John Mills: Austerity isn’t working, but that doesn’t mean Corbyn is the answer

But those who criticise the far-left need to do more than just decry the policies they propose


Support for Jeremy Corbyn in the Labour leadership election is yet another manifestation, among many in Europe, of the widely perceived failure of austerity to improve living standards for most people.

Who can deny that austerity impoverishes the public sector? That it heaps hardship on those least able to bear it? That it stunts current growth in living standards while failing to produce a sound foundation for future economic growth? And that it tends to favour the rich – and especially lenders rather than borrowers – at the expense of everyone else?

There is little doubt that it is the frustration generated by both the inequity and ineffectiveness of austerity policies that is driving the desire for left-wing policies to be brought back onto the agenda again.

The question is, can they provide any kind of realistic solution?

Clearly, there is a very high electoral hurdle to be overcome. The Labour Party is unlikely ever to get elected on a manifesto containing radically left-wing policies. And even if these policies were put into practice, the evidence accumulated over past decades strongly suggests that they would not achieve the results their supporters hope they would.

So how have we got ourselves into this predicament and what can we do about it?

The root problem is the ineffectiveness of the economic policies across the western world during the past few decades. These have allowed too many economies in the West to become increasingly unbalanced. Their levels of investment in the future have fallen to dangerously low levels, with much of the expenditure they do undertake being spent on projects which do not increase productivity.

They have de-industrialised, thus both foregoing the increases in output per head which manufacturing is so good at producing, and ensuring that they cannot pay their way in the world. They have consequently suffered from balance of payments problems which have sucked demand out of their economies, with the shortfall being financed by running up huge debts.

What expansion in output there has been has largely been led by consumption, based on ultra-low interest rates and assets inflation, neither of which are sustainable.

It is the consequences of these imbalances which have generated the rationale for austerity policies. The key issue is whether the policies advocated by Jeremy Corbyn and his supporters – at least from what we have heard so far – are likely to do anything significant to create better conditions.

First we must recognise that the only way to overcome austerity is to get the economy growing more quickly. Redistribution of existing output, beyond what is being done already, is extremely difficult to achieve on any major scale.

The issue then is whether the policies the left supports have any real chance of making the economy expand more rapidly.

Unfortunately, they almost certainly won’t – at least as articulated at the moment – for all the following reasons.

To increase investment both in industry and in the infrastructure – which has to be the way ahead at least as a percentage of the national income – consumption has to be reduced. This might be possible if the initial impetus to the economy came from manufacturing and exporting, where sufficiently big gains in output are possible over quite a short period, making it feasible both to increase living standards and investment levels at the same time.

But this could only happen if manufacturing became much more profitable. This might well be possible but it would involve a major devaluation to make productive industry more profitable, which is not currently part of the left strategy.

Without a more internationally competitive economy – as Greece and indeed many other Eurozone economies locked into high unemployment and low growth have discovered – the other policies which the left proposes are unfortunately almost certain not to work.

Increasing expenditure on infrastructure, while pushing up government debt which really has to be brought under control, will by itself do very little to increase economic growth. The return on most social investment unfortunately barely covers the interest costs involved in financing it.

Setting up an investment bank will not help manufacturing much, if at all, if the fundamental problem is lack of profitable investment opportunities. Renationalising the railways and energy companies may stamp out some abuses and stop subsidies being syphoned off as profits, but history suggests that relying on the government rather than the private sector for investment funds will not get these industries to make a stronger contribution to our economic performance.

Those who criticise solutions offered by the far-left need to do more than just decry the policies they propose. They also need to think long and hard about where we are going when many people – including plenty who are not Jeremy Corbyn supporters – justifiably fear that the future is one of stagnant living standards and endless cuts.

You may not believe in the remedial strategy which the far-left puts forward, but it is hard to deny that its supporters have a very serious point which badly needs an answer when they say – especially thinking of those who are already disadvantaged – that there are too few signs that austerity policies really provide any long-term solutions to the problems they are supposed to solve.

