a Party that has promised not only to keep all the coalition’s cuts in place after 2015 but to make additional cuts of its own.  Miliband’s presence was of course a symbol of the relationship between the TUC, who organised the march, and the Labour Party.  The strangeness of this event is not so much the fact that Labour looks increasingly like an echo-chamber for the coalition’s neoliberalism, but that Labour remains largely funded by unions whose members appear to oppose the neoliberal consensus of which Labour is an integral (and, on the basis of Ed Balls’ recent pronouncements, enthusiastic) part.  The relationship between Labour and the unions looks increasingly like a dysfunctional marriage in which the maintenance of appearances and patterns of behaviour has long superseded any sense of common purpose; without that troubled relationship Miliband addressing yesterday’s rally is about as likely a spectacle as Margaret Thatcher addressing a symposium on the benefits of free school milk.

None of this would be so puzzling if there were not a nuanced, evidenced case against austerity economics; indeed, if austerity economics were not failing in its own terms.  As many of us predicted at the outset, cuts and austerity are not reducing the deficit but increasing it; a slower version of what is happening in Greece and Spain is happening here, and all Labour’s economic policies are set to do is to speed the process.  Much of the austerity narrative is astoundingly economically illiterate; every time a Coalition politician solemnly intones banalities about paying down the nation’s credit card, or talking about Labour’s profligate legacy, they are showing their inability to grasp – or at least to articulate – the most basic economics.

A fine example of that illiteracy can be found in comments by Hove MP Mike Weatherley, who was reported a while ago celebrating benefit cuts of £10 million in Brighton and Hove without apparently the slightest inkling that this was £10 million taken out of the local economy – hitting businesses both large and small (although the small ones do not have access to the cheap labour of workfare, pioneered by Labour and implemented with zeal by Tories.

And also note in that piece how Tories continue to  press the lie that housing benefits are paid to those on benefits rather than lining the pockets of landlords, and repeats the lie that those who receive benefits are not working, when that is simpy not the case.  These lies continue to gain traction, and not only do they build on the rhetoric of Labour in office but continue to inform its public positioning.  It’s not as if the language is quite the same as that of the Tory party – which at its recent conference often appeared to be only two gin-and-tonics from labelling the recipients of benefits as “useless eaters” – but is couched in terms of that insidious dog-whistle phrase “hard working families”.  Labour’s rhetoric on benefits is almost a dictionary definition of moral cowardice.

And the technical understanding of how shifts in public expenditure affects economies is increasingly undermining the case for austerity.  One of the stranger aspects of yesterday’s events was a Labour leader addressing a TUC rally from a position that appears to be substantially to the right of the IMF.

The dysfunction we saw yesterday was that of tens of thousands of decent people – people who know that there is an alternative that is better, fairer, more efficient, more grounded – being betrayed and abandoned by the Westminster elite; and by a Labour leadership that really has nothing to offer beyond more of the same.  Yes, Labour politicians do make all sorts of noises about fairness and justice; but they simply appear incapable of understanding that fairness in society depends above all on economic justice, and on reversing the transfer of resources from the poor and vulnerable to the wealthy and owners of property – a transfer that Labour presided over in office, which the Coalition has accelerated and which, rather than the deficit, looks like the rationale for austerity and cuts. Labour’s leadership looks like nothing so much as a First World War general, straight out of Blackadder, whipping up enthusiasm for the big push while the poor bloody infantry try to rationalise away their anticipation of the likely reality.

The real debate in Britain – and elsewhere in the rich world – is not between political parties in the establishment, but between a political establishment that is united around a neoliberal programme and the people who understand and experience the realities of austerity – who see their livelihoods destroyed, their experience devalued, their votes ignored.  Five million people have walked away from Labour since 1997; quite a lot more will walk away from the Liberal Democrats in 2015.  But the anti-austerity case is not necessarily a left-wing one; its advocates include people like Paul Krugman and Joseph Stiglitz, former Clinton advisers and no socialists; the authors of the Spirit Level, whose programme looks like a traditional centrist social democracy; increasingly the IMF appears to be accepting the anti-austerity logic.

I have written here many times before that a political system based on a main-party consensus that does not reflect wider opinion cannot be a healthy democracy.  Yesterday, in Hyde Park, accompanied by all the accoutrements of the traditional Labour-TUC link, that conflict was manifested in a very obvious way.  There is a very strong, evidenced and clear case against austerity economics, based on fairness and economic justice.  The people who marched yesterday understand that case.  Labour lacks the intellectual and moral courage to articulate it. Those who want real social and economic justice in Britain need to look elsewhere.

Austerity: is Ed Balls being outflanked on the left by the IMF?

Austerity has become the default mode of European – more especially British economic policy; in his speech to the Conservative Party conference last week David Cameron reiterated that there is no “Plan B” and mocked the Labour Party for its alleged tax and spend profligacy – even though the statements of shadow Chancellor Ed Balls appear to lock Labour into an endorsement of austerity that is in many respects more rigorous than that of the Coalition, raising the prospect of deep cuts after 2015 on top of those that the Tories have already made.

