Achilles Healey

Ayes, eyeballs, and ideas…

Labour’s conference is an event in three parts. First, the main hall. Full of delegates (party members) sent by their constituency to discuss, vote on and pass motions that may or may not become national policy. It’s a tightly controlled process. No one wants an embarrassing motion to disrupt the carefully curated conference narrative.

Then there’s the exhibition. If merch is your thing you’ll never want for branded pens, mugs, lapel badges and stress balls again. There’s the great and good of British media, the 3^rd sector championing those without a voice, and then the large corporates keen to get their products and services in front of policymakers. Get a meeting with an MP or a Minister and who knows, you might just hit this year’s sales target.

And then there’s the fringe. Hundreds of events across the city. People crammed into meeting rooms, bars, theatres, and hotel suites to share ideas, debate policy, argue ideology and listen to the hundreds of panel discussions where MPs speak and offer unique insights into what they really think.

We spent a couple of days at the new economy fringe. Arguably the finest progressive economic discussion in the UK other than Resilient Economy’s own Economics Festival. I’ll share a few highlights in part two of this blog. But first, the new Chancellor’s speech.

Achilles Healey

If you only take three things from John Healey’s speech, they are these: Fiscal Discipline. Growth. And a new age of Industrialisation.

It all sounds good in principle but when viewed through a resilient-economy lens it exposes the economy, and Labour’s chances of re-election, to considerable risk.

Take fiscal discipline, by which he means a commitment to the (made-up) fiscal rules that serve no purpose other than to constrain a government from meeting society’s needs. For a currency-issuing state such as the UK the notion of ‘balancing the books’ is meaningless. Shrinking public spending and raising taxes will drive households and businesses into debt. That’s a recipe for collapsing living standards at the best of times. Overlay a global oil supply crisis that has sent petrol prices north of £2/litre and it could be catastrophic.

What about Growth? Healey said, “the money Labour had in the 1990s is not there now” and that “the cost of servicing the nation’s debt is money we cannot spend elsewhere”. Either Healey chooses to ignore, or is ignorant of, the fact that his government has unlimited access to all the pounds it needs. So binary trade-offs that prioritise warfare over welfare are political choices, never economic necessities. Healey’s scarce money narrative lays the ground for his ‘growth’ narrative. Healey believes that if the economy grows he’ll get revenues to pay for public services. In fact, the reverse is true. Households and businesses can only accumulate net financial assets through government’s deficit spending. Healey’s fiscal rules are at odds with his growth agenda.

What about industrialisation? Submarines, Airbus Wings, Small Modular Reactors and Ferries. Perhaps these things shouldn’t come as a surprise given that both John Healey and Alan Milburn, who is leading the government’s review into young people and work, are men in their late 60s who grew up in the mining communities of South Yorkshire and the shipbuilding communities of the Northeast. At a time when the UK faces a polycrisis of climate & biodiversity collapse and food & energy resilience, these priorities suggest treating symptoms rather than addressing root causes.

Mission, or omission?

So, what was missing from Healey’s speech?

Many argue that to address polycrisis at a systemic level requires the UK to implement a Marshall style plan to mobilise every resource toward the productive economy. Growing food to reduce reliance on overseas imports. Massively expanding renewable energy production, installation, and home insulation. A shift to mass public transport. Closure of fossil fuel-consuming industries. Building the stock of social homes and expanding universal basic services to lower living costs. As John Maynard Keynes and Clement Atlee understood, anything we can do we can afford. Now is not the time for fiscal rules. Now is the time for fiscal expansion as a drive to full employment and economic resilience to avert the imminent threat of climate breakdown.

Which brings us to the second major omission.

Climate was entirely absent from Healey’s speech. Not a single mention of arguably the greatest threat humankind has ever faced. In pursuing growth Healey is ignoring the planetary boundaries that will constrain his industrial ambitions. As Donella Meadows said:

“There always will be limits to growth. They can be self-imposed. If they aren’t, they will be system-imposed. No physical entity can grow forever”.

His final omission? The role of the state as an employer.

Healey believes businesses create jobs and that it is his job to ensure private employers receive wage subsidies and government contracts in the hope that industrial jobs will follow.  But businesses invest only when they see the potential for profitable growth. Healey’s fiscal rules and the Bank of England’s interest rate policy act as a natural brake on the economy. 

Instead, the chancellor of a currency-issuing nation facing no financial constraints can end unemployment (the UK has 1.8 million unemployed and 9 million economically inactive citizens) by mobilising the state as the employer of first resort to create jobs aligned with economic resilience that transition workers out of unproductive jobs and the fossil-fuel economy.

There is no end of teaching, caring, healthcare, home building and maintenance, sustainable food production and public service delivery work that needs to be done. Healey’s speech mentions ‘Jobs’ on 23 separate occasions. He wants to do everything he can to offer people a job, except offer them a job.  

Two visions of resilience

I watched the Chancellor’s speech in a room full of progressive economists. We held a round table discussion afterwards. Comments included ‘depressing’, ‘pitch rolling for Milburn’ and a chancellor ‘nostalgic for an imperialist economy that has gone forever’.

My fellow economists were united in their concern at the complete absence of any vision for a new economy built for a climate-constrained world. Healy’s vision of resilience is drawn from the past. He described miners working in intolerable conditions, going back into the darkness day after day in the hope their children might one day have a better future.

A world where our children’s futures are at risk like never before requires a new view of resilience. An economy designed to serve the needs of the many, control of our collective resources, using public money for public goods, a wellbeing economy that respects our planet’s boundaries. All were depressingly absent from Healey’s speech.