The media, social and otherwise is now rife with analyses (my own included) of why Labour lost the 2019 election so badly, and what the Party should do about it. A common theme revolves around the loss of ‘traditional working class’ seats in the English North and Midlands, and how Labour has moved away from their ‘socially conservative’ and ‘communitarian’ values. These values evidently led many of these constituencies to vote in favour of Brexit in the 2016 referendum, which further alienated some of their voters from Labour’s soft Brexit and second referendum stance. If this analysis is correct it leads to some serious soul-searching within the Labour Party.Continue reading Should Labour Represent the Working Class?
So there we have it. The polls were right, and produced the electoral results that could have been anticipated from them. To the extent that is a surprise it is only because of the unexpected result of the 2017 election and the rarely-fulfilled dream of some substantial tactical voting. Of course Scotland is a rather different story, and one that looks likely to run and run.
As far as England is concerned, Labour seem to have been caught in a Brexit trap – divided both within and without by the either/or nature of the question. It could neither fully embrace what was always primarily a right-wing nihilist project, nor fully reject a referendum result that was backed by many in ‘working class Labour heartlands’ – irrespective of which side actual Labour voters had supported in that referendum. At least the Conservative majority gives that issue some clarity; whatever Brexit brings over the next five years – and it is unlikely to be anything particularly good – it will be entirely at the doors of Boris Johnson (if he survives without terminal scandal) and the Tories.Continue reading Labour Must Not Reverse on Policy
Reaction to modern liberal society has apparently been treated as akin to ‘the Inquisition and Islamic State, Francisco Franco and Ayatollah Khomeini, Vichyism and Leninism’. If you make that claim and end by stating ‘[W]e do well to remind our fellow citizens [that] Man [sic] is made for more than this world, and his [sic] final destiny is in the hands of the Almighty’ you might be thought to have given up your own cause. But let us be charitable and (overlooking the implicit sexism) acknowledge that we must accept our ignorance of the universe’s final ends and live only according to the little that we can know.
Sohrab Ahmari’s essay on ‘The New American Right’ in First Things attempts to lay a philosophical base for what he calls ‘Post-Fusionist Conservatism’, but which elsewhere has been referred to as ‘Post-Liberalism’ and in the UK flies under the banners of ‘Blue Labour’ and ‘Red Toryism’, associated with Maurice Glasman and Phillip Blond respectively. The basic premise is that ‘liberalism’, in both its social guise and economic guise has precipitated a society that is ‘fragmented, atomized and morally disoriented’, and in consequence ‘we need a politics of limits, not of individual autonomy and deregulation’.
Ahmari’s call for ‘a public square reoriented to the common good and ultimately the Highest Good’, is commendable, but leaves open the question of what and whose ‘Highest Good’ is to be sought. Without revealed truth (and a single revealed truth at that) this can only be speculative. The unique selling point of liberalism is that it recognises this and so seeks to maximise the options for everyone, individually or collectively, to seek and to find their own Highest Good. Ahmari characterises ‘progressive liberalism’ as wishing to ‘raze all structures that stand in the way of an empire of autonomy-maximising norms’, while ‘conservative liberalism’ recognises ‘the need for some limits’. He rejects both, arguing that ‘freedom requires a moral and religious horizon…in the state and the political community’. But this is to bring the subjective and the metaphysical into the objective and empirical; ‘[m]illennia of religious tradition and philosophical contemplation’ are no better than ‘old prejudices’ when they lack any empirical foundation or basis in common experience of the world.Continue reading Two Cheers for Liberalism
IS-LM and MMT
The core issue at the heart of debates between the heterodox Modern Monetary Theory (MMT) approach and more mainstream macroeconomics is how the financial economy and the real economy interact. As a consequence we see Keynesians of various hues attempting to illustrate their response to MMT with the standard orthodox Keynesian IS-LM model of the economy, which attempts to illustrate this interaction graphically.
The IS-LM model, as elaborated by various economists after Keynes, consists of upward and downward sloping curves in income (Y) and interest (r) space. (See Figure 1) The downward-sloping IS curve illustrates the inverse relationship between the cost of physical capital (summarised by r) and GDP (Y) where investment is assumed to be the major variable in the latter. The upward-sloping LM curve is a somewhat more complex concept but essentially proposes that given a fixed supply of money, a higher Y leads to a higher interest rate on bank deposits. This interest rate is assumed to feed through to the price demanded for financial capital in such a way that it can be considered as variable r for the purposes of the model. The model is thus somewhat vague in what r is really standing for. Further criticism is that a fixed supply of money is an unrealistic concept; the quantity of money supplied in a modern monetary economy being endogenous to its demand. It is also pointed out that the model mixes up stocks (of money) and flows (of income). Despite these criticisms, the IS-LM structure has been used to characterise MMT ideas in terms of the slopes of the two curves – in its extreme a vertical IS curve (implying investment as independent from any rate of interest) and a horizontal LM curve (implying a technically unlimited supply of money).
A Matching Flows Approach
A better way of approaching the real/money interaction might be to work from the viewpoint of two linked flows – that of money and that of its exchange counterparts. We start off with the economy in a steady state, with constant flows of money on one side and of real goods and services and speculative assets on the other. (See Figure 2) There is no distinction between consumer goods and services and productive capital goods in this model, since this is regarded as an arbitrary distinction between goods that have a spectrum of durability and of the timing of flows of utility and/or monetary return. What we will distinguish are goods purchased for use, and those (speculative assets) purchased for resale at (expected) higher prices.
