Alistair Darling's story of his time as Gordon Brown's Chancellor of the Exchequer is intriguingly titled Back from the Brink. There are many brinks in this book - the near-collapse of the British banking system and the world economy, for one. The relationship between Mervyn King, governor of the Bank of England, and Callum McCarthy, then chairman of the Financial Services Authority, is also said to have been "on the brink of collapse". But the brink that Darling is chiefly concerned with is his relationship with Gordon Brown. Frequently they contemplated divorce on the grounds of incompatibility, but soldiered on like an estranged couple, tied together by old loyalties.
The two were long-standing political allies, and Darling hadContinue reading...
The Osborne Ultimatum
The New Statesman
| Thursday, March 24, 2011
The ideas of two dead economists, David Ricardo and J M Keynes, are shaping the cuts debate. The coalition is in thrall to the former’s small-government agenda and says there is no alternative – but its plans aren’t working.
The course of deficit cutting has been set in stone and few expected that the Budget, announced on 23 March, would dislodge it. The purpose of this article is not to supply the facts and figures of the Chancellor’s policy failings – though these are plentiful – but to explain why his policy of slashing public spending cannot be expected to produce a robust recovery. To put it simply, it is based on false premises. This gives Labour an opportunity to wrest the intellectual initiative, but only if it can develop anContinue reading...
Vince Cable’s essay in the 17 January issue of the New Statesman (“Keynes would be on our side”) is the first, and very welcome, sign of a senior coalition politician being willing to engage in a serious public debate on economic policy. It is in a different intellectual league from the jejune meditations of the Chancellor, George Osborne. Cable has written a well-argued – but ultimately unconvincing – defence of the coalition’s economic strategy.
His first, and perhaps least interesting, argument is that the parties are in agreement about a deficit reduction policy: the only question is the speed of reduction. This may be so, but a consensus is not the same thing as the truth. Cable argues that it is appropriate to begin to pay off theContinue reading...
When confidence is shattered
| Tuesday, October 26, 2010
In economics, you cannot convict your opponents of error, but only convince them. Economics isn’t like physics; you can’t conduct controlled experiments to prove or disprove your theories. History provides a very partial way of overcoming this weakness. No events repeat themselves exactly, but past events offer some kind of test of current theories about the economy. The main question of current interest is the effect of fiscal consolidation.
The programme of fiscal consolidation has just been unveiled by George Osborne. The claim behind it is that slashing the deficit – removing £123bn from the economy over the next five years, partly by raising taxes, mostly by cutting spending – will make the economy recover faster and moreContinue reading...
The 2008 financial crash and the shift of power from west to east raise questions about the future of capitalism. Robert Skidelsky appraises the latest thinking, from Ha-Joon Chang, Anatole Kaletsky and Ian Bremmer.
23 Things They Don't Tell You About Capitalism
Allen Lane, 304pp, £20
Capitalism 4.0: the Birth of a New Economy
Bloomsbury, 416pp, £20
The End of the Free Market
Viking, 240pp, £20
These three books are about the future of capitalism. Their inquiry is stimulated not just by the financial collapse in 2008-2009, but by the shift of power from west to east. These events have robbed free-market capitalism of much of its sheen. Anatole Kaletsky says it will be replaced byContinue reading...