Australia – inflation still falling while the RBA governor keeps inventing ruses to keep hiking rates
It's Wednesday and there is a lot going on in the data release sense -…
It is Wednesday and I am now unable to get home to Melbourne as a result of the border closure between Victoria and NSW. That closure is the result of the incompetence of the conservative NSW government who thought they could beat the Delta variant of COVID and leave Sydney open for business. They have now learned that their claim to be the world’s best virus containing government were hubris and so regional NSW is also suffering, what will be a very long lockdown. Victoria has sensibly closed its border as have the other states to NSW, which now is an isolated, pariah state. Pity the NSW Labor opposition is so weak. Anyway, today is a few snippets about the British Labour party being so weak, some reflections on monetary sovereignty, and a note that the barbarians are trying to kill off social sciences in our universities. Then some happiness via some great bass playing.
The latest Survation poll results in the UK carried the headline – Conservative lead jumps to 11 points.
The poll was run between July 5 and 13, 2021 and shows that if a British General Election was held in that period the following voting intentions would be expressed:
More damning is that “There is no change from two weeks ago on who the public think would make the best prime minister, with Boris Johnson still leading Keir Starmer by 45% to 28%.”
And, “On party leader ratings, Boris Johnson and Keir Starmer’s net ratings are both down in the past fortnight, Johnson on -3%, down 3 points, and Keir Starmer on -11%, down 2 points on a fortnight ago.”
So, at a time that the Tories and the PM are obviously not very popular, the Opposition leader is going backwards.
Clearly, the Opposition leader is still locked into a neoliberal macroeconomic mindset.
The latest example is the debate in recent days about the Tory cuts to foreign aid.
The BBC article (July 13, 2021) – Foreign aid: Covid costs mean we have to cut payments, says PM – demonstrates that both political parties are locked into a flawed conception of the fiscal capacity of the government.
The Tories have cut aid by around £4 billion – which will leave aid around 0.5 per cent of GDP rather than the 0.7 per cent commitment that the Government voted on in 2015.
The Government is claiming that the pandemic has seen it spent £407 billion during the pandemic to “shelter our people from an economic hurricane never before experienced in living memory” so that there has to be “consequences”.
They cited the rising debt associated with that spending boost as the reason for cutting aid, despite the fact that the Bank of England has purchased most of that debt – the government buying its own debt in practice.
The Opposition leader played it ‘cute’ with his response in the Commons (see video below).
He said that the 0.7 per cent target should be retained and allowed the Government to scale aid to the current GDP levels.
Interestingly, he said that:
Every member here was elected on a manifesto promise to retain the 0.7% target … Cutting aid will increase costs and have a big impact on our economy. Development aid reduces conflict. It reduces disease and people fleeing from their homes.
It is a false economy to pretend that this is some sort of cut that doesn’t have consequences.
So, he is being cute because he is pretending he supports no cuts in spending while retaining the 0.7 per cent of GDP target.
Imagine GDP is 1000
0.7 per cent of 1000 is 7.
If GDP falls to 900, then 0.7 per cent falls to 6.3.
A cut of 0.7.
So if “Development aid reduces conflict. It reduces disease and people fleeing from their homes”, then the Opposition leader is voting to increase conflict and disease and force more people from their homes in less developed countries.
Sure enough, the Tory decision cuts aid more than if the 0.7 per cent rule was retained but that is not the point here.
In the video statement, the Opposition leader said:
Nobody in this House is arguing for overseas aid to be maintained at the pre-pandemic levels during the downturn … We all recognise that a contracting economy means a relative contraction in our aid budget.
I don’t recognise that.
There is every need at present for the British government to actually increase foreign aid spending to help the nations that are less able to help themselves.
There is absolutely no need for the contracting UK economy to cut foreign aid.
There was an interesting article about Fiji in the ABC News last weekend (July 11, 2021) – Fiji is racing against time to vaccinate its population while a COVID-19 outbreak explodes.
The COVID situation there is difficult now after a long period of being free of the virus.
The government there has “refused to implement a nationwide lockdown” despite “recording around 700 new infections daily”.
The Prime Minister Frank Bainimarama is a sort of Bolsonaro character and claimed that “We don’t want to lock people up”.
Better to let them die, it seems.
He invoked the myth that lockdowns do not work against the virus but “kill jobs”.
I think the evidence is to the contrary as long as there is good fiscal support for income protection etc.
Which brings me to the point.
