Not a case for Sherlock Holmes

Today’s Observer reports that Nick Clegg is to hold an investigation into whether members of his team briefed against Vince Cable before conference.

The matter in question is a briefing given that said that, in a debate on the Glasgow economy motion at an MPs’ awayday, the vote went 55-2 against Cable's unhappiness with it.

This was reported by the media, plainly as the result of an official briefing, though was later the subject of a limited retraction by the BBC’s Nick Robinson, who said:

I am now told that no vote was held after a debate about economic policy at the Lib Dem parliamentary meeting a few weeks ago. However, sources close to both Vince Cable and Nick Clegg agree that the Business Secretary did urge the party to be prepared to relax fiscal policy if the recovery wasn’t sustained. Mr Cable is said to have had the support of just one other Lib Dem MP. Mr Clegg persuaded all the others. So, it was 55 versus 2.

There are several reasons why it is clear that Robinson and his colleagues were misled in a way designed to damage Cable, an idiotic course of action by whoever was responsible since Cable is a major party asset and a public figure in his own right.

The most obvious is that, with David Ward suspended from the party whip over his comments on the Middle East, and Mike Hancock having had the whip removed over matters we need not enter into here, there could not have been 57 MPs present.

Even if there had been, anyone who spoke to a few MPs at conference would be perfectly well aware that a lot more than two prefer Cable’s position to Clegg’s.

Indeed, one MP said the meeting in question had no formal vote but he kept a scorecard of speakers’ sentiments that came out 2:1 in Clegg’s favour – a much more believable ratio and, as one MP put it, “many of those on Clegg’s side were those who still retain ambitions”.

The Observer did not say who was to conduct this inquiry, or what would happen to anyone found to have misbehaved.

Given the frequency with which one name was mentioned at conference, the inquiry may not have very much inquiring to do.

Inability to count

Word reaches Liberator of an altercation at yesterday’s parliamentary party meeting over briefing by those associated with Nick Clegg, to the effect that the unamended motion on the economy (debated by party conference yesterday morning) was supported 55-2 at a pre-conference awayday of MPs.

We hear that this greatly displeased Vince Cable, on the grounds that no such vote took place at the event concerned and that, even if it had, not all 57 MPs were present so the figures could not have been correct.

The implication was that Cable was among the two and therefore that his position on the economy enjoyed only minor support among MPs. This is believed to be a terminological inexactitude.

Liberator would be grateful for any further details of what transpired at the meeting, our usual discretion assured. Oh, and the 224-220 vote yesterday in favour of a 45p top tax rate, rather than 50p, was, it should be noted, made possible only a by frantic late whipping in of ‘payroll’ MPs, to the wry amusement of those on the 50p side.

At least 220 people understand the important political symbolism in being a party that thinks some burdens should fall on the rich, even if the leader doesn’t.

A Pyrrhic victory?

The outcome of this morning’s Liberal Democrat conference debate on the economy was a mixed bag for social liberals.

At the Huffington Post, Liberator’s Gareth Epps has just posted his assessment of the debate.

Meanwhile, there is another consequence of this debate. After prostituting himself to support the establishment line on the economy for the second year running, party president Tim Farron MP can kiss goodbye to the party left’s backing for his leadership ambitions.

Why Monday’s debate on economics is crucial

Monday morning’s debate on economics at the Liberal Democrat conference is the most significant of the conference.

It is significant because it is effectively the first time that the party has ever been consulted about Orange Book editors David Laws and Paul Marshall’s plan to convert the Liberal Democrats to neoliberalism.

The key votes will come on the Social Liberal Forum’s amendments. If these amendments succeed, members will know that the Orange Book project has finally been defeated. If they fail, it will be a Pyrrhic victory for the right, because the party will haemorrhage active members.

I’ve provided further arguments on Liberal Democrat Voice.

And they’re off!

Nick Clegg has taken the unusual step of deciding to sum up in the debate on the economy motion at the Liberal Democrat conference in Glasgow next week, in which he will attempt to convince the party and country that the coalition’s economic policy has been a howling success and needs only minor tweaks. Or not as the case may be.

