Thursday 20 September 2018

Socialists naive about power, Liberals naive about money

This post first appeared on the Radix blog...

Socialists are naïve about power; Liberals are naïve about money. That is the rule of thumb that I find myself judging current policy by – and especially when the parties that represent them are being particularly naïve.

I had the temerity to say this again in a Demos/Centre for Progressive Policy fringe meeting at the Liberal Democrat conference in Brighton and I was quite rightly contradicted.

It isn’t, as I suggested , that the Lib Dems are empty-heads when it comes to economics. It is that they tend to cling, for whatever reason, to old fashioned economic consensus of yesteryear.

Vince Cablels speech showed no signs of this, to be fair – there were bold statements about tackling the abuses that drove the nation to Brexit (what the Archbishop of Canterbury memorably called the “return of an ancient evil”).

I fear the timidity about new kinds of economics has less to do with Liberalism and more to do with the merger with the SDP in 1988, when the party came to believe at some fundamental level that to be ‘serious about power’, they needed to be very mainstream about economics.

The fear of economic crankery also runs deep in the English soul, which is a pity at times like these.
And because the subject of the fringe meeting where this conversation took place was ‘inclusive growth’, and it seems to me that this is one of the most important concepts in economic policy for some decades, steeped as it is in a radical devolution of economic power.

See the new article by Charlotte Aldritt on the subject in Prospect.

It s all too easy to judge other parties by their economic orthodoxy, were it not that the nation is desperately looking for a different ways forward capable of spreading prosperity downwards a rather than concentrating it at the top, where it is said to trickle down (but quite patently does not).

One last comment on the Lib Dem conference. They rejected an amendment backing free trade by just two votes, which means that the party remains stuck in the old free trade versus fair trade conundrum.

Part of the emerging new dynamic of inclusive growth is a commitment to antitrust, and an understanding of why and how monopoly power leads directly to inequality (see the paper read to central bankers last month in Jackson Hole). It is time that the forces of liberalism, and beyond the Lib Dems, reclaimed free trade as their central economic idea – not as it has been inverted by American Republicans as a right for the rich and powerful to ride roughshod over the rest of us, but as it originally was: as a critique of monopoly power, not an apologia for it.

The forces of enlightenment have developed a new approach to economics, and a new way of sharing responsibility for prosperity. If the enlightenment can embrace this quickly, it seems to me, then they might just have a chance of pushing back some of the darker clouds that are gathering near the horizon.

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