An Australian-based professor of epidemiology was quoted as saying that while:
In a rich country, it’s a very easy solution. In a poor country, this becomes a major problem.
Apparently, “Australia could turn to lockdowns as a way to reduce case numbers or minimise deaths, but countries like Fiji may not be able to afford such decisions.”
Fiji issues its own currency, the dollar but the central bank of Fiji does administer capital controls which “help prevent large and/or sudden outflows, which can significantly reduce Fiji’s foreign reserves.”
Fiji is a small, open economy that is impacted by foreign commodity price swings and natural disasters.
They gain foreign exchange from large flows of tourist income, remittances and sugar exports.
Tonight, I am presenting a lecture at the Madrid Summer School on the topic of monetary sovereignty.
One of the sub-topics is related to the Fiji question, which generalises to many small, less developed economies.
When we talk about monetary sovereignty, we must also recognise that there are other limits, even when a nation issues it’s own currency.
Some economists like to express this in terms of a spectrum of monetary sovereignty from high to low depending upon the circumstances that prevail in each situation.
Most developing countries do have limitations on the extent to which they can claim to be monetarily sovereign.
What Modern Monetary Theory teaches us is that any currency-issuing nation can ensure that all the productive resources that are available to it can be fully and productively employed.
But that doesn’t insulate the nation from material poverty.
A nation with very limited productive resources, particularly in terms of food and energy self-sufficiency may well be able to achieve full employment but still remain relatively poor in material terms.
There are several ways that developing countries lose monetary sovereignty.
The main reasons relate to their propensity to issue debt in foreign currencies and to peg their currencies to other currencies.
The extreme example of the latter phenomenon is dollarisation, where the nation uses a foreign currency (in this case, the US dollar) as its own.
The experience of the West African nations who still use the CFA franc as a relic of the colonial era is another example.
Within these constraints, mainstream economists, represented, for example, by the policies and practices of the World Bank and the IMF, prescribe various solutions for developing countries to improve material living standards.
The problem is that they all tend to undermine the goal.
None of the current advanced nations, which enjoy high material standards of living, could have achieved that state of development if they had have followed the prescriptions now in vogue and applied by the IMF and the World Bank.
The package of solutions that are proposed (and enforced through debt relief and structural adjustment programs) are multi-dimensional.
The first IMF-type strategy is to encourage Export-oriented growth.
This strategy has been a staple of the IMF, and, involves the conversion of subsistence agriculture into cash crop production for export mixed with some form of assembly-line manufacturing, which means the nation is seen as an assembly line for products destined to be sold in the advanced nations.
The problems of this strategy are many.
With the agricultural conversion, sustainable practices and food security are lost and nations depend on prices in world markets for income, which are volatile.
They also lose subsistence food self-sufficiency and become increasingly dependent on imported food, often of lower nutritional quality.
I am referring here, for example, to the rising dominance of the fast food industry.
History tells us that price drops are common in markets flooded with produce, which, in turn, creates problems of debt sustainability and nations enter a vicious cycle of increasing debt and resource depletion.
The decimination of finite resources, such as forests also undermines future prosperity.
The creation of assembly-line manufacturing, involves the importation of high value-added goods (capital, machinery, etc) and energy resources, which further imbalances the precarious trade situation of the nation.
The second IMF-type strategy is to encourage foreign direct investment.
This often invokes a ‘smokestack’ chasing exercise where nations race to the bottom to attract foreign capital, and, end up with depleted environmental outcomes, poor working conditions and wages, and a compromised tax base.
Nations also sign free trade agrements which privilege corporations via investor dispute mechanisms and compromise the legislative capacity of the elected national government, which degrades the quality of their democracies.
Rarely will the interests of the foreign corporations align closely with those of the local population.
The third IMF-type strategy is to encourage financial market deregulation.
Related to the problems of foreign direct investment, is the relentless push from multilateral agencies, such as the IMF, for nations to deregulate their financial markets in order to attract speculators – the so-called ‘hot’ money investors.
In addition to allowing these speculative flows of capital to enter and exit without control, nations are pressured to bias monetary policy in the direction of higher interest rates and fiscal policy in the direction of lowering tax rates in order to attract immediate inflows of foreign capital.
Taken together, these strategies typically align the national policy with the interests of foreign capital, and, undermine the well-being and future prospects of the local population.
While a nation might record large short-term inflows of foreign capital, minor shifts in conditions in world markets, precipitate sudden outflows, which create financial crises and share market collapses.