But who will draw the short straw of having to propose this nonsense? Liberator’s bookmakers suggest the following:

• Duncan Hames: 2-1. Wide-eyed young colt, keen to impress. But he is Clegg’s PPS, so may not get a choice.
• Stephen Gilbert: 6-1. Economic right-wing MP needing to raise his profile.
• Jo Swinson: 100-30. Heavily promoted by Clegg; Not renowned for substance and moving this motion will hardly help in that cause.
• Danny Alexander: 8-1. Do they actually want to win...?
• Mike Thornton: 4-1. Still glowing from the spotlight of being a Liberal Democrat who got elected in 2013, but low profile since.
• Lorely Burt: 8-1. Guaranteed to keep the sign language interpreters busy.
• Stephen Williams: 16-1. But he would love to do it.
• Shirley Williams: 20-1. Another abuse of her name in a motion would surely result in a suit for defamation of character by association with Clegg, after the debacle last year over the ‘Shirley Williams’ health motion.
• Paddy Ashdown: 3-1. Would even Ashdown approve of the tactic of facing down bloody-minded activists in a debate, with a party to enthuse ahead of a general election? A speech would be enough, though.
• Jeremy Browne: 12-1. Plausible after promoting Tory policies in the Home Office but, let’s face it, Jeremy Thorpe would be more likely to go down well at conference.
• Tim Farron: 25-1. Believes in divine intervention, and might just get his wish.
• A Leadership Programme Candidate Who Nobody Has Ever Heard Of: evens. Guaranteed to deliver any old rubbish he/she has been given with starry-eyed, uncritical zeal, exactly as trained to do in the programme.
• Floella Benjamin: 15-1. Guaranteed wholesome fun.
• Vince Cable: 1000-1.

Latest news:  A late entrant to the field - Steve Webb. 2-1. He thinks God made him do it. But he’s not the messiah, he’s a very naughty minister.

Ending the obsession with deficit reduction

Most politicians are economically illiterate, preferring homespun wisdom to intelligent macroeconomic analysis.

Thanks to Liberator Collective member Gareth Epps, who (via Mark Pack) spotted an article by Professor Simon Wren-Lewis on his blog mainly macro. Wren-Lewis explains why Nick Clegg’s economics motion at this September’s Liberal Democrat conference is wrong-headed. He summarises the motion as asserting that:

...the best thing that has happened to the UK economy recently has been that the deficit has come down. The message seems clear: reduction of the budget deficit is the number one priority and all else has to be subsumed to that.

Now you might in Clegg’s defense say that he has to put it this way, as he has been part of a government which has made deficit reduction the overriding priority. I think that is simply wrong. He could say instead that the focus on deficit reduction was appropriate given all the uncertainty as the Eurozone crisis broke. However now it is clear that this was a crisis specific to the Eurozone, and with interest rates on UK borrowing really low and likely to stay there, the UK can make reducing unemployment the priority, while still of course operating a prudent fiscal policy in the longer term. In other words, he could begin to de-prioritise deficit reduction. The fact that he chooses to do the complete opposite suggests he is content to see fiscal policy as an extension of household financial management. We will see in September whether the Party as a whole is happy to follow its leader in ignoring 80 years of macroeconomic analysis.

So the conference will be faced with a choice between Clegg’s Tory-lite folk wisdom or intelligent macroeconomic analysis. If ever there were a case for delivering a humiliating defeat to the leader, this is it.

What political genius thought of this?

Yes, let’s pick at some old scabs, shall we?

The New Statesman reports that Danny Alexander has confirmed the student loan book will be privatised. The report explains why this makes no economic sense.

What the New Statesman doesn’t say is that reopening the issue of student loans makes no political sense either. That issue has become a byword for mistrust of the Liberal Democrats. So why revive the controversy?

Oh yes, I forgot. Everybody who used to vote Liberal Democrat is a ‘protest voter’ who can be safely jettisoned in favour of hard-working-centre-ground-alarm-clock-Britain. I hope these imaginary voters will be impressed.

The end of democracy?

