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Corbynomics – a work in progress

OVER A THOUSAND PEOPLE ATTENDED JOHN MCDONNELL’S ‘State of the Economy Conference’ in May. Many more were turned away. There was enormous enthusiasm for alternatives to the drab grey of austerity economics. Ideas that had been bottled up for years were fizzing away.

What should we do about the environment? About inequality? About gender politics? About the chronic short-termism of British capitalism? How can we help small business? What should we do about the financial sector’s apparent inability to channel idle funds into productive industry?

These are important questions - but some of the Conference sessions provided more questions than answers. At the outset John McDonnell proclaimed the need for the next Labour government to transform capitalism’ by delivering a ‘fairer, democratic, sustainable prosperity shared by all’.

Is a kinder, gentler capitalism possible? The new leadership has made important strides forward. They have dumped the ‘austerity lite’ position of former Shadow Chancellor Ed Balls. They have established that austerity is a political choice, not an economic necessity, as the Tories argue. As a result they have been able to force the government to retreat from some of its most malevolent policies.

McDonnell is well aware that Labour has lost credibility because the previous leadership accepted the myth that ‘we’re all in this together’; that therefore savage cuts in workers’ wages and public services were necessary. He therefore proposes a ‘fiscal credibility rule’. He commits a future Labour government to match income with expenditure on current spending within five years.

Of course it depends on what you’re borrowing for. John knows full well that the government should be able to borrow in order to invest. As he says, his proposal is widely welcomed by business leaders as well as trade unions. Chief economics commentator of the Financial Times, Martin Wolf, a Commander of the British Empire and pillar of the establishment, commented (24 February): ‘Major governments are able to borrow at zero or even negative interest rates, long term. The austerity obsession, even when borrowing costs are so low, is lunatic.’

It’s official then. Osborne is a lunatic!

John also spoke at the Co-op Conference in January. He advocated that a future Labour government would give workers first option on the right to buy shares on firms which are in the process of being dissolved, sold or floated on the stock exchange. Often these will be firms in trouble. Understandably workers will be desperate to defend their livelihoods, but often it may be too late by then to clean up the mess left by the capitalists who have abandoned their workplace. Is that it?

Labour under Corbyn committed itself to a temporary nationalisation of Port Talbot steel works until a (capitalist) buyer was found. Saving jobs and the UK steel industry is obviously the top priority, and a big improvement on the Tories’ history of malign neglect. But the entire story of the industry is testament to the fact that capitalism has failed steel in Britain. The only other concrete proposal for nationalisation is to take over the private train operating companies’ franchises as they expire.

The seminar on finance at the May Conference was particularly unsatisfactory. Whereas banks like HSBC think it legitimate to launder money for Mexican drug cartels, they will not provide the funds to invest in British industry. Yet there was very little discussion on the National Investment Bank proposed by Jeremy, which is already TUC official policy, and none on the need to take over the banks as part of a fundamental transformation of the British economy and society.

The whole thrust of the Corbynist agenda so far is to co-operate with big business in order to try to generate preferable outcomes. One alternative proposed is to work round capitalism, for instance by experimenting with alternative models of ownership.

The harsh fact is that the capitalist class generally approves of Tory austerity. They fear a Corbyn-led Labour government. Tony Blair, a reliable weathervane of the establishment, regards it as ‘a very dangerous experiment.’

The fact is that Labour’s new economic programme is still unfinished business. We remain stuck in an economic crisis, and it may well get worse. In that situation, big business is likely to turn on a future Labour government. Compromise and reform will be torn up when big business cuts up rough.

In the last big capitalist crisis in the 1970s the left of the Labour Party under Tony Benn came up with what they called an ‘Alternative Economic Strategy’ (AES). The country was faced with global stagflation and the collapse of the apparent success of Keynesian economic policies in maintaining full employment since the Second World War. The AES proposed protectionist measures to try to immunise us from globalised chaos, selective nationalisations, control of the banks and capital controls, and – very important – industrial democracy.

The right wing Labour leadership under Wilson and Callaghan faced off the challenge and the AES disappeared without trace. Though I believe it was in part misconceived, the AES represented a more serious challenge to the rule of capital than the present policies.

At some point a reforming Labour government will have to choose. To succeed, it will have to take on the ingrained resistance of big business. In the 1980s the French Socialist government under Mitterand took over virtually the entire financial sector, yet was eventually brought to heel by strikes of capital, runs on the French currency and economic sabotage by the capitalist class.

In the end it’s us or them. So far the programme we have developed shows no awareness of the likely troubles ahead for a Corbyn-led Labour government. It does not propose a coherent socialist alternative. Much of Labour’s future economic programme remains a blank page. We must all use the democratic structures of the Labour Party to strengthen our programme and make it fit for purpose.

Solidarity with the refugees

Solidarity with the refugees

Jo Cox

Jo Cox