The Staggers

The New Statesman’s rolling politics blog

How the left can be radical without spending money

Balls's speech made way for a new agenda that is profoundly exciting.

By Rowenna Davis Published 17 January 2012 11:35

Balls's speech made way for a new agenda that is profoundly exciting.{C}

Ever noticed how shutting one door can open another? This week Labour's staunchest champion of growing our way out of the deficit acknowledged that he could well be making cuts in 2015. The left, personified by Owen Jones and Len McCluskey, were up in arms. They think we've lost the possibility of being radical. I say we've opened it up.

The modern left frequently makes one mistake. They assume that the most significant means government has of transforming lives is through taxing and spending, traditionally known as the "demand" side of the economy. They have left the supply side - the rules that govern the price of labour and capital - to the right.

But what if, at a time of pressure to reduce government spending, the left could develop an agenda for the supply side of the economy that delivered meaningful change?

It's not surprising we're sceptical. Because the right have dominated such policy in the past, such an agenda is associated with smashing unions to decrease the cost of labour, deregulating capital to enrich the fortunate or privatising at the expense of quality.

But supply side policy doesn't have to be regressive. It's just a tool that's been used in the wrong way. Most recently, Ed Miliband has been talking about a number of supply side policies that are courageous, imaginative and proudly consistent with the values of the left.

The most high profile example is his attack on certain energy and transport companies. We know that these markets are sown up, so increasing competition and regulation will deliver a fairer result. The living wage is another example. Government contracts that build in apprenticeships and local investment is another. The High Pay Commission's work on wage transparency and shareholder representation on boards is another. Cutting down on corporate tax havens as Miliband just outlined is another. Breaking up the banks takes this one step further.

Although it needs sexier branding, these supply side policies are all part of what Miliband calls "responsible capitalism". It's why Blue Labour is interesting.

These policies have three big advantages. First, they don't cost anything. Second, they make people's lives better. Third, they are much closer to where the public is at. I appreciate the arguments made by Owen Jones, but I don't think he has appreciated the scale of anger there is about a perceived waste of public money by Labour in the good times.

As someone who remembers what it was like to not have enough chairs in their classroom, I'm never going to apologise for investing in schools, and you'll never hear me say that government spending isn't essential and necessary. But waste on IT contracts, PFI and middle managers? I'm happy to apologise for some of that.

And as Ed Balls said this week, a true Keynesian is sometimes a hawk. If you genuinely believe we should be running a programme of increased spending now, then you have to acknowledge that we should have spent less when the economy was booming. The idea that Keynesians believe in high spending throughout the cycle misses the point completely.

So let's not get confused - Labour is still saying that we should cut less fast and less deep now, but with the OBR estimating we'll be 18 per cent poorer as a result of the recession, the state will be smaller once we're out of this mess. And that means a progressive supply side agenda.

If we do that, then Ball's speech wasn't a sign of giving up and following the Tories slowly back to the middle ground. It was a necessary part of gaining credibility with the public to make way for a new agenda that is profoundly exciting. Interestingly, it's one that Miliband is leading, not the shadow chancellor. The left shouldn't abandon ship, it should get on board.

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Tags: Ed M Ed Balls

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21 comments

Wed, 2012-07-04 09:16 — Xavierre (not verified)

The party’s full name translates as Coalition of the Radical Left , which sounds like something that Glenn Beck might have scrawled on his blackboard during the health care debates of 2009 but actually describes the party’s supporters pretty accurately.

Tue, 2012-01-17 15:50 — Sir Michael (not verified)

Labour should be arguing for a higher tax rate on the rich and on corporate profits, and a far more robust action on tax avoidance and tax evasion.

Really, we have one right wing party and one ultra-right wing party in this country. Can we have a left wing party for democracy sake please? Even if they don't necessarily get elected we should have the option for it.

Tue, 2012-01-17 16:35 — Awake!

'Even if they don't necessarily get elected we should have the option for it.'

Wed, 2012-01-18 20:59 — Dr Tomato (not verified)

You're disappointing, Fergus. You can be bothered to correct a typo by posting a correction that contains - ho ho - a typo, but can't be bothered to rack your brains until you realise that "perceived" is there to acknowledge that there is a debate, but temporarily put that debate on hold as it is not central to the argument. But the fact that you're reading NS gives you hope - keep on taking the medicine and the pompous twit persona will melt away, revealing the true, caring you.

Tue, 2012-01-17 20:11 — Kevin Irving (not verified)

I watched Ed Milliband on the BBC News Channel for over an hour last week when he re-launched his leadership and then took questions from an invited audience. I thought he come across as a genuinely likeable leader. However, he lacked specifics. When it came to the question of rail fares he could have simply said that once each of the current rail franchises come to an end they would then be returned to the public sector. A popular policy, an integrated, green, low cost rail system for all to use and enjoy. Open goal missed.

Tue, 2012-01-17 21:43 — Hugh Markey (not verified)

What a miracle worker Clem Atlee must have been. In his few short years as PM he dealt with the aftermath of a world war which had bankrupted Great Britain, nationalised the commanding heights of the British economy, freed India from the yoke of empire, created the NHS, helped to feed war-torn Europe and keep it out of Stalin's clutches, and he faced hostility from Trueman and his business-oriented administration. Besides burying a monarch and fighting as a loyal ally of the USA in Korea, Atlee's Britain held the Olympic Games and organized the Festival of Britain. Have we left anything out?.
Not only that - Atlee had to deal with the manoeuvrings of Herbert Morrison and his supporters within the Labour Party and government.
And by the way, the employment figures weren't too bad either.
Double-dip recession? Don't make us laugh!