Why is the public gradually disengaging from democratic politics?

Henry Farrell thinks he knows the answer. In an essay inspired by Colin Crouch’s influential book Post-Democracy, he writes a depressing epitaph for democracy. Globalisation and neoliberal economics have combined to shift power elsewhere, while the voters are left with less and less choice. In a postscript on the Crooked Timber blog, Farrell laments the current political chaos in Italy.

The problem with Farrell’s thesis is that he conflates the malaise of democracy in general with that of social democracy or moderate socialism. It is true that democracy is in trouble, and that neoliberalism has had a major role to play in the undermining of democratic politics. But just because the traditional left has no answer to the current economic crisis does not necessarily mean democratic politics as a whole is impotent.

The collapse of neoliberal orthodoxy in the recent financial crisis was a gift to its opponents but the traditional left has been completely unable to provide a coherent or compelling response. That is not because democracy is failing. It is because the social and economic conditions of the post-war era (which made the social democratic settlement possible) no longer apply. Like UKIP, social democrats yearn for a return to the 1950s, but for different reasons.

There is a coherent and compelling response for the Liberal Democrats to adopt (once they get over their current fixation on blending into the establishment). First, they should adopt the recommendations of the Rowntree-funded Power Inquiry (full report here and executive summary here), which examined popular disengagement from formal democratic politics in Britain (and which was previously discussed on this blog here). Second, they should develop some radical new economic thinking, and this work has already begun, in particular with the ALDC’s 2008 pamphlet by David Boyle and Bernard Greaves, The Theory and Practice of Community Economics, and the just-published Green Book.

One can at least agree with Farrell that things cannot continue as they are. One cannot accept his fatalism simply because the parties of the old left resemble exhausted volcanoes.

The Rise and Fall of Economic Liberalism

The recent debate about secret courts has had an extraordinarily unifying effect on the Liberal Democrats, uniting previously opposing factions. Admittedly, they have been united against their own leadership, which is another matter.

But it does make you wonder why the party split into factions in the first place. The answer is that this is perfectly normal. Major political parties are broad churches and must remain so if they are not to become narrow sects. There are basic beliefs that all members share, otherwise there would be no point being in the same party. But in a broad church, it is inevitable there will also be competing values and interests, and like-minded members will collaborate and coalesce into factions to advance those values and interests.

So the real question is not why there are factions within the Liberal Democrats but why the party was under-factionalised for much of its history. The party was founded in 1988 with two ready-made factions, the Liberals and the SDP, but that division has long ceased to be a fault line.

The main ideological division now is about economics. It began with the sudden emergence of the self-styled ‘economic liberals’ in 2001. This development was one of the most profound in the history of the party. It was also one of the most bizarre.

It was bizarre because the economic liberals seemed to come out of nowhere, having scarcely been evident in the Liberal Democrats beforehand. Nor were they much in evidence in the two predecessor parties. The pre-merger Liberal Party was a social liberal party; classical liberalism was largely superseded by social liberalism towards the end of the nineteenth century. The pre-merger SDP was social democratic, as you would expect. A few of the economic liberals who emerged in 2001 were new recruits to the party (notably the small group of right-wing libertarians around Mark Littlewood) but most of them had been members of the Liberal Democrats for some time. They must have either suddenly changed their views in 2001 or previously kept quiet about their predilection for market forces.

The emergence of the economic liberals was also bizarre because of its timing. Why leap aboard the Thatcherite ideological bandwagon so late in the day? By 2001, Thatcherism had been the dominant orthodoxy for over twenty years. The fall of the Berlin Wall, which encouraged the idea of ‘TINA’ (There Is No Alternative), had occurred in 1989. The same year, Francis Fukuyama published his seminal essay The End of History?, while Tony Blair ascended to the leadership of the Labour Party (and made his peace with Thatcherism) in 1994.

[At this point, some readers may already object to the distinction between ‘economic’ and ‘social’ liberals, claiming to be both or that both are the same. I would merely point out that, if that were the case, why did ‘economic liberals’ label themselves as such and start their factional activities in 2001, which created the current division?