The fourth IMF-type strategy is to encourage tourism.
Turning cities and/or regions in less developed nations into ‘playgrounds’ for foreign visitors is a popular strategy and proponents claim it allows the nation to acquire valuable foreign currency reserves.
There are many problems that arise however.
The quality of local urban environments where people live and work are compromised to satisfy the whims of the ephemeral inflows of foreign tourists.
Large scale resort style developments often permanently impair the local ecosystem and absorb valuable subsistence agricultural land.
Moreover, the nation has to import food, energy and capital to facilitate the hotels and other tourist infrastructure, which often undermines the trading situation and promotes currency instability as speculators bet on exchange rate depreciation.
The imports that are necessary to facilitate the tourist industry also reduce the import space available to the nation for bringing in essential goods and services to satisfy the basic needs of the local population.
We also witness race to the bottom strategies, where nations compete against each other for tourists via huge subsidies and tax breaks to foreign tourist operators, who often force local workers to work for poverty wages.
The final IMF-type strategy we consider here relates to the reliance on remittances.
The multilateral agencies often hold out that nations can develop if they allow their most skilled workers to work abroad and remit their incomes back to the local economy.
The problem with this strategy is that it builds cyclical fluctuations into family income where foreign workers are often the first to be made unemployed when the host nations encounter recessions.
But, the more basic problem with this strategy, is that it creates a brain drain, where the investment that the nation has made in education and skill development is lost and the benefits are enjoyed by other nations.
What is the alternative approach?
My MMT colleague, Fadhel Kaboub, who is the premier expert on these matters, refers to these mainstream approaches to economic development as ‘long-term structural traps’.
The alternative approach starts with a recognition that there several interrelated structural strategies that must be invoked to kickstart, and, then, sustain the development process.
First, the lack of food self-sufficiency has to be addressed to reduce the need to import basic nutritional requirements and free up ‘import’ space for other items, such as productive capital.
Sustainable agricultural policies lie at the heart of this approach.
Instead of converting subsistence agriculture into cash crops for exports, nations need to enhance the productivity and security of their subsistence sectors.
Second, nations need to reduce their dependency on imported energy sources by investing in renewable energy and reducing the need to import fossil fuels.
Third, the industrial strategy typically promoted by the multilateral agencies is typically deficient in that the value-added component of exports is low (unprocessed primary commodities or agricultural products) and the value-added component of the necessary imports (like fuel and processed food) is high.
Less developed nations need a big push led by state investment in infrastructure in the health, education and skill-development areas.
They need to invest heavily in research and development and seek to shift the value-added equation to processed exports and reduced imports.
They cannot just develop assembly lines for products that benefit the advanced nations.
As this strategy unfolds, subsidies to sectors and activities that do not fit this innovation profile should be phased out.
What should be the role of multilateral agencies like the IMF and the World Bank?
They should be replaced with a new agency that has the mission of ensuring less developed nations can always get sufficient foreign exchange to allow for imports of food and energy resources that are essential to maintaining adequate material living standards.
The bottom line is that Fiji can still protect the incomes of their workers in the same way that Australia can.
But that doesn’t mean that its other vulnerabilities are reduced.
It has experienced a huge GDP collapse – negative 19 per cent in 2020 in real terms.
It has a trade deficit and relies on imported energy.
It runs a continuous fiscal deficit – currently around 2.3 per cent of GDP.
And, its currency has been stable for many years
Like many universities in Australia, the University of Westen Australia is experiencing a budgetary crisis due to the COVID restrictions on international students and the failure of the federal government to provide adequate support to the higher education sector.
The budgetary crisis is, in part, due to the inflated salaries that the top managers take for themselves these days in the sector.
They always make budget cuts to the lower paid workers who actually do the work in our universities and keep rewarding themselves grossly scandalous salary levels.
Anyway, the UWA has decided to cut social sciences heavily and is basically scrapping the the Sociology and Anthropology areas.
You can read about the situation in this WA Today story (July 14, 2021) – ‘Degree factory’: UWA students revolt over $40 million restructure chasing ‘profits over people’.
The damage will be substantial.
If you want to send a protest voice to the UWA then please sign this petition – Save Social Sciences at UWA.
This is what I have been listening to while working this morning.
One of the great bass players in jazz history is – Oscar Pettiford – who was one of the first bebop players.
He also pioneered the use of the cello in jazz (his story is interesting on that).
His great period was during the 1950s. He died of a polio related illness at the age of 37 in 1960.
This track is of a Bethlehem Records release in 1955 – Another One.
This track 0 – is the famous piece by – Hoagy Carmichael – and – Mitchell Parish –
Appearing on this track with Oscar Pettiford is – Dan Abney (piano).
It is one of my favourite albums.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.
This Post Has 31 Comments
Thanks Bill. Keep up the good work. A change is gonna come
I’m afraid it gets worse. You will be bemused(?) to read about the latest gimmick that the dominant centrists in the U.K. Labour Party are wheeling out: “Renaissance”!!!
As if the party isn’t Blairite enough already, centrism is to be… reborn!
This from today’s Grauniad:
++Voters still unlikely to trust Labour with spending, party warned++
“Voters blame local Labour councils for austerity and see voting Conservative as a chance for change – and are still unlikely to trust Labour with spending – a new pressure group has cautioned.
The warnings come from a newly launched group Renaissance – led by key figures from Labour’s centre including Stephen Kinnock, Yvette Cooper and Justin Madders – who have called for the party to refocus on winning back Conservative voters in towns”
“The problem comes when – if you’ve got a lack of clarity about who we are and what we stand for – that is fertile territory for the Conservatives to plant the seeds of division,” [Kinnock] said.
“You need to fill that space with really strong and compelling stories about being a party of work and good jobs, being a party that wants a manufacturing renaissance, and being a party that’s going to manage your hard-earned taxpayers’ money in a very sensible and sound way that’s actually going to invest for change in the future. Then these other issues and concerns and sideshows will just evaporate.”
“Voters also suggested they were deeply concerned about the national debt and said they did not trust Labour with high-spending pledges. “It’s hard to trust Labour given that the pandemic will have to be paid back for some time,” one from Don Valley said.
However, Kinnock said the focus groups showed that a relentless focus on secure jobs could win over voters.”
Wow! Placing yourself to the fiscal right of the current crop of Tories is going to be a vote winner? And imagining that “stories” are what’s required, as opposed to socialist principles?
This is a party that’s ideologically bankrupt, it exists solely to *prevent* socialism in the U.K., and the sooner its pasokification is complete, the better.
Best, Mr S
All parts of the Labour Party are unelectable – largely because it has become a Liberal Democrat tribute act.
“0.7 per cent of 1000 is 700” ??
It’s actually 7, Bill !
“Tony Blair” keeps returning to UK Labour in different guises.
So, if the original “best Thatcher creature” was labour worst enemy, why do they keep on appointing his clones to Labour leadership?
Some might say that is because Jeremy Corbyn was defeated in the general election and leftists lost all chances of winning.
But, will Keir “Blair” Stramer do better than Corbyn? Not likelly.
So, what’s on it that we don’t see?
Money might be the answer.
Everything’s for sale nowadays and the top elites have plenty of it.
And they have no trouble spending.
They know that spending can give good return, if it’s invested in the right assets.
We, the 99% ,seem to have forgoten that. We are certain that deficits are allways bad, so we (the state, that is) don’t spend.
We rather give it away to the 1%, hoping for the best, but expecting the worst.
Well, History tells us that, in the long-run, everything will go the right way.
That would be true, if we don’t destroy the planet in the meanwhile.
Thomas Pikkety has shown that fossil fuel consumption is concentrated in the top elites.
Reducing to zero the fossil fuel consumption of the lowest 99% of the population will have no impact on climate change, if the top 1% keeps the actual rate of consumption.
That’s the main reason we have to end the creature’s work for good.
@ MrShigemitsu: ‘This is a party that’s ideologically bankrupt, it exists solely to *prevent* socialism in the U.K., and the sooner its pasokification is complete, the better.’ Here’s an article on pasokification https://novaramedia.com/2021/05/20/has-keir-starmer-heard-of-pasokification/ . The indented video interview with Starmer: ‘What does change mean in say policy terms? ….it means facing the country’ (repeat twice) demonstrates the utter vacuousness of Starmer’s Labour which needs to die. The other included video interview with Matthew Brown, Leader of Preston Council, besides being a great example of a Lancashire accent, offers some hope that an alternative with actual policies could be generated from the grassroots.
