Monday, March 14, 2016

Bill Mitchell — British Labour Party surrenders … back to its Monetarist roots

Last week, the shadow British Chancellor, John McDonnell confirmed that the British Labour Party under Jeremy Corbyn will not be part of a progressive realignment of the public debate regarding fiscal policy. By that I mean, they have chosen, probably for misplaced ‘political’ concerns (leaving aside total ignorance), to reinforce in the public mind the neo-liberal myths relating to the capacities of a currency-issuing government to spend and advance prosperity. I have no doubt that John McDonnell desires, genuinely, to advance the material well-being of the working class in Britain. His public career to date would suggest that. But like many on the Left, he has been seduced by the neo-liberal snake oil into believing that fiscal rules that bind a currency-issuing government to balance, in total or in part, the fiscal situation and that such a government should submit itself to the dictates of a technocracy full of mainstream economists, is a necessary requirement of responsible fiscal management. His most recent statements really amount to surrender. The British Labour Party is staying faithful to its Monetarist roots, which were established in 1974 under Harold Wilson’s second tilt at the top job. The distractions of New Labour and now Jeremy Corbyn has not really changed anything. This is a neo-liberal party no matter what they claim and their advice and underpinnings are firmly neo-liberal.

I have written about this in the recent past but there are some things that need repeating and further amplification.….
Bill Mitchell – billy blog
British Labour Party surrenders … back to its Monetarist rootsBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


John said...

An example to show how radical MMT is. Some time last week, the editor of the Morning Star, a communist daily newspaper, was invited on to the BBC show "The Daily Politics". The communist editor said something along the lines of there being "nothing socialist about being fiscally irresponsible" and that spending more than you have is something that should not be entertained unless over the course of an economic cycle the deficits are balanced out by the surpluses. Did any other inhabitants of this Perfidious Albion, this Sceptr'd Isle see this idiocy?

I can't say that MMT is to the left of the communists. It is just another excellent example of having a totally different paradigm, with different concepts and different ways of thinking. I find myself relating to Stephanie Kelton's description of MMT as an "autostereogram": once you see it, you can't not see it!

Bob said...

And so the BLP is relegated to the dustbin of history. Along with SYRIZA, Podemos, Die Linke, etc.

John said...

Bob, there is still hope for Syriza, Podemos and Die Linke because they're relatively new, able to be reformed and democratised and mostly haven't held power. I think all is lost with the Labour Party. The last throw of the dice is Corbyn. Perhaps he can make a fist of it. I hope so. But the chances are slim: the vast, vast majority of the parliamentary Labour Party hate him with a passion and would rather lose than win under Corbyn. He won't be long for this world.

Random said...

"there is still hope for Syriza, Podemos and Die Linke because they're relatively new, able to be reformed and democratised and mostly haven't held power."

Ridiculous. There is not. There is no hope. They will remain in the Eurozone. What is more likely is far-right fascists returning to power like the 1930s.

Ignacio said...

Right, all those parties are euro-uber-alles, and if at some point they were not they had to drop the idea or risk becoming irrelevant.

The (continental) Europe population is under the spell of the euro and hard money/government-like-a-household and that's not going to change soon except for the nationalist right, which is yet a minority.

John said...


I said there was hope, not any sort of likelihood. At least with these parties there is a glimmer of hope. With the mainstream establishment parties there is absolutely none.

So, yes, I agree with you, the likelihood is the so-called Left will choose to stay in the EZ, destroy their countries, their societies, their democracies and hand Europe over to fascists. Unless something dramatic happens, Europe is going up in flames. As usual, the Left, of whom I do consider myself a member, will fight amongst themselves, claim that the next disaster will see them gain power, or just generally bungle about. That's what's most likely to happen.

Let us not forget, however, that no one predicted the rise of Syriza and the rest. The only hope hinges on the people who voted for the so-called radical Left. If they did it once, in the knowledge that they were voting for the most radical party available, there's no reason they won't do so again, and this time one that will leave the EZ.

Kristjan said...

Love the first part of your comment John where you say what the left is. The second part you say:

"Let us not forget, however, that no one predicted the rise of Syriza and the rest. The only hope hinges on the people who voted for the so-called radical Left."

Yes yes yes, the radical left that went against democracy in Greece. Let's not forget about them, they were such heros. Surrendering to the neoliberal establishment on behalf all of us.

Jonathan Larson said...

I grew up out on the prairie where the ideas of the old agrarian progressives still could be heard in barbershops, grain elevators, or church basements. It was so common, I just assumed everyone's politics centered on the cost of money. Then I went off to the University of Minnesota 1967-74. Those were times of some serious radicalism. Our economics department was populated with folks who claimed to be to the left of Keynes.