Oh, and this is a long-ish historical analysis. Before you read any further, make yourself a pot of tea and put your feet up.]

For an explanation of why the economic liberals emerged when they did, one should first

Vince Cable backs Social Liberal Forum motion?

At least that’s what it says in the Sunday Mirror. Although the Mirror’s headline is the more dramatic:

Vince Cable backing rebel Lib Dems’ call for end to Tories’ “slash and burn” policies

The Social Liberal Forum’s emergency motion at this weekend’s Liberal Democrat spring conference is titled ‘Kick-starting the economy’. Again, the Mirror prefers a more hyperbolic description, calling the motion:

...an explosive bid to rock the Coalition.

Which is all a bit odd because, of the two emergency motions to win yesterday’s ballot and thus be chosen for debate, neither is the SLF motion. First place in the ballot, predictably, was won by the motion ‘Continuing Our Opposition to Secret Courts’, while the other motion selected was ‘Implementing the Leveson Report’.

The SLF motion actually took second place in the ballot but was not accepted for debate because of a decision by the Federal Conference Committee that it would require one hour for debate rather than the usual 30 minutes allocated to emergency motions. Were it to have topped the ballot, therefore, no other emergency motion would have been taken, which would have prevented a debate on secret courts. As it came second, there was not enough time for it to be debated, hence the promotion of the third-placed Leveson Report motion onto the agenda in its place.

None of this explains why the Mirror thinks that the SLF motion is on the agenda, let alone why it reports that Vince Cable is backing it.

Later...

Gareth Epps has a theory why the FCC ruled that the SLF motion could not be debated, and it is not time limits.

Gareth Epps on Left Foot Forward

Liberator’s Gareth Epps has just published a post on Left Foot Forward, which praises Vince Cable’s New Statesman article (discussed on this blog yesterday).

Gareth mentions that the Social Liberal Forum is proposing an emergency motion (‘Kickstarting economic growth’) at this weekend’s Liberal Democrat spring conference in Brighton, and we would urge representatives to support it.

That Vince Cable article in full

Vince Cable has been in the news this morning for an article he has written in the New Statesman.

The article is important because it advocates the financing of more capital investment by borrowing, although it does so in measured tones, weighing up a “balance of risks”. It is also a lengthy and somewhat technical article on economic policy, making it too difficult for anyone with a short attention span. For this reason, it has been subject to dramatic interpretations by the media.

BBC News is an honourable exception (see also Stephanie Flanders’s blog). But the Guardian described the article as, first, “Vince Cable makes direct challenge to Cameron” then later as “Vince Cable contradicts Osborne”, while the Independent’s headline declares “David Cameron and Vince Cable at war over route to recovery”. The Spectator’s Coffee House blog attempts to up the ante with “Vince Cable’s borrowing bombshell”, compared with which the Daily Mirror’s “Vince Cable breaks Coalition ranks” seems restrained.

Is any of this hyperbole justified? One interpretation of events says that it isn’t. The budget is less than two weeks away and it seems doubtful that any cabinet minister – even Vince Cable – would be allowed to rock the boat at this stage. There will have been robust arguments within the government but these have probably been resolved by now. So what is going on?

Has Cable won the argument (as Bill le Breton suggests on Liberal Democrat Voice today)? Is the New Statesman article a curtain-raiser for a budget that will signal a change in direction? Of course, the government will want to save face and deny any failure, so any change in policy would be presented as a seamless continuation of a long-term plan. But are we about to see ‘Plan A+’?

Or is Cable out on a limb? Does David Cameron’s speech today represent a genuine determination to stick with Plan A? Cameron’s warning that changing course would “plunge us back into the abyss” suggests that it does. And what of Nick Clegg’s statement on his weekly LBC phone-in programme this morning? It was hardly a ringing endorsement of Cable’s position, although Clegg revealed that he, Cameron and George Osborne had all seen the New Statesman article before it was published.

If one had to say which is more likely, Cable’s muted optimism or Cameron’s resort to ‘TINA’ (There Is No Alternative), echoed by Clegg, the government will almost certainly opt for the latter.

