As Labour retains its massive lead in the polls for what looks likely to be an October General Election, it’s reasonable to wonder how they will manage the economy. To date Starmer and Shadow Chancellor, Rachel Reeves, have been fairly vague about what life under Labour is going to look like.

Monday evening’s Mais Lecture to the University of London Business School was an opportunity for Reeves to put some flesh on the bones. Many of the headlines, following the event, centred on Reeves’ apparent love affair with all things Thatcherite. This was slightly unfair in that she never actually mentioned Thatcher. What she said was: “As in the 1970s, we are in a moment of flux,” which she reiterated in the phrase “As we did at the end of the 1970s, we stand at an inflection point. And, as in earlier decades, the solution lies in wide-ranging supply-side reform, to drive investment, remove the barriers constraining our productive capacity, and fashion a new economic settlement, drawing on evolutions in economic thought. “

What this means in broad terms is, as in the early eighties, fiddling at the edges of the economy by pursuing policies that are supposed to create economic growth. It is based on an orthodoxy that says the failure to invest is a result of too many obstacles. So we need to reform planning laws, for example, to provide businesses with easier access to land to build new factories and homes. And we certainly must retain Corporation Tax at its current record low level, because we have all seen how successful that has been at stimulating the economy. On the other hand, businesses rather like hanging on to as much of their profits as possible. Not to pass on to consumers but to keep their shareholders happy.

In a telling passage Reeves says: “Without the promise of stability, how can business invest with confidence? Without security, how can we ask an entrepreneur to take the plunge and start a new business?”

The entire emphasis of Labour’s economic policy is to create an environment for business. In the eighties Reagan and Thatcher promoted trickle down economics, in which making the rich richer was supposed to create new jobs for those lower down the ladder. Removing constraints on business investment meant shackling the trade unions to prevent workers from fighting back effectively. Interestingly enough, Reeves characterises recent trade union action as “the worst period of disruption since the 1980s.” Remember this was a party which banned its front bench from being seen anywhere near a picket line.

The emphasis is on business investment but without a single idea about why they are not investing now? Indeed Reeves is peddling an old line that workers and bosses are in some form of partnership, as she characterises her economics “an economic agenda that is both pro-worker and pro-business”.

The problem with this ‘common sense’ approach is that the interests of bosses and workers very often are not the same. In Port Talbot currently the Indian owners of the Tata steel works are determined to close the plant. Workers are determined to keep it open. If you are the government, you have to take sides. There is no doubt that, based on their actions in opposition, Labour in government will have no difficulty choosing. They will always support bosses against workers and will, as Blair did as PM, put pressure on trade union leaders to keep workers in line. Unions at the Tata Steelworks have been told to wait until after the next election in the vague hope that Labour will rescue them.

Reeves, as do other Labour politicians, makes much of the suffering of what they call ‘working people’. No mention of the working class in Labour circles, smacks a bit too much of socialism. When she talks about ‘working people’ it is what Labour will do for them. They are going to “unlock the contribution of working people and the untapped potential throughout our economy”, though it’s not clear how. They are going to increase productivity “for the living standards of working people”. Though quite how producing more will filter into wage packets is less clear. In many industries productivity has been delivered only for the workforce to be reduced. Some get a better standard of living at the expense of those thrown on the scrapheap. There is nothing in what Reeves says to suggest that Labour has an alternative to this dog-eat-dog approach to industrial relations.

The word that appears more than any in the speech is ‘growth’. It is mentioned 58 times (which, coincidentally, is precisely 58 times more than the word socialism). Everything is predicated upon achieving growth, though Reeves resists the temptation to claim, as Starmer’s website now says, that Labour will, by an effort of pure will, make the UK the fastest growing economy in the G7 (It’s currently fifth). 

But, if we are to reach the net zero target Reeves argued for, it is difficult to square the circle of growth and emissions. The majority of emissions come from productive sources and they are driven by growth-fuelled capitalism. No government wants to do much about this, if anything. As economist Michael Roberts puts it: “Nowhere near enough is being done by governments or companies to stop the accelerating rise in global warming and its impact on the planet.  That’s because sustaining the fossil fuel industry is more important than sustaining species on the planet and living standards for the majority of humanity.”

But, even if we forget that a growth agenda is an extinction agenda, the possibilities of turning the British economy into a macroeconomic miracle seem unlikely. Nobody believes that it is possible by wishful thinking alone to turn an economy like the UK’s into a dynamic growth-driven one. Supply side economics does not deliver better living standards. They deliver wealth for the richest and a worsening of public services to pay for them. Reeves and Labour do not have a new economic model up their sleeves. What they have is a set of vague promises absolutely reliant upon a set of circumstances they cannot deliver.

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