Tue, 2012-01-17 23:03 — andykm (not verified)

There is nothing wrong in saying that Condem's policies are failing and likely to result in continuing economic problems which in turn mean that a new govt would have difficult decisions to make and could not promise to immediately undo all the harm caused by the current Govt.
However to give the impression that
the cuts are supported by Labour and that austerity is the answer to our current and overhyped dificulties seems politically peverse as well as being awful economics.
Perhaps this isn't what was said or meant but it was what was heard. Don't the upper echelons of the Labour party have any guidance on, or indeed any sense of, the likely effects of what they say on the general public?

Wed, 2012-01-18 10:30 — Fergus Pickering (not verified)

Is not a cheerleader an attractive girl dressed in not much who dances. I'd rather fancy being one of those. And aren't ALL Tories the enemy of you lot. I am certainly a Tory. Ergo.

Wed, 2012-01-18 16:16 — Union Steve

So now we are tied to the tory cart so we can all go over the clif together. Balls to credibility you set of neoliberal lickspitals!

Tue, 2012-01-17 11:50 — Fergus Pickering (not verified)

A true Keynesian, eh? Sounds like religion to me. Keynes was an economist in the middle part of the 20th century. He would not have expected his pronouncements for that time to be set in stone for all time. By the way it's 'sewn@ not 'sown'. And do you mean by a 'perceived' waste of money that it was not a waste of money at all. And this too fast and too far stuff. Osborne hasn't actually cut at all. Things are just going more slowly in the wrong direction.

Balls will never gain credibility. I shouldn't tell you this, for I am the enemy, but you need to get rid of him. Left over from the last reign, don't you know.

Tue, 2012-01-17 12:09 — Arturo Bandini (not verified)

You're not the enemy Fergus, just a cheer-leader for them.

Ideas above your station, don't you know?

Tue, 2012-01-17 12:27 — RedMan! (not verified)

Great article Row, but I think there is something key. The message is right, the messenger is not right - that is the problem. Also, Labour should not always be quick to regulate, that's my problem - it should enmpower people to challenge the markets, rather than always turning to top-down regulation but I thik on tarriffs and fares, Labour is right. But Labour needs someone who is actually electable to communicate these values rather otherwise we may remain in hung parliament territory or the public may even give Cameron and Clegg the benefit of the doubt which cannot and must not happen.

Wed, 2012-01-18 17:13 — Privet (not verified)

good points matt 18 jan 11.48

Tax & spend for government is not enough, capitalism can work if there is less income inequality and more capital spread around

Tue, 2012-01-17 13:04 — Freeman2

Arturo Bandini writes, 'You're not the enemy Fergus, just a cheer-leader for them.'

Wouldn't 'sewer' be nearer the truth?

Tue, 2012-01-17 13:09 — V.SMALL (not verified)

Responsible capitalism? Sounds good. Keeping spending in check? I'm fine with that. Refusing to reverse any cuts? This is where Ed Balls has appeard to close down options for Labour, while confusing and annoying many in his own party and undecided voters.

If we want to be close to where the public is at, then we need something to say about certain cuts, such as welfare and health reform. Would it be too cheap for Labour now to promise fair and universal access to NHS care and decent support and allowances for the disabled and terminally ill? I think just a few specific spending commitments could put a bit of humanity back into Labour's image and help win back public trust.

Tue, 2012-01-17 13:21 — Politico (not verified)

John Maynard Keynes was a Liberal. His theory on demand management in re stimulating the economy is pehaps not valid for re introduction at this time.

The Supply side or Monetarist principle is more in tune with Thatcher and her promotion of the aggregate "i".

Rowenna predicting the economy is difficult.

There ar three ways of controlling the economy
1. Fiscal - by the use of taxes and invest through demand management
2. Monetary - using money in the economy for example control of interest rates
3.Planning by Governement control targets

Inflation is the key here.
Inflation will come down by the end of the year

Ed Balls has already given up his adaptation of Keynes by joining the Tories. What if inflation soars. Will he side with the tories by indicating too much money in the economy or revert back to Keynesian belief of real economy demand as the cause.

You are asking the Labour Party to become Blairite or move to the right with the Tories

There are two definitions of monetarism and none of them fit into socialist ideology.

Ed Balls know wants to play Milton Freidman and control money.

Nice one.

Tue, 2012-01-17 13:37 — Politico (not verified)

Sorry Rowenna,

As I have been unable to post on Medhi Hasan's blog due to ? I would like to respond on here as it is much more interesting and he may even learn from a good journalist to produce better articles.

Medhi,
I will say what I see. Every person has the right to voice their concerns.

What I will say it that individuals place themselves in a position to be held accountable for their actions and their verbal onslaught. You are no different. Your last few blog articles promote nothing but conflict.

The New Statesman is indeed a place for debate.

What I do know is people should never be judged by the might of an unknown pen. I know that you are not as intellectual as you try to impart.

He has succeeded however to wind everybody up into frenzy on his recent blog article. Which gives him the evidence to write his waffle.

Personally I think its best if he is ignored. Every contributor should refrain from making comments to his blogs and articles then you will observe in time him making less for a living

I believe in the working man, traditional labour thinking with a contemporary edge and Croslands Social Democracy.

Mr Hasan perhaps would not win many arguments with me.