Corbynomics: Putting the Political back into Political Economy

October 7, 2015 at 2:24 pm (capitalism, democracy, economics, labour party, posted by JD, reformism, workers)

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By Ewan Gibbs and Nathaniel Blondel (at Left Futures)

The reaction to John McDonnell’s announcement that he would aim for a balanced current account, whilst maintaining borrowing for capital investment, revealed a recurrent fault line within left-wing economic thought. At its most banal McDonnell was accused of signing up to George Osborne’s ‘austerity charter’, whilst more sophisticated critics argued such policies would weaken demand and harm economic growth. This article will not address the technicalities of figures and whether Labour should borrow limited amounts rather than aim for a balance (see a critical account here). Instead we will focus on the key political division the fallout from this announcement has revealed, and what it says about the character of ‘Corbynomics’, and the barriers it faces.

During the last thirty years of political setbacks, socialist economic policies have taken a particular battering. This has been very apparent in the predominant responses to the onset of austerity since 2008. Rather than proposals for a fundamental restructuring of the economy, the main left response has been both defensive, and grounded in an argument for why “ideological” cuts are unnecessary and harmful. Invoking mainstream Keyensian economists such as Joseph Stiglitz and Paul Krugman, the argument has gone that government could stimulate an economic recovery through borrowing at cheap rates. Insofar as it went this was welcome, but it was a more or less passive argument that could unite trade unionists, and political forces of the ‘centre-left’ from Labour, to the SNP and Plaid Cymru. At best, the Keynesian approach amounts to a tepid intervention and stimulation of demand.

McDonnell’s proposals are a sharp break from this perspective. They unapologetically place the redistribution of wealth and power at the centre of economic policy, where it belongs. In total this is a buoyant attempt to shift the argument about what macro-economic policy is for. The proposals for a National Investment Bank (NIB), a ten pound an hour minimum wage, and raising taxes on the rich and enforcing corporate taxation signal a major change in the vision of the economy that Labour is putting forward. This was summed up in his Labour conference speech when he spoke of an “entrepreneurial state”, stimulating innovation and its commercialisation, the NIB and an invigorated trade union movement replacing the “rich elite” who presently hold sway.

This brings the core questions of ownership, control, and democracy to the forefront. Rather than economic policy being dictated by concern for the confidence fairy and ‘light touch regulation’, predicated on the seminal importance of how certain the rich are in making a profit, democratic forces will reshape our economy. This is fundamentally tied to a vision of actual rebalancing, through a ‘green new deal’ fostering economically secure and environmentally sustainable manufacturing employment.

However, this is where the big ifs and buts occur. The character of the NIB ranks alongside Trident as a major factor in the future of Corbyn’s policy. Will it merely be an auxiliary to Britain’s globalised financial sector that gives assistance to firms for reasons that extend beyond immediate profit motives, or will it be a tone setting body exercising control over it? This raises the spectre of capital controls, and even how you attempt to collect the taxation that corporations are so expert at avoiding. There’s a reason the centre-left doesn’t propose these sorts of policies anymore. Capital controls were an accepted part of UK regional policy under Labour and Tory governments to distribute industrial investment from the ’core’ South East and Midlands to ‘peripheral’ from the 1940s to the 1970s, but were dismantled in the 1980s as the financial sector we know today took off. Attempting to exercise the form of control that an effective redistributive policy requires would necessitate overturning a political as well as economic paradigm. A connected issue relates to asset bubbles and house prices. With property speculation sucking up so much of UK investment resulting in little to nil productive outcomes, rent control policies would be welcome, but much more is required. Public sector house building would need to be accompanied by investment controls and redirection.

Corbynomics is not nostalgic; redistributive measures and the empowerment of workers must be at the forefront of any socialist economic agenda. But it also remains a malleable entity. Naturally, McDonnell is cautious in outlining policies seen as revolutionary in a country where the political bubble has become fundamentally decoupled from even mainstream economic thinking. The rise of Corbyn and a mass membership and participatory Labour Party has created space and an urgent necessity to have these arguments. As has been said many times before, “economics is too important to be left to economists”: it’s down to all of us.


  1. Scott Republic said,

    James If you get a chance have a look at this. Scott Date: Wed, 7 Oct 2015 14:24:20 +0000 To:

  2. Steven Johnston said,

    Keynes was no socialist as he loved capitalism and hated Marx. Who once said “I find myself in almost total agreement with Keynes”…it was Milton Friedman.
    There is nothing socialist about Kenyes or Keynesism.

