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Catastrophe averted?

The leaders of the rich countries went to Washington to save the world from sliding into deep recess

Vincent Cable

Shadow chancellor, Liberal Democrats

By the low standards of economic summitry, the G20 meeting rated quite high. There was a predictable, no doubt pre-written, communiqué, full of the usual banalities. And the meeting suffered from the absence of the world's most important politician, who hasn't yet taken up office. But, these necessary caveats aside, there were important achievements.

The first is that the meeting took place at all. The ludicrous pretence of the G8 (or G7) that the old western powers should set the global economic agenda has been punctured for good. On a purchasing power parity basis, China has the second-biggest economy in the world and India the fourth. It has been clear for some time that China is lender of last resort to the global system (by, in effect, underwriting US government paper) and the main source of global incremental demand (and commodity price inflation). The Chinese self-parody as the pupil sitting meekly at the feet of a dominant, but erring, master defies belief. It is obviously right that China, India and the other main non-G7 countries should be at the top table.

The second achievement was the clear realisation that unless governments hang together they will hang separately. Enough has been learned from interwar history for us to understand the follies of beggar-my-neighbour economics. Perhaps a warning shock was being sent across the bows of the incoming Obama administration not to reinvent the protectionist tariffs of the 1930s in a new guise, directed at China or Mexico in particular, or aiming to salvage the US auto industry through public subsidy. But this new-found concern for open markets has not yet communicated itself to EU or Indian or Chinese trade negotiators, who show no enthusiasm for lifting the block on trade liberalisation under the Doha round.

While trade policy is on the back burner, macroeconomic policy co-ordination is not. With a few exceptions - Germany notably - there is recognition of the need for aggressive monetary and fiscal policy and for large-scale intervention to recapitalise banks. These interventions can be and are being undertaken nationally. But governments acting in isolation attract critical attention from capital markets and currency speculators, as Gordon Brown is discovering. Structures like the G20 are the best safeguard against chaotic, unilateral action.

Will Hutton

Economic commentator

It was remarkable to gather so much economic and political power in one room to address a common agenda. That was the good news - along with commitments to co-ordinate fiscal expansion, to expand the lending power of the IMF and World Bank (Japan's $100bn loan to the IMF will increase the Fund's lending capacity by 40 per cent), to boost cross-border supervision, to tackle credit rating agencies, to reassess mad accounting rules and require member countries to attack the bonus culture in the financial services industry. A year ago such an agreement would have been inconceivable.

The bad news is that much of this is shutting the stable door after the horse has bolted. Four things have to be recognised: that the world has profound imbalances between high-saving, high-surplus areas in Asia and the Gulf and low-saving, structural deficit countries in the transatlantic economy (Germany excepted); that a system of floating exchange rates and private banks can no longer take the weight of recycling those savings; that unless the system is de-risked and the burden of adjustment is placed on deficit and surplus countries alike, the global system faces breakdown; and finally, that the business model used by the banks to recycle surpluses - securitisation and hedging in the $360trn global derivatives market - is broken.

In plain English, China must accept that its currency must appreciate; Britain and America, that they cannot run their economies on foreign savings; and all players that there has to be a system of semi-fixed exchange rates between the yen, the euro and the dollar.

One tough reality is that, for all their new economic weight, China, Brazil, Russia and India do not have fully convertible currencies - nor do they want to accept the discipline involved in having convertible currencies.

Ann Pettifor

Fellow, New Economics Foundation

Over the past decade, the Group of Eight leaders turned their exclusive annual meetings into jamborees. Rock concerts, protesters and celebrities added populist glitz. However, the real purpose of the meetings - international co-operation and co-ordination - was ducked. At last year's G8 Summit in Heiligendamm, Germany, George W Bush and Gordon Brown vetoed Angela Merkel's agenda item for co-operation over tighter international regulation and financial oversight of capital markets. That task, they argued then, could safely be delegated to "the invisible hand". Now that the fantastic, self-regulating machinery of free markets has proved grossly malfunctional, it is good to hear talk of enhanced co-operation and regulation.

But, in places, the joint statement issued by the 20 world leaders borders on the delusional. The phrase "We must . . . ensure . . . that a global crisis, such as this one, does not happen again" implies that they are avoiding the next war when they are still losing this one.

Even more questionable is the call for continued "economic growth". In a world of finite resources on a planet with limited capacity to absorb toxic emissions, and with bushfires encircling Los Angeles, we would have hoped that world leaders had some awareness of the threat of climate change and of the limits to economic growth. But no. The gravest threat to global security - our rapacious attitude to the earth's resources - is once again whipped up with talk of "market principles, open trade and economic growth".

Jesse Norman

Senior fellow at Policy Exchange

One might have thought the G20 summit a good moment for some straight talk from the Prime Minister. Instead, the political wind machine was cranked up to full blast. The summit would be a second Bretton Woods. Gordon Brown would forge a new global consensus on co-ordinated intervention to stimulate growth (while, of course, leading reforms to prevent the banking crisis from ever recurring). Luckily virtually none of this was true, or the summit would have been a hopeless failure. With fiscal measures already widely adopted, the G20 hardly needed Brown's leadership. No surprise that he returned empty-handed.

