Nothing left for Protestants

In his earnestness and abstemiousness, the new Prime Minister is drawing on roots deep in the Labour

Does the seizure of the Labour leadership north and south of the border by Presbyterian progeny signal the revival of religion in British public life? Both Gordon Brown and Wendy Alexander are self-consciously "children of the manse": happy, we are told, to bring their Protestant sensibility to bear upon public policy. Whether it is opposing supercasinos, or rolling back cannabis liberalisation, or calling for a "coalition of conscience" against the atrocities in Darfur, the Presbyterian ethos of "giving witness in life" has returned to the higher echelons of government.

But this is eyewash: the Protestant mindset has rarely played less of a role in Labour politics than now. A movement that once owed more to Methodism than Marx has lost sight of its religious prehistory. Thanks to the fashionable, secular fundamentalism of writers such as Richard Dawkins and Christopher Hitchens and the unattractive evangelism of the US "moral majority", the British left has systematically abandoned the progressive Protestant voice. Labour's sense of mission is poorer as a result.

The Protestant inheritance has long been divisive. From the outset, the Reformation contained within it radical and conservative readings. While Martin Luther's split from Rome in 1517 offered a template of rebellion, his stress on scriptural authority (sola scriptura) gave the Bible's conservative edicts new force. Particularly attractive to authoritarian Protestant princes was Romans 13:1 - "Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God." Here was godly sanction for state autarchy - a Protestant tradition of conservatism that would eventually find a British voice in "Church and King" Toryism.

But a reading of the Book of Acts could lead believers in a different direction: "We must obey God rather than man." For those Anabaptists in 1530s Münster and Calvinists in 1550s Edinburgh who decreed that their governments were in opposition to the rule of God, the response was revolution. Indeed, much of modern resistance theory - the duty to overthrow despotic authority that inspired revolutionaries in 1640s England and 1770s America - stems directly from the Protestant tradition.

Along with this came a focus on equality. In place of the inequitable hierarchy of the Catholic Church, Luther posited a "priesthood of all believers". But, his poorer followers were not slow to ask, why not social justice together with spiritual equality? In the beautiful words of William Tyndale, the genius translator behind the King James Bible, "As good is the prayer of a cobbler as of a cardinal, and of a butcher as of a bishop; and the blessing of a baker that knoweth the truth is as good as the blessing of our most holy father the pope." This was the socialist imperative of Protestantism, which would inspire generations of radicals, from the peasant leader Thomas Müntzer in 1520s Germany to the Methodist revival of 18th-century England to the civil rights mission of Martin Luther King, Jr.

With the scriptural reasoning came a culture of resistance and triumph. The Christian narrative of redemption, chronicled majestically in Bunyan's Pilgrim's Progress, was transposed into the political realm. Socialism, a religion of humanity, was susceptible to this spiritual paradigm. So the most successful recruiting sergeant in the British socialist canon, Robert Tressell's Ragged Trousered Philanthropists, can only be understood fully as part of the Protestant tradition. In his charity and ascetic holiness, Frank Owen is a missionary operating in the darkest heathen terrains. His lonely, arduous work converting the fallen philanthropists - the hapless painters and decorators of Mugsborough - to Marxian socialism is a chronicle of sacrifice worthy of any biblical parable.

This tradition, of equality, duty and intense literacy, was Labour's religious preamble. For, uncomfortable as this may be to today's secular enthusiasts, the Labour movement from its earliest days was joined at the hip to Protestant Nonconformity. Its foundation place, the Congregational Memorial Hall in Farringdon Street, London, was a monument to one of the defining moments in Puritan history - Charles II's ejection of Dissenting ministers from the Church of England in 1662.

Early membership of the Independent Labour Party found its strongest support in the Nonconformist chapels of West Riding, County Durham and South Wales. The spirit of Dissent was felt keenly by its first leader, James Keir Hardie, who regarded socialism and Christianity as philosophical bedfellows. "The impetus which drove me first of all into the Labour movement, and the inspiration which has carried me on in it, has been derived more from the teachings of Jesus of Nazareth, than from all other sources combined," he explained in 1910. "The Labour movement in its very essence is essentially religious."