  3. Steven Johnston said,

    After 30 years of Keynesian economics, Britain had been dubbed the “sick man” of Europe, our economy was thought of as a rust bucket. Inflation was 16% and unemployment was 1.5 million and rising. Then in 1976 a labour leader told us:

    “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”

  4. Rilke said,

    The idea that Keynesianism is just ‘spending to stimulate the economy’ is too crude. It is not just about ‘spending’, that is a Tory simplification. Monetarists in the US, here and elsewhere are more than happy to pour tax capital into high-end corporate operation, bids and ‘projects’. Many so-called businesses such as military hardware would collapse almost immediately if they were subjected to the much vaunted ‘free marked discipline’. That is why they spend so much effort on lobbying. They are often propped up and ‘assisted’ by huge government subsidies and ‘engineered opportunities’. You can grow, invest, expand, innovate and share/distribute your way out of economic misery and the history of civilisation in general proves this. Keynes simply made this fact ‘social’ and exchange based rather than strictly monetary and surplus based as neo-monetrists now claim. You should be careful Steven when you simply repeat the old monetarist lines. You will be telling us that there is only the ‘economy’ and no such thing as ‘society’ next.

    • Steven Johnston said,

      Rilke, do you dream in colour or in black and white too?
      Keynesism is not socialism and can be critiqued from a socialist point of view and found wanting, as it has been in the link I provided.
      Nowhere did I say that Kenyes was all about spending, indeed it is his supporters who overlook the fact that when inflation was rising his answer to that was the c word; cuts. You got it, governments were to run a budget surplus to reduce inflation, but what happens when unemployment rises? The answer was to run a budget deficit, spending money to increase employment. But, what happens when both inflation and unemployment are rising? A government cannot run a budget deficit and surplus at the same time.
      Next you’ll be telling us the “New deal” reduced unemployment, yet after 6 years of the New Deal unemployment was still 19% in the US, it was not until 1939 that it started to reduce.
      Keynes eh? He called Marx insane, his followers deluded and was a strong supporter of capitalism. No wonder the left love him.

    • Steven Johnston said,

      I was not me that said “I find myself in almost total agreement with Kenyes” but Friedman. Though Rilke interestingly if you stop pouring tax into corporations and switch it to the welfare sector, what will happen? Jobs will be created in the welfare sector you will cry! Yet their will be a trade off with jobs being lost in the corporate sector. But will you take the line of the libertarians, that business must stand on it’s own two feet?

      • Jim Denham said,

        It’s not clear to me, Steven, whether or not you’ve noticed that the authors of the article we’re commenting on, are not advocates of Keynesianism. In fact, they write: “At best, the Keynesian approach amounts to a tepid intervention and stimulation of demand…McDonnell’s proposals are a sharp break from this perspective. They unapologetically place the redistribution of wealth and power at the centre of economic policy, where it belongs.”

  5. Steven Johnston said,

    Fair enough Jim, so what approach are they advocating? Presumably, the capitalist class will not like what they are doing so capital will take flight and move elsewhere, leaving Britain skint.

  6. Rilke said,

    Steven has convinced me. We cannot have capital, in the full formal, abstract and exchange sense going ‘elswhere’ when governments try to make surpluses ‘socialised’ (not synonymous of course with ‘socialist’), rather than simply accumulating and expanding them as monetrary surpluses. If capital is to flourish in the way Steven advocates then the capital markets must have their way and not be hampered and restricted by any social concerns. Afterall, we cannot have children in the UK getting an educaion up to age sixteen when in Bangladesh they are subject to market demands and begin super exploited ’employment’ at ten years old. We had better start getting them to work here sharpish or the capital will go to where the full market returns and capital surpluses can be made and Britain will be left ‘skint’. From infantile ultra-communism to corporate fascism in one easy turn.

    • Steven Johnston said,

      Or as Karl Marx put it, capitalism cannot be reformed to work in the interests of the majority and all and any attempts to try are doomed to failure. Best replace it with socialism.

      Regarding Corbynite economics have they came out with that old chestnut, “If you do what we say, it’ll be the end of the boom & bust economics?”. I mean, where have we heard that one before?

      • Glasgow Working Class said,

        Steven it a time cycle people forget what happened last week and what they were moaning about. The welfare state was a counter revolutionary move and clever. I think Lenin once said ‘ do not feed them’ as on a full belly they will have nothing to fight for. I am sure someone will correct me.

  7. Steven Johnston said,

    Absolutely! Yet some fools, who claim to be socialists think that hand outs from the capitalist table…i.e welfare = socialism.