Labour has moved from despondency to a manic desperation to remain in office. The result is that the ever-fragile concept of truth in politics has wholly been cast aside. Thus the humiliating bank nationalisation has been dressed up as an act of far-seeing economic statesmanship. And a sensible warning from the shadow chancellor that current economic policy puts sterling at risk has been condemned for breaching an irrelevant semi-convention dating from the time of fixed exchange rates.

Alex Brummer

City editor, Daily Mail

There is a golden rule of international financial meetings. The larger the "G" number, in other words the more countries involved, the less likely it is that any worthwhile or binding decisions will be taken. So while it was wholly encouraging that the G20 summit brought a number of emerging market leaders to the top table of finance, including China, Brazil and Russia, there was never any real prospect of the event becoming the new Bretton Woods.

Furthermore, the summit took place in the final days of the lame duck administration of George Bush. Once it became clear Barack Obama was going nowhere near the confab, the event became even more of an irrelevance.

European leaders may like to blame Wall Street and Anglo-Saxon capitalism for the credit crunch and the recession now spreading through the Group of Seven like wildfire, but there is no hope of concerted international action without the new White House and Federal Reserve on board.

Almost all that was agreed could have been decided before the leaders left home. The commitment to reviving the Doha trade round is pure motherhood and apple pie. The prairie populists on Capitol Hill are unlikely to be enthusiastic.

At the core of the proposals was the commitment to use fiscal measures, tax cuts and public spending to kick-start global economies. But despite Gordon Brown's enthusiastic embrace of a new Keynesian big-spending approach - as advocated by Nobel prize-winner Paul Krugman - he neatly forgot to mention that such big-spending ways were only for those countries with a "policy framework conducive to fiscal sustainability". The UK with its ballooning budget deficit, which could hit £100bn or more next year, is clearly in no such position.

It is hard to fathom in what way the G20 was "historic", as the Prime Minister claimed in the Commons. There is little original in a bunch of old ideas designed to remove risk from the financial system and control executive pay. That is what regulators should have done before the banks ploughed into the iceberg.

James Buchan

Author and financial commentator

What is the Financial Stability Forum? What is "mitigating against pro-cyclicality in regulatory policy"? What, if anything, has the G20 summit in Washington on the weekend of the 15 November achieved?

Nothing very much, is the answer to all three questions. In the twilight of a discredited US administration, and with President-elect Barack Obama absent, the meeting was never likely to achieve a great deal or generate excitement in the US. Yet the final declaration, drafted with suspicious ease by the delegations on Saturday night, has something for everybody but not enough of anything to scare the financial horses.

Nicolas Sarkozy, the French president whose idea the whole thing was, gained some support for more institutional government of trade and finance, but no super-gendarme international of the type that has been directing financial traffic in the French imagination since the 17th century. As Jean-Pierre Robin wrote in the Figaro: "Those with fantasies of supranational supervision will need to change therapist." The US, jealous of its commercial sovereignty even when it is going about without its shirt, put paid to those Gallic dreams and also gained some platitudes about free trade.

The new commercial powers, not only Brazil, Russia, India and mainland China but also rich oil producers such as Saudi Arabia, received diplomatic recognition of their deep pockets. "The world's geopolitical structure has a new dimension," the Brazilian president, Luiz Inácio Lula da Silva, said. "There is no logic to making any political and economic decisions without the G20 members - developing countries must be part of the solution to the global financial crisis."

I suspect the winner is Gordon Brown. The next meeting will be held under his presidency in London in April. The Washington ragbag of proposals to reform or tinker with the current system, such as reminding us about the Financial Stability Form and mitigating against that regrettable pro-cyclicality in regulatory policy, appeals to his technical vanity and plays to his technical strengths.

Paul Mason

Economics editor, Newsnight

There was a sense in Washington, despite the throbbing engines and bulletproof glass, of powerlessness. The communiqué was stronger on the causes of the crisis than on co-ordinated solutions. Policymakers are right to stay focused on the near-term dangers: these are country-level debt default, the rising cost of borrowing for non-financial companies, rapid job losses and - via feedback - further destabilisation of the banking system. We are moving into the phase of fiscal stimulus but there are powerful technical arguments that say without "quantitative easing" - that is, printing money to stimulate demand - it doesn't work. The same people who told me it would come to recapitalisation, that the TARP (troubled assets relief programme) would not work, are now saying: nationalise the banks and print money.

Despite the urgency of the focus on near-term dangers, what was obvious at G20 was the lack of vision as to the future growth model of capitalism. The problem was seen as a failure of regulation; the solution a pretty weak brew of re-regulation that will get diluted even more as the lobbyists begin to have influence. But the problem is more fundamental: the growth model based on high debt instead of high wages has failed and will be hard to revive.

Peter Mandelson

Secretary of State for Business

We have been caught in a global whirlwind of extraordinary force.

It has brought with it a fear that has gripped the world economy and taken hold here at home. We are seeing it every day, with fear among consumers that is depressing demand; fear among banks that is inhibiting them from lending; fear among small- and medium-sized businesses that banks are just about to cut off their credit lines. The choice facing us and governments around the world is this: do we act decisively to counter and overcome this fear, or do we become paralysed by it and fail to act?