Later...

I’ve been reflecting on the politics of the situation. Why did the ‘Quad’ (Cameron, Osborne, Clegg, Alexander) allow Cable to publish his article, even though it disagrees? After all, if the Quad or the Treasury had wanted to enforce cabinet discipline, they could easily have blocked publication.

This is all about positioning before the budget on 20th March. The Quad clearly plans to stick to ‘Plan A’ (even though it isn’t working) and, in the absence of effective opposition from Labour, needs Cable as a ‘defining other’. Cameron and Clegg could not have made their unrepentant statements today without being able to contrast with a prominent critic. And if Cable hadn’t said what he had said, who else could they have knocked down?

Bankers’ bonuses: Liberals 1 Tories 0

The EU proposal to cap bankers’ bonuses has received predictable opposition from David Cameron and Boris Johnson.

The willingness of the Tories to continue to defend the selfish interests of the bankers who caused the global financial crisis seems to know no bounds.

So it is good to hear Sharon Bowles, Liberal Democrat MEP and chair of the European Parliament’s most powerful committee, the Economic and Monetary Affairs Committee, strike the right note:

“Overall, this is a major achievement for [the European] Parliament, in curbing the culture of quick profit and irresponsible lending that has played such a pernicious role in fuelling Europe's banking crisis.”

Meanwhile, if the Tories are right, and a few irresponsible and overpaid arseholes flee to Singapore or Zurich, good riddance.

Market fundamentalism? It’s dead meat

Why is the horsemeat saga continuing to dominate the news?

It was the question posed by Peter Oborne in his introduction to yesterday’s edition of BBC Radio 4’s Week in Westminster:

There’s nothing like a story about dumb animals to bring out the most atavistic and juvenile instincts of your average British newspaper reporter. Few stories in living memory have been less significant than the Great Horseflesh Scandal. Nobody has been killed and and there’s no evidence anyone’s health has been put at risk. Not since rival teams of crack reporters from the Sun, Star and Daily Mirror raced around southern Spain on the trail of Blackie the donkey in the early 1980s has a story counted for much less. Yet very rarely since Blackie the donkey has a story been awarded more airtime. Such are the mysteries of modern media and political discourse.

In a sense, Oborne is right. There are no dead or wounded. Nevertheless, the story has touched a raw nerve and the media are not entirely to blame for the continuing public interest.

The reason for enduring public concern is that the horsemeat scandal symbolises a much deeper problem, which is explored in two articles in today’s Observer. Will Hutton sees the horsemeat scandal as a final denouement for Thatcherite values:

The collapse of a belief system paralyses and terrifies in equal measure. Certainties are exploded. A reliable compass for action suddenly becomes inoperable. Everything you once thought solid vaporises.

Owen Paterson, secretary of state for the environment, food and rural affairs, is living through such a nightmare and is utterly lost. All his once confident beliefs are being shredded. As the horsemeat saga unfolds, it becomes more obvious by the day that those Thatcherite verities – that the market is unalloyed magic, that business must always be unshackled from “wealth-destroying” regulation, that the state must be shrunk, that the EU is a needless collectivist project from which Britain must urgently declare independence – are wrong.

Indeed, to save his career and his party’s sinking reputation, he has to reverse his position on every one. The only question is whether he is sufficiently adroit to make the change.

Paterson is one of the Tories who joyfully shared the scorched earth months of the summer of 2010 when war was declared on quangos and the bloated, as they saw it, “Brownian” state. The Food Standards Agency was a natural candidate for dismemberment. Of course an integrated agency inspecting, advising and enforcing food safety and hygiene should be broken up. As an effective regulator, it was disliked by “wealth-generating” supermarkets and food companies. Its 1,700 inspectors were agents of the state terrifying honest-to-God entrepreneurs with unannounced spot checks and enforced “gold-plated” food labelling. Regulation should be “light touch”.

No Tory would say that now, not even Paterson, one of the less sharp knives in the political drawer. He runs the ministry that took over the FSA’s inspecting function at the same time as it was reeling from massive budget cuts, which he also joyfully cheered on. He finds himself with no answer to the charge that his hollowed-out department, a gutted FSA with 800 fewer inspectors and eviscerated local government were and are incapable of ensuring public health.

