The Staggers

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Exclusive: Vince Cable – “Keynes would be on our side”

Cable argues in this week’s New Statesman that the famous economist would back the coalition’s econo

By Duncan Robinson Published 13 January 2011 11:46

In an exclusive essay published in this week's New Statesman, the Business Secretary, Vince Cable, discusses the ideological battle between left and right over John Maynard Keynes's legacy – and why Keynes would back the coalition's policies.

Cable argues that knee-jerk opposition to the cuts will not suit the long-term causes of the left. "If the British left follows Bob Crow and the National Union of Students to the promised land of the big spenders, it will enjoy short-term popularity at the expense of the coalition but it will also enter an intellectual and political blind alley," writes Cable.

The cuts that the coalition is making are not a matter of choice. "For all the protesters shouting 'No to cuts', this electoral term would always have been about public-sector austerity, no matter who won the election," Cable argues.

"The outgoing Labour government was already planning a fiscal tightening of 1.5 per cent of GDP in 2010/2011," he writes. "The difference between its deficit reduction plan beyond 2010/2011 and that of the coalition amounts to roughly half a per cent of GDP per annum: well within the forecasting error."

The rhetoric of anti-cuts protesters is overblown, says Cable. "Such differences, though not trivial, hardly justify the titanic clash of economic ideas advertised in the commentaries or a threatened mobilisation of opposition comparable to the General Strike."

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Tags: John Maynard Keynes Coalition Vince Cable Liberal Democrats

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16 comments

Tue, 2011-01-18 13:29 — David Blanchflower1

Interesting comments all. Blanchflower and Skidelsky in our joint piece will deal with many of these points in this week's issue.

Needless to say we do not believe Keynes would be on the coalition's side.
Danny Blanchflower

Sun, 2011-01-16 15:08 — Michael (not verified)

Vince Cable and the Liberal Democrats intentionally positioned themselves to the left of New Labour for most of the last decade to pick up left-leaning voters disaffected with Labour's Authoritarian Neoliberalism. For Cable to now wipe that whole slate clean and treat the left with such disdain as he and his party enables a conservative government to privatise Higher Education and the NHS and attack those on incapacity benefit is worse than just dishonesty it's bare-faced lying to get votes and then do what every government in this country has done for the past thirty years- allow the global market to dictate our economic and social policy to us. I truly feel let down but one of the few politician's I actually respected.

Thu, 2011-09-15 08:30 — tuspitporie (not verified)

hi everybody ,I just desired to introduce myself like a total new person of nanostudio.I just joined the actual discussion board which is my first

Thu, 2011-01-13 11:51 — David Wearing1

"If the British left follows Bob Crow and the National Union of Students to the promised land of the big spenders, it will enjoy short-term popularity at the expense of the coalition but it will also enter an intellectual and political blind alley"

An intellectual and political blind alley occupied by at least three Nobel Prize winning economists that I can think of. Cable invokes Bob Crow and students such as myself, knowing full well that Christopher Pissarides has raised serious questions over the government's deficit-hysteria, and Joseph Stiglitz and Paul Krugman have openly ridiculed what Cable is now saying.

The sheer, self-serving dishonesty of the Lib-Dem leadership is astonishing. And transparent. This is why they have lost all credibility with the public.

Thu, 2011-01-13 12:15 — Graeme (not verified)

If Vince has looked at the lives of poor people, and the punishment they are now being made to suffer, perhaps he would come to his senses. But I doubt it, he has lost the plot entirely. Once upon a time he was a socialist, then a liberal, now clearly a Tory, and a creep.

Thu, 2011-01-13 12:17 — swatantra

Keynes would be turning in his grave at the shut down in the British economy. Growth is the only answer. The only award Vince is going to get this year is 'Hat of the Year'. It takes 2 to tango, and that means unions and business bosses have to come together for the sake of the nation. But he's not saying that. Heads need knocking together and thats the job of any Govt.

