In a recent revealing speech, the Labour leadership have outlined their economic strategy. Their message of ‘fiscal responsibility’ is aimed at appeasing big business. But only a bold socialist programme can offer a future to workers.

In a recent revealing speech, the Labour leadership have outlined their economic strategy. Their message of ‘fiscal responsibility’ is aimed at appeasing big business. But only a bold socialist programme can offer a future to workers.

With the government preparing its budget statement for March, Labour’s “new management” has started dropping hints about their own economic programme. Their main objective? Convincing the establishment and big business that capitalism would be safe in Labour’s hands.

Up until now, Starmer’s “constructive opposition” has been coy about taking clear policy positions. Instead, the Labour leadership has focussed on suppressing the left, and promoting its “patriotic” credentials.

Last week, shadow chancellor Anneliese Dodds began to outline Labour’s economic policy at the prestigious annual Mais Lecture at the Cass Business School in London.

The 45-minute-long presentation was low on substance. More significant is what was missing. The Green New Deal is out. Talk of public ownership and workers’ management is out. Addressing the housing crisis is out. Free education is out. £83bn of extra tax revenue from the rich and from corporations is out.

In other words, any trace of ‘Corbynomics’ is out. So what’s in? A “responsible” economic strategy – a word repeated 23 times throughout Dodds’ lecture. This is a euphemism for a rightward turn.

Ruling class’ spending addiction

The pandemic has triggered an unprecedented economic crisis. Due to Tory bungling and long-term decline, British capitalism has been particularly affected by this, with the UK economy falling by 11.3 percent last year. To tackle this, the ruling class has performed a 180-degree pivot.

After 2008, their watchword was “limited government spending”. But with the country yet again in lockdown, and much of the economy surviving on the iron lung of state support, the Office for Budget Responsibility (OBR) estimated that government borrowing would be £394bn for the current financial year (April 2020 to April 2021).

This is the highest level outside of wartime. Such a figure would have sent the establishment media into an apoplectic frenzy had it appeared in a Labour manifesto under Corbyn’s leadership. But these are not normal times.

This spending is preparing the ground for sharp class conflicts down the line, when the ruling class attempts to foot workers with the bill. But the economy and job market will collapse if the taps are turned off now. Millions of workers are relying on furlough schemes and government support to stay afloat, as are thousands of businesses.

The current message to governments from the financial press is therefore: “Forget about the debt (for now). Keep on spending – or risk a social explosion!”

On top of that, Chancellor Rishi Sunak is contemplating raising corporation tax to help close the deficit, to the alarm of the Tories’ traditional allies in the City.

While Sunak is also talking about the need to make “tough decisions” (i.e. the inevitably of austerity), the Tories are wary of forcing workers to shoulder the burden of this crisis too quickly. In particular, they are concerned about losing support in their newly-won seats in the North of England, Wales and the Midlands – places promised a “levelling up” rather than a dressing down.

This crisis-ridden Tory government, faced with the biggest calamity in the history of capitalism, is therefore breaking all of its own rules to hold the situation together.

“Responsible” fiscal policy

Starmer big businessThe response of Labour’s new leadership is apparently to outflank the Tories on the right. Cribbing their ideas from the likes of the IMF (!), they are posing as the more fiscally “responsible” party – that is, as a ‘safe pair of hands’ for capitalism.

Speaking about the Tory-Lib Dem coalition government’s failure to spend its way out of the 2008 crash, Dodds stated that:

“Fiscal action, low interest rates and gargantuan quantitative easing programmes can exacerbate inequality and concentrate economic gains in the hands of those who were already asset-rich, at the expense of those who rely on income from their labour... [This] can exacerbate inequality.”

It is true that the billions thrown at the economy after the 2008 crisis mostly went into the pockets of the banks and the rich. And workers were forced to pick up the tab through austerity. But what is the alternative in such scenarios? According to Dodds: putting the brakes on spending.

She spoke of a “responsible fiscal framework...rather than narrow political considerations”. One of her few concrete proposals was a “fiscal anchor” to “limit the amount...of further increases in day-to-day spending that is announced”.

Reading between the lines, this means that Labour would seek to ensure that ‘short-term’ stimulus measures don’t become a permanent feature of government spending, with the goal of “a balanced budget” when the economy recovers.

In the immediate aftermath of the pandemic, this would open up a backdoor for cuts. For example, Labour is currently pushing the Tories to keep the £20 per week increase to Universal Credit. But this is precisely the sort of ‘short-term’ measure that could face the chop down the line under Dodds’ proposals.

Nevertheless, some of Jeremy Corbyn’s old allies have praised Dodds’ speech as a “continuation of Corbynomics”. Why? Because it didn’t mention austerity by name; and because John McDonnell (the former shadow chancellor under Corbyn) also talked about balancing the books in the 2017 and 2019 manifestos, in an attempt to look ‘credible’ before the likes of the CBI, the bosses’ union.