Hutton points out that a strong FSA, far from being a regulatory burden, would have given British enterprise a competitive advantage:

What the Paterson worldview has never understood is that effective regulation is a source of competitive advantage. If Britain had a tough Food Standards Agency, it would become a gold standard for food quality, labelling and hygiene. British supermarkets and food companies could become known for their quality at home and abroad, rather as “over-regulated” German car companies are, rather than first suspects when something dodgy is going on.

In a companion piece, Jay Rayner points to the “thuggish” behaviour of the big supermarkets:

The horsemeat scandal is not some isolated incident. It is a symptom of a much bigger disease affecting mass food retailing in Britain. (Last year’s row over falling payments to dairy farmers was another.) It is about the way British supermarkets have singularly failed to react to the vast changes to the global food market that they assumed was theirs to plunder by right.

Ever since the banking crisis of 2007/8, it has been obvious that the dominant economic orthodoxy of the past thirty years is a busted flush. And now we have yet more proof of its moral and practical failure.

There is no future in the fundamentalist ideology that elevated markets from a mechanism to a value and, moreover, a value that trumped all other values. The small minority in the Liberal Democrats who continue to seek to push the party further in that direction must be barking mad.

Why wasn’t a Lib Dem MP saying this?

It was good to hear Green MP Caroline Lucas making the case for land value taxation on BBC Radio 4’s Today programme this morning (listen online here – zap forward to 34:06).

A pity it wasn’t a Liberal Democrat MP making this case. After all, Liberals have supported this policy for rather a long time.

Not that we’re calling for Plan B, you understand...

The headline in today’s Independent says “Lib Dems turn on Osborne over cuts”. The story beneath informs us:

Liberal Democrat cabinet ministers are worried that the Government is not doing enough to boost growth, and are privately pressing the Chancellor to speed up job-creating building projects in his March Budget.

Indeed, Nick Clegg is quoted being openly critical of cuts to capital spending:

In an interview with Parliament’s The House magazine published tomorrow, the Deputy Prime Minister admitted the Coalition made a mistake when it cut capital spending soon after it was formed in 2010. He said: “I think we’ve all realised that ... in order to foster a recovery you need to try and mobilise as much public and private capital into infrastructure as possible. So what we’ve done since then, in effect, is come up with various surrogate ways in getting working capital into infrastructure.”

But it is obvious that Clegg’s spin doctors don’t want you to get the wrong idea:

The Liberal Democrats are not calling for a Plan B, which would divide the Coalition on its central mission of tackling the deficit.

In their 2010 general election manifesto, the Liberal Democrats predicted that Tory austerity policies would be counter-productive. And with a triple-dip recession now likely, this prediction has proved correct.

So now we’re in the business of saving face. Coalition policy will be changed incrementally to enable everyone responsible to claim they were right all along.

Mid-Term Review – What’s all that about, then?

Today’s media are full of Sunday-for-Monday stories about tomorrow’s launch of the coalition government’s ‘Mid-Term Review’ (MTR) – see for example the BBC, Express, Independent, Sun.

The MTR is intended to relaunch the coalition but is unlikely to justify the hype. In fact, the ambitions for this exercise have been scaled down considerably compared with what was originally planned.

The MTR started life in 2010 as ‘Coalition Phase 2’, a policy planning operation based on the assumption that everything in the original coalition agreement would have been implemented by the middle of 2012, and that a comprehensive second agreement would be needed to cover the second half of the 2010-2015 parliament. Even by the middle of 2011, however, leading members of both coalition parties were getting cold feet about the whole idea. What we will see tomorrow is merely the residue of a much grander scheme.

The following report, which originally appeared in the Radical Bulletin column in Liberator 355 (September 2012), provides a fuller history:

Have pity on members of the Liberal Democrats’ Federal Policy Committee (FPC). At their meeting on 15 May [2012], they were handed an inch-thick pile of documents from the ‘Mid-Term Review’ of coalition government policy.