The government has already shown its willingness to take the bolder course as the first mover in setting about stabilising the banks. What is needed now is action to stimulate the demand essential for recovery. The UK economy, like economies in the rest of the world, needs a shot of adrenalin.

The Bank of England has already made a significant cut to interest rates. This monetary stimulus now needs to be matched by a fiscal stimulus. And because this is a global crisis this is best done if the benefit of the measures taken nationally is maximised by the same measures being taken around the world. That was the message from the international conference in Washington, as governments recognised the need to take the action necessary to stimulate their economies.

People will say, "But you are resorting to borrowing in order to deliver the stimulus that's needed." My answer to that is, what is the alternative? We certainly haven't heard one from the Conservatives.

David Cameron and George Osborne, trapped by their desire to oppose everything the government does, refuse to accept the scale of the challenge the world's economies now face and the prescribed international action. Their stance appears to be, if the rest of the world disagrees with us, it is because the rest of the world is wrong. The result is incoherence and an Opposition at sixes and sevens. One minute this is "do all it takes" and the next it is - as we heard this week - leave the recession to "take its course".

Sitting on our hands watching houses repossessed and businesses go to the wall is certainly not the approach being urged on me by people I have been speaking to up and down the country. They want their government to act to stimulate demand in the economy here and now. With all due prudence, that is what we are going to do.

Diane Coyle

Author and economist

The G20 meeting confirmed a robust and rapid response (by past standards) to recession, even in the US operating under a rump free-market administration. Policymakers around the world have been shaken to see the financial system at the brink of collapse - on their watch.

Yet it is difficult to predict how severe the recession will be. Bank lending to businesses and individuals is virtually frozen. In many (but not all) areas of the economy, activity has come to a halt. The last financial boom and bust, ending in 2001, had surprisingly little impact on jobs and growth, as the financial bubble had become increasingly untethered from anything real. Today's vicious circle of evaporating liquidity is much more serious, but lower interest rates and bigger government deficits will help. The underlying trends are easier to outline. Some challenges are clearly unaltered, such as climate change and our ageing society.

The technological opportunities are still there, too, in communications, the internet and biotechnology. Globalisation will be less driven by finance in future, but it will not be unwound. It would take a generation to turn back the clock on economic linkages, and the cultural impacts are permanent. In fact, the crisis has underlined our interdependence across national borders.

What has changed is the political economy of globalisation. In the triad of efficiency, fairness and freedom which dominates political choice in democracies, fairness will take priority in the years ahead, and the drive for ever greater productivity gains will retreat. The semi-nationalisation of the banks has started to shift the boundary between public and private domains; we will have to think more carefully about how to govern private choices that have big social spillovers. The G20 did not touch on this profound question of governance.

Iain Macwhirter

Political commentator

The G20 was largely a throat-clearing session and was never going to put in place the foundations of a new international financial system. Progress on the stalled Doha trade talks is encouraging but provides no guarantee that protectionism will not raise its head in the coming economic slump.

It is inevitable that countries faced with financial collapse will try to defend their economies by any means possible. Britain is already far down the road of "beggar my neighbour" economics by the "managed" devaluation of the pound, a crude attempt to boost UK industry by lowering the prices of British exports and creating a de facto tariff wall around imports from abroad. It won't work because Britain does not make much of anything any more except debt, and the world has plenty of that already.

But the collapse of the pound will seriously damage what is left of UK financial services. No one in their right minds would put money into the UK economy now, with the property market collapsing, UK banks insolvent and government borrowing likely to reach £100bn in the next 18 months.

Gordon Brown seems to believe that sterling is like the dollar, and that people will buy our dud pounds whatever the likely losses. However, as we are discovering, sterling is not a reserve currency and unlike the US we cannot force other countries to pay our debts. The future for our battered island is likely to be hyperinflation punctuated by appeals to the International Monetary Fund for emergency aid. Forget about spending our way out of recession - the UK government simply lacks the resources to fund the huge borrowing that would be required. Something will have to give. Brown will have cause to regret being so beastly to the Icelanders.

Richard Reeves

Director of Demos

James Carville, the hardened political aide to Bill Clinton, said that if he was reincarnated he'd want to come back as the bond market: "You can intimidate anybody." Right now it seems odd to think of any financial markets threatening anybody. But it is one of the ironies of the current economic situation that the capital markets still have some serious muscle.

Western governments, faced with recession, need to throw a lot of money at their ailing financial institutions - money that can be raised only by selling Treasury debt, mostly to the capital-rich investors of the Far East. For Gordon Brown, this is likely to become a more difficult sell, as Prudence is given the push and the pound takes a nosedive. Even national exchequers invite sceptical scrutiny in this new, nervous world.

The financial crisis is at heart a loss of faith. The word credit derives from the Latin credo - "I believe". When the Titanic of the financial world - in the shape of Lehman Brothers - was allowed to sink, the bonds of trust stretching around the world were snapped. In an instant, everyone stopped believing in each other.