With regard to development and Bill’s words: ‘The second IMF-type strategy is to encourage foreign direct investment. This often invokes a ‘smokestack’ chasing exercise where nations race to the bottom to attract foreign capital, and, end up with depleted environmental outcomes, poor working conditions and wages, and a compromised tax base. Nations also sign free trade agrements which privilege corporations via investor dispute mechanisms and compromise the legislative capacity of the elected national government.’ This is the situation described repeatedly in China’s Second Continent by Howard W. French (I’m not particularly recommending) of Chinese ‘investment’ in Africa, that has significantly replaced previous colonial/post-colonial exploitation, with one difference that Chinese businesses routinely import Chinese labour as an alternative to racist mistreatment of locals.
Bill, It’s troublesome when someone strings together “value added” along with “processed foods” in the same sentence, . Processed food industry’s model for capitalist profit making usually involves heavy use of sugar, salt, grains and vegetable based oils. The evidence for all of these things being at the root of many of the western world and increasingly the rest of the worlds major health issues is growing quickly to say the least.
This is another area, i think were capitalist thought control has wood worked it’s way into academia, and from there, via media to the rest of the world, much the way New Keynesian bs dominates thought on economic matters. There is a developing trend here.
The meme of covid debt, I’m sure, is being put out there to justify cutting any kind of science that tends to raise inconvenient truths. We have seen this in Canada, were both federal and provincial levels of government, have been using every available debt/deficit narrative to justify cutting funding for any sciences that might observe and discover the adverse impacts of anything capitalists have been exploiting.
Pandemics have been strongly linked to the ever increasing human movement between geographically separated regions; there really is no other way for the likes of a viral illness such as covid to spread across continents.
Prior to the arrival of the French and British colonists in Canada, the indigenous population might have been as much as two thirds the size of today’s entire population, because it is known that at least that many died in pandemics of cholera and smallpox in the mid to later 19th century during a major period for colonial expansion, and coinciding with similar events in other parts of the world were the empire builders were at work.
All of those people existing together in good health on a land that is frozen over everywhere for at least 5 months a year, without the benefits of any modern technology, processed food, New Keynesian economics, modern agriculture or modern nutrition science; how did they manage to survive in from what the evidence suggests was relatively good health for the period and without the wanton destruction of nature we have witnessed?
The advice of the IMF being given to less developed parts of the world is exactly the advice that aids the objectives of capitalists in the more developed world, who need access to growing amounts of natural resource and less expensive labor keep their game going. It’s a kind of Ponzi scheme really.
Several decades ago, E.F. Schumacher had a great handle on these issues of what was then called third-world development. “Small is Beautiful,” its philosophical underpinnings set forth in “A Guide for The Perplexed,” along with Schumacher’s “Good Work” are as relevant today as when they were written, even more so, and help to put into fuller context Bill’s economic analysis. Obviously, the phrase “tourist trap” means much more than a travel destination that milks visitors.
As a long time avid reader of your blog I have been able to understand the reality of economics. I now am frustrated at the lack of objective criticism allowed on all MSM to challenge the orthodox narrative.
This reflects your complaints that your alternative ideas on economic ideology can lead to professional isolation, loss of budgets and careers.
With this in mind I have realised that there is only one orthodox narrative allowed when it comes to COVID. There are thousands of GPs, medical scientists and virus specialists who have been silenced by the threat of losing their jobs or licence. Many other brave medical people have had to resort to creating their own web sites (like you) in order to enter the debate. Many do not want to have their articles posted on the numerous conspiracy sites, the only places that will take them, because of the association with daft bat crazy ideas that proliferate on these sites.
I know that you do not comment much outside your discipline and I respect that but you have commented on numerous occasions about COVID and lockdowns. These comments have mostly been direct responses to the orthodox narrative and the useless behaviour of the politicians in Australia. All the worlds politicians have been useless in dealing with COVID and no one has allowed any structured debate.
You may well have a researched view on the pandemic and formed an opinion that differs from me but I request that you look at the similarities between your and the medical professions ability to argue alternative ideas.
(Bill deleted two links to external material. He does not wish the debate here to become focused on those issues).
I have no doubt that the primary reason the US and most of the West are on a trajectory of stagnation or decline whilst China is likely to continue down the path of at least three times the economic growth rate of the West; is the fact that China follows a fiscally expansionary path (actually more optimal fiscal path) while the West in general still perseveres with neoliberalism and fiscal austerity.
The rest of China’s growth rate probably arises from competent state intervention in nation building, great success with manufactured goods exports and a large well educated and industrious populace emerging from a low income base.
