Why Liz Truss’s policies will not promote long-term growth — and the other parties have no good alternatives

Political debates these days are deeply frustrating to me, as they seem to completely miss the point. On the one hand, the so-called ‘left wing’ launches tirades against economic growth, calling out GDP figures by drawing attention to the socio-ecological background against which technological development rests. At least, that is how I imagine the left making a logical argument, but Twitter would suggest a darker view, where a dangerous misanthropy has left many to call into question the legitimacy of technology at all, based on a medieval distinction between nature and man-made artifice. Meanwhile, the right has stolen the narrative, allowing Prime Minister Truss to call out ‘anti-growth’ critics of her plan for growing the economy through tax cuts, bond buying, aggression towards Russia and China at the same time, and trade deregulation to deepen relations with America and detach from Europe further. The plan makes no economic sense. Here’s why.

Too Thatcherite for Thatcher: Liz Truss’s planned cut to benefits has even led hard-right MP Jacob Rees-Mogg to defend the rights of ordinary people. What planet are we on? ‘Back to the future’ …

Tax cuts don’t work. They incentivise capital investment, for sure, but decrease the relative power of labour. The consequence is less money for public services and weaker wage growth, leading to less spending and a tendency towards dynamic price alteration. Look at the effect of Thatcher’s tax cuts: the only alleviation from the ensuing economic chaos and class warfare was the temporary restoration of higher taxes, Keynesian stimulus, and the Falklands War. Is that the remedy for neo-Thatcherite Truss’s plan for oblivion?

Reagan’s policies equally have depressed growth since the 1980s compared with the decades after World War II, when high taxes combined with massive state investment to produce sustained economic growth — until, that is, capital was unshackled from its national cage by way of the Eurodollar market in the 1960s. When oil crises bit in the 1970s, in a world of floating exchange rates, all hell broke loose. The attempt to repress the ensuing inflation through Paul Volcker’s high interest rates led to massive unemployment in the 1980s. Alas, the media tells a different story, one which ignores the vampire-like tendency of mobile capital to drain resources from the real economy to a strange netherworld of finance and investment. This same tendency caused the financial crisis in 2008, which was followed by the same bond buying — socialism for the big banks and their wealthy clientele — that Truss’s tax cuts now make necessary.

After Brexit, an American alliance became necessary. But without voting power in the United States Senate, what real power does Britain have over an economy six to seven times bigger than our own? We will be forced to abide by race-to-the-bottom regulations. We will be a vassal to American hegemony — which, while promoting minimal peace, is no longer conducive to prosperity until the American government abandons its Reaganite economic mandate.

And then there’s foreign policy. The Monroe Doctrine in the early nineteenth century stipulated that the United States keep foreign powers out of the Americas, which the United States had effectively dominated by the later part of that century. The further necessity of keeping other powers from dominating their regions of the world became apparent during two world wars and one cold war in the twentieth century, with multiple countries vying for competitive status with America. But the United States prevailed thanks to the economic might built up due to massive technological development in wartime and the supporting apparatus of state investment, which underpins everything from infrastructure to the internet and the space exploration that is now being privatised by Iron Man — or is it Elon Musk?

Turning a blind eye to the rise of China just as it turned a blind eye to the rise of Germany, America is picking fights with Russia, whose economy was almost obliterated by IMF structural adjustment in the 1990s. The same policies of debt dependence and spending constraint have debilitated western economies. China and southeast Asian ‘tigers’ survive and prosper due to their violation of every tenet of the neoliberal orthodoxy. They promote state investment and state backing of industry. It is only now that their financialisation is undermining their growth, with a ‘new Lehman Brothers’ crisis threatening China in the form of housing developer Evergrande. South Korea’s financialisation has similarly threatened the stability of its economic growth, promoting dependence on American dollars in times of crisis.

