Unfortunately, now standing at £325bn, or 15% of UK GDP, QE has been a miserable failure in stimulating the economy and these new forms of cheap credit will have a similar result. Britain’s large corporations don’t need credit. They are already flush with cash, but just don’t want to invest. Lowering the cost of credit to them won’t change that. In contrast, Britain’s small firms cannot get credit because banks are worried about these small operations being unable to pay their loans back. And the banks are being told by the government that they must not take ‘excessive risk’ after the bursting of the property bubble and great credit crunch that brought the banks to their knees in 2008-9.
So bank lending in the UK has been shrinking, not rising, despite QE and near-zero central bank rates. On a 12-month basis, credit to business has been shrinking for three years and ‘broad money’ is still lower than in late 2010. It confirms the argument that credit is really demand-led and cannot stimulate the ‘real economy’ if there is no willingness to invest by companies or to spend by households. You can lead a horse to water, but you cannot make it drink.
Instead, if the banks were fully nationalised and under state control, they could be directed to lend to small businesses and to fund employment-creating and skill-raising state projects to boost the wider economy. But such a policy would be an outright threat to capitalist production and so is not on the agenda.
have your say on Labour policy today
You have one week left:
We want to hear views from as many different people and groups as possible. Constituency Labour Parties, affiliates individuals, voluntary organisations and businesses are all encouraged to discuss the documents and submit views. The documents are divided into sections by issue, with questions to help shape discussion. You can pick a few areas and questions or look at all of them – it’s up to you. However you shape your discussions, we want to hear your views.
Submissions which reach us by 8 June will be passed on to your NPF representatives for consideration at the NPF meeting on 16/17 June. Submissions which reach us later than that will still be fed into and considered by the appropriate policy commissions.
Constituency and regional NPF representatives can provide advice or assistance for CLPs on policy consultation work. To contact your representatives in Labour’s policy making process, visit membersnet.
You can download the policy consultation documents here:
Britain in the World
Crime, Justice, Citizenship and Equalities
Education and Skills
Prosperity and Work
If for any reason you are unable to use the form, you can send submissions by email at the addresses below, or by post to:
PiP Policy Consultation 2012, c/o Policy and Research, The Labour Party, One Brewer’s Green, London SW1H 0RH.
Britain in the World
Crime, Justice, Citizenship and Equalities
Education and Skills
Prosperity and Work
On lost deposit parties…
“It is a total illusion, which merely serves to disorient those believing it, to have an analysis that there are millions of people in Britain today willing to support forces to the left of the Labour Party. There are a few hundred thousand people prepared to support parties to the left of Labour, compared to the eight and a half million who voted Labour even in a bad year such as 2010.” — Alex Taylor.
“What these elections demonstrate above all is that despite their leadership and refusal to truly challenge the government’s austerity programme, the working class always turns towards their traditional organisations, in the form of the Labour party and the unions. As have pointed out the low turnouts in this election are a reflection of the failure of the Labour leadership, but at the same time where workers did choose to vote they came out overwhelming in support of Labour for the simple reason that there is no alternative.
“While Socialist Appeal has been continually proved correct in this regard, the relationship of the Labour party to the working class is something that many on the left have never understood. As always a number of groups have attempted to challenge Labour in these elections, but for the most part have failed miserably.
“The Trade Unionists and Socialists Against the Cuts (TUSC), which was mainly backed by the Socialist Party and the RMT, claimed a total national vote of 20,953 in the 132 wards it stood, compared to 25,523 in 166 wards in 2011. Of the candidates, only 13 polled over 10% of the vote. Two of these, Michael Lavalette in Preston and Peter Smith in Walsall, managed to win back seats they had lost previously, while Dave Nellist in Coventry lost his seat. On average they polled 6% in the seats they contested and in the London Assembly elections, one of the main focuses of their campaign, they only managed 0.8%.
“Campaigning on the back of George Galloway’s election victory the Respect Party fared better, winning five of the 12 council seats it fought in Bradford, including unseating Ian Greenwood, the Labour leader, who had been a Bradford councillor for 17 years. However, at the same time Labour saw the number of its councillors in the city rise from 43 to 45, meaning it remains by far the largest party on the council.