Thu, 2011-01-13 12:24 — Nishma (not verified)

Odd how every Keynesian economist disagrees with Cable there: Stiglitz, Krugman, Skidelsky, etc.

It is clear that Cable has no interest in the public he is supposed to serve or he would at least try to understand that we know a little more than he thinks we do.

We have have already entered the 'intellectual and political blind alley' thanks to an international acceptance of globalisation and neoliberalism, which austerity plays directly into. There's a reason it's called "la pensée unique".

Perhaps instead of telling US that 'big spending' won't work, he should tell the same to the banks whose focus on short-term gains through high-risk gambling led us into this crisis in the first place.

Mon, 2011-01-17 13:42 — FA

David Wearing

If you're going to cite economists rather than making an argument of your own then its worth pointing out that the balance of opinion on the part of economists favours the government's policy. If you are going on "what economists think" you can't ignore this. Krugman is an expert in international trade and I have yet to see evidence that he has actually conducted research into this issue. He has simply engaged in journalism. Stiglitz for whom I have time for hasn't ridiculed anyone. Krugman refused to deal with pertinent points from Niall Ferguson on the basis that he "isn't an economist" - a pretty poor argument. I would genuinely be interested to hear responses from Skidelsky, Stiglitz, Martin Wolf and even Krugman to Cable's very well though through article.

Cable has in good faith set our in argument. You Mr. Wearing in engaging in a "knee-jerk" simply because you don't like his conclusions. Read the article and tell us what is wring with his argument.

Thu, 2011-01-13 13:47 — Sam (not verified)

I really urge people to read and re-read Cable's essay. It's a very comprehensive argument he makes and it would be incredibly foolish to dismiss it out of and.

He addresses key points which Skidelsky and Blanchflower (who are responding to the essay next week) are going to have a tough time rebutting.

People should be fascinated by these exchanges between Cable on one side and Skidelsky and Blanchflower on the other, as they are addressing the big issues in the argument in a way no other mainstream publication that I've seen has done.

But this will also make it harder for the layman to understand their arguments but please still try your best to see if you can get a grip on what they're saying.

Hats off to the NS for organising this and giving a the mainstream audiance a chance to see the arguments for and against in a more complex and thorough manner.

Mon, 2011-01-17 16:34 — Corcaighrebel

One word: deluded.

Thu, 2011-01-13 15:34 — Cicero (not verified)

@Sam

"I really urge people to read and re-read Cable's essay. It's a very comprehensive argument he makes and it would be incredibly foolish to dismiss it out of and."

Oh, yeah? What argument did he make exactly?

Thu, 2011-11-10 01:25 — escaggego (not verified)

This is my first publish and the very first time I've discussed my fears as well as emotions openly.

Thu, 2011-01-13 15:55 — Hans Castorp (not verified)

Irritating conflation of Keynesian theory and what Labour would have done here. Hope there's more meat to this in the article.

It will be interesting to hear how the coalition policy of deliberately making hundreds of thousands of people jobless, increasing the Uk unemployment rate by 3.5 percent insodoing, squares with Lord Keynes's general theory.

Something tells me we are going to see this hapless braggart sell out every last vestige of intellectual integrity he has, just try and sway a few NS readers. He just can't help himself.

Mon, 2011-01-17 21:32 — thinkov

Oh well if he's right

i'm sticking with Marx

Sat, 2011-01-15 22:57 — mike cobley (not verified)

I`m afraid that the answer is called expansionary fiscal contraction, as voodoo a piece of economic theory as we've ever had foisted on us in the UK. Basically, the idea is that by slashing public expenditure you increase demand which the private sector expands to satisfy. But, I hear you cry, how can demand increase when the cuts to jobs means that there are less people with disposable income looking for goods and services. Hah, you fool! - dont you realise that with a sprinkling of magical market pixie dust all will be well in the Camerclegg Utopia Of Tomorrow?

Er, well actually it wont. The market responds to buying power, not to need. So the needs of the poor, the sick, the old and the disabled will go unanswered. Bye bye, Vince, you coulda been a contender.