John Mills is an economist and chairman of consumer goods brand JML. He served as a Labour councillor almost continuously between 1971 and 2006.

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37 Responses to “John Mills: Austerity isn’t working, but that doesn’t mean Corbyn is the answer”

  1. Dave Stewart

    Jeremy Corbyn is not a far left candidate!

  2. Asteri

    Corbyn isn’t even that radical let alone far-left, it shows how far the “too cool for the Tories” New Labour right have hijacked the party that Corbyn is viewed as so dangerous. His policies on re-nationalisation of the railways for example are state policy in those Far-left bastions of the Netherlands and Switzerland as is support for the public health service. And what more he is concerned about homelessness and inequality in London? too much for the Kendal crowd whose only concern is sucking up to the city and big business.

  3. Cole

    I’m not sure where you would put being a ‘friend’ of Hamas and Hizbollah on the political spectrum. It’s certainly not what most of us would want in a Labour leader.

  4. The Socialist Party

    “First we must recognise that the only way to overcome austerity is to get the economy growing more quickly.” No it isn’t! The answer to capitalism having become outdated and unable to provide what the majority need is not flogging a dead horse. Capitalism needs to be put out of our misery, buried and replaced with something far better.

    Corbyn just wants leftwing management of capitalism, which is guaranteed to fail, so if he won in 2020, the Tories would be back in 2025 and another 5 years would have been lost.

    Just as more efficient and productive capitalism replaced an outdated feudal economic system, so more efficient and productive genuine socialism must now replace outdated capitalism. We need classless moneyless leaderless real socialism a.s.a.p, not more futile attempts to keep anti-working class capitalism going.

  5. stevep

    Yet another scaremongering article about Jeremy Corbyn, He`s clearly got everyone on the right worried.
    “The only way to overcome austerity is to get the economy growing more quickly”.
    To who`s benefit?
    I think we all know the answer to that one. It isn`t you or me.
    I believe politicians when their utterances transfer into deeds and actions, experience shows that whatever they say about the economy, it primarily benefits the wealthy.
    If the economy had performed as wonderfully over the last 30-odd years as we have been led to believe, then why are we worse off financially. People work harder for less pay, pensions have been cut, working hours are fragmented, jobs are insecure, food banks and payday loan sharks await many of us who fall under through no fault of our own.
    Meanwhile the wealthy grow wealthier.
    Britain has moved too far to the right.
    If Politicians like Jeremy Corbyn present a radical, credible alternative then they deserve our attention.
    Maybe we can get the economic system to work a little better for all of us, not just the few.

  6. Ian

    This is becoming a joke now. Pretty much as bad as The Guardian.

    The neoliberal phony Labour people, on here and elsewhere , need to piss off and create their own party. They have some chutzpah, hijacking the party and telling everyone who stands still for a second how Labour is being hijacked by the left.

    Corbyn was an actual genuine Labour MP before most of these neoliberal shysters had left their private schools. To say his supporters are taking over is idiotic, they are the norm outside Westminster , not the useless , pointless PPEs clogging up the benches now. It’s high time the PLP and the corporate shills in the mediarecognised that, shut up and aceepted it with good grace.

    Personally, I think the party, and indeed the planet, would be better off without the arrogant , entitled little bastards

  7. Philip Weaver

    Many people are sympathetic with Palestinians, because of the illegal activity of the Israelis in stealing their land
    (PS this is not an anti-Jew or anti-Semitic comment; it’s just being truthful about their government’s appalling behaviour. Unfortunately, many governments don’t want to be called anti-Jewish, so they do nothing to persuade other countries to come out in favour of Palestine)

  8. Stephen Linstead

    Put that in context rather than using it to provoke knee jerk reactions. He explicitly said you sometimes have to talk to people you disagree with in the interests of peace. He welcomed them to the talks somewhat gently as friends to try to signal a positive tone to the discussions. Should he have called them enemies? And we now know that Thatcher was secretly talking to the IRA in the 80s whilst taking a public hard line.

