The existential crisis of Labour-type political parties

At one point in my student days anyone who wasn’t reading Marx on a particular day, was reading Satre, Camus and Merleau-Ponty, among others, at least in the groups that I mixed in. But then they were also reading Dostoyevsky. Whichever way – they learned a lot about class conflict and existentialism. Labour-type political parties might reflect on the concept of an existential crisis because the declining electoral fortunes around the World are of their own making and reflect a lack of identity and certainly little ‘essence’. These parties have lost their meaning and purpose of existence and everyone knows it. The reasons are relatively straightforward. They have bought into the free-market myths and demeaned the role of the State. They now only argue about how much fairer their version of fiscal austerity will be relative to the conservatives, never challenging the underlying lies that drives the austerity agenda in the first place. Here are some lunchtime thoughts on the matter.

While there was a mass of analysis in the media about the demise of the British Labour Party in last week’s national election, another story in the Australian Fairfax press helped frame an understanding of what happened to British Labour.

The report (May 11, 2015) – Skilled Filipino migrants were given illegal contracts – reports that a major Australian construction company Thiess has been employing foreign workers in Australia on illegal contracts in an effort to bash the local union and undermine local wages and conditions.

The company had clauses in the short-term contracts “allowing migrant workers to be sacked and deported if they joined a union”.

The 457 visas are controversial and were introduced to provide companies with the capacity to import skilled labour to fill vacancies that would otherwise be difficult to fill. The scheme is largely ‘self-regulated’ by the companies themselves but external audits have shown it is badly rorted by the same companies.

The latest scandal follows “allegations of migrant farm labourers being grossly underpaid and kept in slave-like conditions”, a matter still to be dealt with by government.

Australia is a signatory to international human rights treaties that “ensure the right to freedom of association”.

However, both sides of politics have turned a blind eye to our international obligations to a number of requirements in different treaties.

What this story tells us is that traditional notions of class conflict between Labour and Capital within the Capitalism production system are alive and well.

Workers still want more for less and bosses want more for less. No matter how many people become self-employed as an act of desperation in economies starving for adequate spending, the principle remains the same – there has to be a surplus created and expropriated by the owners of capital.

Capitalism hasn’t gone away no matter how it has morphed into some international global morass with financial capital now dominating over industrial capital.

The fact remains that the dynamics of capital still drive the show. Every day, there is something happening that tells us how the struggle is ongoing.

The desire for individual freedom to do what we want does not undermine the centrality of the state being our vehicle to discipline capital and prepare for some sort of post-capitalism evolution.

Please read my blogs – We need to read Karl Marx and When the left became lost – Part 1 – for more discussion on this point.

The idea that the ‘left’ and ‘right’ dichotomy, or working class versus capital etc are obsolete is rejected by the evidence.

It is an idea that is propagated by those with a vested interest in developing the ‘free market’ myth where we are all, essentially, free traders and own-producers at heart who agree (aided by market forces) to specialise into labour suppliers or capital providers.

The myth continues that we are all free traders – everything is voluntary and all exchanges are mediated by market prices which deliver equalised use values to each exchanger to be enjoyed upon completion of the same.

The reality is different. Workers do not sell labour – they rather sell labour power (the capacity to work). That immediately invokes a managerial imperative.

Why? Answer: because the use-value of the labour power is enjoyed (extracted) within the actual exchange (that is, while the workers are still at work). The use-value – the source of profit – is uncertain and a control function is indicated.

Bosses have to control the realisation of that use value as production in an environment where the majority of workers would rather not be there. That is a very different dynamic environment to one where we go into a shop and buy a trinket to be enjoyed later.

There are clearly complex layers over the basic capital-worker distinction and certainly these layers are exploited by the power elites to obscure them further (for example, gender, sexuality, race etc) but when push-comes-to-shove the struggle over the distribution of income arising from production is still highly significant.

The on-going suppression of real wages growth, the redistribution of national income towards profits, the enormous executive salaries have all combined to generate rising income and wealth inequality over the last thirty years.

There is a reason that has emerged after workers had made gains in the Post World War period up to the 1980s (or so).

The neo-liberal period – crisis included – has been an attack on the conditions of workers and the suppression of the lower ends of the income distribution.

In this blog – The origins of the economic crisis – I outline how deregulation has dramatically altered the distribution of national income over the last 30 years in the advanced nations with governments being the facilitators.

Governments became ‘pro-business’ as neo-liberalism gained ascendancy among policy makers. Prior to that – in the full employment era between 1945 and the late 1970s – governments acted to mediate the class conflict and recognised that without intervention the capitalist system was prone to creating entrenched mass unemployment and stagnant economic growth.

The experience of the Second World War showed governments that full employment could be maintained with appropriate use of fiscal deficits. The employment growth following the Great Depression really only accelerated with the onset of the War.

All the orthodox neoclassical remedies that had been tried during the 1930s largely failed. These are the same policies that are being proposed by neo-liberal economists now. We have short memories.

Following World War II, the problem that had to be addressed by governments was how to translate the full employed war economy with extensive civil controls and loss of liberty into a fully employed peacetime model. That is very clearly stated in the White Paper.