“What better conditions could these groups wish for? We are witnessing the biggest crisis of capitalism in its history and have lived through 13 years of New Labour government and two years of the coalition intent on carrying out attack after attack. At the same time the Labour party is failing to offer any real alternative. Surely if there was any time for a new party to the left of Labour to succeed, it should be now? Yet, with a few notable exceptions, the results achieved have been derisory.
“There is no doubt that many of those who campaigned for TUSC are committed socialists who are dedicated to changing society for the better. However, they fundamentally misunderstand the relationship between the working class and their mass party, the Labour Party. No matter how hard they campaign, no matter how favourable the objective conditions may be, they will never succeed in breaking this link from the outside.” — Sam Ashton
“We face a situation which seems neither to have been contemplated in either the Austrian or the Keynesian theoretical frameworks (since both assume some sort of homeostatic corrective mechanism is ultimately at work) or in the any of the various versions of neoclassical growth theory, where some sort of semi-constant equilibrium growth path is assumed to exist, and be recoverable via the application of an appropriate set of structural reforms. Yet the three oldest societies on the planet – Japan, Germany and Italy – have been losing growth momentum for decades now, and it is quite possible will drift into negative average growth rates at some point in a non too distant future. Traditional theory never really contemplated this possibility.”
Edward Hugh, “Global Growth is Slowing” (via nsrnicek)
#Occupy movement calls for Co-operative Commonwealth!
“The economy must be put to the service of people’s welfare, and to support and serve the environment, not private profit. We want a system where labour is appreciated by its social utility, not its financial or commercial profit.”
“• We want democratic control of the global commons, defined as the natural resources and economic institutions essential for a proper economic management. These commons are: water, energy, air, telecommunications and a fair and stable economic system. In all these cases, decisions must be accountable to citizens and ensure their interests, not the interests of a small minority of financial elite.”
“Companies cannot be elevated to the same level of rights as people. The public’s right to protect workers, citizens and the environment should prevail over the protections of private property or investment.”
“• We ask for democracy in companies and corporations. Workers, despite wage level or gender, should have real decision-making power in the companies and corporations they work in. We want to promote co-operative companies and corporations, as real democratic economic institutions.”
Greek gifts to European ruling class
Alex Snowdon writes of the Greek elections:
“Combined with the ousting of President Sarkozy in France - and this week’s UK local election results and the poor showing for Merkel’s conservatives in German regional elections today - it indicates the political crisis generated by austerity. […]
“These elections articulate a complex kind of polarisation: a fragmented picture. But, crucially, it is the anti-austerity left - not the fascists or the established mainstream - that is making the biggest and most politically significant gains. Interestingly, reports from Greece suggest it is over-50s who have propped up the mainstream, while younger voters provided the main base of support for Syriza.”
Richard Seymour concludes:
“the radical Left has siezed the initiative, upended the electoral system, and torn apart the austerity script so painstakingly drafted by the ECB, the presidency and the finance ministers. And in this context, the defeat of Sarkozy assumes a new significance. The mandarins of the EU are worried, as they should be, by the failure of the austerity formula to permit resumed dynamism even in the core European states. From rattled heads of state to the head of the ECB, they have started to wonder if there might not be a case for emphasising growth policies, stimulus rather than austerity. This is all very timid, and it is by no means intended to benefit the working class. But EU elites are also aware that they face an even graver climacteric than two quarters of negative growth if they cannot appear to offer some material inducement to the working class to acquiesce in the politics of austerity. In that situation, the deposal of PASOK as the main party of the workers in the weakest link of a weakened chain of national states, gives the EU leadership all the more incentive to rethink what they have been doing. And that means a more divided and uncertain ruling class than we have hitherto seen.”
And Michael Roberts explains how a Greek government could revive the country’s fortunes by
“reversing the austerity measures without leaving the euro. How? The first measure of an anti-austerity government would be to write off the debt burden with the banks and the Eurozone governments […]
“Look at how the IMF and the Troika doled out their money. Less than 10% of the new funding is going to help the Greek government fund its deficit or get the economy going. Over 90% has gone to fund foreign and Greek banks. Instead, if Greek government debt had been written off and new money lent directly to the Greek government to recapitalise the banks through public ownership and launch a programme of public works to revive the Greek economy, there would have been no need to condemn millions of Greeks to a generation of austerity. But of course that cannot be allowed to happen because it would mean the curbing of the failed and corrupt Greek capitalist business sector and would pose a real threat to Europe’s banking sector and multinationals.”