  9. Cole

    Of course you have to engage your enemies in the interests of peace (as Obama has done with Iran). But to refer publicly to these groups as ‘friends’ is outrageous. And of course Corbyn wasn’t involved in a peace process – just ponticating on a lefty platform.

  10. AlanGiles

    I seem to remember St. Tony (Antony Blair) being on friendly terms with Gadaffi, and he now takes money from dictators by “advising” them. Strange how that doesnt upset the right-wingers

  11. RoyB

    Ok, so if austerity isn’t the answer, and Corbyn’s suggestions aren’t the answer, what is? Some positive alternatives would be welcome. Then, increasing investment requires reducing consumption does it? No it doesn’t, not when major corporations are sitting on cash piles worth billions stashed away in tax havens. If the wealthy, both corporate and individual, won’t use their money it is worthless and we must take their useless cash away from them one way or another, and put it to work. Finally, the only candidate on offer opposing neoliberalism and austerity is Corbyn, and even if his remedies won’t solve all the problems, at least he’s pointing in the right direction, which is more than can be said for any of the others.

  12. Cole

    Of course Blair’s behaviour on Gaddafi (and Iraq) was appalling. But that doesn’t mean we want a leader of the Labour Party who refers to Hamas (a group accuse by Amnesty of abductions, torture and killings) as his ‘friends’.

  13. Oktyabr

    Conventional growth is no longer possible and as long as global finance can find a country poor enough or corrupt enough to install factories run by robots, slaves or children, no mature economy can compete in manufacturing, or even services which can be delivered over the internet. A completely new kind of economic system is needed for mature societies. There may be a bit more more scope for re-distribution but as the author says it is not an answer. Labour has 4 years to find that New Economic Plan. Let’s face it, we all wasted 30 years, from 1979 to 2008, chasing the neo-liberal Dragon.

  14. dontwanttocomment

    whoops a bit of a slip
    Israel is not ‘their’ [the Jews’] government. It is the government of Israel – bit of a difference.

    And do politically aware people really think that international policy is guided by fear of being called ‘anti-Jewish’?

    And, put these two together and we have the silly idea that,
    a. Jews call all criticism of Israel antisemitic (they do not) and,
    b. And since Jews do, then no government can criticise Israel for fear of being called ‘anti-Jewish’.
    And so, Jews are able, by the mere utterance of the word antisemitism, to control the acts of all the governments of the world.
    Yeah, right.

  15. David Lindsay

    I have a lot of respect for John Mills, but the score between New Labour and the Conservatives now stands at a mere 3-2. The last New Labour victory was 10 years ago, or 15 years before the next General Election. It is time to try something new.

    On the scale of public ownership and on the extent of trade union power, Corbyn is well to the right of Harold Macmillan and Alec Douglas-Home. That is not hyperbole. It is fact.

    As it is that Margaret Thatcher presided over publicly owned railways, and over a 60p top rate of income tax well above that proposed by Corbyn. And as it is that Tony Blair promised to renationalise the railways in the 1997 manifesto and in several speeches leading up to that General Election.

  16. David Lindsay

    “Most of us” being who, exactly?

    Corbyn once hosted Hamas, with which the Israeli Government negotiates all the time, and Hezbollah, alongside which our Armed Forces are now at war, a war that Corbyn was one of very few MPs to vote against. It was not he who lowered the flag over the Palace of Westminster when King Abdullah died.

  17. David Lindsay

    Who are the hundreds of thousands who have signed up in order to vote for Corbyn? Are there that many Stalinists, Trotskyists and Maoists in Britain, collectively more numerous than the entire membership of the Conservative Party? Are there that many sad acts who do whatever Toby Young tells them? Of course not.

    And if they are not already, then most of these mainstream, moderate centrists will become full members of the Labour Party once the mainstream, moderate and centrist Corbyn is Leader, involving themselves fully in local party activity even where they have to organise it entirely from scratch.

