The clear conviction of the Labour Party leadership is that we need to be out of the EU so that the UK is free to establish its own set of socialist politics and so that a future Labour government won’t be restrained by pesky EU regulations.
All of which sounds pretty promising at first hearing. I certainly would prefer to have a UK government trying to strengthen public services and govern for the majority than one that believes in tax cuts for the rich and a trickle down economy. Yet I find it very difficult to simply cheer on the resurgent Labour leadership when it seems so obvious after a bit of more careful thought that there are really serious flaws in what they are trying to achieve:
- If the UK pulls out of the single market and decides to subsidise industry in order to enable it to compete better across the world then what would be the reaction of our neighbours and those who buy UK goods and services? They would immediately put tariff barriers up to prevent unfair competition. That has already happened with regard to Bombardier on very flimsy evidence that trade subsidy rules have been broken. A full scale industrial subsidy programme announced by a socialist government would produce even quicker and more extreme retaliation from the EU, the US and China.
- Increasing workers’ rights, protecting health and safety and having strong environmental legislation is very hard to do as a single isolated country. Socialism in one country involves putting up costs for your products and services and losing competitively to places with lower standards. In a market the size of the EU it is possible to do this. A large market can impose standards and protect people from fierce global competition. Outside the single market you can’t do this as easily. You get undercut.
- Nationalising the commanding heights of the economy uses up enormous resources and energy. It makes supreme good sense to steadily get railways back under a single coherent ownership as licences expire. It makes no sense at all to pay owners of the private finance deals Labour signed last time they were in government even more money to hand their contracts back to the state. It makes sense to use the regulatory powers on water suppliers to get rid of excessive profits and help reduce customers’ bills. It makes no sense to buy up all their contracts and leave the government short of money to do anything much else.
- Government picking the winners is rarely a great idea. What Labour is proposing to do comes straight out of the 1970s alternative economic strategy that Corbyn grew up with. If applied then it would have meant heavy government expenditure on old fashioned iron and steel and coal industries and the like. Almost no one would have thought to have put heavy government investment behind computer gaming or online enterprise or bioengineering commerce. Where are the signs that Labour will make better choices this time round? The party is, for example, committed to investing in new nuclear plants years after that technology became a commercial dead end.
An example of where this is being done very well isn’t hard to find. The most astonishing economic success story of recent times is China. Much as I hate their lack of democracy and freedom of expression it has to be admitted that they have used both the market and state planning intelligently. Their focus has been on using whichever is most effective in a given situation. China now has a policy that 10% of all the cars its companies produce must be electric within 2 years. It is building giant solar power facilities and closing coal mines at pace. It is building up its rail networks to help rebalance economic growth more widely across the country. It is training up enormous numbers of science and technology graduates and investing in research programmes. In short it is demonstrating a clear understanding of where the next generation of technology is going and making sure its country is equipped to lead the change.
Example of guiding markets badly are also easy to find. In the US and the UK we neglected control and guidance of our financial systems to such an extent that they were brought to their knees by a few short-sighted profit seekers. We are all still paying the price and waiting to see effective change. At the opposite extreme Venezuela imposed price controls and heavy subsidies across its entire economy and was cheered on by Corbyn for doing so. Despite massive oil revenues that economy is now in a horrible mess and its citizens are clamouring for change.
The UK needs to be following the sensible examples not either of the daft ones.. Back research programmes and business startup schemes in alternative energy, medicine, information technology, electric transportation, energy storage, media enterprises, creative industry infrastructure. Subsidise insulation schemes to cut fuel bills for homes and industry. Support small firms to design and market their businesses better. Encourage science startups to transform excellent research into saleable products and services. Attract talented foreign students to our universities along with their foreign currency. Make your technology vibrant by using the best talent instead of obsessing about restricting movement.
Clums old-fashioned subsidies directed towards clumsy old-fashioned industries and an obsession with nationalisation is not going to work. Getting government to plan and guide a serious change of technological direction towards a modern sustainable small scale enterprise driven economy and society will.
Put simply I worry that what Labour is planning to do is to try and implement policies straight out of the 1970s alternative economic strategy whilst paying a bit of lip service to the idea that it might be nice to do a bit of greening of the economy. I fear more that the Conservatives will carry on implementing failed policies of re-regulation, naked capitalism and narrow nationalism. But both major parties are miles away from a clear understand of the necessary direction of change.
What Britain really needs is a modern forward looking vision of the economy being implemented by politicians who have some semblance of understand of the degree of change that the world economy is going through as we move away from fossilised technologies.
I therefore regret to say that I cannot simply cheer along and get behind Corbyn’s flawed vision of the future just because it is different to May’s flawed vision. I don’t believe that socialism is possible in one country and I don’t share enough of Corbyn’s vision of what kind of socialism we need. I therefore remain convinced we need a strong independent Green voice in British politics.