But even under those circumstances, I didn't meet one "lefty / radical" who was 1/50th as interested in monetary policy as the conservative Republican farmers I had known as a kid. It has taken a long time, but I have finally come to understand that lefties are just dorks when the subject is money. Compared to the agrarian progressives, they simply do not have an intellectual base from which to critique the monetary reactionaries—certainly not after the "New Left" embraced Cultural Marxism as its organizing principles.

Of course, Corbyn sold out. He didn't even know he WAS selling out. He joins a long list of progressive sellouts—Mandela, Manley, Bob Rae, Roussef, etc. They could all be accused of cowardice but I think the better explanation is that they were badly educated on an important issue.

John said...

Jonathan: "They could all be accused of cowardice but I think the better explanation is that they were badly educated on an important issue."

Most achieved what they could. Mandela, for example, believed that the country would descend into civil war if he pushed through a radical plan. He may or may not have been radical, he may or may not have been conservative, but he didn't believe that a truly radical economic plan was possible. The circumstances and the lack of a radical, militant base pushing him forward didn't exist. FDR once remarked that he had to be pushed to do the things he did. Mandela and others weren't or were in a very difficult position and couldn't see any way through other than to effectively surrender to the established economic order. Others were just cowards, sellouts or saw an opportunity to loot the country.

Jonathan: "I didn't meet one "lefty / radical" who was 1/50th as interested in monetary policy as the conservative Republican farmers I had known as a kid."

That's often the case. All the brilliant intellectual insights and theory in the world is merely a reflection of what many people instinctively understand but are unable to articulate.

It's like that great Keynes statement about unemployment: "The Conservative belief that there is some law of nature which prevents men from being employed, that it is 'rash' to employ men, and that it is financially ‘sound’ to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years… Our main task, therefore, will be to confirm the reader’s instinct that what seems sensible is sensible, and what seems nonsense is nonsense. We shall try to show him that the conclusion, that if new forms of employment are offered more men will be employed, is as obvious as it sounds and contains no hidden snags; that to set unemployed men to work on useful tasks does what it appears to do, namely, increases the national wealth; and that the notion, that we shall, for intricate reasons, ruin ourselves financially if we use this means to increase our well-being, is what it looks like – a bogy."

It's beautifully put, and it needed the flair of Keynes to forcibly drive it into your head, with some eloquent sarcasm added to the mix. The public already knew all this but couldn't quite find the soaring rhetoric and insightful wit, and so did "conservative" farmers. It's the damn fools who have been indoctrinated with neoliberalism that need educating, not the plebs who don't understand efficient markets, NAIRU and all the other gibberish that passes for informed policy.

John said...

Kristjan: "Surrendering to the neoliberal establishment on behalf all of us."

That is unfortunately true. Syriza and the rest of these allegedly "radical Left" parties are spineless, gutless, brainless zombies and have surrendered to the German maniacs running the EZ. It is also, however, true that Syriza and the rest are merely a reflection of their societies: the public have no intention of leaving EZ. In Greece's case, there is the understandable argument made by the public that only the EZ is capable of eliminating the endemic corruption, nepotism and fraud that infects the country, and left to its own devices Greece itself won't be able to confront these issues. That's understandable. It is also true that independent, corrupt Greece with the drachma was a far better place than austerian, neoliberal Greece with the euro.

Syriza and the other allegedly "radical Left" parties should be educating the voters, but they're too stupid, cowardly or, worse yet, committed to the idea of a European superstate to do so. In the case of Syriza at least, I used to give them the benefit of the doubt, but that time has gone. The public is going to have to push them towards leaving the EZ. Unless there is a very radical u-turn, history will not be kind to these damn fools.

nivekvb said...

Jeremy Corbyn was once associated with the hard left of the Labour Party and he would defend the Tendency, a Marxist group. For Corbyn to end being a neoliberal is disturbing. Is there no Left alternative to the doctrine? In Argentina Leftist parties would get voted in and then go neoliberal, and the Leftist democratic revolution in Latin America is being overturned. The ruling class have all the power and all the money, and too many of the working class tend to be authoritarian, while significant sections of the middleclass just want low taxes. They also tend to distrust the working class and so the Labour Party as well.

Modern Money Theory is the best chance yet we have had to change things. The problem is that it is so counter-intuitive, e.g that governments spend first and then only tax if inflation begins to rise, and so the tax is designed to keep the value of money in people's pocket as well as the value of thier savings. In this way tax can be seen as not taken money away from people, but as a good thing to preserve the value of their money, i.e. it helps people to keep their money. People are therefore getting a bargain with MMT while the ruling class get stopped from making huge profits out of public services in a Left of centre democracy. MMT and social democracy is win win for the public.

It's comforting to me that so many academics passionately want to change society for the better. Bill Mitchell works hard at it.