In his blistering attack on Jeremy Corbyn’s leadership, Alan Johnson the MP who led the Remain campaign, ended with the following observation: ‘Anti-austerity is a slogan – not a policy.’ Putting side the context in which it was delivered, this may be that something where all competing factions in the Labour Party can agree. We simply have not produced a coherent economic policy framework that could command the respect of the electorate.
If there is a villain of the piece it is the former Labour leader, Ed Miliband. When elected to the position in 2010 he seemed to be ideally equipped to produce such a framework: he was cerebral, well connected and carried no ideological baggage from the past. We needed a clear statement of how modern global capitalism could be organised to deliver growth without producing obscene levels of inequality. Instead Ed Miliband floated a series of ethereal concepts that no one understood and then offered a ragbag of unconnected intervention policies at the 2015 election
It is therefore sad to report on the current failure of shadow Chancellor John McDonnell’s Economic Advisory Council. This brought together leading economists who were progressive in their outlook and part of the Keynesian tradition: broadly, that government intervention is essential to maintain full employment and promote social justice. McDonnell’s Council has become a casualty of the European Referendum disaster and Labour’s mounting civil war.
Two of the highest profile Council members, Thomas Picketty and David (Danny) Blanchflower have recently resigned. Picketty was the author of the best-selling 2013 book ‘Capital’ which offered a withering critique of mounting inequality – and importantly drew attention to the fact that it has become a global problem. He was quoted as being ‘deeply concerned with the Brexit vote and with the very weak campaign of Labour’. Blanchflower’s parting quote was that Corbyn was playing ‘idiotic games’ and should step down as leader; he is also on record as saying that ‘the leadership wasn’t confusing so much as silent. There was no policy direction, no co-ordination, no nothing.’ Five other Council members issued a statement that ‘the EU referendum result is a major disaster for the UK, and we have felt unhappy that the Labour leadership has not campaigned more strongly to avoid this outcome’. They went on to say that they ‘will be honoured to advise the Labour Party in the future, should our advice be sought once the current situation is resolved’. My guess is that the Council will never meet again. Just to add to the malaise, Richard Murphy, the Norfolk-based tax expert who contributed many of the economic arguments, particularly ‘people’s quantitative easing’ that underpinned Jeremy Corbyn’s leadership bid, has completely dissociated himself with current policy development. See his damning blog at:
What this all means that is that it is one thing to use anti-austerity as a slogan; it is another to come up with coherent alternatives. John McDonnell, for all his faults, did try to put a process in place to address the issue; it is a shame that it has fallen apart. A credible economic policy is essential if the Labour Party is to survive in the short and long term. One possible consequence of a leadership contest could be a renewed focus on different approaches to economic management in the knowledge economy. We can live in hope.