Posts Tagged ‘John Maynard Keynes’

The trouble with ‘45

03/07/2013, 05:35:56 PM

by Lee Butcher

Emerging phoenix like from the ashes of 2010 is proving somewhat more difficult than initially expected by some in the Labour party. The shattered economy, left ruined by the fiendish bankers, found the party holding the can and going down to a historically poor election defeat.

The usual fissures in the party have opened up and among the unsurprising and entirely unoriginal bickering between left and right about who is to blame, and who will resurrect the party in time for 2015, a certain wistful gaze over the historical shoulders of the movement has began.

The ‘right’ may have stopped looking back when arriving at Mr Blair’s lofty shoulders but the loosely defined ‘left’ have taken it upon themselves to cast their gaze back further into the distant past coming to a halt at the heady days of July 1945. Ken Loach’s nostalgic documentary outing, soon to be a regular repeat on Film 4, was the cultural firing gun of this endeavour.

A country whose recent past had left its economy close to bankruptcy and social ills crying out for remedy; 1945 and 2015 have never felt so similar. These observations are not entirely incorrect and any wise head in the party would do well to ask what Clement Attlee’s band of post-war “revolutionaries” has to teach us.

The problem is not that it is the wrong question to ask, the problem is that the answers returned are incomplete. As with all matters historical and political, the devil lay firmly in the detail.

As the proponents of such a view argue Attlee & Co. faced a fiscal crisis worse than our own and went on to dramatically increase public spending. They did it, so can we! They are entirely correct, but that enthusiasm can only be dampened when it comes to how they did it.

Britain’s economy, then as now, was in great trouble. Bankrupt is the term employed by most post-war historians to describe the Treasury’s books. George Osborne may have been rendered dumbfounded by a certain predecessor’s note informing him of the fiscal situation, Hugh Dalton must have been rendered incandescent at the sight of most of Britain’s cities laying in ruins.

In response to the fiscal legacy left by the work of the Luftwaffe’s finest, and the unbearable burden of maintaining over one million men in uniform scattered across the world, and the government picking up the bill for thousands conscripted to keep the essential industries running, Attlee and Dalton came to much the same conclusion as Messrs Cameron and Osborne; we need to cut spending.

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Bloomberg speech shows Balls can find what he needs in Keynes

21/01/2011, 05:55:27 PM

by Anthony Painter

Following his very well received Bloomberg speech, I cautioned back in September on Uncut against a “no retreat, no surrender” political strategy. Ed Balls is now shadow chancellor. He faces a number of challenges. One of which is how to respond to the Bloomberg speech.

Actually the speech – if followed to its logical conclusion – provides a powerful political narrative that in some ways resolves one of Labour’s current problems: how does it free itself from the perceived failures of its past?

The speech had a core argument that was anything but deficit denial. It was actually a different strategy for dealing with the deficit. Counter-intuitively, but based on completely sound Keynesian economics, Ed Balls argued that, in these circumstances, government should pursue an expansionist fiscal policy. The result will be an economy that grows more quickly and creates more jobs. The government’s counterargument is that in an open economy there are limits to the degree to which you can do this. Furthermore, they said, by May 2010 the UK was breaching those limits (there was scant evidence for this as tracking long term interest rates demonstrates; though the argument was of risk rather than immediacy). (more…)

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