Party members may be excused for feeling confused about any such policy review, since there seem to be so many of them.

Back in the heady days of 2010, it was assumed that the coalition agreement would provide only enough policy to last for the first half of the parliament. By the middle of 2012, the reasoning went, all the ‘difficult things’ would have been accomplished and the coalition would need another agreement supplying a second batch of policies to fill the remaining time.

To this end, two joint Tory-Liberal Democrat initiatives were launched in the autumn of 2010, one official and one semi-official. The official one was called ‘Coalition Phase 2’ and was jointly led by Danny Alexander for the Liberal Democrats and Oliver Letwin for the Tories. Its main task was to produce a ‘second programme for government’, which would concentrate on issues that are “easier for the coalition to absorb” and would be less “heroic”.

The semi-official initiative, separate from Coalition Phase 2, was called ‘Coalition 2.0’. It was set up under the auspices of the think tank CentreForum and intended to plan coalition policy for the 2012-15 period. Alarms went off immediately since, with the exception of Chris Huhne, all the Liberal Democrat participants came from the right-wing free market fringe of the party (see Radical Bulletin, Liberator 344 [February 2011]). Nothing has been publicly seen or heard of this group since its launch.

Then there was a third initiative, this time confined to the Liberal Democrats. The FPC deputed a group under its then-chair Norman Lamb to produce a ‘policy development agenda’. Its recommendations, titled Facing the Future, were published in August 2011 and debated at the following month’s party conference. This turned out to be a disappointingly timid document and earned a riposte in the form of an alternative report by David Boyle and Simon Titley, Really Facing the Future (available here).

By the middle of 2011, however, both coalition parties were getting cold feet about the idea of a second coalition agreement, with senior figures in both parties reluctant to open a can of worms. By January 2012, at a meeting of the FPC, Danny Alexander went out of his way to play down the significance of Coalition Phase 2, saying that it was now merely fleshing out the original coalition agreement, but he promised a report later in the year.

The Mid-Term Review (MTR) is consequently the residue of Alexander and Letwin’s Coalition Phase 2. A thick pile of MTR documents was presented to the FPC’s meeting in May [2012] by Julian Astle (former Director of CentreForum, now employed as an adviser to Nick Clegg), deputising for an absent Alexander. The documents are the basic information on which the MTR is based: an ‘audit’ of the original coalition agreement, intended to identify policies that have been achieved, policies only partially achieved where more action is needed, policies where nothing has yet happened – and whether to press for action or not.

Unlike Coalition Phase 2, the MTR will not put forward any new policies; the original coalition agreement remains sacrosanct and will not be re-opened. And because the MTR is merely an audit, the FPC and Federal Conference Committee have made a dubious decision that no conference debate or formal approval is required, which is why this September’s [2012] conference is getting nothing more than a Q&A session with Alexander.

Both coalition parties are conducting separate MTR exercises, then the results of both audits will be submitted to Alexander and Letwin, who will agree a joint set of recommendations for priority action by the government in the next two years (Astle told the FPC that the purpose of the Liberal Democrat half of the MTR is to provide ‘guidance’ to Alexander when he negotiates with Letwin). Anything that Alexander and Letwin cannot agree will be resolved by the ‘Quad’ (Cameron, Osborne, Clegg and Alexander).

Some things remain unclear. What about government policies that were not part of the coalition agreement, such as academies and NHS reforms – and will the MTR prevent further instances? Will either or both of the Liberal Democrat and Tory MTR recommendations be made public? (Although the FPC’s report to party conference promises that the MTR “will be published in Autumn 2012”, it isn’t clear whether this means the party’s recommendations or the final agreement between the parties).

In the meantime, the scope of the MTR can be judged by the papers given to the FPC. They vary in length and thoroughness, and include, in no particular order, overall priorities, fixing the deficit and securing growth, family friendly policies, ‘Greenest Government Ever’, diversifying provision of public services, civil liberties and political reform (the longest paper at 35 pages), pensions, immigration, housing, social mobility, educational underachievement, reform of the welfare and tax system, crime and punishment, and international affairs (the shortest paper at less than a page).

