Krugman, Gamble & Turner: porters to economic base camp

Unnecessary preamble

I quite liked Charlotte Gore’s half metaphor for her current writer’s block, upon which I ventured after learning of Left Outside’s (whoever he or she) own problems putting fingers to keyboard:

‘I accidentally looked up at the mountain and now I don’t know what to write.’

I know that Mil is, or at least was, suffering some of the same, and Andreas too has been quiet, though he now promises 94 exciting instalments of how the economy should be managed; I suspect that’s just a way to get himself going again.

Why this sudden, apparently blogopshere-wide affliction? 

Well, more than our fill of the MP expenses scandal might have something to do with it, but for many of us – myself included – the mountain I look up is economic in nature, and finding a way up the mountain when I’ve got quite bad knees and no crampons is a daunting matter. 

So like Andreas, I’m content in this post to get as far as base camp, with three trusty porters to carry my gear for me before I strike out on my own.

Krugman, Gamble & Turner as porters

I have in the last week or two, as part of my preparation for the monster blogpost to end all monster blog posts (see below),  invested a little time and ill-gotten cash in three recently published books about the current financial woes that dominate the headlines on the days MPs are not being exposed for corruption and rank arrogance.  They are:

Andrew Gamble’s ‘The Spectre at the Feast’

Paul Krugman’s ‘The return of recession economics’

Graham Turner’s ‘The Credit Crunch, Housing Bubbles, Globalisation and the Worldwise Economic Crisis’

Of the three,  only Graham Turner’s book  tackles with any vigour at all the deepest root of the current recession – the deepening inequity between capital and labour – and the clearest way of providing long term financial stability – addressing that inequity.

Turner is the only one to acknowledge explicitly that, if it is consumer demand which drives growth, then wage-earners worldwide need to earn enough to be able to afford to consume without having to borrow wildly and create another credit/housing bubble.  Of course, it’s more complex than that, but his basic message is that unless the power of capital to exploit labour is curbed, then the same boom and bust cycle will be back again with a vengeance.  He offers no solutions,  and acknowledges this, but at least he raises the need for the re-emergence of trade union/labour power as a key stabilising economic factor.

Turner’s acknowledgment of the importance of labour to economic stability is thrown into sharp relief by Duncan’s excellent post on the very real risk of a ‘double dip’, with a longer and deeper recessionary period (cf. the 1937 dip) coming after an initial recovery, especially if public spending is cut too early (he warns explicitly against a rush to slash public spending as soon as the election is over).   Indeed, Duncan’s fears may be even more pronounced with early evidence from the US that just such a double dip is starting to happen.

While Duncan is not explicit in his post, it seems clear enough to my non-economist brain that the second dip occurs when, after a rise in market and producer confidence, it transpires that the effects of the first recessionary phase have hit consumers to such an extent that they are not in a position – often materially through unemployment and other financial hardship, but also in terms of ‘consumer confidence’ – to start the economy moving again by purchasing more. 

This time around, the double dip may be more pronounced because in many countries (the biggest example of course is China) workers never got to the point of significant consumer demand in the first place (I’ll leave the environmental sustainability issues to another post).  This, of course, links back to the way Multi-National Corporations have been  very content to drive down its wage bill/maximise profit by keeping on moving production to poorer countries.

At Base Camp

And that’s my base camp- the knowledge that the political economy struggle is not simply, as it is for Krugman, about how the economy can be best managed, how large and how long the economic stimulus should last – though this is undoubtedly important;  what is even more important for the long term is the struggle of labour against capital.  From there, the path becomes clearer to the summit, because I start to understand what steps must be taken not just by the big boys and girls in government, but by little people like me.   In my case, the path is that of elected local government, and how it needs to change fundamentally what it does and why.  For others, the path will be different but no less important.

The path ahead

In slow and very pained production at the moment I have a monsterpost of monstrous proportion – less post in fact than framework for the book I might actually get round to writing this summer in a now or never kind of way. 

The monsterpost will be, I intend, an exploration on how the public sector as a large set of financially independent and differentially accountable  (focusing especially but not exclusively those parts that are still under elected democratic control) should act in the light of some of the more recent post-Keynesian economic analysis and policy prescription.

That is, I want to kick off a ‘bottom up meets top down’ economic analysis of how Labour /Left leaning local authorities, through their councillors, should now be challenging the Thatcherite orthodoxies of cost control/rate capping,  in a fusion of  1980s ‘no-cuts’ militancy and what I hope will be very 2000’s grassroots-dictated economic policy.

The institutional/legal framework has of course changed out of recognition since 1984, when the apparent New Urban Left was at it’s height.   Here, I contend, lies challenge rather than an insurmountable problem, and one to which we must now bring the support of ‘real left economics’ of the type supported in various ways and to various extents Krugman, Gamble and Turner.

As I’ve said previously, I don’t generally do conferences.   But this summer I think I might make an exception because, suddenly, I feel I’ve got something to say which I’d like people to hear whether they want to or not.  

I’ll be trying to free myself of children for Saturday 11 July, to go all the way down to London to the Progress Conference ’London and the Global Economic Crisis, ’hosted’ by Ken Livingstone( (with Graham Turner speaking), and on 05 September I’ll be seeing if I can get to Manchester to the Greater Manchester Fabian Society conference ‘Equality and the Recession’.

Quite suddenly, I feel as though I may have something to say, to Ken Livingstone particularly, that he may not have heard before.   

That’s all for the monsterpost but, whisper it quietly, it’s all about the Fifth Tradition of labour(and maybe even the Labour party), drawing on the good stuff that Ken and his mates did in the 1980s, and making sure what happens next is imbued not just with the passion that they brought, but with the sound understanding of economics which tells us that only when international working class interests are properly observed are we ever likely to move beyond a boom and bust cycle, where each boom benefits the rich few most, and each bust hurts the poor most.