A number of sensible measures should be on the agenda when the G20 reconvenes next year, including legislation to ensure bonuses in financial services are paid on the basis of five-year performance; new "pro-cyclical" provisioning rules requiring finance houses to increase their store of capital in economic upturns; and tougher, independent regulation of the rating agencies whose doe-eyed assessments of banks built on a mountain of paper helped get us in this mess.

There is, however, no quick technical fix for such a dramatic loss of confidence. Trust can be lost in the blink of a market-trader's eye - but it will take years to rebuild.

TEN THINGS THEY ACHIEVED

  • 1 Created a road map aimed at stabilising the world economy and overhauling the banking system with targets for the end of March 2009
  • 2 Advocated Keynesian big-spending
    “fiscal stimulus”
  • 3 Expanded from a small club making world decisions to recognise the importance of the economies of Brazil, Russia, India and China
  • 4 Agreed to reform international finance institutions, including better transparency and supervision of credit ratings agencies
  • 5 Agreed that the Financial Stability Forum should include emerging economies
  • 6 Banks and hedge funds to hold increased levels of capital and cash
  • 7 Recommended “supervisory colleges” for all major cross-border financial institutions
  • 8 Return to the Doha round – trade ministers to meet in Geneva next month
  • 9 Instructed G20 finance ministers to draw up plans and timeline
  • 10 Agreed to meet again, in London next April

. . . AND FIVE THEY DIDN’T

  • 1 Agree a future growth model for capitalism. Instead they reconfirmed their “shared belief in market principles”
  • 2 Agree detailed plans for regulatory reforms of banking
  • 3 Establish a plan of action for achieving the already endangered Millennium Development Goals
  • 4 Set up an international supervisory body with sufficient power to control global markets
  • 5 Halt the run on sterling, which fell sharply against the euro and dollar

Alyssa McDonald

This article first appeared in the 24 November 2008 issue of the New Statesman, How to get us out of this mess

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Explaining the love for Jeremy Corbyn

A political movement of hundreds of thousands of people, which has sprung up within a year, demands proper attention. What's behind the support for the Labour leader?

Last week I was having an argument on Twitter, because that’s where arguments happen. I was making the case — outlined in my article here — that to understand the support for Jeremy Corbyn, the place you really needed to look was Facebook. Another political commentator interjected to say I should go to rallies too; which, I agree with, but actually I think that for the “voice of the grassroots”, Facebook is better. 

Her premise was that Facebook is elitist. My belief is that it is far less elitist than a rally. It takes time, effort and money to go to a public meeting; for those with caring responsibilities, or those working shifts, dropping a quick comment on a social network is a far easier way to engage with politics. Ah, but don’t only the rich have internet access? To that, I’d counter that two-thirds of Britons have smartphones, and to me they fall into the same category as the “flat screen TV” of tabloid myth: owning one is not a symbol of disposable income, but a reflection of the availability of credit, and the necessity of staying in touch. 

Anyway, that preamble is to justify what comes next, which is that I’ve spent a fair bit of time in the last week talking on social media to supporters of Jeremy Corbyn. I also put a call out to New Statesman magazine and Facebook page readers for their thoughts, which we plan to publish later this summer. A movement of hundreds of thousands of people, which has sprung up within a year, demands the attention of political journalists, and it is too simple to dismiss Corbyn’s supporters as merely idealistic young protest voters, or Trot re-treads.

I’m also keenly aware that suspicion and hatred of “the MSM” is baked into Corbyn’s appeal — in the first line of his recent interview with Owen Jones, he told the Guardian journalist “you read too many newspapers”. (To which my answer would be, no shit: it’s my job. But Owen is far more polite than I am.) It’s tempting to reflect back that “us and them” attitude, but it’s ultimately unproductive. So I thought I’d run through 11 reasons for supporting Jeremy Corbyn which kept cropping up in my discussions, and reflect on them.

Those who think that long blogs are a blow against “the anti-intellectual legacy of English bourgeois culture, reinforced by neoliberal ideology with its obsession with short-term gratification” will be delighted to know I’m about to bang on a bit. To everyone else, I apologise. 

 

1. There’s no point being Tory-lite.

One of the first conversations about politics I had after Labour was defeated in May 2015 was a friend saying, “What do you think they will do now? Go left?” I explained that the lesson of the election was that the Tories had been very clever at crushing their former coalition partners, the Lib Dems, in England, while the SNP had swept Labour out of Scotland for a generation. Labour had increased its existing majorities in London but should worry about the surge in Ukip support in the north of England. The lesson I took from that election was that a) Labour faced an enormous electoral test to get back into power; b) there were no votes to be won where they would be needed by the party going further left. 

It now feels to me as though many other people looked at the same alarming electoral map and drew a different conclusion: Labour were screwed whatever happened, so why not try something radical? Some on the left of the party felt that they had swallowed their qualms about, say, “the racist mug” (the one promising controls on immigration) or signing up to the benefit cap, because they acknowledged that compromises were necessary to win the election. But to make compromises and still not win? What was the point?

There is a similarity, though: both analyses suggest that “one more heave” was not going to work for the 2020 election. Andy Burnham and Yvette Cooper were seen as offering continuity, when the selectorate wanted change. Even those who opposed Corbyn didn't really want more of the same.