Clean living

Of particular inspiration for Labour's founding fathers was the Puritan example. Calvinist in theology, the "godly sort" of the early 17th century had been the motors for both the founding of the American Commonwealth and the energy of the English Civil War. Their moral rectitude and political certainty were rediscovered in the 19th century, as a statue of Oliver Cromwell was placed before parliament. In a transparently Puritan vein, Hardie began as a temperance campaigner and regarded abstinence, clean living and even vegetarianism as prerequisites for the life of a true socialist. Ramsay MacDonald was similarly infused with Roundhead spirit and in 1912 published "A Plea for Puritanism". "With the Puritan, character must always count," he lectured the troops of the nascent Labour movement. "The Puritan can no more ask what has private character to do with public life than he can ask what has theft to do with honesty."

The cult of abstinence continued into the 20th century in the fastidious form of Stafford Cripps and in the equally ardent teetotaller Tony Benn. Indeed, Benn's childhood memoir, Dare to Be a Daniel, is a celebration of the Puritan spirit: his early days were spent listening to Old Testament tales from parents who lived next to the Tate Gallery but never went inside. Benn's obsessive diary-keeping is a product of the Puritan impulse: a combination of personal vanity with an obsessive commitment to record every hour and justify it to God. But Benn himself is in denial about this Puritan genealogy. Talking to me last year among the pews of Burford Church in Oxfordshire - commemorating Levellers' Day - he insisted that the Labour Party was a secular institution born of a collective of workers, trade unionists, socialists and intellectuals. The Dissenting tradition had been politely excised.

His voice is a common one. Despite the church service that will begin this month's Labour conference, Protestantism is largely absent from the modern party's policymaking and ethos. Of course, Christian groups play a role around the edges - notably in the Jubilee 2000 and Make Poverty History campaigns - but the still, quiet voice of Puritan struggle has been lost. An ambitious young backbencher would be far wiser to join Labour Friends of Israel than the Christian Socialist Movement. Moreover, among leading figures within the party's powerful Scottish caucus, Catholicism often plays a stronger card.

Grinning popes

This spiritual amnesia is strange, given the intense religiosity of the last Labour leader. But Tony Blair's Protestantism was of an ecumenical, Anglo-Catholic nature (witness his Cardinal Newman gift to an indecently grinning Pope) and wholly devoid of the grinding self-doubt central to the Puritan soul. There was certainly a Manichaean tinge to his geopolitics - with its arcs of extremism and its existential struggles against Islamism - but little historic connection to the "Good Old Cause".

Brown is different: raised in the precepts of the Church of Scotland, he is a Puritan in the greatest sense of the term. Despite dismissing the label at a recent press conference with a misquotation from Mark Twain ("It [London] was no place for a puritan, and I did not long remain one"), his seriousness and even dourness shine through as readily as Maggie Thatcher's Methodist make-up. Visitors to Downing Street these days find an air of closed-door, hushed studiousness in contrast to the more gregarious Blair days. Only someone with Brown's Calvinist inheritance could conjure the slogan "Make Work Pay". He also seems to be thinking more broadly about the Protestant sensibility, citing the anti-Nazi Lutheran pastor Dietrich Bonhoeffer in his recent book Courage: Eight Portraits, and looking closely at the attempt of the Democrat evangelist Jim Wallis to revive progressive Protestantism in America.

But Brown is in the minority. Today, we don't want morality from our politicians: the examples of Pat Robertson in the US or Ian Paisley in Northern Ireland make many on the left instinctively wary of faith-based politics. Yet there remains so much unique to the Protestant tradition - its calling of autonomy and equality; its culture of education and literacy; and its genealogy of struggle - that the left should cherish. To abjure this inheritance for a knee-jerk, left-liberal atheism is a product of both historic illiteracy and intellectual arrogance. Instead of denying its Protestant past, the Labour movement should lift up its eyes and reacquaint itself with the party's founding principles.

Tristram Hunt's TV series "The Protestant Revolution" begins 12 September at 9pm (BBC4)

This article first appeared in the 10 September 2007 issue of the New Statesman, Why Boris and London deserve each other

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt