There’s been an interesting and timely addition to Labour’s much needed economic debate today with “In the black” Labour. In many ways it’s not dissimilar in the arguments it makes to what I said back in May, particularly on the need for “Hard Keynesianism”:
“Keynes didn’t just believe that it was necessary to spend heavily during a recession to stimulate an economy. Such thinking is reckless and lop-sided unless there is a counter-mechanism which can operate when the economy is strong. What Nobel Prize winning economist du jour (and New York Times columnist) Paul Krugman calls “Hard Keynesianism” should be applied by Labour. We should advocate stimulus spending now to get the economy off its knees, but we should be prepared to run a surplus when the economy is in good shape, and invest that money (perhaps in a UK investment bank or stablisation fund) to fund future stimulus spending.”
Some have suggested that the “In the black” pamphlet presages some sort of uber-Blairite revivalist movement, although that’s a simplistic and woefully inaccurate portrait of the people behind this brief but impressive piece of work. Anyone who is familiar with the writing of Anthony Painter or Hopi Sen on these pages, for example, would surely know that pigeon-holing them in such a manner does them a disservice. Yet some see a fight in an empty room, and will rearrange the furniture however they can to ensure that happens. To that end, they set up “In the black” Labour as anti-the Miliband/Balls axis. That’s an analysis that doesn’t fly.
It’s almost cliched to paint Balls as the the crudest of tax and spenders, throwing money at a failed system in a desperate attempt to turn the ship around. To read much of the media coverage around the shadow chancellor (and for that matter, the Labour leader), you’d presume they long for nothing more than another spending binge. Yet tell that to the shadow cabinet, many of whom feel stymied in their attempts to even float potential new policies (nevermind make concrete spending commitments) by the strict control Balls’ office has maintained over even potential spending commitments. Nothing that could even notionally impinge on economic policy is put forward without the explicit say so of the shadow chancellor – a cause for silent frustration for many seeking to make their mark around the shadow cabinet table.
There is much to take from this new piece of work, and it sets the groundwork well for the debates that the party will need to have before returning to government, and in government. Balls and Miliband won’t be able to return to 2005 levels of public spending – even if they wanted to – and that’s going to be a harsh reality that will upset many within the party in 2014/15. Sadly though, Osborne’s mismanagement of deficit reduction means that a 2015 Labour government will still be paying down the debt for years. Whilst “In the black” provides many important questions for Labour, the sad fact is that it’s proposals are for an economy that is sound, and growing. Even if Labour win in 2015, it’s likely to be years before we are confronted with a picture like that.