Against this background, it has been fascinating to read the assessment of Jonathan Portes, director of the National Institute of Economic and Social Research (NIESR), on his blog Not the Treasury View.  In my view his analysis is desperately important.

Portes’ assessment matters because it goes right to the heart of the theoretical justification for austerity economics.  Portes examines the multiplier – the key theoretical construct that underpins Keynsian economic analysis and explains the effect that changes in Government expenditure have on the economy as a whole.  The fundamental principle is that government and individuals behave in different ways.  Individuals consume and save (and, increasingly in the boom years before the 2008 crash) borrow.  Governments spending goes on procurement, projects, transfer payments (benefits and subsidies), and of course paying public workers.  They also borrow, and repay debt; but at different levels to individuals. Put crudely, a key assumption of Keynsian economics has been that Governments – especially in bad times – spend a higher proportion of their income directly than individuals, especially in an environment where they are borrowing, than individuals, who have a propensity to save or offshore – the wealthier they are, the more likely they are to take demand out of the economy in this way. Thus increasing Government expenditure is, other things being equal, more likely to stimulate economic activity than cutting taxes  – it’s the basic reason why many of us on the left see the Coalition’s economic policy as so utterly disastrous.

The multiplier, then, is the mathematical expression of this relationship.  It’s obviously something that is pretty approximate, based on a mixture of theory and observed effects in a massively complex economic world.  But as a rough rule of thumb it has plenty going for it.

Portes shows that there are three views of the way in which the multiplier operates under austerity.

• First there is the view articulated by the supporters of austerity – that empirical evidence suggests that, far from stimulating activity as Keynsian policy-makers have assumed, increasing government expenditure decreases it.  As Portes argues, this counter-intuitive view was based on a single influential paper by Alesina and Ardagna which emphasised confidence and exchange rate effects; it has the effect of telling politicians whose inclination was to reduce public expenditure what they wanted to hear. Portes concludes that this view was not very credible economically, but hugely influential politically.

• The second view – pretty mainstream among economists, including the IMF  – was that austerity would be damaging but not disastrous. Based on historical evidence it postulated a multiplier of around 0.5 – i.e. a reduction of 1% in public expenditure would lead to a fall in output of around 0.5%

• The third view was exemplified by the writings of Nobel Laureate Paul Krugman and numerous others, and argued that institutional factors meant that the multiplier was likely to be much higher; these economists crucially argued that rather than relying on historical data to understand an economic situation that had few precedents, it was necessary to revisit the macroeconomic theory. Krugman famously and scathingly caricatured the advocates of the first view as “waiting for the confidence fairy”.  They argued that this approach led to the conclusion that the multiplier would be far higher, certainly greater than 1 and possibly as high as 1.7.

Portes quotes from the latest IMF Bulletin which shows that the Fund is moving much closer to the third view – and points out the policy implications: first that the assumptions used by the OBR to feed into UK economic policy were way too optimistic (and its puzzlement over why things have not gone as it predicted misplaced); and that the impact of fiscal expansionism, the obverse of austerity, will be all the greater.  In other words – the bang for each buck of extra Government spending appears to be greater than many have assumed.

There are a number of conclusions that I draw from this.

• First – as Portes notes – there is the utter contradiction of using fiscal contraction as a means of restoring stability to economies after the 2008 blowout.  The feedback problem – that austerity is trashing tax revenues to the point where more austerity becomes necessary to achieve deficit reduction – is already savagely at work in the Greece, Spain and Portugal and is happening in the UK too.  The effect of the IMF’s shift in position is essentially to knock the legs out from underneath radical austerity.  Portes points to the contradiction between the aim of long-term stability and austerity’s effect of short-term upheaval and instability is crucial.

• Second, in shifting its position, the IMF is actually – if probably not explicity – responding to one of the fundamental Marxist critiques of capitalism, that the growth of capital requires, among other things, buoyant consumer demand to allow capital to expand.  Crises of demand could in the past be assuaged by things like colonial expansion and the monetization and privatisation of common assets, but the scope for doing that no longer really exists.  The IMF understands what politicians – with their ideological hostility to the state and their apparent desire to pursue regressive policies that transfer wealth from poor to rich – apparently do not; that economic stability in a capitalist society is dependent on people buying things (indeed, one can argue that the transfer of wealth from people who predominantly spend to those who accumulate has its own multiplier effect).  The IMF’s tone sounds rather like that of Keynes, whose mission was not to abolish capitalism but to save it from itself.  There are long term arguments about whether capitalism based on mass consumption is sustainable (my own view is that it isn’t) but the point is that on capitalism’s own terms the evidence against Plan A is becoming overwhelming.