 

2. Scotland shows that a left-wing party can take power.

This is one of the most interesting arguments to me, principally because of how it’s mutated over the last year. In the summer of 2015, I had a lot of people tell me that Corbyn was Labour’s only hope of winning Scotland back. (I have to say that most, if not all, of these people were not Scottish.) The theory went that the SNP were an anti-austerity party, particularly on welfare, and that’s what people wanted. Jeremy Corbyn, by being an anti-austerity Labour leader, could win them back.

This is a dramatic misreading of Scotland’s political culture. The SNP are a phenomenally impressive political party, and their rise has been fuelled by deeper currents of identity, nationalism (the clue is in the name) and an appetite for power to be wielded closer to home. The concomitant demise of Scottish Labour is also about anger at being taken for granted; there is still a feeling that some Scottish Labour MPs were “absentee landlords”, who went to Westminster and then enjoyed living in London so much they lost touch with their constituencies.

None of that can be simply undone by Labour saying nicer things about benefits claimants. And in any case, I find the English left’s belief that the SNP are a devoutedly anti-austerity force troublingly naive. They are a centre-left party, which has worked hard to demonstrate economic competence and a friendliness to business. Witness their evolving attitude to the 50p tax rate: after flirting with it in the general election, in order not to be outflanked by Labour on the left, Nicola Sturgeon announced before the Holyrood elections in 2016 that the party would oppose its reintroduction. Her rationale was exactly the same as George Osborne’s: that it could drive high earners out of the country (in her case, to England). After being attacked by Labour’s Kezia Dugdale and the Lib Dems’ Willie Rennie, she fudged, saying that she was open to the idea, but only if tax avoidance could be tackled. She also rejected the Lib Dem and Labour call to add a penny on to income tax immediately to fund public services. This is cautious, pragmatic, triangulation. 

Added to this, the SNP are ferociously disciplined at Westminster. Their conference, as I wrote at the time, was positively New Labour-esque in its dazzle and message discipline. Having attacked Labour in May as being insufficiently left-wing, after the election of Jeremy Corbyn the SNP seamlessly switched to calling the party disunited and incompetent. 

That leads me on to . . .

 

3. Jeremy Corbyn has won by-elections and mayoral elections — proving that he can win in the country.

I kept hearing this analysis, and the counter-analysis (that every opposition leader expects to gain votes in by-elections and council elections), and it took me a while to realise what was missing. Scotland. Labour came third in the Holyrood elections earlier this year, behind the Conservatives. Were those elections a test for Corbyn? I think there’s a good argument to be made that they weren’t, if you accept the premise that Scottish Labour can only rebuild by being as independent from the Westminster party as possible. (I do.) But the total omission of the Holyrood results from any consideration of Corbyn’s electoral record sticks in the craw a bit after a summer of being assured that the Scots were simply waiting for a properly anti-austerity leader in order to flock back to Labour.

On the other elections . . . as I said before, all opposition leaders expect to gain votes in local elections, which are often seen as a low-cost way to kick the government. I also don’t buy Corbyn’s assertion at a rally in Salford that there’s anything strange about the media not reporting a parish council seat Labour won from Ukip. It’s not a conspiracy not to report an election in which there are fewer than 500 voters.

On the other hand, the mayoral contest in Bristol is positive for Jeremy Corbyn, and my colleague Stephen made a good case that Sadiq Khan did benefit from a “Corbyn effect” in the London race. Corbynism does connect in cities like London, Bristol and Brighton — although the risk (if winning a general election is your aim) is piling up votes in areas which were already majority Labour. 

 

4. The PLP undermined him from the start. He didn’t have a chance.

There is undeniable truth to this: the Labour MP Jamie Reed, for example, resigned from the frontbench during Corbyn’s acceptance speech in September. Some MPs refused straightaway to serve in his shadow cabinet. Others briefed against him from the start. 

There were two other big groups, though, which don’t get as much attention (because they were far less ready to go on telly). The first was the “he has to fail in his own time” group; Labour MPs who thought the whole project was doomed from the start but believed that it needed to be given a chance to do so, without its demise being blamed on them. The second was the “just make it work” faction, to which many of those who agreed to serve in the shadow cabinet belonged. People like Thangam Debbonaire and Lilian Greenwood didn’t relentlessly scheme and brief against Corbyn, they just tried to get on with the job of opposing the Tories. In both cases, their resignations were driven by questions of competence, not about the ideological direction Labour took. 

What complicates this argument, of course, is that Jeremy Corbyn himself was a serial rebel. He tried to depose Neil Kinnock as Labour leader. He provided vocal opposition to Tony Blair (did anyone ever attack him for not serving in Blair's cabinet? No, they accepted that he couldn't serve until a leader with very different values to him, aka the same decision made by Chuka Umunna and others). I very much doubt he had anything obliging to say about Gordon Brown. He was extremely lukewarm about Ed Miliband, and he and John McDonnell told Vice before the 2015 election they didn’t really believe in leaders. 