America must fight two wars at once: against capital, and against China. It must meanwhile keep an eye on climate change by investing massively in the only big-energy alternative to fossil fuels: nuclear power. It must ally with Russia to stop China, and abandon the NATO project of containing post-Soviet Russia — a project which incited the ongoing bloodshed in the Ukraine, where countless innocents suffer at the hands of misbehaving great powers in a neo-Cold War proxy conflict. Pick your battles, the West.

Liz Truss wants to aggress Russia and China simultaneously while deregulating trade and following the Thatcher/Blair drive to privatise whatever can be privatised. This will do untold damage to the economy. If we give China the alliance with Russia, we will increase China’s energic and economic foundations for geopolitical competitiveness. This will increase the likelihood of violent war between America and China in the South China Sea, and increase the duration and deadliness of such a war. RAND reported in 2017 that any war in that region between the dragon and the eagle, as it were, would be significantly more damaging to the global economy than the financial crisis — and, we can say with retrospect, coronavirus or war with Russia.

I know what you’re thinking. Why not vote Labour? Why not vote Lib Dem? Why not vote Green? The small parties never achieve anything significant, and the big parties — Labour and Conservative — can only implement their policies honestly if they win a majority of seats in Parliament. The first past the post system is unfair, but it is democratic, and it is effective. The riddle of politics is given one resolution here, in the messy politics of Great Britain. Why meddle with it now? And why vote for a small party and small change when you can vote for a big party and big change?

Problem is, Labour leader Keir Starmer does not stand for anything of any significance. Labour’s policies remain opaque, as they did under Ed Miliband prior to the rise of Jeremy Corbyn and his ‘toxic’ brand of ‘radical’ insurgent politics. But Corbyn had the rather ingenious idea of People’s Quantitative Easing, bond buying to finance public investment in public services under a National Investment Bank, an idea which received praise from a range of notable economists. The idea was ditched due to scepticism from the immobile centre or right wing of the Labour Party, a faction which Keir Starmer represents with minimal charisma.

There is, however, a darker path. If Liz Truss is Margaret Thatcher, perhaps Keir Starmer promises a new Tony Blair brand of ‘radical centrism’, taking the Party towards a compromise position between the welfare state and marketisation. Blair nearly put in place a policy of privatising half of NHS hospitals. Starmer wouldn’t dare go that far. Would he?

A bland politician is a bad prime minister. German historian and political writer Max Weber once railed against the extremes of ‘conviction’ and ‘responsibility’ in political ethics. Truss is plainly a conviction politician, committed to whatever beliefs she wholeheartedly holds to be true in the moment. Starmer is a responsibility-oriented politician, prepared to put the good of the country before inner principles. Sounds good, right? But alas, both extremes are dangerous in politics. Conviction leads to recklessness, and responsibility to inertia. They form a vicious cycle, one supporting the other.

In policy terms, this vicious cycle is even more apparent. Truss supports the expansion of the market to every area of life possible. Starmer refuses to stop the expansion — only to soften the blow. This echoes the rightward drift of Rishi Sunak until the tax status of his partner called his propriety into contestation towards the end of the campaign within the Party after the downfall of Boris Johnson following his own alleged impropriety. But such nonsense distracts us from what Truss succeeded in doing to Sunak’s ‘moderate’ platform — moving it inexorably towards the radical right on policies of economic significance, after Sunak saved the country from the abyss through the Keynesian stimulus package at the height of the coronavirus crisis.

We’ve been here before. Marketisation prompts a crisis and the state steps in to save the day. It is a sad story of those least well off being trodden on by the wealthy and powerful. Away with this drudgery. Enough! Reject these false alternatives. Break free from the cycle. Choose life, community, and freedom. Choose democratic socialism. When Labour reawakens to its historic vocation to save the British working class from oblivion, we will as a country rediscover our own manifest destiny among the free people of planet Earth. Just don’t count on it, just yet. First, the abyss awaits us all. May the heavens be merciful. The infernal idiocy of neoconservatism and neoliberalism awaits. It is certainly going to be a bumpy ride.

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