    By Christmas, every Constituency Labour Party will contain a majority that had joined specifically because of Jeremy Corbyn. Abstentionist MPs who had thought that you had meal tickets for life, you need to start looking for jobs. Although good luck to most of you with that. Tony Blair used to talk about “literally a new party”, but it is Corbyn who has already created one.

    Figures of such Olympian self-regard as to profess that they “would not serve under Corbyn”, as if they would have been asked, need to be made aware that plenty of people without a Marxist bone in their bodies would be more than happy to do so, and would merrily relieve them of the parliamentary seats that they obviously would not be needing. Any seat that was Labour in 2015 will always be Labour.

    Although not affiliated to the Labour Party since the High Blair Period, the RMT and the FBU remain affiliated to the Labour Representation Committee, which is constitutionally committed to the election of a Labour Government. They ought to undertake to pay all election costs of Labour candidates selected in place of prima donnas who thought that they were indispensable.

  18. David Lindsay

    Corbyn’s position on Northern Ireland has been that of the Conservative Party since 1993 in principle, and since well before that in practice. There are people in Northern Ireland who dissent from it, but for whom do they vote? With their Confederate, apartheid and Nazi flags, they identify publicly as one Lost Cause among many.

    Whereas Corbyn will soon speak at a Sinn Féin-associated cultural festival alongside a Democratic Unionist MP and former Lord Mayor of Belfast who was 13 at the time of the Good Friday Agreement. The most controversial thing about the entire week is the question of whether or not Frankie Boyle will appear.

  19. dontwanttocomment

    Despite spinning it the way you have done so, Corbyn actually claimed Hamas and Hizbullah were purveyors of ‘political and social justice across the region’ and not ‘just’ (unpleasant) partners for peace. It should also be remembered that Corbyn also supported and was prepared to share a platform Raed Salah after he was found to have said that Jews make bread with the blood of children. After the court case in the UK he the seconded a call for an enquiry into ‘Jewish influence’ of the Home Office.


    I spent a bit of time demonstrating against the NF Nazis during the seventies. Now Corbyn sits in the company of his friends who like the NF are right wing homophobes and in denial of the Holocaust. Seems to me the hard left and fellow fascist travellers are on a bandwagon.

  21. Wolfgang Kuchler

    “Redistribution of existing output, beyond what is being done already, is extremely difficult to achieve on any major scale” – with this assertion, John frames his debate. As long as some people are sitting in restaurants and taking several holidays a year while others struggle on low pay or benefits or on the streets, there is a case for confronting the better off.

  22. David Lindsay

    You are far too young to have done any such thing.

  23. Cole

    I doubt if the Israeli government has ever described Hamas as their friends, or praised them as Corbyn has done. And that surely the point.

  24. Faerieson

    Are the tabloids so hard pressed, with their misinformation agenda, that they now find the need to incorporate the help of the rest of the media? If so, thank heavens that consciences here are also so thin on the ground.

    With the BBC, The Guardian and Left Foot Forward all fighting to smear Corbyn a conspiracy theorist could have a field day. Just who is it that might be able to pull quite so many strings on behalf of those on The Right? Surely, it can’t be that God awful Blair again!

  25. Faerieson

    When The USSR was busily attempting to occupy Afghanistan the predecessors of these enemies were being hailed as heroic freedom fighters. I’m guessing there were talks then.

  26. Faerieson

    To pretend that those in power do not talk to whoever they feel they need to in order to achieve the desired outcome would be naive in the extreme.