This is an insoluble conundrum, because many in the PLP feel that Corbyn never earned their loyalty. For many of Corbyn’s supporters, though, the principles justify the means: they regard Corbyn’s dissent on the Iraq war, for example, as correct and therefore excusable. One supporter I spoke to said they felt Corbyn had been loyal — to Labour voters betrayed by the party hierarchy during the Blair years. 

 

5. The media undermined him from the start. He didn’t have a chance.

I don’t find much to disagree with here. In the first few days, as Owen Jones predicted, Corbyn did face a “firestorm” from a right-wing press determined to define him before he defined himself. The lowlights were the suggestions he didn’t bow "deeply enough" at the Cenotaph, and the mad idea that he and Tom Watson had stolen lunches from veterans, both of which were unadulterated cobblers.

These stories came about because of his decision not to sing the national anthem, and his hesitation about joining the Privy Council. The left’s relationship with patriotism, and where that shades into jingoism, has long been a fraught one, and it gave an open goal to right-wing papers and blogs to imply that he “hated Britain” (as the Mail had earlier suggested of Ed Miliband’s father). 

I don’t pretend that some papers would have ever been anything but antagonistic towards him, but the circumstances of Corbyn’s outsider candidacy didn’t help his media operation. He entered the leader’s office with only a skeleton team, and much of the institutional memory went with the staffers who departed Brewers Green after he won. Added to that, he had never run a media strategy at the level of opposition leader.

However, I do question the methodology of the LSE study showing bias against him; not including a Labour/Corbyn point of view is deemed to be inherently negative, whereas any lobby journalist covering Labour will tell you that it has often been hard to extract an answer from the party on key policy questions. (Take the recent contradictory statements from the Corbyn and official Labour Twitter accounts about the future of Hinkley Point.) Partially, this goes back to the lack of communication between the leader’s office and the shadow cabinet that several former members referenced in their letters of resignation. How can you give the party’s policy when you don’t know what it is? In those cases, it’s also not the fault of the media for not giving the Labour view.

Plus, there has clearly been a decision at the top of Labour to bypass the “mainstream media” wherever possible. It’s not an absurd tactic — Nicola Sturgeon prioritises broadcasters (who have a regulatory duty to be impartial) over the print media, in the belief they will ensure a fairer hearing for the SNP. And the Labour digital team has done great work building up Facebook, Twitter and Snapchat presences for the leader. These are undeniably effective communication tools — many pro-Corbyn memes and the most stinging criticisms of the PLP emerge there. The Labour right/moderates/centre don’t have anything like the same gift for communicating with the activist base. 

My problem with some of this — and I admit it’s personal — is that the whole “MSM” is too often lumped together. It’s the mirror of the growing anti-politics mood, or Michael Gove’s assertion that we have “had enough of experts”. There is now a very well established shortcut for dealing with anything that you don’t like or disagree with — dismiss the whole category of people it emanates from. Unfortunately, it’s deeply corrosive. Look at Donald Trump, who is explicitly trading on the idea of leading a grassroots revolution against “elites” from either his private jet or a literal throne in his gold-walled penthouse. If you dismiss the whole “political class”, "mainstream media", or the “establishment” (which by definition you are not a part of, even if you are, say, an established academic, a respected journalist or have been an MP for three decades), then you place yourself in a zone where you can never be contradicted. 

 

6. Corbyn has achieved victories in parliament, despite the media and the PLP. For example, he has fought successfully against welfare cuts.

This is another good example of an issue on which Westminster-watchers and the activist base draw two opposing conclusions from the same facts. 

The Westminster view goes like this: George Osborne’s climbdown on tax credits was driven by a threatened rebellion within his own party, expressed through the disquiet of Tory backbenchers such as Stephen McPartland, Johnny Mercer and Heidi Allen. Added to that was the realisation that, since the near-total removal of hereditary peers, for the first time ever a Tory majority government could not also rely on a Tory majority in the upper house. The Lords threatened to delay the tax credit cuts for three years, leading to all kinds of bloodcurdling talk about them overstepping their boundaries and how their power would be taken away by the Strathclyde review. Together, the Lords and the Tory backbenches made the political cost of implementing the cuts too high, so they were kicked into the long grass of eternity by being bundled with universal credit implementation.

This is the view I subscribe to. The Labour operation in the Lords is quietly impressive, and features several old hands who really know their way around a statutory instrument. Plus, with a majority of 12, the Tories didn’t have much room to alienate their backbenches. 

The alternate view is that Jeremy Corbyn, by opposing the cuts instead of trying merely to tinker with them (as many supporters suspect a Burnham, Kendall or Cooper leadership would have done), put the wind up the Tories. It is undeniable that the Conservatives are still sensitive to “nasty party” charges — hence Iain Duncan Smith’s many reminders of his ostentatious compassion, and Theresa May’s positively Milibandian speech in Downing Street about inequality and life opportunities when she took over as PM. 

So the Corbyn-friendly view is not absurd. Even if Osborne believed that looking pro-welfare would screw Labour in places like Nuneaton, Norfolk and Newcastle, the party’s full-bodied opposition did risk leaving the Conservatives looking mean and vindictive towards low-paid working families. 