Similar to China, Japan has used fiscal policy to ensure close to full employment as well as using direct government intervention to drive economic development and with meeting challenges such as the 1970’s oil crisis, periods of trade protectionism and now the global warming crisis.
The nominally progressive left in most of the West are equally complicit with the free market conservative right with imposing destructive neoliberal reforms and fiscal austerity. Keir Starmer is no better than bumbling Boris.
It must be so frustrating for Bill and others to know that each nation can legislate and adequately fund most of the solutions to the challenges we all face; but to see that advice ignored or derided.
Multitudes in the developing world are indeed suffering even more terribly than normal due to Covid-19, both through the illness and from the necessary imposed economic shutdowns in combination usually with the absence of any government provided financial support due to the near universal neoliberal domination of fiscal policy imposed by international institutions such as the IMF and World Bank as well as by most Western governments. This is not the time to cut foreign aid.
China’s ambitious Belt and Road initiative is rightly criticised for imposing debt traps onto the developing world, increasing Chinese government influence and with prioritising jobs for Chinese workers rather than local workers but given the disastrous neoliberal economic policies imposed by the West on the developing world, China usually wins by offering the best deal available.
The answer to an excessively assertive China is for Western governments to realise their true fiscal capacity and to out compete China with aid and development programs and projects that truly prioritise and benefit local people as well as minimising environmental harm. China would then no doubt feel compelled to outbid ‘the West’ based on merit.
As Bill has said so often the disastrous neoliberal IMF, World Bank and similar neoliberal international institutions must be radically reformed or shut down.
Also as Bill, Fadhel Kaboub and others have pointed out; a knowledge of MMT reveals that developing world countries can also do so much better for themselves by more fully utilising their own human and other resources.
The narrative needs to change from immigration and “foreign direct investment” to one of developing people in other nations and “foreign outward investment”.
There should be a permanent Marshall plan to sustainably develop the entire world. We can’t afford not to do that.
But until everybody at home has a job and an income, inevitably “charity begins at home” will dominate. As we saw with the pointless cut in “foreign aid” this week in the UK, and which in reality is a cut in government subsidy to UK export businesses. A point nobody in power appears to understand.
To say that Labour is unelectable may be true (at least according to ecent polling) but is not a good stance to take. After all, while Starmer is not great, at least he isn’t Johnson, who is loathsome and incredibly dangerous. This is the contrast that should be kept in mind when one is thinking of voting. It is not good, but it is the least bad, as it were.
“And imagining that “stories” are what’s required, as opposed to socialist principles? ”
Are you saying you think that the UK public would elect a socialist party?
@ Neil W,
You can bet your bottom dollar that the particular projects that will bear the brunt of the Foreign Aid cuts will be precisely those that offer few, if any, income-generating deals for UK exporters, tied up in those agreements.
It’s quite touching to think that a large proportion of the UK population actually believes that its Government is in the business of simply ‘donating’ money to poor, foreign, brown people – with no strings attached. Bless!
@ Bill, I do hope you manage to get home to Melbourne soon – it must be grim to be stranded elsewhere for the duration. Good luck.
@ Henry Rech,
“Are you saying you think that the UK public would elect a socialist party?”
Maybe, maybe not – but what I do know is that when confronted by a list of policies, but without the names of their parties attached, the UK public overwhelmingly supports left wing policies over right wing ones – including such socialist measures as nationalisation of monopolies, and of course a fully-public NHS.
The anti-Tory vote always wins a popular majority in UK General Elections, and it’s only the FPTP system that gives the impression that the Tories win it, when they don’t.
The current Blairite incarnation of the Labour Party has nothing really to offer anyone, which is why it is languishing so poorly in the polls, in spite of the most appalling government the UK has ever seen. When led by Corbyn, and with a policy not to challenge the Leave result, Labour won 40% of the vote in 2017 – enough to remove the Tory majority of the day, and within 3000 or so, marginally-targeted, votes of winning.
So a socialist victory is always a possibility, but would most probably still require Labour Party branding – something which the Blarites know is the case, which is why they resist what little remains of the Labour Left so strenuously, because they see it as their sworn duty to prevent socialism ever happening in the UK – and being rightist cuckoos in an erstwhile socialist nest is how they have achieved this.
They may have won that war, but the result is now a disaster for the UK population, faced with more years of Johnson and/or his crazy libertarian front- and backbenchers, to whom he is beholden.
