The announcement of Labour’s new Economics Advisory Committee is perhaps the most important development in the Party since Jeremy Corbyn became leader. It’s a powerful statement of intent that Labour is determined never again to be accused by the Tories of lacking economic credibility, but it is something far more than that.
To grasp its significance, I found myself reflecting on my time as an A-level economics student in the late 1970s, when the apparent breakdown of the post-war economic consensus had led to the emergence of market economics as the intellectual focus on the Right; I remember as a student devouring Sir Keith Joesph’s Stockton Lecture, Monetarism is Not Enough, and understanding how the intellectual ferment in market economics had become political mainstream (I took my Economics A-level within a few weeks of Thatcher’s 1979 election win). The importance of the blending of politics and economics that the monetarist ferment represented cannot be underestimated – it was one of the underlying assumptions of New Labour and enjoyed political hegemony for almost thirty years.
It was the economic crash of 2007-8 – and the politics of austerity that followed it – that sounded the intellectual death-knell for what we loosely call neoliberal economics; supply-side policy failing in its own terms, with collapsing living standards and soaring inequality, as well as exposing the long-term structual weaknesses of low investment and economic insecurity, with the spectre of secular stagnation suggesting that something new was needed.
Jeremy Corbyn’s leadership campaign – which was largely about ideas and a decisive rejection of the politics and economics of austerity – indicated that the neoliberal idea was losing its grip. But now, the roll-call of Labour’s advisory committee – Thomas Piketty, Ann Pettifor, Simon Wren-Lewis, Mariana Mazzucatto, Joseph Stiglitz, Danny Blanchflower – reads like a Who’s Who of opposition to the economic ideas that have shaped discourse for a generation. And it is difficult not to draw the comparison with the late 1970s – in which an opposition leader, widely regarded as unelectable, mainstreamed opposition to a decaying economic consensus and forged the tools that defined both her Governments and economic policy for the next thirty years.
Obviously there are differences. Thatcherism was wholly in tune with the establishment; Corbynism certainly isn’t; but there is perhaps the glimmer of an emerging view that the inherent instabilities of neoliberalism may be starting to impress themselves on more thoughtful media commentators, business leaders and economists. Moreover, in the UK, five more years of Osbornomics are likely to start hitting the middle classes in a way that they didn’t under the coalition. But, increasingly, it seems possible to draw the comparison with how the economic culture of political discourse changed in the 1970s.
There is a long way to go. But if today’s annoucement represents a step – a significant step – on the path to the political mainstreaming of anti-austerity economics, it could, perhaps, be a crucial turning point.