The question of welfare is one which should get more attention among Corbyn supporters. The great totemic issue is last year’s welfare bill, which we are told that “Blairites” and “Red Tories” in the PLP abstained on, rather than voted against. Decades from now, I will be found in my nursing home explaining to a parrot that it was only a second reading, while amendments were being put down, and the party as a whole voted against the bill at the third reading. In any case, the Tories have an overall majority so without a significant rebellion in their ranks, Labour’s whip was always going to be symbolic rather than decisive. Nonetheless, the fact does remain — and I should acknowledge — that acting leader Harriet Harman decided it was lethal for Labour in the country as a whole to seem as though it was in kneejerk opposition to every welfare reform. That was the reason for the abstention. 

It's no consolation to everyone in Labour who voted with the whip and now get screamed at on twitter that she was probably right, of course. For Corbynism to succeed, a hell of a lot of people (including many people on benefits) will need to be convinced that the benefits system is not too generous and full of people taking the taxpayer for a ride. It’s a big challenge. 

 

7. Corbyn has pulled the political consensus to the left.

Again, this one is undeniable — if you mean the political consensus within the Labour party. One trade union insider said to me yesterday that he worried Owen Smith’s platform was "a bit left-wing". There is no way anyone who voted for the Iraq war, believes in welfare cuts or wants to cut immigration would currently get a hearing among the most vociferous activists.

But in the country, the polls put the Tories consistently ahead (compared with Ed Miliband’s Labour, which was leading by 4–6 points in this period in the last electoral cycle). There was one poll which had Labour level, before the shadow cabinet revolt, but if we are mistrustful of polls, then we should be quintuply suspicious of single polls which are outliers that happen to show us what we want to see. 

Where Corbyn has been incredibly successful, I think, is in drawing the extra-parliamentary left into Labour: from smaller groups such as TUSC and Left Unity to some Lib Dems and Greens. He has also attracted thousands of people who left the Labour party over the Iraq war, or over Blair-era policies such as allowing private companies to work within the NHS. Any rival Labour leader would also need to expand the party, to enthuse supporters, to encourage activists to door-knock and phone-bank, and to raise money for YouTube and Facebook adverts. (Side note: one glum MP I recently spoke to pointed out that the leadership election, with its £25 supporters, had rescued the party from the financial brink. "We should have one every year," he said with gallows humour. Ironically, that used to be Corbyn's view too.)

My assumption has always been that Jeremy Corbyn sees his project primarily as remaking the Labour party, rather than waving from the front door of Downing Street. I think he has already been incredibly successful in that aim among the membership, and now the same process could be repeated in the PLP. If boundary changes come through and MPs are forced to seek reselection, that will change the gravity within the party. Boring but vital things like the NEC elections will also make the party more Corbynite. It seems obvious to me that Andy Burnham stayed in the shadow cabinet because he believed he could not win the Manchester Mayoral primary if he had been publicly “disloyal” to Corbyn. Many other MPs will look round their CLPs and make similar calculations about the price of dissent if Corbyn is re-elected. (Others, particularly those with small majorities and within the more Corbynsceptic parts of London, might reach the opposite conclusion: that they have nothing to lose.) He is undeniably remaking the party.

 

8. This is the first step to remaking politics and forging a progressive alliance.

There is a widely expressed sentiment about the need for Labour to become a “social movement”. As I said above, I think this springs from the same sense of despair that leads centrist MPs to think the party needs to compromise with the electorate on welfare and immigration. Same facts; different takeaway. My question is always: why should that social movement be born from the Labour party? The Labour party was established to win power through parliament and in the country; that's Clause One. If that’s not your aim, why is the Labour party the means? (If anyone would like to answer this, do drop me a line. My suggested response is, “because it’s easier to hijack something that already exists than build something new from scratch,” but perhaps I’m being too cynical.)

On the prospect of a progressive alliance, the latest polls show that the Conservative and Ukip support, added together, reaches over 50 per cent. So anyone wishing for proportional representation is hoping for a Tory-Ukip government. They are also projecting their own wishes on to Jeremy Corbyn. Despite urging from John McDonnell, he has never thrown his weight behind electoral reform.

Also, anyone who thinks that an alliance with Labour is in the interests of the SNP is forgetting that the Nationalists’ continued dominance of Scottish politics (the arena they really care about) is contingent on suppressing the Labour vote. Why would they want to be the Lib Dems’ to Labour’s Conservatives, and get kicked at the polls for being the junior partner in any kind of coalition, like Nick Clegg did?

One note of happiness, however: the EU referendum showed that asserting that “non-voters don’t vote” is a bit glib. Turnout can be increased when people really feel there is something at stake.

 

9. I can’t see Labour winning in 2020 with Owen Smith either.

“I’d rather have Corbyn be captain of the ship when it goes up in flames than Smith,” was how one 17-year-old activist expressed this thought to me. It’s an update of last summer’s lack of enthusiasm for Yvette Cooper, Andy Burnham and Liz Kendall. And that was an update of the post-May grumpiness that Ed Miliband had made uncomfortable compromises with right-wing ideas and still hadn’t won. 