  8. Rilke said,

    Any person who thinks that starvation and misery = revolutionary fervor is a romantic clown and there is a strong and clear difference between ‘handouts’ and hard won ‘rights’. The idea that going back to early Victorian social misery equates to working class outrage is a fantasy world informed by Tory notions of ‘social dynamism’. Those poor socialist ‘fools’ who thought that child labor was wrong – the idiots. What we really need is more social misery and poverty to fuel our revolutionary energies, ha ha ha! Hilarious! Are you two morons writing from a guilt-broker funded think-tank meeting at the Tory conference?
    I’ve met big mouths like you two before. Always going on about how simple ‘picket lines’, wage rises, struggles for ‘safety measures’ are ‘reformist’ and pointless and what we really need is true ‘communist action’ not boss’s ‘handouts’. Trouble is, when it comes to the big push you can never be found! When we attacked and occupied the managers offices at the Selby mining complex in 85 the big mouths such as you who had constantly called for ‘proper action’ were suddenly nowhere to be seen – there’s a surprise.

    • Steven Johnston said,

      Yah…as the best strikes are those that never happen.
      But don’t personalise this, unless you are going to condemn Marx too, he spoke out against reformism and said that what the working class needed was socialism and nothing but.
      I think you need to check the history books, Butler, who introduced free schools was a conservative, Mr Beveridge was a liberal and Bismarck, who gave us the first NHS was a very reactionary man.
      As for mining, in a sane society no one would have to go down a mine.

      • charliethechulo said,

        Steven J: “unless you are going to condemn Marx too, he spoke out against reformism and said that what the working class needed was socialism and nothing but.”

        ” [A]nd nothing but” … Oh yeah?

        “Do not imagine, gentlemen, that in criticising freedom of commerce we have the least intention of defending Protection.

        “One may be opposed to constitutionalism without being in favor of absolutism.

        “Moreover, the Protective system is nothing but a means of establishing manufacture upon a large scale in any given country, that is to say, of making it dependent upon the market of the world: and from the moment that dependence upon the market of the world is established, there is more or less dependence upon Free Trade too. Besides this, the Protective system helps to develop free competition within a nation. Hence we see that in countries where the bourgeoisie is beginning to make itself felt as a class, in Germany for example, it makes great efforts to obtain Protective duties. They serve the bourgeoisie as weapons against feudalism and absolute monarchy, as a means for the concentration of its own powers for the realization of Free Trade within the country.

        “But, generally speaking, the Protective system in these days is conservative, while the Free Trade system works destructively. It breaks up old nationalities and carries antagonism of proletariat and bourgeoisie to the uttermost point. In a word, the Free Trade system hastens the Social Revolution. In this revolutionary sense alone, gentlemen, I am in favor of Free Trade.”

        First published in French as a pamphlet at the beginning of February 1848

        Signed: Karl Marx {end}

  9. Steven Johnston said,

    Rilke, the root cause of all the problems you mention is capitalism. The solution is socialism. Yet, when told this, where are you? Off saving the whale, the rainforest, the Palestinians, the miners etc. Off on the reformist merry-go-round when there is proper work to be done.
    Now the new hobby-horse for the left is Corbyn. I thought the left were a cynical lot but they are very naive if they think Corbyn is the answer.

  10. Rilke said,

    Listen, it is termed ‘historical materialism’ because every society is a historical development as well as an ‘economic’ system. This is what you do not seem to understand. You seem to think that there is this inviolate ‘thing’ called ‘capitalism’ outside and beyond history and society as such, yet Marx simply used the term the ‘bourgeois’ mode of production’, he actually uses the term ‘capitalism’ rarely.
    By the way, I did not go off seeking to ‘save the miners’ that phrase is idiotic. I was a miner and I fought to defend my mode of work, my family, my community and my union from direct attack. It was a defensive battle not an offensive one. The fact that the labour movement and its leaders could not see clearly the nature of that attack meant it could therefore never become a truly offensive struggle, despite our efforts.
    You talk of ‘proper work’ but your ilke are never to be found when there is actually such work to be done. As I say, I have met such as you before. All is a reformist ‘merry go round’ accoring to such as you, but the ‘real work’ you talk of never materialises. I had to deal with such talk from the nutcase Sparticist League of the USA during 84/85. They kept on and on about ‘killing the cops’, ‘attacking the state directly’ and the ‘real work’ of revolution and all that blab just as you do, but when it actually got down to the hard hand-to-hand stuff they could never be found – typical.

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