Neoliberalism is a self-fulfilling
prophecy. Don’t implement it and it predicts gloom doom and disaster. Implement
it and it announces that the gloom doom and disaster it produces are due to
something else. Possibly the weather.
The current example of thus double edged
sword of untruth is the huge effort now being made to blame everything that
goes wrong from knife crime to the railway timetable fiasco on Brexit. No
medicines. No food. No sauerkraut & Frascati. Dover closed. God help us!
In fact the slow growth of the British
economy and our low productivity are largely due to the fact that Osborne dealt
with the Great Recession (itself the result of neoliberal de-regulation) by
neoliberal austerity which was the exact opposite of the Keynesian expansion
that was necessary. The guiding aim of policy from then to now has been getting
the debt down, rather than growth and investment up.
Si monumentum requiris circumspice. But
the genius of neoliberal double think allows it to be blamed on Brexit with
worse to come after the Grand Depart. That prediction comes from a treasury
model from whence all miseries flow because it’s built on neoliberal
assumptions about “rational choice” , the dangers of debt and the naughtiness
of state intervention. Rubbish in rubbish out.
There’s no other way to get growth back
on track than by borrowing, spending to invest and stimulating via the
multiplier. Keynes lives. That’s also the way to ride out any difficulties due
to Brexit. Trade adjusts quickly as it did in Australia and New Zealand in the
seventies when Britain betrayed them by
selling out to Europe but it will adjust easier with government help.
A
nation which issues its own currency (which the Euro members can’t) can set its
own interest rates and borrowing levels to suit its purposes. It can create the
money it needs to invest and grow. If the neoliberals can create £375 billion
to stuff into the banks to improve their
balances, and the banks can pour huge sums into mortgages, we can create even
larger sums to finance big housing contracts, major infrastructure projects,
new factories and a national investment fund.
This will produce neoliberal cries of
shock and horror but why should it?
Expanding the economy allows it to bear a greater burden of debt. Interest
rates can be kept down and any effect on sterling (and the great quantitative easing didn’t have much)
is welcome to boost exports and tax imports. The comparatively small fall in
the pound after Brexit boosted production, manufacturing and exports though the
boost is now petering out because manufacturing didn’t seize its opportunity).
As for inflation, no past devaluation has produced a serious problem .Until
productive resources are overstretched there won’t be one.
More
neoliberalism isn’t the answer to the problems produced by neoliberalism.
Reversal is. It’s what the electorate voted for when it rejected the EU. It’s
necessary if we stay in Europe and more than necessary if we are to ride out
the changes and problems arising from coming out. It would be wrong to start
difficult negotiations before preparing that, and better to conduct them having
triggered it. We mustn’t be so palsied by forty years of neoliberal
indoctrination that we miss yet another chance.