How is it that the media conversation on the economy can segue so quickly from permanent austerity to Britain being on course to be Europe's largest economy? That within the same newspapers - even the same articles - we are told that the economy is still, five years on, in mortal peril (business-cycle be damned) but if only people would stop interfering boom times would be back. That the economy is an urgent problem, and only a return to 'stability' will do (where stability is narrowly defined to robust but not excessive growth with as few inefficiencies as possible created by government, because governments never provide things people want such as capital investment in infrastructure, education and health protection for the workforce, monetary stability or trade guarantees.) It is clear enough which major party is served best by this narrative.
Even if the growth projections are true, this skirts over the fact that Britain is forecast to have a growing population at a time when other European nations (particularly Germany and Italy) are facing shrinkage. More people equals more money, the assumption goes. Demography is destiny, in other words, which is an adage best left to historians than journalists.
It also places all of our national chips on the magic potential of financial services - a sector that created the largest bank bailouts of any major economy - to not only return prosperity to the UK indefinitely (another assumption that goes unchallenged) but to produce an ever larger share of it. In other words, an assumption that increasing financial productivity can permanently make up for slowing productivity elsewhere in the economy.
Such thinking makes a case for generally taking economic analysis, both good and bad, with a pinch of salt, and given a complex system with numerous uncertainties endowing public policy with a deference to justice rather than the generalised assumption we currently have that inequality can always be outrun by just getting richer and richer.
Osborne has decided that all of the capital earned by the economic recovery (actually a temporary and not yet stabilised return to the norm) will be converted into political capital for his party and their agenda. Coming out in support of a Minimum Wage rise is awesome politics because it has aborted Labour's gaining traction on the Living Wage, precisely at the time when Milliband is attempting to restyle his leadership as one of quiet competence. This is not admission of failure, it is a strategic retreat for the purposes of laying a political trap.
By attempting to spike the Labour guns on the cost of living crisis, he has shown himself adept enough to attack Labour at their strongest point, and confident enough to concede that Balls and Milliband have landed some blows on the cost of living crisis. If people weren't aware that this Chancellor has awesome political skills, this act has demonstrated it. It is an enormous gamble that Labour is distrusted on the economy more than the Tories are distrusted on the ability to look after the vulnerable.
This is a bigger gamble than people think. There is a chance that the Chancellor is naïve enough to buy into the myth that some right-wing thinktanks and press promote that after thirty years of Kinnock, Smith, Blair, Brown and Milliband, Labour still has an instinctual recidivism towards nationalisation, favoring labour over capital, and tax and spend.
While it is good politics to paint Labour as the party that built up a trillion-pound debt by supporting out of work illegal immigrants, this assumes that voters can't and don't also believe the other side of the story too: that a banking crisis caused by some very conservative ideas about deregulation brought on economic crisis, pubic debt to soar, and for Britain to lose its top credit rating. Judging by their public statements, neither of our major parties seem to have grasped the essential fact that people don't blame either scroungers or bankers alone for our present economic difficulties, but that they hold both responsible. It doesn't matter what the facts are, six years into a long, tiring recession, it just feels right that there are crooks on both sides.
We know the figures. Public debt was 44.5% of GDP in 2008 and has doubled since. By comparison, in the Euro-Zone, debt was 66.2% and is currently similar to Britain's. The argument that all of this public debt was created by scroungers on incapacity benefit (roughly 0.7% of government spending) just doesn't come close to explaining the trend, when £850bn was spent on bailing out the banks just in the UK.
Osborne is still gambling that people have bought into the idea that the recession was caused by the Labour Government being too socialist. Raising the minimum wage is a bold political move that makes for good economics too, but for Labour not to be banging on about how this is a tactical acknowledgement that underlying Conservative economic ideology - and this specific Conservative Government's economic policy - is failing is almost a dereliction of duty.
Osborne's insistence in the New Year to not only see austerity through but to make the state permanently smaller - assuming that there is an inverse relationship between the size of the state and the performance of the economy (like in that economic powerhouse Somalia) - only makes sense if they address the other side of the logic that their Conservatism drives them to.
A small state, where people are free of over-weaning central power, only makes sense so long as the political economy allows each individual to be more than just a consumer, in order to unleash the rational self-interests conservatives claim are held back by the nanny state. So long as the political consensus is that the only legitimate economic role most people have is as a consumer, then logic demands such a class of people be subsidised either by benefits or by cheap credit in order to create all the demand for goods that the 'productive' produce.
Opposing the subsidy of people either through benefits or through debt has become the bedrock of Cambornian economic thought. The perversity of this belief turned a severe recession into a prolonged stagnation, and focused only on public debt whilst having no opinion at all on the household variety, as if these things are economically and morally unconnected.
I have made this point before - Cameron and Osborne are not conservatives. They do not believe in restraint, caution or prudence. And they certainly do not subscribe to the paternal Toryism that ran from Disraeli through Macmillan to Major.
They are small state nihilists taking from classical conservatism only the general distrust of solidarity and none of the corresponding faith in institutions, traditions and experience.
They take from free market economics only the lesson that government needs to be small; not the experience of how government establishes and guarantees free markets. And they take from Toryism all of the myths of Margaret Thatcher but none of the actual facts related to the fourteen other Conservative predecessors.
They imagine that their protestations about not demonising a banker-class will not look hypocritical set against the persistent demonising of a scrounger-class: the mass of low-paid or generally vulnerable who are hurt in the desire to punish the 0.7% committing fraud. This argument only works so long. Labour has shown that the Low Paid Britain and Cost of Living Crisis campaigns do have traction; they just haven't figured out how to overcome that which Camborne so ruthlessly exploit: the general feeling that life has got harder, so kick down upon the most vulnerable. More young women, disabled people, and ethnic minorities in Labour's line-up (in addition to the suave and brilliant Chuka Ummuna) might help make this point.
Cambornian economics hinges on the notion that the current way of organising the economy is the only way of organising the economy. And if any party is placed to challenge this notion it is Labour - the Conservatives are explicitly, and to their credit openly, the party of capital. That is why they stick to the argument that stabilising the markets and then leaving them alone as quickly as possible is the only economic strategy that works. If Labour can move the ball at all on either convincing people that there is another economic way, or that the Tories are now claiming economic competence on the basis of returning precisely to the economic logic that created the crisis, then there is a chance that Cameron and Osborne will have to start playing defence.
This is the question that should be keeping politicians of both parties awake at night: would people settle for a nicer version of the Tories, or do they want a political alternative? A Labour Party able to articulate a vision of what that alternative may be might just be in with a shot of making the case that the economy, whatever return to economic 'health', has been hijacked just at the moment it was most vulnerable in order to serve the interests of a narrow, cynical, scared cabal committed to the idea that discussing the roots of financial crisis is to invite its return. An economic philosophy that doesn't accept that modern capitalism is broken, only that scroungers, whingers, sentimentalists and the naïve prevent it from attaining perfection.Suggest a correction