Needless to say, this was a futile effort. Given Corbyn’s radical base of support, the capitalists were never going to trust Labour with the economy. It is not so much Corbyn and McDonnell that big business was afraid of, but the grassroots movement that stood behind them.

Ruling class embraces Keynesianism

john maynard keynes 650But times have changed, the ‘pragmatists’ say. Corbyn has been ‘vindicated’ by the Tories’ recent spending spree. At the same time, they say, a loose fiscal policy will mean debt and inequality during the COVID recovery. So, to be ‘credible’, Labour must be prepared to set limits and ensure public spending represents ‘value for money’.

The reformists have always clung to the Keynesian idea of deficit financing – i.e. government borrowing and public investment. Out of desperation, the ruling class has also recently embraced this same approach. But this only goes to show that the former never had any real answers to the crisis of capitalism.

On a capitalist basis, there is no such thing as a free lunch. The intervention of the state cannot resolve the contradictions and crises of capitalism, neither through printing money nor through deficit financing. We said as much when Corbyn was leader.

Despite the limitations of Keynesianism, it is clear that Labour’s response to the Johnson government’s borrow-and-spend should not be to criticise the Tories for spending too much! The term ‘fiscal responsibility’ – both during a crisis, and otherwise – is always a capitalist codeword for attacks on the working class.

Rather, Labour should propose a socialist programme – based on nationalisation, workers’ control, and economic planning – in order to put the ill-gotten wealth of the capitalists at the service of society’s need. This is the only way to avoid workers’ picking up the tab for a crisis they did not cause.

Reformists kidding themselves

The likes of James Mills and James Meadway (former economic advisors to Corbyn and McDonnell) have implied that the paucity of concrete proposals in Dodds’ speech is a good thing. This offers scope for “radical policies”, they optimistically suggest. There was nothing in the shadow chancellor’s speech to “rule them out”, they say.

This attempt to flatter the new leadership will only disorientate and mislead grassroots activists. Mills and Meadway willfully ignore all the innuendo in Dodds’ speech about “pragmatism, not dogmatism” and “long-term resilience” – phrases clearly intended as an unsubtle message to the City of London that Labour is ‘fit for government’, ready to manage capitalism.

Indeed, Dodds’ speech was received precisely as such, loudly and clearly. For example, the shadow chancellor was rewarded with a glowing write-up in the Financial Times, a reliable mouthpiece for the capitalist class, which praised her for:

“Backing away from the hard-left economic policies of former leader Jeremy Corbyn, seeking instead to fight the Conservatives on economic competence and protecting the UK’s recovery from the damage caused by the Covid-19 pandemic.”

The confusion of the reformists is further shown by the fact that, on the one hand, they claimed that the FT was disingenuously cherry-picking from Dodds’ speech, while on the other praising her for “getting plaudits from people who would normally attack” the party!

The serious bourgeois strategists see with far more clarity than the reformists. Labour’s leadership have done nothing to correct any of the assumptions in the article. This suggests that their message of “fiscal responsibility” can be taken at face value.

And he who pays the piper sets the tune. By cultivating support from the capitalist establishment, any future Labour government will be expected to act in its interests.

For example, Starmer recently forced out left-wing Scottish Labour leader Richard Leonard, allegedly at the behest of millionaire party donors. This is an indication of the party leadership’s new approach.

Need for socialism

But we should be clear. Even the left-wing economic programme put forward by Corbyn, McDonnell, and their successors in the Socialist Campaign Group of MPs would not be enough in the face of the current crisis.

Public services and local authorities were being torn to shreds even before the pandemic; millions stand to lose their jobs and income; the NHS is hanging by a thread; local authorities are going bust. At this junction, therefore, anything short of the most radical programme in the history of the Labour Party will fall short of what the working class needs.

The bosses and billionaires have enriched themselves even further during this crisis. But instead of attacking this wealthy elite and showing solidarity with workers in struggle, Starmer and the Labour right wing have ditched any radical rhetoric or left-wing policies, instead pitching themselves as ‘responsible’ and ‘respectable’ representatives of capitalism.

This continued rightward lurch will only provoke further outrage amongst Labour’s rank and file. This provides the context for Starmer’s continuing attempts to liquidate the left – a necessary step for the party establishment, in order to eliminate any resistance to their jettisoning of the class-based policies brought in under Corbyn.

Rather than creating illusions in Starmer, Dodds, and the rest of the right-wing gang, we must organise and fight for a bold socialist programme. Only this can put an end to the crisis of capitalism and offer a real future for workers and youth.

This means struggling to regain our party, fighting for a socialist leadership that will take on the capitalists, not attempt to appease them. We implore you to join us in this struggle.