Lessons on austerity from the great depression…

As we emerge, blinking, into a summer made fragile from pandemic, I thought it might be worth reminding ourselves that we once hoped for a much better world; one in which equality, fairness and social justice was more important than private wealth and accumulation…

I found myself thinking about austerity, and the ‘we can’t afford it’ mythology that Conservative politicians have used to justify slash and burn of community, health and welfare expenditure in recent years- something that has undoubtably left the UK more vulnerable to COVID-19.

When considering new political and economic actions, we always have to look backwards as well as forwards. I would suggest that there are some interesting comparisons to be made between the times we are living through and the pre and post second world war economic situation.

Think back to the 1930s. Mass unemployment. Dust bowl migrants. The Jarrow hunger march. (Also, the rise of fascism.) In response, governments slashed public spending, leading to a cycle of agony for poor people that was only broken by a world war.

After the war, in the wrackage of Europe, a new economic theory arose.

Don’t get me wrong, I am not advocating Keynsian economics as a complete solution. For a start, Keynes was still wedded to the goal of economic growth, which is killing the planet, but if you are not familliar with the arguments that raged back in the 30’s, nor with the way that Keynsianism dominated the economic thinking of the fifties and sixties, then it is well worth watching this short video.

As you do, think about what we have been told about the evils of public spending and national debt.

Think about the way that insitutions such as the world bank and the IMF have been bent towards a wholy different purpose that that which Keynes originally intended.

Perhaps above all, think about his warnings over boom and bust cycles in unfettered free market capitalism, and the way that slashing public expenditure makes things catestrophically worse.

In the interests of even handedness (ironically not something that Hayek was particuarly concerned with) perhaps we should also add this video.

For most of his life, Hajek’s ideas were discredited- regarded as irrelevant within a modern managed economy. Until Thatcher that is. Thatcher wanted a new way to look at the world. He gave her a way to ignore the old partnerships between markets and labour, and she went for it. Thatcher and her neo-liberal followers (including Blair) held the middle ground ever since.

Until now.

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