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