Now unless you are as old as me and as sadly inclined to take an interest in such things it is unlikely that you will have heard of this. But it matters a lot for today's politics.
Picture the scene. A new Conservative Prime Minister has come into power and his Chancellor's key policy is to stimulate the economy to get us out of trouble. Yes it did happen. Things were very different back in 1970. Shortly after Heath came in he appointed Anthony Barber as his Chancellor with a brief to get the economy moving. Barber thought he could do this by using some of the tools of conventional Keynsian economics which had worked so well for the past 25 years. If the economy was slowing down then his job was to counteract this and to print money, spend it on and tax cuts and get us out of the slump.
What happened, though, was different to what had happened before. Throughout the 50s and 60s when the UK boosted its economy the result was the money that had been pumped in put British people back to work and the goods they produced meant that there were plenty of nice new things for them to spend the extra money they earned on. We therefore got low unemployment without significant inflation. When Barber tried it things went very wrong. Instead of the boost to the economy being spent on British goods a great deal of it simply went abroad. It was used to buy cheap Japanese goods or to buy oil. The result of boosting the economy via tax cuts was a disaster. The balance of payments went badly wrong, inflation began to rise and it became clear that the country couldn't just keep printing money if too much of it was going to end up abroad.
Almost overnight Heath decided to change tack. Instead of going for expansion he cut back sharply. It provoked a wave of strikes and protests - not least from the miners and he was soon out of power. Before long we had 27% inflation and dreadful unemployment both at the same time. We had entered a new era of a global economy and one nation could no longer just expand its way out of problems. Margaret Thatcher watched with interest and came to the conclusion that Keynsian economics were finished and the free market was the only solution to any and every problem on all occasions. That has been the standard version of economic theory ever since.
Now we have at last the chance for something different. There is a serious prospect of the next government deciding to use its power to get an economy back on track by expansion. The central problem for Corbyn is how to do this whilst avoiding a Barber boom and bust.
Printing money and investing it wisely really can work. But the worry that it will simply give rise to inflation is not a stupid one. If you print money without using it to generate an equivalent expansion of the creation of goods and services that people want to buy then all you get is a short and spectacular boom followed by a nasty bust and years of right wing governments. Investing for growth only works when you invest in the right things at the right time.
The key calculations that have to be made when organising people's quantitative easing are:
1. Is there a boom or a recession on at the time it is attempted?
2. To what extent will any investment result in spending circulating around the British economy or will most of it go on imports?
And 3. To what extent it will expansion put pressure on the planet's resources and increase commodity prices and inflation.
We know from Anthony Barber that in a global economy if you print money and give it to people via a tax cut or benefit increase then it is highly likely that they will spend most of their new income on products coming from abroad. So there is a high risk that money will simply leak abroad and result in a balance of payments crisis and a run on the pound. But there are plenty of things you can invest in that don't have this impact.
If what you do with the newly printed money is to invest in building affordable homes on brown field sites then, at least initially, the money is likely to stay within the UK because you cannot buy a house from abroad. Almost all the first wave of spending will go on UK jobs and incomes. There will also be other very significant gains. The cost of rents and house prices will gradually go down as supply increases. This will ease any pressure on inflation. There is, of course, a second round to the impact. In a global economy all those newly employed building workers could spend a great deal of their money abroad. We therefore need to ensure that any people's investment takes full account of this risk.
As it happens there is one very good way to do this which is also hugely beneficial to the economy. When Barber was running our finances any expansion meant an increase in imports of oil and raw materials. We now have the science and technology to avoid that. If the people's investment can put that technology to work then we can grow the economy and reduce our import bill and much more importantly our impact on the environment. For example the new homes can be properly insulated, heated by ultra efficient graphene radiators, and generate more renewable power than they use from solar and from heat exchanges. Investment in science could create drugs we actually need such as new antibiotics and generate income for the country without putting any pressure on the environment. Investment in new technology could put the country at the forefront of the next phase of the industrial revolution whilst investing in subsidies to install that technology could massively cut our import bill on oil and gas.
People's QE is therefore only likely to be effective if it is also environmental QE. That is the only way to avoid a repetition of the disaster of the Barber boom.
Well OK that is not quite true. There is another way. You can get all the leaders of all the major economies to organise a collective drive to all do QE at the same time. Good luck with that. World guidance of a global economy is the real long term solution to our problems but it is an extraordinarily hard thing to engineer and not something an incoming UK government can just magic up. It is a lot quicker and simpler to focus on investing in UK growth that is geared up to generate reduced consumption of materials and energy. And that just happens to be what we most need to save the planet. I call that a win win. People's QE needs to also be QE for the planet!