Already shaken by Brexit, banks are reconsidering their positions in the UK. And it is crucial that they know where they stand with the Labour party.
Labour has been trading vaguely menacing statements with Morgan Stanley, accusing the investment bank of being among the “speculators and gamblers who crashed our economy in 2008” after it warned its clients that a Labour government could pose as much of a risk to British business as Brexit.
A few days later, the rightwing press latched on to a statement by City trading firm the CME group, which warned that Theresa May’s government is “hanging by a thread” and advised businesses to prepare for the “nightmare scenario for the pound” of a Corbyn government.
It would be easy to dismiss these incidents as mere sabre-rattling, but there are good reasons to pay attention. Jeremy Corbyn’s statement to Morgan Stanley has been read in some circles as a general attack on the financial sector, suggesting a threat to capitalism at odds with the more conciliatory signals sent by both Corbyn himself and John McDonnell in recent months.
Already shaken by Brexit, banks are reconsidering their positions in the UK. And it is crucial that they know where they stand with the Labour party. `
These are heady days for Labour. After a generation wandering in what many see as the neoliberal wilderness, the party has returned to its roots. And nine years after the financial crisis, the country seems poised finally to elect a government with a mandate to set course for a more sustainable economy.
Within the party, long-repressed voices are suddenly being heard—voices for a range of social and economic ideas which were anathema during the decades when we were assumed to have arrived at the ‘end of history’. While some on the right see this as a hostile takeover, there can be little question that broadening the church has breathed new life into the Labour movement.
But amidst this ferment, there is a risk of losing sight of the essential problem of translating idealism into action. Labour’s shock electoral comeback in June was based on a supremely pragmatic manifesto—a platform which, far from being anti-capitalist, promised instead a mixed economy, capable of managing capitalism better than the neoliberals. If enacted, that manifesto would hardly represent a grand social experiment; it would simply return Britain to the social democratic consensus of countries like Germany, Denmark and Norway.
For some on the left, this is simply not enough. Last month, Owen Jones argued for a dramatic step: the nationalisation of the banking sector. For Jones, as for many others, the next Labour government cannot simply be a way of escaping neoliberalism; it is a once in a lifetime opportunity to build socialism.
As noble as the sentiment may be, we must consider the consequences of taking dramatic measures like these. The nationalisation of banking would send panic through the financial sector, initiating a process of capital flight that would decimate the industry which has been the primary engine of growth since the 1980s. Jones seems to embrace this prospect, condemning banking for leading the deindustrialisation of Britain. He is undoubtedly right to call for a rebalancing of the economy; but a process of economic renewal cannot begin with the gutting of one of the few remaining productive sectors.
Such a scenario was foreshadowed, too, by McDonnell’s revelation that contingency plans have been drawn up in preparation for a run on the pound triggered by a Labour victory. The implication seems to be that capital has something to fear from a Labour government—a narrative which calls to mind not the managed capitalism of Clement Attlee or Harold Wilson, but the years of chaos, capital flight and subterfuge triggered by Salvador Allende’s election in Chile.
There was, perhaps, a time when one could make sense of the Marxian instinct to seize the means of production, capital flight be damned. But deindustrialisation has removed this possibility for the foreseeable future. A country which brings factories and mines into public ownership might just go on producing what it needs, having thumbed its nose at global capital. A country with no means of production to seize but call centres and offices will not last long.
This kind of thinking is not only dangerous; it is wholly unnecessary. A Labour government can achieve immeasurable social progress without bringing itself into conflict with capital at all. The neoliberal experiment has failed industry as well as individuals; a mixed economy can deliver lower input costs and higher investment to business. There is no need to attack capitalism itself. As it did in 1945, Labour can, and must, show business that a well-regulated, mixed economy is in the long-term interest of capital, as well as the people.
The next Labour government may, indeed, be a once in a lifetime opportunity. If it fails, then the ideals which animate it may once again be condemned for a generation. All the more reason, then, to take the path of least resistance—and to work with the grain of power wherever possible to achieve radical reform.
This is not a time for menacing signals and talk of a run on the pound. The message to business should be loud and clear: Neoliberalism has failed everyone. The mixed economy proposed by Labour is about managing capitalism, not destroying it.
Mark Stanford is a postdoctoral researcher in anthropology and a fellow at Wolfson College, Oxford. He tweets here.
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