The post WWII period was marked by governments maintaining levels of demand sufficient to ensure enough jobs were created to meet the demands of the labour force, given labour productivity growth.

Governments used a range of fiscal and monetary measures to stabilise the economy in the face of fluctuations in private sector spending. Unemployment rates were usually below 2 per cent throughout this period.

Fiscal balances were almost always in deficit and the few times that surpluses were targetted and achieved a recession typically followed.

The ‘wealth creators’ were the workers, for without them, there is no production. Governments introduced a range of income support measures and job protections to ensure the workers were adequately rewarded for their work – a practice that allowed consumption growth to be maintained with little recourse to household debt.

The eulogising of those who just shuffle financial products and think this is a productive activity would come later.

This all changed in the 1970s and early 1980s. The free market lobby gained prominence and infested policy makers after the OPEC oil crises.

It was supported by mainstream economists who worked hard in the 1970s (and a bit earlier) to dis-abuse us of the basic truth that underpinned the use of fiscal deficits and job protections. It was hard to find a Keynesian economist after the 1970s.

The rise in acceptance of Monetarism and its new classical counterpart was not based on an empirical rejection of the Keynesian orthodoxy, but was according to Alan Blinder in 1988 “instead a triumph of a priori theorising over empiricism, of intellectual aesthetics over observation and, in some measure, of conservative ideology over liberalism.”

Any Keynesian remedies proposed to reduce the rising unemployment in the 1970s were met with derision from the bulk of the profession who had embraced Monetarism and its policy implications.

They claimed that the economy would always tend back to a given natural rate of unemployment (which was associated with stable inflation), no matter what had happened to the economy over the course of time.

The policy debate became increasingly concentrated on deregulation, privatisation, and reductions in the provisions of the Welfare State. The so-called structural or supply-side remedies.

Unemployment continued to persist at high levels and soon, underemployment entered the scene.

At that point, the Labour-type parties were faced with a crisis of existence. And the path they took almost everywhere only served to quicken their lack of meaning existence, which has finally translated into electoral wipeouts of the type we saw in Britain last week and in Australia in 2011.

My belief is that the Labour-type parties, given their historical charters, have now run out of meaning. They neither serve the working class (in its various states of employment and unemployment) nor capital and are thus expendable for both.

In Australia, the Australian Labor Party (ALP) began life as the political arm of the trade union movement during the 1891 strikes and was committed to democratic socialism.

The Party supported an extensive welfare state and worker protections. It was committed to the nationalisation of the banks and major income redistribution. It was not a free-market party in any way.

The turning point in its approach came in the early 1970s. Gough Whitlam came to power in 1972 with this same social democratic ideal after the conservatives had previously been in power for 17 years. He was a progressive Labor Prime Minister.

Whitlam’s team was inexperienced and they made some serious errors in policy implementation. He was also caught out by the OPEC oil shocks which combined with his expansionary fiscal policy led to an unprecedented inflation spike.

His government also ran afoul of the interests of capital and with the help of the CIA (Source) was toppled by the conservatives – his government lasting from December 1972 to November 1975.

It should never be forgotten though that in his government’s last ‘Budget Speech’ (1975), the then Treasurer extolled the evils of fiscal deficits – claiming they were, in part, the cause of the high inflation of the day. The neo-liberal period in Australia really began with that speech.

Please read my blog – Tracing the origins of the fetish against deficits in Australia – for more discussion on this point.

Prior to that the Australian government clearly understood the need to run continuous budget deficits to ensure that there was full employment. Since 1975, the Australian economy has laboured under the fiscal drag of a sequence of governments intent on delivering surpluses.

Also since 1975, and not unrelated, the Australian economy has not returned to full employment – a state which prevailed from the end of WW2 to around 1974. Unemployment rose as the Labor government … then the conservatives (after 1975) started to hack into net public spending because they thought this would be an appropriate way of dealing with a supply-side inflation shock (from the oil price hikes).

It was never an appropriate response but morphed into serving the neo-liberals very well.

The Labor Party increasingly bought into the narrative that with the decline of central planning (and ultimate collapse of the Soviet system), the way forward was to ensure the market economy was freed up to be as ‘efficient’ as possible.

By the time Labor were relected in 1983, they had firmly embraced the neo-liberal agenda and eschewed direct government manipulation of the economy and promoted the pursuit of fiscal surpluses to a number one priority.

The Labor governments since that time (Hawke-Keating then Rudd-Gillard) became increaseing to the right of the conservatives that ruled for so long in the post-WWII period.

The Labor governments became increasingly full of university educated careerists rather than people who had worked their way up through the trade union movement. That changing demographic is highly significant in the way the Labor party has deteriorated and embraced anti-worker, neo-liberal policies.

Lawyers replaced people who had worked more directly face-to-face against capital.

The emphasis was no longer on ensuring a fair distribution of income, which in part required that real wages grow in line with labour productivity growth (to keep the shares in national income between wages and profits stable) but on pursuing an ever bigger economic pie irrespective of how it was distributed.

The claim was that workers would become better off in absolute terms and that it didn’t matter if some people became spectacularly rich in the process.

These governments rejected the traditional Labour ambit to maintain full employment and provide those without work for whatever reason with adequate income support until they could get jobs (usually a short period). Instead they bought the full employability myth and deliberately kept the unemployment benefit below the poverty line and inflicted meaningless training programs and pernicious work tests on the recipients.