• Third, as I have argued before, there is a huge failure on the social democratic left to challenge the austerity narrative with one that is altogether more grounded and evidenced.  The failure of the British Labour Party is salutary in this respect.  Ed Balls is far from being a stupid man, and is certainly one whose technical understanding of economics far outstrips that of George Osborne.  But he has become part of a political consensus that is simply unwilling to challenge the fundamentals of austerity, and to argue that even measured against the aim of achieving stable capitalism it simply isn’t working.

For me, one of the most frightening aspect of the politics of the right in general and of the UK Coalition in particular is the way in which ideology repeatedly triumphs over evidence – a major theme of the three weeks of party conferences that have just finished.  Is there anyone left in the political mainstream who is prepared to champion an evidence-based critique of austerity?

The choices before Labour: Tawney revisited

In a political life that has taken me from undergraduate Liberalism (in the days when Liberals challenged Tories rather than sustaining them in office), to the political neutrality of the Civil Service, to a brief (and deeply uncomfortable) flirtation with Labour, and now finds me comfortably at home in the Green Party, the towering figure of R H Tawney, historian and Socialist polemicist, has always been an influence and guide.  Tawney is a figure apparently forgotten in today’s Labour Party and his brand of moral integrity, unswerving socialism and sonorous prose, his unselfconscious and bracing morality, would certainly sit uneasily with the Labour Party today.  Faced with a world of complexity and a political system in decay, the question “What would Tawney have said?” is as good a starting-point as any for we on the left to get to grips with the current neoliberal hegemony.

As the Labour Party conference gets under way in Manchester it’s notable that Tawney’s concerns are strikingly contemporary.  As a Conservative Education Secretary prepares to abandon fifty years of educational progress, guided apparently by prejudice and misplaced nostalgia, Tawney’s essay Keep the Workers’ Children in their Place, published in 1918, provides a startlingly relevant commentary on the ideologies at work in English education.  It is a sobering criticism of the politics of education that the same issues – faith schools, class segregation, social mobility – form the core of the education debate nearly a century on.

Of all Tawney’s writings, none carries greater resonance today than his great essay The Choice Before  the Labour Party, written in 1931 response to Ramsay Macdonald’s National Government.  It is Tawney at his finest, his most challenging, his most coruscating – and at a time when Labour, more clearly than ever, appears to be throwing in the towel in the face of the most concerted assault on the living standards of ordinary people in general  and the vulnerable in particular since Ramsay Macdonald looked forward to being kissed on the cheek by every Duchess in London, it is a powerful corrective.

Early in the essay Tawney throws down the challenge:

The fundamental question, as always, is:  who is to be master? Is the reality behind the decorous drapery of political democracy to continue to be the economic power wielded by a few hundred thousand – bankers, industrialists and landowners? Or shall a serious effort be made – as serious, for example, as was made, for other purposes, during the war – to create organs through which the nation can control, in co-operation with other nations, its economic destinies; plan its business as it deems conducive to the general well-being; override, for the sake of economic efficiency, the obstruction of vested interests; and distribute the products of its labours in accordance with some generally recognised principles of justice? Capitalist parties presumably accept the first alternative. A socialist party chooses the second. The nature of the business is determined by its choice.

It’s a challenge that Labour today quite obviously fails. The last few weeks have seen pronouncements from Labour leaders that make it clear that Labour is simply not prepared to distance itself from the economics of austerity – it appears curiously comfortable with the economic assumptions that underly the Coalition.  Ed Balls has committed Labour not to restoring cuts to further long-term public sector pay freezes – a commitment echoed at the Labour Conference – and has promised ruthlessness in paring public expenditure.  Liam Byrne has called for an end to the Beveridge principles of universal benefits - even though that arguments for universality, forged in the aftermath of the 1930s, remain unchanged and more important than ever.

In other words – public sector workers, those on benefits, the poor and vulnerable must continue to pay for the crisis they did not create, while the financial sector which did create the crisis remains untouched, and continues to enjoy taxpayer funded payouts through bailouts and the subsidy of quantitative easing.  In the essentials of its response to the crisis, you cannot get a cigarette paper between the analyses of the Labour leadership and the coalition. And Labour’s response simply entrenches the neoliberal mythology that the crisis was caused by Labour’s profligate spending.  Whatever the views of many thousands of Labour members, who doubtless are profoundly uneasy at their leaders’ behaviour, the message is clear: the Labour leadership has neither the intellectual nor moral stomach for the fight, and is quite happy to allow the coalition to dictate the economic agenda.

Tawney realised – as did the Labour Government of 1945, whose name and spirit are apparently being invoked at this week’s Labour Conference – that control of economic policy remains the bedrock on which radical change is built.  The question is quite simply one of whether the productive capacity of a society should be moulded to produce greater equality and a decent sufficiency for all, or whether Government is prepared to take pot luck on whether a system based on the irresponsible maximisation of gain for the holders of capital can be relied upon to provide those things.  In other words, is the productive capacity of the economy to be guided democratically?  Or is it to be left to the desire of a wealthy minority to maximise their wealth to provide the crumbs for which the majority must scrabble to provide the decencies of life?