  27. Ian

    I find these blogs, along with an embarrassing – for them – number of Guardian articles criticising Jeremy Corbyn’s potential leadership to be faintly ridiculous. More than faintly, actually. Only in a chattering class so full of self-interested, infantile, out of touch, pompous nitwits would Jeremy Corbyn be described as far left. It shows how far the centre has shifted rightwards when a few basically centre or slightly left of centre policies have got so many nominally Labour MPs soiling their breaches and crying ‘Marxism!’ or whatever the SPADs have decided to call Corbyn this week. It is truly amazing how many supposedly independent-minded people all say essentially same thing, none of which withstands even the slightest scrutiny. They obviously take everyone for idiots.

    The truth is, it is those who are decrying and insulting Jeremy Corbyn who are the real usurpers, they are the ones that have sneaked in and taken over Labour; Tony Blair was the Trojan Horse and these vacuous empty suits on the Labour benches as well as bloggers and supposedly left wing Guardian hacks are the neoliberal foot soldiers, hell bent on rendering Britain a one party state, in effect if not quite openly. As such, these are the ones who should be considering their career options beyond politics, though it’s highly unlikely they have ever considered anything but their careers.

    The new Labour type is not of the left. They have mistaken their identity politics for left wing. They consider themselves as being better than Tories; they could never be Tories because Tories don’t like gay people or ethnic minorities.

    New Labourites are Tories without the racism and homophobia etc. That puts them one step above the Tories (who are, to my mind, one step above sex offenders at best) but it doesn’t make them Labour.

    Take your corporate shilling now, New Labourites. You’ve made your contacts and said all the right things, now go and leave the party to rebuild itself. You don’t belong.

  28. dontwanttocomment

    Indeed, but that is not what Corbyn was doing. What he actually said that Hamas and Hizbollah are, to repeat, movements that can bring ‘political and social justice’ across the entire region (the entire Middle East). He did not say that Hamas and Hizbollah should be welcomed solely as partners to a future peace deal; a position that many would or should accept. Be that as it may, the attempted evasion of what Corbyn actually said as opposed to what people would have preferred him to say does not apply to the blood libelist that he supported and wanted to share a platform with, nor can supporting a call into ‘Jewish influence’ in the Tory party in any way be said to further the course of peace. Unfortunately, that belongs to an entirely different tradition; a tradition that both the left and the right wing of the Labour Party were proud to stand against, but which now it would seem some are prepared to compromise.

  29. madasafish

    Well you try getting hold of Apple’s Billions… Legally you cannot..

  30. Riversideboy

    Does it not seem that the whole system of capitalism does not work? Everything has been tried and mulled over to do with it now to absolute mind numbing boredom. It works for a few end of argument. Why don’t all these experts just admit it, for the man and woman in the street it means, in the vast majority of cases, a job, mostly poorly paid and a life where there is no control or certainty. That’s a fact and I fail to see why these so called experts don’t just admit that there is no other way, so live with it, instead of these interminable articles repeating the same tried and failed “solutions”. Capitalism has turned into neoliberalism (Globalism) which means the small person, me and possibly the mass of others, get even less.

  31. Duckman

    Name me the countries which are Socialist today? One or two. Socialism is in many ways a complete failure; not Socialist policies but Socialism

  32. Duckman

    I am looking at these comments and wonder how can anyone say that John Mills is a Blairite? Maybe he is. but his arguments are credible and are not some right winger attacking corbyn based on corbyn’s ideology.

  33. /O43 |_|K19!!

    Because British Rail was awesome, right?

    Railways ought to be privatised and NOT subsidised. That way they can go the way of the Dodo and the money saved can go into road building and tax reductions on automobile usage. Cars work, no matter how much the trendy left (descended from the old elites) hate giving commoners freedom of movement.

  34. Peter Martin

    You don’t need to get hold of them. They’ll be recycled back to the US Treasury in exchange for bonds.

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  36. madasafish

    Only in a chattering class so full of self-interested, infantile, out of touch, pompous nitwits would Jeremy Corbyn be described as far left.”

    “The truth is, it is those who are decrying and insulting Jeremy Corbyn who are the real usurpers”

    Man complains about Corbyn being insulted so insults everyone he opposes.

    Obviously not very aware of irony.

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