They also bought in – some might say were trapped into accepting – the priority of the ‘apirational’ voter who had been hardened into believing that the unemployed and poor were different to them because they didn’t work hard or were not motivated enough.

The conservative media bombarded us with these notions – dole bludgers, welfare bludgers etc. Within a decade, the Labor Party here and similar parties elsewhere were promoting individualism and rejecting the notion of collective will and solidarity.

The latter concepts were too tied to ‘socialist’ ambitions of the past and the spin doctors claimed the parties would be vilified by an increasingly anti-socialist media and commentariat. It all became a self-evident truth (not!) when the Wall collapsed and the world embrace ‘free markets’ – or so the spin went.

In Australia, the Labor Party embrace of the consumption-driven middle class saw it undermine income support systems for the unemployed, single mothers, the sick etc – all unworthy in the new narrative. They provided massive funding to elite private schools and starved public schools of funds even though the vast majority of children are still educated in the public system.

They also perpetrated mass infringements of basic human rights – with respect to our own indigenous population (the ‘intervention’) and refugees (locking them up and torturing them on remote Pacific islands).

This was so far removed from the traditional roots of the Party, which was splintering into green groups and other coalitions.

More importantly, by buying into the neo-liberal macroeconomic myths about fiscal deficits etc, the Labour-type parties only served to legitimise them the public’s perception.

And once they had bought into the ‘we will run fiscal surpluses too’ narrative, they lost the scope to articulate coherent social policy because the debate would flounder always on who will pay for it.

Their embrace of the aspiriational consumption dogs who had been indoctrinated by neo-liberalism to be selfish first and selfish last meant that any question of making them pay (given the taxpayer-funds everything myth) was toxic.

They trapped themselves and steadily became undifferentiated from the conservatives and their reason for being was gone.

Everyone knows that the conservatives are a more entrenched part of the social networks of capital and will therefore do a better job of being ‘pro-business’ than the wannabee lawyers who parade as concerned Labour-type politicians.

So why vote for the wannabees when you can get the real thing?

They share the same ideology but the conservatives are the real McCoy!

This sort of ignorant pragmatism has meant there are no grand differentiated political philosophies emerging from the Labour-type parties anymore. Those philosophies gave the Labour-type parties meaning to exist.

Please read my blog – The demise of social democratic parties – they are all neo-liberals now – for more discussion on this point.

The same existential crisis is creating havoc in the British Labour Party. They lost the plot when Tony Blair and Peter Mandelson pushed the ‘New Labour’ mantra.

There are those who claim that Miliband lost in Britain because he was too ‘left’. That is a ludicrous assessment. Miliband also bought into the fiscal myths and by doing so legitimised them and gave himself no room to articulate a coherent path.

The signs are that lessons have not been learned.

In the days following last week’s election, various candidates for the Labour Party leadership have emerged. An apparent front-runner, Chuka Umunna exemplifies why British Labour and Labour-type parties around the world are failing and have lost meaning.

He told the press on Sunday (May 10, 2015) – ‘No-one is too rich to be in Labour’: Chuka Umunna sets out leadership stall:

1. “Labour was wrong to run a deficit before the financial crisis”.

2. Condemned “Ed Miliband’s attacks on ‘wealth creators'”.

3. “Labour can regain power within five years if it is ‘pro-business’ and makes clear no one is ‘too rich to be part of our party'”

4. “you can’t be pro- the jobs we want to see unless you are backing the people that create them”.

5. “Labour must appeal to middle income voters in England who have ‘ambition, drive and aspiration to get on and do well'”

He is a lawyer by background.

He is being championed by the pompous and scandal-prone Mandelson, part of the New Labour movement in Britain which destroyed the nature of the Labour Party once and for all in that country and turned it into another pro-business party with tenuous claims to its past.

There is nothing I have heard since the election disaster last week that indicates that anyone who is likely to lead the British Labour Party understands they have no existence if they continue to think that capital is the wealth creator and workers get the benefits of that endeavour, that a political party has to be ‘pro business’, that mass consumption and indvidualism is to be prioritised over decent work and collective well-being.

Conclusion

In Australia, at least, the Labor Party has no reason to exist other than a “a vehicle for political careerists” (Source).

It certainly has no claims to its traditional purpose any longer and now actively undermines the aims that defined its creation.

Until these parties contest the macroeconomic myths and educate the public accordingly they will never be in a position to articulate a socially-progressive and inclusive agenda.

That is enough for today!

(c) Copyright 2015 William Mitchell. All Rights Reserved.

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    39 Responses to The existential crisis of Labour-type political parties

    1. Tarantula of Forli says:

      Thanks Mr Mitchell, for that concise history lesson.

      But just as an aside, not all of us lawyers are so simplistically minded as to buy into the myths perpetuated by neo-liberalism. Nor are we all without experience of working “directly face-to-face against capital”. But your more general point about career politicians is taken.

    2. The Dork of Cork says:

      Class conflict is a outcome of state usury policy /capitalism.
      It is not a natural state of affairs.
      In the British Isles it essentially goes back to the enclosure period which immediately followed the 1545 state usury law.
      People betray each other to get a yield so as to pay taxes and the like.
      Peasants become serfs, the winners claim they are too the manor born

      The social ecosystem is not a Jungle but a man made hothouse.

