Corbynomics

Blairites cannot deny the level of support in the party for Jeremy Corbyn. Now, they also cannot deny his support amongst the electorate at large. So, they have tried to attack the credibility of Corbyn's policies on the basis of economic feasibility. They are on no firmer ground.

Gordon Brown's intervention, on Sunday, in that debate has taken the Blairites no further forward. However much the Tory media may try to portray Brown as some kind of left wing figure, the fact is that Blair and Brown are politically inseparable. The things New Labour did that could be given critical support, are the attempt to make Labour more “professional”, which Lenin, basing himself on the German SPD had also encouraged in “What Is To Be Done?”; the introduction of the Minimum Wage; the increased investment in the NHS, and other aspects of the welfare state.

Besides the non-economic policies, such as the Iraq War, what New Labour could not be given critical support for was the failure to reverse the economic model introduced by Thatcher and Major, based on a low wage/high private debt economy, which encouraged low levels of productivity, de-industrialisation, the blowing up of huge bubbles in stocks, bonds and property, and thereby created the inevitability of the financial crashes of 2000 and 2008, and the much larger one, still to come.

New Labour, under Blair and Brown, had 13 years to have reversed that, but instead they continued it, and enhanced it. Giving the Bank of England independence simply emphasised the dominant role that money-lending capital had assumed within the economy. It was reflected in the kow-towing to the agents of the money lenders in the City of London, as well as to the big individual money lenders like Rupert Murdoch, who used their power to exercise undue control over the economy and social life.

Because they failed to reverse the conservative economic model of low wages, high private debt and the exaggerated role, therefore, of fictitious capital, New Labour found themselves having to introduce ever more elaborate, ever more expensive responses to the distortions created, and in doing so created even more distortions.

As the blowing up of credit bubbles caused property prices to soar beyond reach, and sent rents soaring after them, Housing Benefit payments exploded. In addition, a raft of other, in-work, benefits, such as Tax Credits, were introduced. Instead of reversing the low-wage/high debt model it enhanced it, because all of these benefits amounted to a subsidy to the low paying, inefficient, small businesses, who were thereby encouraged to keep paying low wages, and fail to invest so as to raise productivity, in the knowledge that the state would keep subsidising their wage bills.

New Labour could, during all that period, instead have introduced a much higher Minimum Wage, which would have acted to cut the welfare bill, and force inefficient producers to invest, to raise their productivity. They could have encouraged Councils to build many more council houses, so that rents and house prices would have been reduced. But, even when they had been elected, and could have done that, they did not do so. For three years, they simply kept to the Tories spending plans, and instead of encouraging councils to build houses, they more or less encouraged them to sell them off to ALMO's, the main beneficiaries of which were the former Directors of Council Housing Departments, who saw their wages more than double, and the money lenders, who provided the loans to the now privatised Housing Management organisations.

Brown is portrayed by the Tory media as some kind of left-wing alternative to Blair, but one of the first things he did when he became Prime Minister was to invite Thatcher, the butcher of Orgreave, into 10 Downing Street, followed shortly after by making the odious right-winger Digby Jones Labour's Industry Minister.  Yet, yesterday we have Brown quoting Nye Bevan, who described such Tories as worse than vermin, as well as quoting Gramsci, who died for his principles at the hands of the Italian fascists, lecturing us to the effect that the most important thing is to win governmental office so that we can implement OUR ideas.  You would have to laugh if it didn't make you cry.

New Labour saw the house price bubble as beneficial as it created the delusion of wealth amongst home buyers and elderly home owners, and underpinned a further expansion of debt, as it did in the US, ahead of the sub-prime crisis. When those bubbles began to burst in 2008, New Labour could have allowed that to happen, concentrating instead on the real economy. Instead they bailed out the paper wealth of the banks, at the expense of destroying vast amounts of real productive wealth, though that process was really implemented, by the Liberal-Tories, with New Labour complicity, more after 2010.

So, Brown and the Blairites are in a poor position to lecture Corbyn and his supporters on economic credibility. It was Brown who sold off large amounts of gold in 1999, as its price began to rise sharply, along with other governments, because a series of global banks and financial institutions had shorted gold, and were in danger of going bust, as the price rose. It was New Labour that had feted these bankers, and allowed them to operate unregulated, as the Tories before had done, which created the conditions for all of the misselling and other financial scandals that are now coming to light.

