Tuesday 11 August 2015

Corbynomics vs Ideological austerity

The incredible surge in popularity of the Labour leadership candidate Jeremy Corbyn is proof of the fact that a significant proportion of Labour Party supporters are utterly sick of their party refusing to take a stance against Tory ideological austerity.

The mainstream media reaction has been to deride Corbyn's economic plans as some kind of left-wing lunacy, but this is merely an illustration of the fact for five years the mainstream media and the Labour Party have utterly failed to challenge the Tories on their socially and economically harmful ideological agenda, meaning that anything that contradicts it now lies outside the approved spectrum of debate, not that "Corbynomics" doesn't make an awful lot of sense on a macroeconomic level.

It's no surprise that the mainstream media have given the Tories such an easy ride on George Osborne's failing economic ideology, because the media is so heavily dominated by right-wing billionaires like Rupert Murdoch (S*n, Times, Sky TV), Jonathan Harmsworth (Mail, Metro), Richard Desmond (Express, Star) the Barclay Brothers (Telegraph, Spectator). The refusal of the Labour Party to challenge Tory austerity is a lot harder to fathom. Perhaps they thought they just couldn't win the debate against the right-wing dominated media? Or perhaps it was because the Labour Party had become so dominated by right-wingers (Ed Balls, Chuka Umunna, Chris Leslie, John Cruddas ...) over the years that they actually favoured the continuation of an economic ideology that results in a massive transfer of wealth from the poor and ordinary to the super-rich minority?

Whatever the case, at least there is now a movement within the Labour Party to actually stand up and challenge George Osborne's ideological austerity agenda as the socially and economically destructive con job that it is.

In this article I'm going to outline some of the important differences between George Osborne's ideological austerity agenda and the Jeremy Corbyn's stimulus and investment policies.

How ideological austerity has failed

In the absence of any coherent criticism of ideological austerity from the Labour leadership, it was left to a few backbenchers, left-wing journalists, trained economists and independent bloggers to make the case against Tory ideological austerity over the last five years. I've written a lot of articles on the subject, so instead of detailing the case all over again, I'll provide bullet points with links to corroborating evidence.

How New Labour failed to challenge ideological austerity

One of the most spectacular failures of Ed Miliband's Labour Party was their abject unwillingness to articulate an alternative to George Osborne's ideological austerity con. In fact Labour were so inept that they even whipped their MPs into voting in favour of ideological austerity in January 2015, less than four months before the General Election.

Given the absolute wealth of evidence that ideological austerity failed to achieve any of the economic projections George Osborne promised back in 2010, it's astonishing that Miliband's Labour Party refused to criticise austerity, preferring to offer the public a bizarrely unappealing prescription of austerity-lite, in the vain hope that "more of the same but not quite as evil about it" would inspire people to flock to the Labour party in droves (which it absolutely didn't).

Offering exactly the same economic ideology as the Tories (but just slightly less harsh about it) was strategically inept, not just because there is so much evidence that ideological austerity is a terrible policy, but also because it commits the fundamental error of accepting their opponents' lunatic proposition, that "cut our way to growth" is the best/only economic strategy.

Labour's failure to counter the failing "cut our way to growth" ideology was bad for them because it cost them a very winnable General Election, but what is worse is that it has created the impression that there is a strong consensus in favour of ideological austerity (outside of Scotland at least) when there really shouldn't be.

Even though there is a strong consensus amongst economists that ideological austerity is economically destructive, swathes of the electorate now tend to believe that there is no alternative to it, which makes it that much harder for anyone who does try to articulate economically coherent alternatives to ideological austerity.

How "Corbynomics" makes sense

As much as the Tories and their allies in the right-wing press will try to fearmonger about "Corbynomics" meaning ever more borrowing, the economic evidence and the historical record is on Jeremy Corbyn's side when he says that public debt can be reduced through intelligent investment in things that stimulate more economic activity than they cost.

From a macroeconomic perspective the policy of using the current ultra-low costs of government borrowing in order to invest in economically beneficial activity like improvements in public infrastructure, housing, education and support for high-tech industries makes sense. Anyone who is familiar with the concept of fiscal multiplication knows that targeted investment makes a lot more sense than severe, target driven funding cuts.

The historical record also supports Jeremy Corbyn's position that large public debts can be reduced through investment. After the Second World War the UK's public debt stood at an enormous 238% of GDP (which is almost four times the public debt inherited by George Osborne in 2010). Even though the debt was so high back then, the post-War Prime Minister Clement Attlee instigated a massive investment programme which included the foundation of the NHS, introduction of Legal Aid, construction of hundreds of thousands of decent houses per year and major improvements to pensions, unemployment benefits and disability allowances. The simplistic worldview that underpins ideological austerity says that such massive investments should have continued to increase the debt, but in reality the debt began to fall dramatically. By the time Attlee left government the debt had fallen by well over 40% of GDP, and by the time the post-war consensus was torn up in 1979 and replaced with the Thatcherite economic ideology, the debt was down to 43% of GDP.

In contrast George Osborne's programme of ideologically driven cuts has seen the public debt continue to soar, resulting in him missing all of the economic projections he made in 2010 and almost doubling the level of public debt in the space of just five years.

Levelling up or levelling down
When it comes to the differences between ideological austerity and "Corbynomics" there are many. There's the fact that "Corbynomics" makes sense from a macroeconomic perspective and ideological austerity doesn't; there's the fact that the historical record supports "Corbynomics" and it shows that ideological austerity has failed to achieve what Osborne said it would; and there's the fact that "Corbynomics" is a long-term holistic strategy of investments with the objective of improving the health of the economy, while ideological austerity is a short-term strategy aimed at altering just one economic indicator (the debt to GDP ratio) way above all other economic considerations.

In my view the biggest difference of all is how the two strategies would change the composition of the UK economy. The endgame for "Corbynomics" is to turn the UK into a high-skill, high-tech economy with world leading infrastructure and services and a highly educated and well-paid workforce (like Germany) while the logical endgame for ideological austerity is to deliberately reduce the wealth and standards of living for the majority of the UK population in order to meet the rising standards in China and India on our way down.

The shocking thing is that there are so many people out there who are unwilling or unable to recognise ideological austerity for what it is, preferring to buy into the economically incoherent narrative that there is no alternative but to have our living standards slashed while the tiny super-rich minority help themselves to ever larger slices of the pie

The people who have swallowed the Tory narrative that there is no alternative to ideological austerity will lap up the anti-Corbyn propaganda because they've been conditioned to believe in simplistic fairytale economics. If Corbyn does win, it's going to take an awful lot of effort to replace these ludicrous economic fairytales with worldviews that make any kind of sense on a basic macroeconomic level, not least because of the abject failure of the Labour Party over the last five years to stand up and criticise ideological austerity or to present anything remotely resembling a coherent alternative.

 Another Angry Voice  is a "Pay As You Feel" website. You can have access to all of my work for free, or you can choose to make a small donation to help me keep writing. The choice is entirely yours.

Austerity is a con
Labour vs the Lib-Dems in the strategic ineptitude stakes
What is ... Fiscal Multiplication?
George Osborne has created more debt than every Labour government in history combined
How Ed Balls' austerity-lite agenda ruined Labour's election chances
The Tory ideological mission
How the Lib-Dems were just as compassionless as the Tories
Margaret Thatcher's toxic neoliberal legacies

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