Moreover, it’s important to understand that many of the most controversial and, to we on the Left, obnoxious elements of Coalition policy have their roots in what Labour did in office.  NHS privatisation and outsourcing? Demonising those on benefits? ATOS? Tuition fees? Academies and the privatisation of education? The marketisation of public space?  All of them are legacies of New Labour, taken to their logical conclusion.  Were Labour to be a serious party of change it would need to face up to and repudiate that legacy.

And, in doing so, it would need to revisit the rapprochement with capital that was perhaps the signature of New Labour.  Tawney again:

If there is any country where the privileged classes are simpletons, it is certainly not England.  The idea that tact and amiability in presenting the Labour Party’s case – or the “statesmanship” of the last Government – can hoodwink them into the belief that it is also theirs is as hopeful as an attempt to bluff a sharp solicitor out of a property of which he holds the title-deeds.  The plutocracy consists of agreeable, astute, forcible, self-confident and. when pressed, unscrupulous people, who know pretty well which side their bread is buttered, and intend that the supply of butter shall not run short.  They respect success, the man or movement who “brings it off”.  But they have, very properly, no use for cajolery, and laugh in their sleeves – and not always in their sleeves – at attempts to wheedle them.  The way to deal with them is not to pretend, as some Labour leaders do, that, because many of them are pleasant creatures, they can be talked into the belief that they want what the Labour movement wants, and differ only as to methods.  it is, except for the necessary contacts of political warfare, to leave them alone until one can talk with effect, when less talking will be needed, and, in the meantime, to seize every opportunity of forcing a battle on fundamental questions.  When they have been knocked out in a straight fight on some  major economic issues, they will proceed, in the words of Walt Whitman, to “re-examine philosophies and religions”.  They will open their eyes and mend their manners. They will not do so before. Why should they?

One of the most impressive things about this passage is its self-confidence – a belief that Socialists have the moral force and intellectual argumens to win the support of millions on which a fundamental shift in society depends.  No question here of letting the parties of capital dictate the economic and social agenda.  Tawney was writing at a time of deep economic crisis – a crisis that has remained unmatched until the present day.  Tawney understands that the confidence of capitalists had been shaken – and that it is not the job of the Left to give them a hand up and to help dust off their clothes.  Yet today, across our four main political parties (I include the SNP) there is still the belief that businessmen and financiers who have orchestrated the current crisis are the best people to lead us out of it, but the language of political debate remains dominated by the language of market capitalism – the argot of failure.  It is one of the main reasons why people are alienated from mainstream politics; the language of politics is no longer their language, and Labour’s managerialism is a major issue in this.

And it is not as if there is any lack of intellectual alternative.  One only has to read Krugman on the economics of austerity and the vanity of appealing to the confidence fairy; Richard Murphy on the Courageous State (and, most importantly, on the moral imperatives of progressive taxation); Allyson Pollock on the dangers of marketising public services; The Spirit Level on the need for equality; Elinor Ostrom on the triumph of the commons; even, from within Labour’s whale, Owen Jones on the language and reality of social exclusion from those whom the prosperous turn into an underclass.  With that one exception the common thread is that all these voices are outside the political, academic and media mainstream; there is a nuanced, grounded and evidenced debate about austerity but the fact that it is taking place on the fringe is itself a symptom of how political discourse has failed.

Labour claims to be leading a rethink of alternatives to the Coalition, but it leaves the most persuasive and convincing voices outside.

It will not do. To kick over an idol you must first get up off your knees. [...] Either the Labour Party intends to end the tyranny of money, or it does not. If it does, it must not fawn on the owners and symbols of money.  If there are members of it – a small minority no doubt, but even one would be too many – who angle for notice in the capitalist press; accept, or even beg for, “honours”; are flattered by invitations from fashionable hostesses; suppose that their financial betters are endowed with intellects more dazzling and characters more sublime than those of common men; and succumb to convivial sociabilities, like Red Indians to firewater, they have missed their vocation.  They would be happier as footmen.  It may be answered of course that it is sufficient to leave them to the ridicule of the world which they are so anxious to enter, and which may be trusted in time – its favourites change pretty quickly – to let them know what it thinks of them.  But in the meantime there are such places as colliery villages and cotton towns.  How can followers be ironsides if leaders are flunkies?

Tawney was attacking Ramsay Macdonald’s obsession with social preferment. But today we could take that text and apply it to the way in which a party financed by Trade Union subscriptions appears to be led by people who are happier in the company of venture capitalists and media moguls – and happier to share their outlooks and perspectives on the world – than they are in the company of working people.  Labour invents the fictional and highly ideological construct of the hard-working family – usually as part of a rhetorical device to diminish  the least fortunate in society who look to the state for support – while disdaining those who lead lives less glossy, less padded than their preferred company; and feign surprise that five million of their core supporters have walked away from them since 1997.  The Labour Party’s relationship with the Trade Unions looks increasingly like a dysfunctional and abusive marrage, in Labour is quite happy to accept the Unions’ cash but will no longer defend union members’ rights.