Where they have insisted that the rest of us must tighten our belts, under a regime of austerity, no amount of money was spared to maintain the hugely inflated prices of fictitious capital, including a huge printing of £375 billion, as part of the Bank of England's policy of QE. Yet, today, the Blairites howl at the idea that the Bank of England might print money to support real investment in productive-capital, organised through a National Investment Bank, or that it might support necessary spending on infrastructure and so on, to increase productivity and competitiveness. That is the extent to which the Blairites, like the Tories have no concern for the needs of productive-capital, only with the continued inflation of fictitious capital prices.

They talk about the interests of business, but they really only mean the interests of the 0.001% of the population who own the majority of fictitious wealth, not the real businesses made up of millions of workers and managers, who each day produce society's wealth in goods and services.

I heard, the other day, Jack Straw object to the proposal for QE to finance such investment, in the most ridiculous terms, which showed he simply does not understand the economics behind it. It was okay to bail-out the banks by QE, he said, because the money only went into the banks' balance sheet, whereas it would be inflationary to print money to cover government spending. The mind boggles. The whole argument behind QE, for example that being used in Japan and the Eurozone, is a need to stimulate inflation, by that money being loaned out by the banks. Straw also doesn't seem to realise that the way QE works is that the central bank does buy government debt! It buys government bonds, held as bank capital, by the commercial banks, with newly created money. It thereby provides the banks with liquidity that they are intended to lend out.

Of course, the problem is that this QE has not stimulated economic activity. It has simply bailed out the owners of fictitious capital, and inflated their paper wealth even further, by reflating asset price bubbles, and so making the next bigger crash even more inevitable. In other words, it has created the worst kind of hyperinflation. It has sent share, bond and property prices soaring further, which encourages further speculation in these markets, as an alternative to productive investment – pace Haldane – and because it makes houses and pensions more expensive for workers, it pushes up the value of labour-power and reduces profits.

The other Blairite objection to Corbyn's policies is that the proposals for renationalisation of the railways, energy and so on, would be unaffordable. One obvious answer to that would be to buy them back at the same knock down prices they were previously sold off at. But, there is a better answer. Stella Creasy has argued for using fines on energy companies as a means of mutualising them. That would be too slow and time consuming. Instead, Labour should take a leaf out of the Tories' book. They have just forced Housing Associations to sell off houses to tenants at huge discounts of up to 60%. Labour should extend that principle.

Corbyn has proposed extending the “right to buy” to the tenants of private landlords. I agree. Its an excellent idea. But, we should use the same principle, to meet the aspiration of millions of workers not just to own their own home, but to own their own business. We should introduce a Workers Right To Buy, the company they work for, with the same 60% or higher discounts to the current asset value of the company.

In addition, workers would find it much easier to achieve that if they had control over the £800 billion in their pension funds. Labour should legislate to transfer the control of these pension funds to directly elected committees of workers, so that they can meet our needs, not the interests of the 0.001% of society that comprise the rich money lenders.

The Blairites complain that Corbyn's policies are old. There is nothing wrong with old policies per se. Besides, the policy of austerity advocated by the Blairites is the same old policy of balanced budgets accepted by Ramsey Macdonald in the 1930's. What counts is whether the policy is correct or not.

There are other policies that Corbyn could pursue that would be new and progressive compared with the old conservative, nationalistic policies of the Blairites, over immigration, for example.

Corbyn should use the current surge to extend the lesson from Greece, that we can only provide a rational solution on a European basis.

Corbyn should campaign for a renewal of social democracy across Europe, to draw in the energy unleashed by Syriza and Podemos. They should campaign for an equalisation of pay and conditions, as well as tax and benefits, across Europe, and for an EU coordinated programme of investment, like the Marshall Plan after WWII, along with a similar writing off of debt that occurred then. It would require a thorough democratisation of EU political institutions.

The reality is that the conservative ideas pursued by the Blairites are only a watered down version of the backward looking, conservative ideas that the Tories and other conservatives have inflicted on society over the last 30 years. Those policies have not just failed, they have been disastrous even in capitalist terms.

It is time for a serious change in direction. The social-democratic ideas of Jeremy Corbyn are not socialist. They are not the socialist solutions that a Marxist would propose, but they at least turn things in a forward looking direction. They open up the potential for discussion, and for a strengthening of the working-class, and its on that basis that Marxists can give them critical support.