John McDonnell’s appointment of a council of economic experts is a shrewd move
Labour’s emerging economic policy is coming under intense scrutiny – from friends and foes alike. John McDonnell’s surprise statement that he intends to back George Osborne’s fiscal charter – committing the government to running a surplus during ‘normal times’ – was labelled ‘insanely stupid’ by one of the economists who had formerly given his economic platform a broad welcome.
Caroline Lucas, no doubt voicing the doubts of many of Labour’s new members, said McDonnell had ‘fallen into Osborne’s trap’.
The context for why Labour needed something like Corbynomics – and conversely why John McDonnell feels compelled to endorse the Tories’ fiscal charter, if only his own interpretation of it – was set out recently by the IPPR. Research they have published pinpoints two main reasons for Labour’s defeat in 2015.
First, it wasn’t trusted on the economy, with the 2008 financial crash blamed on Labour overspending. Second, it didn’t give voters on the left enough of a reason to vote for it.
This is the bind Labour finds itself in. Over the last Parliament, Labour tried to regain the public’s trust on the economy by pledging that it, too, would make cuts to reduce the deficit. The main effect of this strategy was to confirm the Conservative narrative and amplify the noise around an issue for which Labour was widely blamed.
To those on the left, meanwhile, it was toxic, Labour coming across as Tory-lite.
To have a hope of winning in 2020 Labour is going to need to appear both credible and principled. Commenting on the IPPR’s research, its director Nick Pearce was sceptical that Corbynomics could deliver both:
“The issue for John McDonnell and others is whether that forthright opposition to austerity simply cements the view amongst the public that your answer to economic problems is to spend money.”
In truth there is no need for Labour to see its options in such either/or terms. There is a substantial body of expert opinion which criticises Osborne’s economics on theoretical grounds. A variety of economists and commentators, not least Keynes’ biographer Robert Skidelsky, have given a broad welcome to Corbyn’s economic platform. Labour can make a credible case for anti-austerity policies.
What this will require is reframing the entire debate on economic policy. This is essential, because for as long as Labour is playing within the rules set by George Osborne it will be on to a loser. But it is also a massive undertaking, since it means swimming against the tide of received opinion.
Until this week, Corbyn’s leadership team did not quite look up to this considerable job. The very fact Labour’s new economic platform has been referred to as Corbynomics – with all its crackpot overtones – has been a problem. Given some of John McDonnell’s past remarks, his appointment as shadow chancellor has presented further challenges. Neither has it helped that the guru behind Corbyn’s economic policy has been reported as an ‘accountant from leafy Norfolk’.
In this context, John McDonnell’s speech to Labour Conference was a major step forward. Its most significant feature was the news that Labour is establishing an Economic Advisory Committee, including Nobel laureate Joe Stiglitz. This might seem too much a matter of process to be that interesting, but its potential importance cannot be overstated.
At long last we might see the opening up of lines of communication between the leadership of the Labour Party and heterodox economists who can mount an intellectual challenge to the basis of neoliberalism and the politics of austerity.
This Economic Advisory Committee will be needed to refine the content of Labour’s economic policy. But their biggest job will almost certainly be to convince first the shadow cabinet, and then the PLP, that such ideas could be credible as well as popular.
One concern is whether they will be involved enough (it’s reported they will meet four times a year) to have a decisive influence. Partly for this reason, there is perhaps a case for in addition appointing a chief economic adviser – not just to advise, but even more to be the public face of Labour’s anti-austerity economics.
Even in the best-case scenario this will be a long and difficult process, given the intellectual hegemony built up by the case for austerity. Labour MPs, let alone middle England, may take a lot of persuading – and that is the point: MPs will need to see that middle England can be convinced before they can sign up to it themselves.
So how about this? Labour could build on the appointment of its Economic Advisory Committee by launching an inquiry into how to get the economy working again, for every region and sector of society. Such an inquiry could take evidence from a range of expert opinion, not just those already among its advisers – allowing Labour’s emerging ideas to be fully tested in debate.
And it could take evidence in public around the country, and hear both from businesses and local people about their needs and abilities, and where the current economic system was not meeting them.
By making such an effort to listen, Labour might win the right to be listened to. The extended nature of such a process might win credibility for new ideas by their very repetition – and convince people over time that a new approach was worth a try.
Bill Blackwater is associate editor of Renewal: A journal of social democracy
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24 Responses to “Making Corbynomics credible”
JoeDM
Surely you mean Moronomics !!!
The man is a communist.
stevep
Communists must be more popular than are given credit for, after all David Cameron`s over in China selling fair chunks of British industry to them at knockdown rates, as we speak.
Perhaps you`re on to something!
frankie
I really like Corbyn’s foreign policy, but I think his economic policies are terribly crass & unimaginative and have been repeatedly shown in history to end with impoverishment for almost all in society except the senior party apparatchiks. The ideas behind Corbyn’s and McDonnell’s economic policy need to be consigned to the dustbins of history, to rot along with feudalism, slavery, colonialism etc.
pencil
How can ideas which logically and historically have been proven to be complete failures, ever be made credible. If printing money was the answer to economic prosperity, zimbabwe would be the wealthiest country in the world!
Tanc
So what was quantitative easing?