Again and again, one is struck by Tawney’s prescience, the way in which he aniticipates the policy debates of the 2012 Party Conference season.  In one sense it is not surprising; the current economic crisis is strikingly similar to what Tawney faced in 1931, the policy nostra of all the main Westminster parties largely the same – as if the political culture of the West is incapable of learing from what went before.

After Labour

The question for those on the Left is whether clinging nostalgically to the Labour Party is going to bring change.  The prognosis is poor.  Labour’s leadership appears to be comfortable with the language and assumptions of market capitalism; it does not appear willing to challenge the Coalition’s agenda; it remains scared of the media.  Organisationally, it remains committed to upholding a brand – a brand whose essentials ceased to exist long ago – rather than challenging the assumptions of capital.  For example, in Brighton and Hove, where it has been outflanked from the Left by a resurgent Green Party, its response has been to back the Tories’ cuts agenda and snipe from the sidelines, happier to back council tax freezes for its middle-class membership than to support the administration in resisting cuts.

Can Labour change? The organisational change that led to the creation of New Labour appear to have been crafted to give the appearance of party democracy while denying the reality.  It is difficult to see any way in which the many thousands of decent Labour people who really do believe in changing society can bring their leaders to account.

Increasingly, I believe the Left must recognise that we are in a post-Labour era – a more pluralist, diverse and co-operative one, in which aspirations for economic and social change are not just channelled through a single brand.  “Socialism is what a Labour government does” is an arrogance that, mired in crisis as we are, we can no longer afford.  The Left must accept that Labour  is a party that can no longer act as an agent for real change, and which has – at the top at least – lost all real interest in making fundamental shifts in the balance of wealth and power in society.  Can you imagine where this lot would have got us in 1945? Would the NHS have been established with Ed Balls as Chancellor, cutting public sector pay and micro-managing public expenditure cuts while expounding on the values of private entrepreneurship?  The circumstances may be different, but perhaps the qualities and the intellectual understanding required are similar.  Can Labour be weaned off the seductive illusion that social justice can be achieved without changing the balance of power and wealth in society?

Increasingly, it seems likely that the challenge to the neoliberal hegemony must come from outside the Westminster bubble.  I have written before about the crisis of democracy that results when an apparently democratic political system can no longer represent the aspirations and needs of millions of citizens. Labour is part of that problem and clearly has no stomach for the fight to provide a solution. The ultimate frivolity in the face of our current crisis is to assume that because Labour has a glorious past and a Parliamentary presence, it provides a force for change.

Railways, renationalisation and political risk

Recent announcements that rail fares will rise by up to 11% have produced a significant political reaction.  Formerly supine Tory MPs for commuting constituencies have been making subversive noises; on the left, the call for renationalisation has been strong.

It’s difficult to argue with renationalisation in principle.  Privatisation has resulted in a hugely inefficient structure based on a vastly complex system of contractual arrangements, from which private companies cream off profit while fares and subsidies soar and service standards fall.  Significant investment – which the privatisers would come from the entrepreneurial spirit of the private sector – comes from the public purse, with the benefits accruing to private shareholders.  Managing the contractual interfaces between providers becomes a vast, expensive task overseen by a bureaucracy of regulators.  The whole system is a mess, and it is clear that it is the structure designed to allow the private sector to run rail for profit that has done this.

Moreover, Network Rail is close to being a nationalised industry; it is a not-for-profit company without shareholders entirely dependent on Government-backed debt and Government subsidy.

So in principle the case for nationalisation is obvious.  But the practicalities of nationalisation are a nightmare for a number of reasons.   For a start, the law would have to be substantially rewritten; even if you allow franchises to lapse and Government decides not to let them again, the basic structure that creates the lunatic inefficiency of the current system would still be in place and would need to be repealed and replaced. It’s difficult to see anything other than a large and complex piece of legislation that would occupy a lot of Parliamentary time and effort.

And there would be huge financial implications.  Most franchises are being let for 15 years, and decisions would need to be taken on whether to allow those franchises to continue – with no possibility of renewal, thus incentivising operators to run down services and grab as much profit as they can, while perpetuating the costly inefficiencies of the current structure; or to buy them out at huge costs.  There is the problem of what to do with the rolling stock companies.  And of course all existing contracts are likely to have change-of-law clauses under which the nationalisation legislation would probably trigger large payments.  All of this implies huge costs.

None of which is to say that renationalisation could not or should not be done; simply that it would be a hugely complex and expensive undertaking, which would probably involve an incoming Chancellor being prepared to sink huge amounts of up-front funding to secure benefits that might not be apparent for years, with no PFI to squirrel the capital costs off the books (and if that incoming Chancellor were for example Ed Balls with a commitment not to reverse Tory cuts, it is difficult to see these decisions being taken).  It would be a massive and risky political investment  which would need a clear political commitment and a clear mandate.

