Labour is leading Britain on an economic death march
Keir Starmer’s premiership looks to be over but, unlike great Labour leaders of the past, none of his possible replacements has a vision for growth, says Paul Ormerod
To all intents and purposes, an election campaign for the position of leader of the Labour Party is currently underway. In fact, it has been for some time.
Acute dissatisfaction with Starmer is rife across the Parliamentary Labour Party, in the trade unions and throughout the Labour membership as a whole.
We do not know the outcome. Starmer does appear to be uniquely unpopular with the electorate, and the feeling might be that it does not really matter who replaces him as long as someone does.
On the other hand, the Prime Minister may even survive because of an inability to agree on who might do the job better and give Labour a chance of winning the next election.
It is certainly not yet sufficiently clear that a different Prime Minister would bring about a real change in tack in policy. The policy discourse in this shadow election campaign is very limited in its scope.
Much of it appears to be around redistributive concerns such as how to pay for the existing levels of public sector employment and benefits, and whether various forms of taxation should be increased and a wealth tax introduced in order to do so.
But unless productivity and economic growth are increased markedly, this whole process is being played out to the sound of a death march.
At some point, for example, higher and higher taxes will lead to a sharp drop in the incentive to work hard and be creative, and as a result growth and productivity will fall away even more. At some point, financial markets will lose confidence in the ability of a government operating under such conditions to repay its debt.
There seems to be little to be gained by changing one political leader for another unless there is a vision as to how strong economic growth is to be restored.
There may be a temporary boost to Labour’s fortunes if Stamer is replaced, but if his successor is effectively offering just more of the same, this is bound to be purely transitory
There may be a temporary boost to Labour’s fortunes if Starmer is replaced, but if his successor is effectively offering just more of the same, this is bound to be purely transitory.
The great Labour leaders of the past all had a vision as to how the economy could be transformed.
Great leaders of the past
After the Second World War, Clem Attlee and his Cabinet faced enormous difficulties. The country was far more indebted than it is today, and there was the major question as to how to absorb the millions serving in the armed forces back into civilian work without creating massive unemployment.
The government was guided by a visionary document, its 1945 manifesto entitled “Let Us Face the Future”. It was far from perfect but it reduced debt, preserved full employment and laid the foundations of the welfare state.
In 1964 Labour returned to power under Harold Wilson. Economic dynamism was the hallmark of his campaign.
He coined the brilliant phrase “the white heat of the technological revolution” and claimed that Labour’s mission was to harness it. The government found it rather difficult in practice to live up to the slogan, but the economy still grew by nearly three per cent a year.
Tony Blair understood to his fingertips the importance of creating new wealth through growth. It was Peter Mandelson who coined the phrase “”We are intensely relaxed about people getting filthy rich”, but it was a sentiment which underpinned the strategy of the government.
The current Chancellor, Rachel Reeves, is completely out of her depth and has no idea how to generate growth.
But someone amongst the contenders to replace Stamer has to pick up the challenge and come forward with a convincing vision for growth. Otherwise, we will simply see a validation of Karl Marx’s famous phrase “history repeats itself, first as tragedy and then as farce”.
Paul Ormerod is an Honorary Professor at the Alliance Business School at the University of Manchester. You can follow hm on Instagram @profpaulormerod