    3. Neil Wilson says:

      It’s time to stop being ‘pro-business’ and start being ‘pro-market’.

      – If you’re pro-market then you remove power and size differentials wherever they may be to ensure competition is allowed to work.

      – If you’re pro-market then you ensure that everybody has an alternative job offer open to them via a Job Guarantee, ensuring there is always competition for labour resources.

      – If you’re pro-market you address monopolies and rentier issues to ensure that resources are always fully utilised and available at the best prices.

      ‘pro-business’ people take the opposite view on these points.

      Business needs to be treated as cattle not pets. They are looked after and farmed for what the output they provide, but if they stop doing that then they are culled to avoid wasting resources better used by others.

    4. John Hermann says:

      Sadly, this all rings true. A large part of the blame for this state of affairs can be laid firmly with the mainstream neoclassical and “New Keynesian” economists, who exclusively make up the array of government economic advisers, including those employed within Treasury and the central bank. If these economists had thought and behaved differently, the present parlous situation would not have developed as it has.

    5. Fugue says:

      I’ve noticed more and more voices making arguments from an MMT framework in the comments underneath press articles (where they support comments, that is) and while the authors may deign to respond to requests for clarification, the MMT proponents appear to be completely ignored.

      Of course I know I’m not exactly talking mainstream press let alone TV spots, but there is at least a groundswell of understanding popping up in some arenas. I’m waiting for a political party to fill the vacuum left by these “artificial left” parties and begin talking earnestly about the economy.

    6. I don’t like Bill’s use of the word “existential”. Unfortunately loads of academics over the last five years or so have thrown the word around so as to mask the mundane nature of their writing.

      Where people mean “existing”, as in the “current” of “existing problems for the Labour Party” then use the words existing or current.

      The word existential should be reserved for its original meaning which (I think) was to refer to Sartre’s existentialism. And the latter was a truly beautiful idea (which means that practically no one takes any interest in it). It’s the idea that one can go thru the motions of claiming to be guided by some movement (Islam, MMT, Christianity or whatever), but in fact it is you yourself who CHOSE to join that movement and remain with it, or perhaps reject it after a period of time. I.e. there is no such thing as being a follower of a movement. Put another way, you have no option but to think for yourself. That’s what Sartre meant by his famous phrase “Man is condemned to freedom”.

    7. Coming says:

      No offence Bill, but you are an economist and you are quite ready to articulate a “socially-progressive and inclusive agenda.”, and there is no more despicable or white collar a profession than economists!

      Perhaps your point regarding Labor politicians all being lawyers is not entirely fair or relevant.

      Especially since the white collar/blue collar divide is not so relevant in 2015, when tradesmen make more than doctors, as it was in the 1970s and earlier.

      Otherwise an excellent article

    8. Jerry says:

      Yawn. We’ve heard it all before. When the labour parties lose an election a person not in the labour movement begrudges the labour movement for not listening to them. BTW Robert Michels wrote the exact same thesis… oh some 100 years ago… and yet still… the labour movement is the largest successful democratic movement in the world making great improvements in the lives of working people and more recently women, aboriginals… homosexuals and people with a disability… but yeah wake me when your revolution begins.

    9. “Yawn. We’ve heard it all before. ”
      Yes you have and you’ve kept on ignoring it. The result is declining support. Top heads of Labour parties don’t even bother to listen to it’s own movement any more. Instead they persuade different key figures within and outside the movement to convince a majority within the movement to buy into their agenda.

    10. bill says:

      Dear jerry (at 2015/05/12 at 21:13)

      Thanks for your comment. You mention Robert Michels, the German sociologist who went from being member of the Social Democratic Party (as a socialist) to joining forces with the Italian fascists (Mussolini) when he moved to Italy after World War 1. His main book – the 1911 Zur Soziologie des Parteiwesens in der modernen Demokratie. Untersuchungen über die oligarchischen Tendenzen des Gruppenlebens – mounts an argument about the way political parties transform themselves into anti-democratic oligarchies – rule by elite.

      Have you read it? If you have read it, it seems you have forgotten what the book was about.

      His thesis is nothing at all related to the conjectures outlined in my blog today. Sorry.

      best wishes
      bill

    11. Willy says:

      How suprising. Misdirection, strawman, and apathy from a professed member who can speak for the party (or little troll). You’re right, no difference is a real difference. Obviously so sophisticated you can’t simply see or evaluate problems. Yeah, MMT is just a tautology with the “iron law”, phttttt. To think some of the rabble is dissatisfied and would dare bite the hand that feeds. I never!

    12. J Christensen says:

      Most of the working class, have not had the benefit of so much as introductory level economics education, nor an undersanding of their own political system, or their full role in it. This is a pathetic commentary on public education systems, which should be the first line of defense, protecting society from those wishing to mislead voters.

      Among many workers there has been a prevailing attitude since at least the late 1970’s that “business knows best” when it comes to economic matters and, that if they can just sacrifice enough of themselves, business will “succeed” and magicly all will be well with the economy and lot’s of good paying jobs will soon follow. “Government can’t influence economic outcomes”. I have heard even severely oppressed workers vehemently promote these point’s of view to their peers.

      It is little wonder labour type parties have lost their way; how do you compete with such ignorance? Workers have been divided within the workplace by mantra’s around “the work ethic” and the need for “competitiveness” or “the right to disassociate from the unions”, because of course, they only use your money to “hurt” business. They simply don’t understand that what they are competing with are other workers who can be exploited to a greater extent than they are (offshore workers and temporary foreign workers). Then there is the rivalry between public sector workers and private sector workers, and the self employed, which has been fully exploited by divisive and destructive politicians.

      Off topic: In Canada there is a challenge to the government over the way the public, yes public, central bank has been operated since the 1970’s. It seems to be moving forward and gaining at least a little bit of mainstream media attention:

      http://www.cbc.ca/player/News/Business/ID/2666703865/

    13. psychadelic.fuse.81 says:

      “Yawn. We’ve heard it all before. When the labour parties lose an election a person not in the labour movement begrudges the labour movement for not listening to them. BTW Robert Michels wrote the exact same thesis… oh some 100 years ago… and yet still… the labour movement is the largest successful democratic movement in the world making great improvements in the lives of working people and more recently women, aboriginals… homosexuals and people with a disability… but yeah wake me when your revolution begins.”

      There is a massive difference between Labor Parties and the labor movement at large. The Left’s erosion has been of primary importance in the wasting of the traditional Labor Parties, especially since the eighties onward. If political parties like the ALP are to start regaining the consciousness of old, then it will probably be on the back of a rank-and-file, militant union revival, IMO. And I don’t see that happening for the foreseeable future unfortunately.

      And you can’t deny the change in the ALP’s material constitution. Most of its head pollies are lawyer-types who graduate from university and go straight into the party machine; back in the 45-73 era, most Labor MPs came from blue-collar working-class backgrounds. This has accompanied a very similar shift in the makeup of the union bureaucrats as well.

    14. Ucumist says:

      Hi Ralph
      I am a newbie here. I enjoy reading Bill’s blog and have noticed that you often comment. Is it important for you to find any irrelevant word in the blog so as to be able to be critical?
      Picking on existentialism is odd. I would agree that applying this description to an organisation is not the true sense but I accept that Bill is treating the body politic as individual in order to make a point.
      Existentialism is a difficult term to define and open to many interpretations. Of all the amateur philosophy descriptions I have read, yours is the least intelligible.

      “By and large Existentialists believe that life is very difficult and that it doesn’t have an “objective” or universally known value, but that the individual must create value by affirming it and living it, not by talking about it.
      For the Existentialist one faces these moments of decision with a sense of fallibility and seriousness of purpose, and then RISKS. Sartre is extremely harsh on this point. At one place he says: When I choose I choose for the whole world. Now what can this mean. I think what Sartre is getting at is that first of all when I choose and act, I change the world in some iota. This note gets written or it doesn’t. That has ramifications. It commits me to say what I’m saying. It may change someone who may be affected by my remarks. Others can be too if they hear or read them. And so on. The ripples of actions are like ripples on the sea, they go on and on and on.” Corbett
      This does validate Bill’s use of the word to get his point across.

    15. Karen says:

      Good piece, thanks. A point to remember is that full employment largely referred to men’s employment, as women were pushed out of jobs after WWII to make way for returning veterans. So I would argue there was probably underemployment in the post war period, but unrecognised. It doesn’t detract from main point of today’s blog, because parties of the left have lost their purpose and have little clue about how to regain support.

    16. Mike Ballard says:

      The composition of the working class is changing. Not so much manufacturing is going on these days in the industrialised world as there once was. Most of that work has been shunted overseas by capitalists to areas of more cheaply priced labour power. Still, in the free market world of narrow, hurrah for me, fuck you, individualists, the workers sell their skills to employers for wages in exchange for giving up control over the goods and/or services they produce. The wealth of nations continues to grow. Thus, the wealth creators are still the workers, but as Marx pointed out in his ‘fetishism of commodities’ section of CAPITAL vol I chapt 1, they see this social relation of Capital camera obscura.

      The left began to forget this important observation long ago. The Marxist-Leninist left just made matters worse by embracing their own State’s versions of the wage system. And leftists galore called that ‘socialism’. So, this rot in class consciousness has been going on a while now both inside and outside the social democratic movement.

      The left still exists. It tries to get more of the wealth the workers produce back to them via tax policy and social spending e.g. Medicare in Australia. The ALP is still associated with unions. The LNP is still a Coalition formed to stop the ALP from being in government. The real problem is with the consciousness of the rank and file citizenry, a citizenry mostly made up of workers who have never heard a critique of wage labour from anyone they respect or listen to.

    17. Jake says:

      From the tory manifesto:

      “More borrowing – and the extra
      debt interest that it brings – means there is less money
      to spend on schools and hospitals. More spending
      means higher taxes for hardworking people, and interest
      rates that are higher than they otherwise would be –
      punishing homeowners, hurting businesses, costing jobs”

      Clearly articulate/cut across that: Deficit spending ≠ Debt issuance + Central Bank controls interest rates

      -Spoke to a minimum wage renting shop worker who voted tory, his younger colleague aswell .I couldn’t understand.

      -spoke to a city lawyer, she also voted tory, earns well above national medium, salary. She felt she was paying to much compared to other people. To be fair tory tax cuts will boost demand, I support the increasing of the threshold to above minimum wage.

      Regardless, it is clear to me that the majority(or at least 36%) in this country feel well off and comfortable enough. The electorate at large wound me up with their decision, though. The buy to let landlords were certainly cheering the results.

      @Karen, Interesting point, but back then the earning power of one worker was enough to raise a large family. Whereas now families require two wage earners to make ends meet.

    18. Bob says:

      “The buy to let landlords were certainly cheering the results.”
      Yep. Remember it was the last Tory govt (Major) that ended security of tenure for renters. BTL started in 1996.
      “To be fair tory tax cuts will boost demand,”
      Not by as much as cuts reducing demand. Most will be saved, maybe more “investment” in land.

    19. mark delmege says:

      As a matter of interest, William Mitchell, how do you view Dr P C Roberts’ recent writings – on the economy and world? Thanks for the article.

    20. Magpie says:

      @Jerry

      No need for Labor (with or without “U”) to change? Fine.

      Let them do what they do best: every time they lose (and, boy, they have been losing a lot lately), they use the Snagglepuss strategy and do the “Exit stage, right”.

      That has been a real winner with the voters!

    21. Reading this and Robert Reich’s recent blog on the Roots of Widening Inequality is rather depressing. It seems to me a key role of Government is to ensure the benefits of an Economy flow to the Many rather than the Few. The wealthy Few with the help of their friends on the political Right have in recent years organised matters so that increasingly the benefits of the economy are flowing to them. In this they have been spectacularly successful. It seems to me that their is a pressing need for those on the political left to do a much better job and reverse that flow. Political parties are the critical agents in Western style democracies as they are currently constituted so it behoves those on the political left to get their act together.
      Labour in the UK lost the recent election because it was politically incompetent. Ed Miliband failed to craft and communicate a message that resonated with traditional Labour supporters. He allowed those traditional supporters in Scotland to fall into the embrace of the Nationalists and appointed as Shadow Chancellor a man who merely echoed the neo liberal messages of the actual chancellor on deficits and austerity. No wonder they got a thrashing at the polls.
      Say what you like about Blair and Mandelson, they knew how to run a political campaign. Their successors could learn a lot by studying their approach. They could also learn a lot about what not to do when you get elected.
      Similarly we hope the Australian Labour has learned that division is death at the polls.

    22. Kevin Harding says:

      I agree with the analysis of the Labour Party and social democratic parties
      generally.They have become largely irrelevant they have abandoned any
      progressive macroeconomics (Keynes as well as Marx).They have
      abandoned egalitarianism perhaps new labours second great legacy after
      disastrous foreign interventions was growing inequality.
      BUT
      Mr Blair won 3 elections when Foot kinnock and Miliband failed
      SNP won a landslide where Scottish socialist parties won an odd seat.
      It is simply not credible to suggest social democratic parties have lost
      votes by being too centrist certainly not in the uk.
      How I wish it was otherwise!
      I am afraid having a policy on the unemployed will never be enough to
      win enough votes to form governments.

    23. Kevin Harding says:

      Please do not mistake the SNP for a left wing party.Let alone one influenced by MMT
      Serial advocates of rejecting monetary sovereignty .Not even new labour went that far.
      Now seeking monetary union with the uk after previous seeking to use the Euro.
      Rejecting austerity with permission of a foreign central bank has not worked well
      for a left wing party in Greece and the SNP are not left wing.
      When I say rejecting austerity they argued for deficit to GDP ratio to fall without
      cutting departmental budgets ,not fiscal stimulus.
      Although sturgeon following almond are a cut above their labour contemporaries in
      dealing with the media.Although Salmond was a little too close to Murdoch.
      FairPlay to Ed for bravely distancing himself from Australia’s dodgy export.
      Salmond was also particularly fawning of Gooodwin the failed Scottish Banker.
      What we can say is the massive swingometer of centrist macroeconomic policy
      to the right has made the traditional labour taunt of the SNP as the tartan Tories
      hypocritical bit it still not far from the truth.

    24. bob hart says:

      Great post prof.
      Heidegger following Kirkegaard\’s idea of a levelling of values, would hold that we are Dasein-ing in a economic world in which we are thoroughly socialised to view things according to the neo liberal paradigm. The young people I meet at work can\’t believe I got my education without a HECS debt. They find it hard to comprehend my memories of full employment during the sixties. To paraphrase David Malone, \”what happened to our our world that went from viewing the future as bright and full of promise(1960\’s) to something dark with a feeling of foreboding?\”
      The problem is that neo liberalism has captured the \”argument space\” in which the discussion is held.
      MMT need to need to go beyong mere evidence and reconfigure the economic world(like post WW2) into one
      which aspires to go beyond seeing ourselves as mere selfish economic atoms. Maggie Thatcher was very prescient when she said: \”there is no such thing as society\” , this is where we are now.

    25. Jim says:

      All that happened in the UK this month was that the SNP and the Conservatives used each other to eradicate the Labour party’s seats. In summary, the old tactic of ‘divide and rule’.

      It wasn’t about left or right, it was about UK or not-UK.

      However, on the topic of Labour and ‘the left’, some home truths about the culture in the UK:

      The public hate (yes I do mean hate, not dislike) words like Left, Marxist, socialist, maybe even working class. They do not go down well in this country, and probably never will.

      The public hate strikes, strikers, unions. They probably always will. (The Conservative-supporting newspapers hammered Ed Miliband and Labour for this as soon as the unions enabled Ed to become Labour’s leader, and hammer it home every time there is a strike – strikes = ‘holding Britain to ransom’.)

      The public now hate benefits claimants. Not just benefits scroungers [sic], but all benefits claimants. Hate them. Despise them. Detest them. The atmosphere in the country is very unpleasant. The political parties have brought that about for their own purposes. It’s worked. Labour were part of it. If they wanted to get elected, they should have changed tack on it, but as Neil Wilson pointed out on this very site, Labour the other week forthrightly and unambiguously disowned benefits claimants.

      The public don’t want a ‘left-wing’ party. They don’t like talk of ‘left-wing’ and ‘right-wing’. They don’t see their lives in those terms. Such talk is a turn-off.

      The public basically like a ‘pro-business’ society. They don’t like extremes of greed or abuse of power, but they like the fact that the UK is ‘pro-business’. They want a sense of community but they also don’t want other people ‘holding them back’. This is a culture where many things no longer have fixed costs – things are now haggled over so that each individual tries or fails on their own haggling abilities to get the best (often = cheapest) deal for themselves. We are told that this makes us ‘sassy consumers’, and unfortunately IMO, we now like it that way. Then we are told that to have lower energy bills we must club together and haggle with the utility companies to give us a specially-arranged group price, but that the government will not be involved – it is up to us either individually or as citizen-formed special-interest groups (e.g. the elderly). In other words, we cannot expect the power of the State to represent our interests vis-a-vis the cost of living.

      On the other side of the equation, the votes cast for Labour were higher this time around than in 2010. The idea that Labour was unpopular is clearly not entirely accurate.

      Soul-searching by Labour could be useful, but it would be simpler if they actually just listened to what people told them. It’s cheaper too – no need to hire American PR strategists, just listen to what your fellow Britons have been telling you.

    26. Ikonoclast says:

      Excellent analysis Bill and correct in every point. Our so-called “Labour” parties are indeed simply Tory-Lite. They have nothing to do with helping workers any more. They are unreformable and have to be destroyed at the ballot box as indeed the Tories must also be destroyed.

      My concepts of politics do not end at the ballot box or with bourgeois democracy. However, it’s what we have at the moment and I will confine myself to remarks in this arena. In Australia, the Australian Greens are the best bet we have. If you analyse their policies they are in line with humanitarian and sustainability principles. They are not too far from understanding broad MMT in practice (if not in theory) in my opinion. Certainly, their economic policies would be far more enlightened than those we get from the Tory and Tory-Lite parties.

      I am not a member of any political party but I would urge people to vote Green or Socialist. That’s the only way we will break out of this negative paradigm in a peaceful manner. If we don’t do it that way, matters will become very dangerous, very unstable and very polarised. It would be best to avoid that path if at all possible. I say this because the current path is unsustainable. It is unsustainable both environmentally and also socially. The shift of income and wealth from workers to capital cannot continue indefinitely without causing a social and political crisis. Something has to halt the regress. If good sense and good policy do not halt it then a destructive cataclysm will halt it.

    27. Daniel D. says:

      michael bruce says:
      Wednesday, May 13, 2015 at 4:24

      Say what you like about Blair and Mandelson, they knew how to run a political campaign. Their successors could learn a lot by studying their approach.



      Frankly, the “New Labour” campaigns amplify the Professors main points.

      Blair went out of his way to become the Tory party. He had to assure the British elite that he would do nothing against their interests. Blair and friends had no particular interest in progressive policies only personal ambitions, regardless of the consequences. Blair even went so far as to kiss the ring of Murdoch to ensure that News Corp would unconditionally support New Labour. Blair literally dumped everything that Labour had traditionally stood for to buy Murdochs support.

      You can check the records for yourself, as the Sun and others under Murdochs control supported Labour for 12 years, ending in 2009. Labour somehow lost the next election in 2010?

      No question that Labour was successful in getting elected during that 12 year period, but, to do so they were nothing more than a more affable Tory party, supported by the MSM in Britain.

      The article is spot on as Labour whether in Britain or elsewhere have nothing to offer the electorate when they accept the neo-liberal socioeconomic myths as the equivalent of natural laws.

    28. chris says:

      Depressingly accurate.

    29. Kevin Harding says:

      Jim I think you maybe overstating it.
      Not sure if people hate the unemployed.They sure love feeling superior to them.

    30. paul says:

      Kevin Harding,
      The SNP are a middle of the road party, not perfect by any means, but pretty much the best option for Scottish voters. If you want to look for Tartan Tories, try Danny Alexander (orange book liberal and staunch supporter of Gideon Osborne) or Jim Murphy (labour, founding member of the odious henry Jackson society and leading personification of the trends the article outlines).
      The SNP opposed austerity, weapons of mass destruction and the privatisation of health. Not perfect, but they’ll do until something better comes along.

      The liberal and labour Tories got wiped out by a party with a growing and active membership who offered something, if not everything.

    31. The Dork of Cork says:

      Parliament is where the oligarchy fight for the now centralised wealth, the crown first centralised it and then it’s fought over by the most powerful men in society.

      It’s not and indeed was never designed as a functional democracy.

      I am afraid Bolloc, Chesterton, Douglas and o Duffy has been proven correct.

    32. /L says:

      Social democracy in Europe is probably the the most important bulwark against progressive economic politics against unemployment and inequality. Just because they pretend to be the opposite, everybody knows instinctively that the right wingers don’t work in the common peoples good.
      There has been elections in UK, Finland, local elections in France, all great right wing success and Social democrats declined further. Hollande promised what could be perceived as classic social democratic polices, promises he couldn’t deliver locked up in the EU/Euro neoliberal straight jacket. He must have known this, did he lie? Syriza could of course not do much to alter things, at the end it will be mostly hot air. UKIP didn’t succeed as they had hoped but did grow substantially.
      So the only alternative left for people i Europe if they want to break the evil circle is with right wing fringe like Marine Le Pen.

    33. @Daniel D
      So Miliband did not speak with Murdoch. In fact he went out of his way to attack him. So do we think the less fortunate in the UK will be better off over the next five years as a consequence of this decision?
      Politics is a rough trade. If you cant stand the heat of the kitchen, best not go there.
      Rule one in the handbook is get elected. Politicians can do nothing from opposition.
      I take Bill’s point about a Labour government under the sway on neo liberal economic myths but it is it better than the five years of Tory rule that we are going to have in the UK? I think not.
      Political parties of all stripes have been the prey of careerists since the Roman Empire but they are a fact of life in our democracy.
      Those on the Left sometimes seem to forget they are in a very rough trade. Those on the Right have no such compunctions as can be seen in the UK by the Tories decapitation of their erstwhile Coalition partners, the Liberal Democrats
      Suggest you look at Simon Wren Lewis recent analysis of the UK election on Mainly Macro.

    34. Kevin Harding says:

      Paul I agree that the Labour Party is completely hypocritical to label the SNP
      tartan Tories.I agree with bill that parties like the uk Labour Party have made
      themselves irrelevant by excepting the macro economic narrative of neo-liberalism.
      I do not agree that the SNP are the best alternative .They are anti austerity lite.
      they advocated cutting the deficit relative to GDP they advocate currency union,
      they fawn before wealth and power as long as it is not based at Westminster.Their
      major appeal is nationalistic even the greens are better.
      What I think does not help is self delusion.Underestimating the gulf between
      Keynesianism (let alone MMT perspective) and the general public.Voters for
      the Tories UKIP and the ulster unionists were just over 50% of the population in
      the last election. Ihope that will not always be so but they would not have voted labour
      if only they were more left of the current centre.

    35. Kevin Harding says:

      By the way Paul if I lived in Scotland as I presume you do I would have
      voted for independence just couldn’t vote for the SNP .

    36. Postkey says:

      The Conservatives criticised the 1997 government for ‘excessive’ public expenditure.
      The main beneficiaries of this policy were the ‘lower income’ groups?
      This would increase their ‘social wage’?

      If ‘we’ are looking for an individual to blame, then look no further than G.B.?
      He appeared to be discouraged from calling an early election {prior to the G.R.} by a speech from G. Osborne {and he had the example of J.Callaghan}?

    37. paul says:

      Kevin, I did vote for independence, and the whole referendum experience was one of the most heartening developments I have known in thirty odd years of neoliberal hegemony. While the outcome was disappointing, the response certainly has not been.
      A lot of people came to the strange realisation that things could be better, that there are alternatives. Seeing the establishment ruthlessly closing ranks and setting their nugatory differences aside to intimidate the electorate into voting no opened a lot of eyes.
      The SNP,as cautious gradualists, were gunning for devo max and I think they were as scared of a yes vote as the unionists. I think and hope they might be a little bolder in the future.
      As voting for the SNP is the most positive thing I can do to further independence, without which there is no possibility of the things you wish for, I’ll put up with their shortcomings for now.

    38. Postkey says:

      “The post WWII period was marked by governments maintaining levels of demand sufficient to ensure enough jobs were created to meet the demands of the labour force, given labour productivity growth.”

      Not in the UK?

      “Was the low unemployment of the 1950s and 1960s due to ‘Keynesian’ policies, such as government deficit spending or expansion of the money supply? The answer must be ‘no’, . . . “ P2

      http://www.press3.co.uk/publications/to_full_employment/chapters/

    39. Postkey says:

      “This all changed in the 1970s and early 1980s. The free market lobby gained prominence and infested policy makers after the OPEC oil crises.”

      It was assumed that the increase in commodity prices would {effectively} reduce the marginal productivity of labour. This will lead to a fall in the demand for labour and an increase in voluntary unemployment.
      V.U., in the short run, cannot be reduced by demand side policies.
      Increasing A.D. in this situation would lead to accelerating inflation. Hence the emphasis on ‘supply side’ policies.

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