One important point of this is how it relates to other privatisations.  The railways are important, but they are used by a minority of people – millions never go near a train – and  still represent a relatively small part of overall public expenditure.

Consider then the remnants of the NHS, farmed out by Condem ideologues to a range of private service providers, the legislative framework for state provision dismantled, and facing all the same issues of bloated costs and poor integration of the railways, but providing services that everyone uses, with vastly greater overall costs (and potential for profits), and for the first time subject to the constraint of EU procurement law.  How do you get that particular genie back into the bottle?  The costs and risks would be enormous.

Back in the 1970′s, when Margaret Thatcher and Keith Joseph were reclaiming the Tory Party for neoliberalism, there was a phrase that one used to hear all the time – “the ratchet effect of socialism”.  What this meant was that once the state expanded into an area of activity it was impossible to roll it back, because of the electoral popularity of state provision.  The genius of the neoliberals in the Westminster political mainstream has been to make state provision unpopular and to ensure that the media are indifferent – witness the BBC’s complete failure to report the full implications of the recent NHS reforms.  We now have a different effect – whereby even within the lifetime of a single Parliament, privatisation can become so structurally embedded that it becomes politically and economically hugely ambitious to reverse it.

And that assumes that opposition parties have that ambition.  Labour, as I’ve argued here many times before, is part of that neoliberal consensus; it showed itself quite content in Government to outsource and in opposition its leaders have simply not grasped the need for an alternative to a neoliberal narrative.  Ed Balls has said in terms that cuts will not be reversed and there is no ambition to look beyond austerity economics – even when there is ample evidence that it would be hugely popular to do so.  The spirit that established the NHS in the face of a far weaker economic position than we face today is singularly lacking in Labour’s leadership.

Renationalisation of any privatised service is difficult, costly, risky and in those circumstances requires a clear political commitment and mandate.  Where will that come from in Con Dem Britain?

Agenda for a new Green leader

Caroline Lucas has announced that she will not seek re-election as Green Party leader later this year, in a move aimed at increasing the exposure of other leading Greens.  It’s a wise move; Caroline’s achievement has been enormous, raising the profile of the Party by gaining our first Westminster seat and providing what has at times looked like a lone Westminster voice against the politics of neoliberalism and austerity.  We have our first Green council, working to confront the huge issues of making a Green case in against parameters dictated by central Government.

The risks have always been that as a Party we could come to look like a one-woman band, and that Caroline could be stretched too thin. Her decision is as good a way as any to minimise those risks.

A leadership election provides an opportunity to reflect on what sort of a party we want to be.  Greens have always been rightly sceptical about cults of party leaders – it was a tough (but with hindsight surely right) decision for this party to adopt a single leader at all. But this election does give an opportunity to think and debate about what we want the party to be.

These, then, are the personal thoughts of just one not very active Green Party member about what he sees as the priorities of a new leadership.  I’m not talking about policy details here, and I’m certainly not criticising Caroline’s leadership which I believe has addressed these issues in a way that no other UK politician has come close to managing.  But these are themes that I believe an effective Green movement must address. Those thoughts fall naturally into three (inevitably linked) categories: dealing with the crisis in democracy, reshaping our economic agenda, and creating a sustainable, fair and cohesive society.  All of these lead naturally into a fourth – the need for a return to evidenced discourse and a challenge to the prevailing ideological narratives.

Dealing with a crisis of democratic legitimacy

If there is one theme that has run through everything I have written on this blog it is the depth of the democratic crisis we face, here in Britain and more generally in the developed world.  The situation in Britain is desperate: three main Westminster parties all pushing a neoliberal agenda and arguing over nuance and who is better qualified to implement it, with an electorate that is increasingly unwilling to vote at all, and a feral media united in an apparent determination to avoid intelligent debate that goes beyond the Westminster consensus.  Even in those parts of the UK where government is devolved, there is no real debate.  In the meantime, the failure of that Westminster neoliberal consensus is becoming clearer by the day.  And there is a quiet consensus to limit the scope of active democracy – for example a localism agenda that seeks to turn effective local government into commissioning bodies doling out contracts to companies providing services for profit.

It is a simple and overpowering fact that many of the measures that characterise this Government were things that neither Coalition party dared put explicitly to the electorate at the last election – the effective destruction of state-provided healthcare, savage public expenditure cuts, cuts in benefit for the disabled, £9000 tuition fees.  But all of them were there in the public domain if you looked below the surface – by reading the Orange Book for example – and every single one of them is effectively a continuation of what Labour did in office.  But nobody, explicitly, voted for these things.

It is almost as if the main parties are fomenting an active suspicion of democratic institutions and practices.  Britain must be the only country in the world in which politicians and the media actively campaign against existing human rights legislation, which does no more than enshrine basic convention rights.  Political dissent is being marginalised and in some cases criminalised; the pre-emptive arrest of a republican street theatre group before last year’s Royal Wedding is just one particularly telling example.  But the use of aggressive police tactics against dissent, like the collective punishment of kettling, and the growing privatisation of public space, are all examples of a society which increasingly seems afraid of those who challenge the consensus. All these are symptoms of a polity racked by fear, acknowledging tacitly its lack of legitimacy. Liberal Democrats used to claim to be upholders of civil liberties – on this issue, as in so many others, they have been shown up in Government as a party of time-serving liars.

The new Green Party leader must be an unequivocal defender of democracy – as, indeed, Caroline Lucas has been.  Most importantly the Green Party must reach out to those who have been left behind by Britain’s failing democracy, and must seek to re-engage them in a democratic process.  It’s a challenge about how we as a party conduct ourselves – not just through our own democratic processes, but by reaching out to people who are, frankly, not well-represented in our Party structures; the poorest and most vulnerable.  I believe we are a society that is ripe for a growth in fascism, and in which the democratic model that both the mainstream politicians and the media present is a sort of eviscerated consumerism, in which a concept of “choice” that has little to offer beyond decisions about whether to buy Jaffa Cakes or Hobnobs in the Co-Op has been elevated into a central mantra of Government. As Greens we have to reject X-Factor democracy and engage with people and ideas that are routinely dismissed or even demonised by the Westminster consensus; it means arguing that democracy is not about choices between market options but about mature collective decision-making, based on trust.

One of the most powerful facts about mainstream British politics is the way in which the Labour Party, which claims to speak for the poor and vulnerable, has long since ceased to do so in any meaningful way.  Labour luminaries from Ed Miliband to Liam Byrne are quite happy to speak the language of benefit scroungers, of feral underclasses and of forced workfare while still arrogantly assuming that they have a God-given right to the votes of the people from whom they have walked away and whom they casually demonise.  Understandably, those people have walked away from Labour in their millions since the high-water of 1997.  The new Green Party leader must understand – and act on the understanding – that Labour is a disgrace, and must understand that it is their duty, and the duty of the Party, to speak for and engage with those people – to give them a voice, and hope, and a stake in the democratic process.

Empowerment must be at the top of the Green Party’s agenda.  There is no other party that is seriously placed to act as an advocate of democratic renewal.

Reshaping the economic agenda

Austerity is a political choice, not an economic necessity. That simple fact must be at the heart of the Green Party agenda.  Neoliberalism, for all its language about freedom, is a deeply anti-democratic creed; where the enrichment of the few clashes with democratic choice, neoliberals will always choose the former, as a growing track-record shows.   And we as a party need to see that the real fault-line in economic policy is not between Westminster parties but between those who believe in the neoliberal doctrine of austerity – the Conservative Party, the Liberal Democrats, the Labour Party leadership, the SNP, big business (obviously),the media, the academic economic establishment – and those who argue for another way – the Green Party, Plaid Cymru, many Labour people, quite a lot of people who have been Liberal Democrats (I’m assuming those with a sense of decency will have torn up their membership cards a long time ago), a growing number of economic commentators, and people of no party who consistently reject neoliberalism at the ballot box and who are the victims of what looks increasingly like the biggest Establishment wealth grab since the Enclosure Acts.

A Green Party leader must explicitly and resonantly reject the politics and assumptions of austerity – once again, Caroline Lucas has led the way, often appearing (along with a handful of Labour and Plaid backbenchers) to be the only voice raised at Westminster against the neoliberal consensus.  And we as a party must be absolutely unequivocal – austerity is a political choice, not an economic necessity.  It is without empirical foundation and is manifestly failing.  And that leader must have the understanding and willingness to engage with the alternatives – whether those alternatives come from think-tanks like the New Economics Foundation, or from Elinor Ostrom’s pioneering work on the commons, or from Richard Murphy’s Courageous State.  There is a ferment in economic thinking and it is a populist movement – consider the way in which UK Uncut has ensured that corporate tax evasion is at the top of the political agenda.

Above all, Greens must be in the vanguard of arguing that market economics is based on illusion and unsustainable. There is a debate about the axioms and purpose of economics that the academy is largely ignoring, focussing instead on the refinement of mathematical models that embody assumptions that are really no more than unsupported ideological statements.  Economics must be at the heart of our agenda – we need to understand the narratives and fears that lead to the paradox that, at the very times that market economics is palpably failing, voters embrace the architects of that failure – the National Government in the 1930s, Thatcher in the 1980s.  Ed Balls has thrown in the towel; alternatives, promoting equity and hope, must come from outside the Westminster consensus – it is for us to create and lead the political opposition to austerity economics.  The evidence is ample and growing; and there is plenty of creative thinking about alternatives.  And we must reiterate – as Keynes did in the wilderness in the 1930s – that economics is a matter for democratic control, and is a matter that should not be the preserve of experts but should be opened up to the full glare of political debate.

