Who Owns the Future?

There is no novelty in arguing, as George Osborne does, that there is no alternative to his destructive and divisive policies of austerity – TINA was, after all, the Thatcherite catch-cry and as misleading in her day as it is today.

But it is surely stretching credulity too far to suggest, as John Harris did in this Sunday’s edition of the Guardian, that the Tories, in making that claim, have also established their ownership of the future.

His sub-editors may have done him no favours with their headline, but let us be quite clear – George Osborne’s backward-looking reconstruction of a 1930s classical response to recession is not only discredited by history but has created a present in which living standards have fallen by a record margin, output has yet to return to pre-2008 levels, and poverty as a result is endemic and growing in many parts of our society.

The future to which George Osborne lays claim is one which many of his intellectual fellow-travellers, including the IMF, are quietly abandoning. It is a future of government cuts without end, of growing inequality, and of a Britain – with only 10% of our output accounted for by manufacturing – finding it increasingly difficult to pay our way in the world.

If that is the future that George Osborne now owns, he is welcome to it. Most people, given the chance, would choose something different. But John Harris is on stronger ground when he argues that Labour and the left more generally have so far not offered them that option.

Most people, probably a comfortable majority, would still sign up to many of the virtues of the kind of society that Labour propounds – one in which there is a fairer distribution of wealth and a greater concern for all our citizens. Quite apart from the obvious benefits – that people would feel less pressured and divided, that there would be fewer social ills of the kind that always accompany poverty and alienation, that we would feel the benefits of living in an integrated society more at ease with itself – there is every reason to believe that a more equal and caring society would produce economic advantages as well.

The statistical evidence shows, after all, that countries with lower levels of inequality – such as the Scandinavian countries and Germany – have performed better than those countries, such as the UK and the US, where high and widening levels of inequality have accompanied relatively poor economic performance over recent decades.

This compelling evidence should come as no surprise. A wide gap between rich and poor in an economy is inimical to economic success for reasons that apply at both ends of the scale.

If wealth is concentrated in a few hands at the top end of the scale, the result is significant economic inefficiency. The rich have a greater propensity to “hoard” – that is to accumulate large cash reserves which remain unspent and are therefore not available to stimulate activity so that the Keynesian multiplier effect is thereby much reduced. And when they do spend, it is often on arbitrary and capricious purposes – little wonder that “trickle down” is not supported by any evidence.

At the other end of the scale, why deprive the economy of the productive capacity of a large chunk of the population? Can it possibly make economic sense to relegate them to unemployment and minimum wages when they could be both working and spending to the benefit of the economy as a whole?

Can it make sense to consign them to a future where poor education, skills and health – all consequences of poverty – mean that they are more likely to become burdens rather than contributors?

The task for Labour and the left more generally is, in other words, not to abandon their vision of a better and more productive and efficient society, but to demonstrate more effectively how it is to be achieved. That will not happen on the basis of “we’ll be just as tough as the Tories, but do it with a smile.”

The whole point of an alternative strategy is that there is nothing alternative about it. It is a strategy that addresses our real, not imagined, problems – the need to rebuild manufacturing, the need to restore our competitiveness as a trading nation, the need to reclaim control from the banks over credit-creation and the macro-economy as a whole, the need to raise demand and get the economy moving, the need to recognise unemployment – not inflation – as the prime target of policy.

Nor is there any shortage of good ideas as to how these should be addressed. Look at the work of John Mills on improving competitiveness, of Michael Meacher on alternatives to austerity, of Richard Werner and George Edwards on investment credit-creation – and the growing debate among leading monetarist economists about the proper role of monetary policy.

Labour has not yet summoned up enough courage to strike out in these positive directions. It is not too late, but defeatism of the John Harris variety – look anywhere but where the real effort is needed, to make the economy function better than it does at present – is, sadly, not of much help.

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This post was written by Bryan Gould