Economic fatalism and the Labour Party leadership election

Perhaps the most dispiriting feature of the Labour Party leadership economics has been the standard of – one is tempted to say the absence of – the economic debate.  There is an emerging – and vague – narrative around the need to be more business-friendly, to reward “hard work”, to cut the deficit, to enable aspiration.  It’s very light on detail and, watching Harriet Harman’s rabbit-caught-in-the-headlghts response to George Osborne’s recent Budget, and the rush to ditch wholesale the economic platform on which Labour fought the last election, there is little to encourage any faith that Labour is close to setting out the clear, radical, popular platform it needs to win electoral support and effect real change.

Simon Wren-Lewis makes the point powerfully in a recent blog post that Labour’s focus on the deficit is short-termist and politically futile, especially if the deficit falls over the lifetime of the Parliament, and rightly chides Labour for poor political choices in its response to the Budget – where the mantra of deficit reduction has undermined Labour’s claim to be a party of social justice.  Labour is developing its economic approach in response to the Tories’ economic framing, not in opposition to it – I’ve written before about the myth of Labour overspending in office and how the current Labour establishment appears to be buying into it in the face of the facts.

With that in mind, it’s worth standing back for a moment to consider the main economic issues facing UK politicians just now.  In no particular these order, the challenges are:

– A continued fall in real wages for millions of workers, especially for the lowest paid; combined with an increase in the prices of essentials (housing, power, food) that is not reflected in headline inflation figures, with increasing numbers of people unable to achieve a decent standard of living while working full-time (among other things, making a complete mockery of the “hard working families” rhetoric we constantly hear);

– The increasing casualisation of labour, with growing insecurity, zero-hours contracts, and a further assault on the right of employees to organise into trade unions;

– Related to that, a continued productivity crisis – perhaps the most distinctive, important and undiscussed feature of British post-crash market capitalism;

– And at the root of that, a continued private sector investment strike, with levels of capital investment so low in the UK that capital stock is not being replaced, let alone augmented;

– The acceleration of the long term shift of income from the sale of labour to the sweating of capital assets – the extent to which we have become a rentier society;

– The spectre of secular stagnation, in which the economy is only able to produce full employment when it is overheating, fuelled by growing private debt, with the inherent instability that follows from that.

The response of Labour’s leadership candidates, with the exception of Jeremy Corbyn, appears simply to be to accept the rationale behind all this rather than to challenge it.  There is at the heart of the Labour leadership debate – and indeed of the Labour Party leadership’s response to Osborne’s recent budget, a deep economic fatalism.  Only Corbyn realises the essential fact that all of the conditions I’ve listed are a matter of political choice rather than economic necessity – but so far has only addressed economic issues at a very generalised level.  It’s one thing to say you’re anti-austerity; it’s quite another to have an election-winning strategy for dealing with it.

I’d suggest this is a systemic failure.  Labour is not made electable simply by intellectually throwing in the towel.  We need a powerful, challenging alternative narrative that recognises that austerity is about political choices, and that how you make those choices is a reflection of your values – and you do not win elections by failing to articulate those values.  But also it needs to understand the political imperative of challenging a narrative and offering a serious alternative.  It’s become fashionable to use “Blairite” as a term of abuse in some parts of the Labour party, but even those who identify themselves as Blairites have not understood what Blair and Gordon Brown did in opposition – using triangulation to provide cover for progressive measures, not to rationalise them away, and assailing the Tories over issues of competence, especially over Britain’s withdrawal from the ERM, while developing a coherent policy platform.  We still have a long way to go to deal with the lie that Labour in office trashed the economy, but pleading guilty is absolutely the wrong way to go about it.

The mainstream leadership candidates are right in one sense only: the economy is key to electability.  We need a strong, clear, attractive, credible economic narrative.  And of the four leadership candidates, Jeremy Corbyn is the only one who comes close to asking the right questions, let alone providing credible answers.  Part – a large part – of the answer lies in much greater state-supported investment, and ensuring that real wages increase; but also in having a more honest debate about work, welfare and social security.  And it means once again reaching out to people who have abandoned the political process, who are very often at the sharp end of austerity, and giving them hope and a reason to re-engage: Osborne’s 40% strategy of maintaining office through the votes of the better-off isn’t decent or sustainable.

Labour’s mainstream leadership candidates have talked quite a lot about Labour coming out of its comfort zone.  Actually, the more pertinent question is, when will they come out of theirs when talking (or not talking) about economic policy? And when will they start asking the difficult political and economic questions, let alone showing that they have a strategy to address them?


2 thoughts on “Economic fatalism and the Labour Party leadership election

  1. Well put, thanks for this. If I were British, Jeremy would be my choice of a leader. Otherwise, not much likelihood of change.

  2. Your list of the main economic issues facing UK politicians reminded me of Michael Perelman making the link between the rhetoric of the Southern US slaveholders and that of modern neoliberals i.e. small government, low (no) wages, low taxation. The only difference is that entrepreneurial superiority has replaced racial superiority.

    The difference between the right and the left has always been economic but Jeremy Corbyn is the only Labour leadership candidate offering a rejection of TINA. The rest of them and the shadow cabinet seem to have no knowledge or memory of Keynes and FDR, let alone Kalecki or MMT. Transatlanticists to a man/woman except for JC.

    Great post.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s