And we need to be champions of the public sector.  We need to state clearly and firmly – as the three Westminster parties cannot – that privatisation is, in principle, wasteful and is about consolidation of wealth and power  in the hands of the few; we must learn to argue for a strong, enabling, democratically-accountable and, in Richard Murphy’s admirable phrase, courageous state.  Once again, Greens must stake their claim in the territory from which Labour has walked away.  Murphy’s cappucino cup analogy – the state as the strong black coffee on which the frothy milk of private accumulation sits – is simple, powerful and one that I argue must be at the forefront of Green thinking.

One of the most insidious political propagandas of our time is the belief – underpinning almost every piece of economic reportage – is that the advocates of the market, and of austerity, are economic “realists” – while those who challenge it are well-meaning, ungrounded idealists.  I’d suggest that a key task for the new Green leader is to attack that explicitly.  The Left has to learn to get to grips with economics again, and to press the case that economic policy is about political choices, and connect with the people the political classes have left behind to lead them out of economic fatalism.  It’s a huge task – but a necessary one.

Social cohesion

Not long ago, six children were brutally murdered in Derby by an arsonist. Because the parents were recipients of benefits, a good number of media commentators apparently believe they were asking for it.  The callousness and cruelty of those commentators is something that has come to characterise Con Dem Britain (as Owen Jones argues powerfully here); it is a political position, sanctioned by Ministers for whom off-the-record briefing against the vulnerable has become a legitimate political tool.   As a society we have to ask ourselves how such hatred and loathing has become absorbed into the political mainstream – and I want to see a Green Party leader who will take an unequivocal stand against such hatreds, whether they manifest themselves through racism, through the blaming of women who are victims of rape, to the demonising of those receiving benefits and unable to work.  I want a Green Party leader who is angry – angry, for example, at the spectacle of a private sector company certifying for profit the terminally ill as fit for work, or at politicians who seek to encourage the belief that those on receiving benefits to provide them with mobility are somehow scroungers, and who tacitly encourage abuse and violence against the most vulnerable in society.  If I wanted crocodile tears I’d join the Labour Party; I want real, visceral anger from someone who is willing to speak truth to power.  I want a leader who will stand up to the casual bullying that, more than anything, characterises the temper of Coalition Britain. I want to be part of a party whose leader will call out the most privileged Government in recent years when they make ideological statements about people of whose lives, struggles and problems they are wholly ignorant, making decisions from which they have been shielded by wealth and privilege.

A Green society is an empathetic society. The British political and (especially) media establishments seem to regard empathy as something that is weak and soft.  Greens need to show that it is the only possible basis of a good society; we need to demonstrate that it is the casual cruelty of the Conservative and Liberal Democrat leaderships that is every bit as damaging as their economic dogma.  And we have to have the moral courage – as Labour clearly does not – to resist the easy temptation of easy populism.  Leadership is about reminding people that the world is a more complex place than many people are comfortable believing.

A return to evidenced discourse

I have focussed on three main areas of debate – but underlying all of these is a bigger issue about political discourse, and what seems to me to be an abandonment of evidence in favour of ideological narrative.  We see it in almost every aspect of political life – the use of prejudice and unsupported assertion to rationalise the wealth and power grab of the 1%.  Political debate becomes not an attempt to understand and interpret reality, but a competition between unsupported narratives; the winner is the party that can make the most outrageous lie stick.

The most obvious example – and one which is close to the heart of all Greens – is climate change; an overwhelming scientific consensus challenged by a toxic combination of big oil and tin tabernacle religion.  In this, as in so much else, Greens are on the side of empirical knowledge against the narratives of the powerful.  We’re dismissed by the mainstream politicians as woolly and idealistic – the same politicians who accept all the axioms of market economics in the face of their disastrous consequences, who await the intervention of the confidence fairy, who haven’t got a clue about peak oil.  Sustainability is about the long-term – planning for the next seven generations rather than the next seven months – and that requires rigour and an engagement with the realities of the world around us.  In one sense we’re talking about the revival of the best of the liberal tradition – the adducing of evidence to mould society in the service of ideas, themselves grounded in reason and evidence.  In the face of neoliberalism, there is no more subversive doctrine than to bear witness and to speak truth to power.

It means self-discipline. It means that we need as a party to shed our New Age image – a willingness (figuratively speaking, of course) to ban homeopaths from our Republic.  In challenging market economics and responding to climate change, or in arguing that equality leads to better physical and mental health,  Greens must be the party of good hard evidence.  We have to resist the siren call of woo, whether economic, social or scientific (one of the best things that has happened to the Green Party in recent years has been the adoption of a science policy that points us back towards rigour).  And we need to demonstrate that in a political culture of parliamentary parties fighting illusory battles, while engaged in an ideological enterprise aimed at disguising a power and wealth grab in favour of the rich and powerful, we are the party whose ideals of sustainablility, equality and justice are grounded and realistic.  It’s a huge task – one that in my view Caroline Lucas has risen to magnificently – but we need more of it, and I believe that the new leader has to use his, her or their position to focus Party strategy on that task.

In a political system based on unsupported ideology, the Green moment may be when reality bites back – as inevitably it must.  In a sense that it what sustainability means.