The Conservatives and dubious economic narratives


The Conservatives’ election campaign seems to be based entirely around the claim that Labour is an economically incompetent party. The problem with this is that when we step away from the right-wing press’ depiction of events from the near and distant past we can see that this narrative is little more than unsubstantiated hearsay.

The Conservative wet dream is the Winter of Discontent. Given as proof of the failure of Keynesian demand management, to this day the Right talk of rocketing inflation alongside unemployment high enough to warrant the famous ‘Labour isn’t working’ posters. As proofs of economic incompetence go, this isn’t a great one.

When Margaret Thatcher left office, inflation was higher than at any point in the famous Winter, while unemployment rose to a peak of double the 1.7 million experienced then. Only in the first year of her premiership was unemployment lower than it had been in 1978.

This tendency towards revisionism can again be seen in the discussion around what caused the 2008 Recession. Since the crash, we have repeatedly heard that the Conservatives are “sorting out the mess Labour left”, as Labour wreaked economic havoc while the Conservatives determinedly tried to stop them.

Typical of the narratives in the right-wing press, while this analysis does have some link to reality it’s fairly tenuous and misses the key points. Labour’s spend and borrow policies did lead to a significant deficit, but you would be pressed to find many academic economists who would maintain this as the main cause of the recession.

Instead, they would probably point to the catastrophic global crash of 2008, which many right-wing commentators seem to forget happened. Or, they might highlight the UK financial sector deregulation, which freed up banks to make extraordinarily speculative gambles with the public’s money. The problem with claiming this was Labour’s fault is that the Conservatives under Thatcher began this trend, and wholeheartedly supported Labour’s decision not to reverse it.

Having seen the tendency of right-wing analysts to create false economic narratives, we can turn to the key one now being thrown at us. This is that the cause of the economic recovery has been austerity, and that therefore this is the road the country must continue down.

To start with, even the IMF has admitted that it was wrong for advocating austerity in the UK. The reasoning given in the 2010-11 was that as debt-loaded countries like Greece and Spain were on the edge of defaulting, deficit reduction must take centre stage in economic plans. This gave the Tories the grounds to cut things fast and (as tens of thousands of disabled people with spare rooms for carers can testify) with a spectacular lack of social conscience, arguing that unless the deficit was quickly reduced firms would lose confidence and stop spending.

In hindsight, it seems this was a serious misprognosis. Unlike Eurozone countries, the Government could not default as the Bank of England could create more money by buying the debt itself, and firms know this so would not just lose confidence and reduce spending. Instead, the effect of austerity has been to create an unevenly felt tightening which massively slowed down the rate of recovery. This was clearly seen in the first two years of austerity, as the economy slowly contracted as people inevitably spent less. Osborne points towards the small growth the country has seen recently and argues it is evidence that his plan has worked. However, although it’s true that the economy eventually picked up, this has only been since the pace of austerity was quietly slowed down after 2012 and is in the context of a worldwide recovery.

In the coming weeks, you will hear and read the near constant refrain that, “Our plan is working, we need to stay on it.” On the contrary, the austerity plan never worked. To borrow Nobel economist Paul Krugman’s description, saying things are feeling better now thanks to austerity is comparable to stopping hitting yourself in the face with a book and remarking how the end of the pain is thanks to the clever course of action you took. Rapid austerity measures were never the right course; rather, they are part of a rich right-wing tradition that fails to recognise its own failings and attempts to paint others as even more incompetent.


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