Even the IMF says austerity doesn’t work. It’s the zombie idea that will not die | Opinion
A few weeks on from the general election, and David Cameron has been disinterred to say giving public sector workers pay rises is the height of selfishness â€" while Theresa May is back to harping on in prime minister’s questions about the debt left by the last Labour government. It’s apparently 2015 all over again.
It’s tiresome to have to keep pointing it out, but Dave from PR was wrong then, and he remains wrong now. He was a good salesman, for sure. Pretending that “The Deficit†is a scary monster that will eat us unless we appease it by sacrificing our wages plays into many instinctual beliefs about the virtues of probity and thrift. But if anything, the monster in the room is the prevalence of what economist John Quiggin called “zombie economics†â€" ideas that are constantly discredited, but insist on shambling back to life and lurching their way through our public discourse.
The supposed justifications for austerity were always, Quiggin writes, “absurd on the face of thingsâ€. The theory that government spending crowds out private sector investment never withstood scrutiny. As he points out, “the painfully evident fact that there is already plenty of room for private expansion, in the form of unemployed workers and idle factories, is simply ignoredâ€.
The IMF â€" historically the world’s foremost cheerleader of austerity â€" admitted that it was based on a false prospectus: these policies do more harm than good. Simon Wren-Lewis of Oxford University said that the issue was not whether attempts to reduce the deficit had damaged the economy, but “how much GDP has been lost as a resultâ€. Amartya Sen said that while austerity “deepened Europe’s economic problems, it did not help in the aimed objective of reducing the ratio of debt to GDP to any significant extentâ€. Richard Portes at London Business School says that even the UK’s sluggish growth under the Conservatives is down to the “semi-covert†backing away from George Osborne’s initially brutal plans, which would have done even more harm.
Paul Krugman wrote that in the post-crisis economy “the government does everyone a service by running deficits and giving frustrated savers a chance to put their money to work … deficit spending that expands the economy is, if anything, likely to lead to higher private investment than would otherwise materialiseâ€. All this has led Joseph Stiglitz to remark that it’s “remarkable there are still governments, including here in the UK, that still believe in austerityâ€.
With the evidence so prolific that Cameron’s supposed “sound finance†is anything but, and with battalions of respected economists lined up to denounce it (Sen, Krugman and Stiglitz are all Nobel prizewinners), why does this zombie idea keep resurrecting itself?
The answer must surely lie in its political utility. The global financial crisis was an opportunity for politicians to practise Naomi Klein’s “shock doctrine†capitalism in the west rather than in the developing world. The Conservatives have presented their ideological project of returning us to the early 19th century as being economically necessary, even unavoidable. Before Jeremy Corbyn’s rise, elements in the Labour party were similarly enamoured with recession as an opportunity to push a culture war over what they saw as a betrayal of “authentic†left politics. Just as austerity economics relies on the demonisation of immigrants and “identity politics†to mask its own crippling impact, so authentocracy relies on a false zero-sum formula where the “white working class†is in a battle with new arrivals for a share of a fixed pot of cash. Its proponents can hide behind discredited economics to claim they are making “hard but necessary choices†about resour ce allocation which, somehow, never address the actual allocation of said resources.
Graham Jones MP raised the zombie of working-class “genuine concerns†this week, but it’s notable how few of those concerns have anything to do with the material conditions of workers. He reels off “counter-terrorism, nationalism, defence and community, the nuclear deterrent and patriotismâ€, only reaching anything to do with living standards when he â€" of course â€" says “wages are being undercut†by immigrants.
Why are these exclusively “working-class†concerns? Are Tory-voting stockbrokers in Kent not also concerned with the trappings of national greatness and military adventure? Why are ethnic minorities and people on zero-hours contracts in call centres always somehow excluded from the working class? Why is this “working class†only concerned about their wages if it’s an excuse to bash foreigners, and completely blasé if their wages are capped below inflation or driven down by austerity?
Again, we see the term “working class†deployed to stand in for a particular set of cultural values that have more to do with England’s conception of itself as a colonial power than with the capabilities of people to live a life of worth and security. Insufficient nationalism from the opposition leader may well be a concern some working-class people have, but that does not make nationalism a “working-class concernâ€.
Austerity politics is intertwined with the authentocratic weaponisation of the working class, and if we’re to oppose one we have to oppose the other too. Those tired old debates of 2015 should be left in the graveyard of history where they belong.
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