Left wing votes have been totally shed from Labour now, along with a large section of its membership. Opinion polls I have seen lately do not appear to include ‘Don’t Know/Won’t Say’ responses, which would be instructive to see, because there will be a great many disenfranchised voters as a result of Labour’s lurch to the right – a move (although conspicuously not working out for Labour at all) that they don’t care about, because their primary aim has been achieved: to keep out socialism in the UK *at all costs*.
The UK population may indeed not vote, in a majority, for a nominally Socialist party, but if there were one (whether it called itself ‘Socialist’ or not), with an eminently achievable percentage of the potential vote in the teens or possibly low twenties, it would certainly put a rocket up the arse of New New Labour, and force it to compete further, if not completely, on the Left field if it ever wanted any kind of parliamentary majority – in the same way that the fear of UKIP support eroding Tory votes forced Cameron to hold the EU Referendum; something he would never have done if it hadn’t been biting at his heels for years – mostly without having even one single MP.
Amazing what a small but vigorous party can achieve – even without any seats in Parliament .
The UK Left ought to try it.
“including such socialist measures as nationalisation of monopolies, and of course a fully-public NHS.”
The problem for me is the term “socialist”. I would not consider the policies above as “socialist”.
These are policies that can be implemented in a capitalist system.
When I see the world “socialism” I take a strict Marxist view and have it mean total ownership of the means of production by the state.
The term has been so abused that I think it has become almost meaningless and misunderstood.
When you use the term “socialism” what do you mean?
In what sense is the UK Labour Party a socialist party?
The U.K. Labour is not a socialist party. It’s original constitution set itself up as one, but Blair removed Clause 4, dedicated to bringing about the people’s ownership of the means of production or some such declaration, and ever since then the Blairite faction has been on a mission to prevent it ever espousing socialistic policies ever again.
It can be argued that this has always been the case historically, with figures like Wilson and Healey always ready to scupper left wing initiatives.
I’m not going to split hairs with you over definitions of socialism, but nationalisation of monopolies and a fully Public Health Service are certainly not features of late stage neoliberal capitalism, as far as I can tell.
If you believe they are, well, you carry on….
It seems reasonable to say that many who vote Tory in the UK have no real idea what the implications are of doing so are all that matters to them is the Tories make enough noises to sound anti-government. What does this mean? There are two main themes to their anti-government hysteria – the government uses taxpayers’ money and government spending will result in high levels of inflation. That I believe is pretty much it in a nutshell. It’s the consequence of main-stream media brain-washing and an education system that studiously avoids any item in the schools syllabus that touches on the mechanics of how good economic well-being for all is achieved in the country. This authoritarianism has been a feature of UK society for centuries, it’s really Stockholm Syndrome.
@ Henry Rech,
“When I see the world “socialism” I take a strict Marxist view and have it mean total ownership of the means of production by the state.”
This is quite a dated concept. Even as early as 1945 the British Labour Government had no problem being understood to be socialist in nature. They introduced the NHS, reformed the education system, and nationalised some 30% of the economy. There was no intention to nationalise every corner shop and window cleaning service.
The Communist Party, who had two MPs in 1945, would have wanted to go further but not quite as far as “total ownership”.
MrShigemitsu, on the back of my membership card it says: “The Labour Party is a democratic socialist party.” And that is the first sentence in current Clause IV.
“The U.K. Labour is not a socialist party.”
I am by no means knowledgeable about British politics but it seems to me, that while the Labour Party’s constitution may no longer have references to the socialization of the means of production, it does have members who would call themselves socialist. Is that not correct?
“….nationalisation of monopolies and a fully Public Health Service are certainly not features of late stage neoliberal capitalism, as far as I can tell. If you believe they are, well, you carry on….”
Firstly, I was talking about capitalism in general.
These may not necessarily be features of neoliberal capitalism but they can be compatible with capitalism.
“This is quite a dated concept. Even as early as 1945 the British Labour Government had no problem being understood to be socialist in nature. ”
It’s a confusing term. I would say it would confuse the British electorate. I would say it would confuse any electorate.
I would also argue that politics in western style democracies is going to be won from the centre. Too far left or too far right, you are out of the game. And if the choice is between hard left and hard right, I will bet the electorate will be forced to choose hard right as the lesser of two evils.
So if this is correct, why would any party wanting to succeed in a western democracy carry the baggage that comes with the term socialist?
Take a look at history. The British Labour Party last became electorally palatable under Blair – I would say a politician ensconced in the centre. However, he clearly did upset some of his constituency with his kowtowing to Bush and his neoliberal economic policies. He took these too far.
So I would argue that British Labour has little chance of electoral success while it continues to habour hard line socialists, let’s call them, and continues to describe itself as socialist (as per Carol Wilcox’s comment above).
Wanting to nationalize industries with a substantial public good component or have a sound public health system does not make you a socialist in my book.
I fear that in the not too distant future New New Labour will be allowed to win an election with no policies, just because they don’t have the label of corrupt tories.
Yesterday I went to the UK Labour Party website looking for their constitution and their policy platform. Could find absolutely nothing. Do you know if it is there?
(I went to the Australian Labour Party website and within seconds it was all easily found.)
Henry, it’s Clause IV of the Rule Book not the constitution.
Your membership card may say that – but by everything the PLP, Blairite party officials, and ’eminence grise’ Peter Mandelson have been doing since September 2015 means you have to employ the most enormous amount of cognitive dissonance to believe it.
Your fears may be correct, though I’m not sure how (New) New Labour could ever win another election once the Tories complete their gerrymandering of constituency boundaries, having insisted on photo ID for voters, continuously leading Labour by more than 10 percent in the polls, and already defending an eighty seat Commons majority.
And what would be the point? They would only lose to the next Tory incarnation, without having achieved a single thing to redress the balance in the meantime.
I’m not sure where Henry Rech thinks the UK Labour Party is harbouring socialists – they’ve either died off, been expelled already, or what remains of them is about to be expunged in the latest purge. Mission accomplished!
“Yesterday I went to the UK Labour Party website looking for their constitution and their policy platform. ”
That’s because they haven’t got one. The Policy Vacuum is so big I’m surprised James Dyson hasn’t issued a patent infringement writ.
“I’m not sure where Henry Rech thinks the UK Labour Party is harbouring socialists ”
Corbyn? And surely he has supporters.
I personally don’t care whether the UK Labour Party is socialist or not. What I am saying is is that, as they say, disunity is death in politics. There has to be some cohesion, common purpose and common ideology or else the Labour Party will continue to flounder. Either the socialists leave the Party and form their own or the centre leaning members leave and form their own party.
“The Policy Vacuum is so big I’m surprised James Dyson hasn’t issued a patent infringement writ.”
I did eventually find (Google search) the Rule Book and the platform from the 2019 election signed off by Corbyn. They’re both tucked away on the website somewhere but not directly linked in any website page I could find.
“I’m not sure where Henry Rech thinks the UK Labour Party is harbouring socialists”
The Socialist Campaign Group?
Neil Wilson wrote: ‘There should be a permanent Marshall plan to sustainably develop the entire world. We can’t afford not to do that.”
That’s the most important sentence on the whole comments section. Meanwhile the Europeans, shocked by record-breaking floods, are shouting louder than ever about climate change, without facing the fact the whole world including ‘poor’ nations will have to ‘find’ $100 trillion or more ASAP to shut down and compensate the fossil industry, the CEOs of which would rather take a chance on the planet dying, than relinquishing the source of their bloated incomes.
Haiti’s president paid the ultimate price for accepting long-term c. 60% unemployment in his nation (and S. Africa’s ‘security’ forces iare murdering its own people to maintain “control” of long-term unemployment); he should have been demanding development aid from the international community from the day he was elected, while exposing the sham that is the US vassal, the Instant Misery Fund (IMF).
My attempts to communicate some ideas to China re funding BRI projects, avoiding the “debt-trap diplomacy” charge of hypocritical Western nations who use fake debt theory to pauperize the bottom deciles of their own populations, have been blocked by Microsoft, so much for much-vaunted Western “freedom”, it’s obviously fake.
BRI should be about efficient local resource mobilization, using the very capable management and engineering skills of China, funded by the currency issuing capacity of the PBofC, in the absence of any meaningful action by the Instant Misery Fund. Biden’s proposals to compete with BRI are as nebulous as the air he expelled when making the proposal.
I will seek alternative communication avenues. Meanwhile China itself is obviously infested with evil Western dogma; eg, the idea that any individual has a ‘right’ to believe he ‘deserves’ to be able to ‘earn’ billions of dollars by ‘his own efforts’ is utterly absurd. So now we have fools like Bezos and Branson wanting to sell joyrides in space to rich people, while 2 billion people are suffering brain damage due to poverty.
But at least the ever-adaptable CCP is showing signs of wanting to clamp down on the excesses of Western financialization of the real economy.