What Corbyn's Critics Miss

“The Stoical scheme of supplying our wants by lopping off our desires, is like cutting off our feet when we want shoes.” ~Jonathan Swift

New Labour leader Jeremy Corbyn won his post with overwhelming, almost unprecedented support from Labour members, indicating a preference for a new approach--even if its herald was considered a veteran of old-school radical Labour. All of Britain’s leading parties had agreed on the basic question of austerity, differing only on the speed and scope at which it was to be implemented. Britain is tired of that--particularly young people. In place of that austerity, Corbyn’s team promises not just wider distribution of existing wealth, but a new economy, based in part on ideas frequently discussed among my colleagues, particularly public banking, worker control, and “quantitative easing for the people,” the repurchasing of debt and investment in economic institutions and entities that can provide wealth and public goods directly to people, rather than trickling it down through trickle-proof banks.

It’s also true that Corbyn and his shadow chancellor John McDonnell want to increase British taxes--massively, in the eyes of Britain’s ruling class. Financial elites today tend to self-describe as conservatives, when really they favor any policy that keeps taxes low and everything available for profit. Old-school conservatives will tell you that’s not conservative. There’s more to life than making more money, and institutions and communities are important.

But Corbyn’s critics from the right (and I haven’t read anything against him from anywhere else) fail to consider that the most interesting conversations about economic policy today have less to do with taxation {with the possible exception of a financial transactions tax, which is different) than with changes in the way resources are created in the first place and that if financial institutions were operated as public utilities in the public interest, taxes could be lower.

The reason for the stark difference is that “tax-and-spend liberalism,” whatever the fairness of calling it that, exists in a redistributive paradigm, where public banks, quantitative easing for the people, cooperative economics and other components of McDonnell’s formula exist in a restructuring paradigm. Redistribution accepts wealth as it is created now. Restructuring changes the way wealth is created.

Old_Logo_Labour_Party.svg.pngMcDonnell’s call for public ownership of the British banking system is a demand that recognizes the need for control of money to be stripped of the intrinsic conflict-of-interest in letting those who profit from our financial conditions sweepingly create them. His proposal that the railways be made public also includes provisions for involving workers in the governance process, a partial “cooperatization” of the work. So while Corbyn truly is more “radical” than his lukewarm Labour predecessors, it’s a foundational radicalism grounded in localism and the sentiments of many classical economists and religious thinkers. Before Thatcherism, many of the items in the McDonnell agenda might have fit in a Tory agenda. It’s only in the most extreme sectarian vision of market purity that an entities like the Bank and Mill of North Dakota (long supported by North Dakota conservatives) or a practice like kickstarting the economy by giving money to people (supported by that starry-eyed communist Milton Friedman) are the exclusive policies of lefties like Corbyn. In fact, it’s a testament to the watering down of conservative public argument that Prime Minister David Cameron could call Corbyn and Labour a threat to national security and the British economy.

Public banks, cooperatives, income dividends, wage caps, and similar policies help small, localized markets and lean government work well, with transparency and explicit responsibility. Want to end the allegedly bloated federal bureaucracy? Build public banks in every state. Want a substitute for heavy-handed regulations over the dying fossil fuel industry? Try a carbon fee and dividend program. Want to make the labor market fluid and give employers as well as employees greater creative space? Implement a guaranteed basic income. Concerning q.e. for the people, Bloomberg economic specialist Matthew Klein says “the core idea is sound and possesses an impressive intellectual pedigree” and could “restore some of the lost ground in productivity and lead to higher real wages for Britons. And by expanding capacity, this extra investment spending may not even end up being inflationary.”

Liberating financial power from big banks helps the small farmer and small business owner. It stops corrupt central governments from propping up big corporations who are joined to the regulatory state at the hip. True, these ideas don’t make an idol and totem out of free markets. But they result in substantially less central control  and substantially more resources for local government. Any “nationalization” Corbyn is proposing will be offset by the freedom gained from the big financial institutions, who are far more opaque and, frankly despotic than governments that continuously fear rejection by the electorate.

Corbyn seems to have caught onto the restructuring paradigm better than Bernie Sanders has, at least since Bernie launched his presidential campaign. Sanders’s campaign rhetoric is almost exclusively redistributive. Contrast it with Jill Stein, who was the Green Party’s 2012 nominee and is running again for the nomination, who makes a crisp distinction between merely breaking up big banks and establishing public ones “at the community, state and national level, so that we can actually democratize our finance.” Sanders’s banking reform proposals on the campaign trail do not include public banks, nor are there any such proposals on his campaign web pages.

Legislatively, and outside of the context of his presidential campaign, Sanders supports both public investment {if not full-on public) banks and worker-owned cooperatives--in fact, he supports using the former to fund the latter, truly a revolutionary idea.

Under one bill in Sanders’ package, the U.S. Department of Labor would provide funding to states to establish and expand employee ownership centers. These centers would provide training and technical support for programs promoting employee ownership and participation throughout the country. This legislation is modeled on the success of the Vermont Employee Ownership Center which has done an excellent job in educating workers, retiring business owners, and others about the benefits of worker ownership. A second bill would create a U.S. Employee Ownership Bank to provide loans to help workers purchase businesses through an employee stock ownership plan or a worker-owned cooperative.

But Sanders’s presidential materials don’t discuss these policies, and the revolution he keeps mentioning on the campaign trail is not an economic one, except insofar as a return to a few facets of the New Deal with new variations, is revolutionary. None of which is to say Sanders’s conversion to old-school Democrat on the presidential campaign trail isn’t full of prudent policy. And he insists on legislation overturning Citizens United as a foundational move, which would, if nothing else, facilitate the elections of more people who think outside Wall Street’s box. But it would be a far different campaign atmosphere indeed if Sanders were to talk more about his state’s E.O.C., or the promise of a BND model.

In 2015, the year of Corbyn’s election as labor leader, we have seen technology take us past the point of necessary employment; we’ve seen 3D printers that can create $5,000 homes, information technology that can link service providers to consumers without corporate management, an explosion in local food production, and an increasing dissatisfaction with neoliberal economics. All these phenomena point to the possibility of sustainable prosperity outside of the confines of traditional welfare statism. All can be leveraged to guarantee both the meeting of basic needs and the encouragement of new, creative forms of economic activity.  Critics of Jeremy Corbyn miss this, and in doing so, miss out on a conversation about the restoration of on-the-ground material autonomy.

Share this blog post with your friends!


get updates