The appeal of this argument is easy to see. Present the party with an oven-ready vote-winner and it will accept that a bad day of a Labour government is better than a good day of a Conservative one. But to beat Corbyn by presenting yourself as the first step on a long, grinding journey back to power would demand a remarkably persuasive orator, and probably one with an exceptional life story. (Look back at Neil Kinnock talking about how a Labour government gave his family a habitable home and an NHS, and remember that feelgood sentimentality is a powerful force in politics.) Owen Smith did well to come out with a list of policies early in his campaign, but what’s the story he’s offering the selectorate? Particularly compared to the almost fairytale quality of what Corbyn offered last summer: the lone dissident, a man of principle, uninterested in power or material goods, who has quietly laboured for 30 years for the weakest in society without hope of reward. 

Which leads me to . . . 

 

10. “He has stuck to his principles.”

Perhaps we can see Corbyn’s success as a manifestation of the same anti-politics sentiment that drove the rise of Ukip. On the left, there is a particular disdain for what Tony Blair became — all open shirts and hobnobbing with dodgy oligarchs. Corbyn is the anti-Blair. He has one house, no wealth, likes photographing drain covers, hasn't named his cat, would cycle to work by choice. His asceticism is appealing to those who don’t like flash, polished, soundbite politicians. (The trouble is, of course, that politicians developed soundbites because they are an effective way of reaching most people, who pay very little attention to politics.)

Above all, I see this factor as the stumbling block of anyone who wants to depose Corbyn. Presenting the contest as “principles vs power” flatters him enormously. No one feels good about casting a vote for power over principles. It feels like casting a vote to say “screw you” to refugees, the disabled, welfare claimants. Given that (and I’m sorry that people will find this offensive), three-quarters of Labour members are middle-class graduates, this is a better low-cost way of feeling good about yourself than any number of Change.org petitions.

There is another option, which Liz Kendall began to reach for in the last leadership election: presenting a centre-left Labour leadership as a desirable, principled choice in itself, rather than as the Coke Zero of politics, the choice you have to pick for pragmatic reasons, even though it’s not as good as the real thing. Presenting a system which limits immigration but treats immigrants with respect and acknowledges their economic contribution as an end in itself, not what you get because the Normals won't sign up for No Borders. “There’s nothing progressive about spending more on debt than on our children’s education,” Kendall tweeted, as an explanation of why she believed in deficit reduction. It was such a good line that John McDonnell announced his “fiscal credibility lock” in March this year by saying: “ There is nothing left wing about excessive spending, nothing socialist about too much debt.”

 

11. “I feel like I’m being heard for the first time in my life.”

Finally, I think this is a really compelling reason too, and it reminds me of the Brexit vote. Voting for Corbyn is a huge raspberry to a Westminster system that can feel very unresponsive and distant. At a pro-Corbyn rally, you can be surrounded by other people who also believe that immigration isn’t horrifying, that welfare spending isn’t too high, that nuclear weapons are a useless extravagance. These are otherwise minority opinions, or at least ones which attract huge ire from many media outlets. The huge weight of criticism levelled against Corbyn increases the sense of an in-group, who need to stick together, in the same way that companies with awful bosses often have less office politics, because everyone is united against them.

Yesterday, someone on Twitter sent me a blog that showed a picture of a Corbyn speech, with a young woman gazing at him in what I can only describe as adoration. In the comments, someone said they were the woman in the picture. "Sarah" explained that her family were never that interested in politics, she felt out of place in academia because of her class background, and that she had suffered from chronic fatigue. 

“ I felt no connection with Labour as much as I wanted to, as it wasn’t fighting for those who desperately needed fighting for, and I felt there was nowhere realistically to turn . . . The world starts to feel like it’s turning on its head as it looks like someone that’s actually loudly talking about poverty, about mental health, about the benefits of immigration might get into a position of power. Can you imagine? I watch a video and here’s someone talking about how they always, even in times of great stress make sure they *make* time to do nice and relaxing things — promoting self-care for mental health. I see someone suggesting that they aren’t sure about a plan for single gender train carriages and that they need to look at more evidence and *speak to women* to find out if it would really be appreciated. I see someone saying they refuse to be involved in slanging matches, that vociferously campaigned against apartheid, that supported numerous campaigns in spite of them not necessarily being the best for his career. Helping those at the very very bottom is never good for your career. They don’t seem to have the power to immediately make it worth your while. They’re often disenfranchised and bitter about politics and don’t see the point in bothering.”

If Sarah had taken her disenfranchisement and her sense of a middle-class elite running the world without reference to her, and channelled it towards Ukip - essentially, turned it into resentment - she would get a far more sympathetic, understanding reaction from most political commentators I know on the right and on the left. Instead, she took her pain and isolation and put it towards a politics that prioritises inclusion and solidarity. Reacting with kneejerk cynicism to that isn’t really helpful, however much it might make you (ok, and me) feel sophisticated.

On that note, there’s a slightly saccharine meme going around about how Owen Smith offered free ice cream to get people to a campaign event. By contrast, the long queue waiting to hear Corbyn had been promised something better: free hope.

As Labour leader, Corbyn makes people feel good about themselves and optimistic about the future. Anyone who wants to challenge him needs to understand that too, just as much as the electoral map or public attitudes to immigration or welfare.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.