It’s the economy stupid! But not the neoliberal economy, rather the Keynsian, mixed economy!


As we in Corbyn’s Labour Party prepare for the elections in May I think it is crucial that we don’t accept the premise that New Labour lost 2 elections because ‘we weren’t trusted on the economy’.

That is of course true for Tory voters who will never believe the economy is safe in our hands whatever we do. But I don’t think it’s generally true across the electorate. In fact I would suggest New Labour lost because they accepted the ‘austerity’ narrative and the economic assumptions of the Tories and thus were so close to the Tories on almost everything that people thought they might as well vote for the actual austerity party rather than a New Labour echo of ‘austerity’.

Having a coherent and convincing ‘alternative’ economic narrative to austerity is what will win us the next election. That will involve challenging the Tory narrative of ‘balancing the books’ and using the authority of economists like Pikety et al to put forward the Keynsian alternative.

After the Wall St crash in 1929 most Western governments turned to austerity, just as they did in 2008. But this austerity further crashed the Western economies and led directly to the Great Depression of the 1930’s with the dust bowls of the USA, the Jarrow marches in the UK and the rise of Nazism in Germany. In the USA Roosevelt’s Keynsian, New Deal ‘saved’ the economy of the USA so that by 1941 they had the resources to join WW2 and fight Japan in the East and Germany in Europe.

After WW2 the 1945 Labour government embraced Keynsian economics which was so successful the Tories also adopted it and this led to 30 years of record-breaking economic growth in the UK from 1945 to 1973. Despite Thatcherite rhetoric the Keynsian mixed economy was the most successful the UK has ever known and by comparison the neoliberal era, 1979-2015, has been a dismal failure. It HAS enriched a tiny minority but for everyone else the appalling financilisation of our economy replacing manufacturing with gambling, has been a disaster causing only sputtering growth with falling wages that have to be counter balanced with overwhelming debt. Neoliberalism has been a disaster and it is not difficult to present that as simple coherent narrative. Jeremy Corbyn’s Labour Party must do so!

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