Last year a strange bit of ‘neoliberal’ propaganda surfaced in the New Scientist of all places. In what purported to be a report of recent research, Washington University psychologist Pascal Boyer has written of how the ‘human mind is designed to misunderstand the mass-market economies we have created’.
He says ‘evidence from psychology and anthropology…reveals that people have an intuitive mental template for how exchange…should occur’, and that these are evolutionary in origin. This template has arisen because, Boyer argues,
Continue reading The New Scientist on Economics
humans evolved to be highly co-operative…[a]nd our ancestors shared resources, especially when it came to goods with highly variable availability… Trade mostly took place between people who knew each other, or between groups that shared repeated exchanges. Technology was simple enough that they could track how much effort was involved in making most things, and verbal communication…was used to select the most co-operative partners with whom to do business. As a consequence, ‘we have a strong sense of fairness, and intuitively expect and prefer that the proceeds of a joint effort be shared in proportion to each participant’s contribution’. Moreover ‘we intuitively consider it beneficial to extend small favours to trading partners rather than exploiting their weak positions, because of expectations of long-term interactions.
In my last piece on Brexit I somewhat underplayed the role of a second referendum – suggesting that it would only probably come into play after a further general election, probably one that Labour won.
Things have moved on from then in that the negotiations have coalesced into a deal with which, rather remarkably, neither the desires of the ultra-Brexiteers for a clean break with Europe, nor those of the DUP for the guaranteed absence of Irish Sea trade barriers, are satisfied. This took some doing, and now gives Labour the potential role of maintaining a Conservative government that otherwise might fall – one they will not, and effectively cannot, play.Continue reading A Second Brexit Referendum?
David Andolfatto recently constructed a model intended to ‘reconcile’ (or I think more accurately to distinguish between) ‘mainstream’ and ‘heterodox’ views of the macroeconomic importance of money and banking. More specifically, he wants to answer the question: does the ability of banks to ‘create money’ when they issue loans give bank lending a greater impact on aggregate demand than other forms of leverage? His conclusion is that in general it does not. I believe his model is wrongly specified to determine this question – it essentially pre-decides by its structure. To demonstrate this, I have identified the features that he omits from his model and attempted to incorporate them within the structure of the model he himself uses. My full response is in the form of a downloadable pdf. Continue reading David Andolfatto on Money and Banking
Donald Trump is coming to Scotland. He claims a special link to this country due to his Lewiswoman mother, Mary Anne Macleod. How should we respond to his visit – is it really an unacceptable violation of our liberal democratic culture for this American President to visit the UK and Scotland in particular? Is it right to think we should protest against him?
Trump is a unique figure among – modern at any rate – US Presidents. He pays no lip-service whatsoever to the norms of civility, respect, presidential communications and policy-making that have generally been accepted by holders of the office in living (and earlier) memory. He is a man with a reputation for dubious moral conduct, shoddy business practices and multiple bankruptcies. In setting up ‘Trump University’ he was guilty of outright fraud, for which he was required to pay a $25 million legal settlement. Continue reading Trump in Scotland – Let’s Protest for Mary
Today Theresa May’s Cabinet are meeting at Chequers (the UK Prime Minister’s out-of-town residence) in an attempt to thrash out a final Brexit negotiating position with the European Union. As they do so, the biggest threat to Brexit seems not to be a realisation of its purposelessness, although that will surely come soon enough, but the process difficulty. This difficulty is entailed by a government reliant for its parliamentary majority on Northern Irish members who as extreme Unionists will not accept any further differentiation between rules and regulations applying between the UK mainland and their own country, as well as on extreme Brexiteers who will not stomach any residual taint of the EU single market and customs union. This sets up an irreconcilable clash with the EU’s shared commitment with its member, Ireland, who are adamantly opposed to any agreed additional barriers between the north and south parts of the island. This opposition is both a matter of historical principle, as well as a practical concern over a reinstated ‘hard’ border being a focus for re-emerging intercommunity violence. Indeed Ireland and the EU both believe, a belief that implicitly is currently shared by the UK government, that the Good Friday Agreement (GFA) of 1998 commits all involved parties to the status quo in regard to the Irish border. Continue reading Brexit Endgames
The Path to Brexit
At the root of the ‘Brexit’ mess is a possibly unprecedented act of self-serving recklessness by the leader of a government in a democracy. It is in large part one which lays bare the sham of the UK’s primary democratic process – its system for electing representatives to its governing Parliament. For some years the electoral prospects and the cohesion of the UK Conservative party have been threatened by a relatively small, but vociferous and unscrupulous cabal of individuals and groups opposed to the idea of mutually beneficial co-operation with other European countries – either because it was a proxy for a mixing of UK (read English) ‘culture’ with that of ‘foreigners’ of different ethnic or religious identity or it was a plutocratic rejection of the co-operation for setting anti-exploitation rules as a basis for national and economic competition, or in quite a few cases – both.
In the winner-takes-all electoral system created by First-Past-the-Post (FPTP) the leaking of Conservative Party support (and even Parliamentary personnel) toward the United Kingdom Independence Party (UKIP) led by Nigel Farage was not an incremental risk but an existential one. The party risked being out of power perhaps indefinitely and even being reduced to a rump of MPs with little compensatory chance of UKIP allies, as the right of centre vote became split, allowing more EU-friendly left of centre parties to dominate. The Conservative Party, having little in the way of clear principles or ideas to bind it, requires the prospect of power and career advancement above all else to unite its members – particularly its Parliamentary contingent. Continue reading The EU, Democracy and Brexit – Part 2