“You no longer have to whisper it, it’s called socialism.” With these words, UK shadow finance minister John McDonnell reconfirmed the Labour Party’s commitment to transforming British society, should they win the next election. On current polling evidence, this seems unlikely.
For those of us more inclined towards the social democratic wing of Labour, this rhetoric is a little dismaying. I am not convinced that the hard left has widespread appeal beyond the party’s core membership. An appeal to ‘middle England’, alongside the working class and those nearer the top of society who see the importance of progressive politics, is vital should they actually want to win the next election and obtain the power required to put policies into action.
A while back McDonnell brought together a number of progressive economists onto an economic advisory panel, including Nobel prize-winner Joseph Stiglitz, Oxford Professor and blogger Simon Wren-Lewis, and Sussex’s Professor Mariana Mazzucato, who wrote the excellent book The Entrepreneurial State. The job of the members of this panel was to debate and produce workable economic policies for Labour, while remaining independent politically and not bound to the party or a particular set of policies.
The panel has recommended an end to austerity in the form of substantial government borrowing, but only to fund public investment, while current spending (apart from investment) would be balanced over the economic cycle. This is similar to former Chancellor Gordon Brown’s fiscal rule, which he admittedly played around with somewhat during his time in office.
With current interest rates so low, it seems sensible to borrow to fund improvements in infrastructure, education and training and, more radically (drawing on Mazzucato’s work), to support industries which have the potential for growth. In her book, Mazzucato used the phenomenon of the smartphone to illustrate how the technologies behind one of today’s most popular consumer goods were initially supported by public investment in the US: satnav, the touchscreen, voice recognition and the internet were all the product of state intervention, and were only later put together by companies such as Apple to create mass consumer technology.
State intervention in potential high growth sectors need not always be successful, and history shows this to be the case. But neither is investment by the private sector. As long as the value of the longer term gains exceeds the value of the losses, there remains a case for implementing such policies.
This is all to the good, but I would not call this socialism. Some of those on the political right like to brand anything to do with state intervention ‘socialism’, but this seems unreasonable. All of today’s rich capitalist countries used state intervention to develop, and often subsequently preached the virtues of the free market to developing nations once they were in a position of strength and able to take advantage of it. But while they were certainly not free market economies, they remained capitalist.
This may seem like quibbling over semantics, but words have power. Naming something makes it more real, and while I would like to see another Labour government, I am not convinced that socialism has enough widespread credibility as a slogan or as a doctrine. Appealing to progressive values such as social justice, economic and social opportunity and how to marry the two with protecting the environment would surely be a more popular platform.