The document titled ‘Fix the deficit and secure strong, sustainable and balanced growth’ is the most revealing. It skates over the fact that the government’s economic strategy is not going to plan and does not confront the elephant in the room: the failure of orthodox economic doctrine. An ideologically-driven policy is failing, just as the Liberal Democrats’ 2010 manifesto said it would. This is fundamental to the coalition government’s underperformance – all else is secondary.

It is inconceivable that the Tories would even consider a basic re-assessment of economic policy, which is presumably why the Liberal Democrat half of the MTR has decided to dodge the issue, which in turn prevents the party establishing any real ‘differentiation’. But sooner or later, the Liberal Democrats will need to repudiate neoliberal economic ideology if they intend to escape from the coalition alive. Just don’t expect the MTR to deliver the necessary exit strategy.

If the spin in today’s media reports is anything to go by, the main message of tomorrow’s MTR launch can be summed up as, “We’re not just about austerity, you know.” The trouble is, so long as the government remains wedded to a failed economic dogma, nothing besides austerity is likely to win much attention.

GUEST POST: Turn, Turn, Turn (To Everything There Is A Season)

From time to time, Liberator’s blog will publish posts by guest writers (usually regular contributors to Liberator magazine). This article has been written by Bill le Breton.

A Happy New Year to the Liberator Collective and Liberator’s readers.

Your blog post yesterday on a new capitalism mentioned Adair Turner in passing. I recommend wholeheartedly his series of Lionel Robbins Memorial Lectures on the overall theme of ‘Economics after the Crisis’, given in October 2010 at the LSE:

1. Economic Growth, Human Welfare and Inequality
2. Market Efficiency and Rationality: Why Financial Markets are Different
3. Economic Freedom and Public Policy: Economics as a Moral Discipline

These three lectures would make an excellent starting point for a debate on where a new phase of capitalism might be leading.

Turner begins by setting out what he calls the ‘Instrumental Conventional Wisdom’, the three main planks of which are, first, that the object of policy should be to maximise Gross Domestic Product (GDP) per head; second, that the primary means of doing this is to create freer markets; and third, that increased inequality is acceptable as long as it delivers superior growth. But does this lead to an increase in human happiness?

In developed economies since 1958, the six-fold rise in real GDP per head has led to no discernible change in measures of life satisfaction. (Bruno Frey and Alois Stutzer, Happiness and Economics, Princeton University Press, 2002).

Beyond a certain level, human contentment does not continue to rise with increased income. Turner develops a new theory of marginal utility (MU) for this stage in development, in which MU appears to rise ahead but when, once reached, delivers the same level of total utility. For societies at this stage of development, new products and services do not result in increased levels of contentment.

At this point, it is relative income that matters to consumers with a developing fixation on positional goods: rising expenditure on fashion and branded goods, increased competition for scarce positional goods, and rising congestional externalities.

Happiness becomes a function of others’ income as well as one’s own.

Turner then leans on Roger Bootle’s distinction between ‘creative’ activities, which increase the net real income available for consumption, and ‘distributive’ activities, which win increasing income at expense of others. (Bootle, The Trouble with Markets, chapters 4 and 5).

He sees this process leading to (a) a fall in lowest decile income relative to the median and (b) a rise in the top decile relative to the median (and actually a huge increase in the top 1% or even 0.0001% relative to the rest of that top decile).

This accelerative inequality at the top is driven by celebrity rents, increased potential for rapid private value creation, highly remunerative distributive activities (PR, lawyers, etc., around the celebrities and high-value entrepreneurs) and cross-comparisons, changing social attitudes, and the role of agents.

Turner goes to Wilson and Pickett to assess the impact of rising inequality accepting much if not all of the conclusions of their research (see The Equality Trust and The Spirit Level). The best indicator of a country’s rank on measures of general well-being is not the difference in wealth between them, but the difference in wealth within them.

Under the Instrumental Conventional Wisdom, the journey matters, not the destination. Economic freedom is valued as an end in itself.

This rough outline covers just the first of Turner’s lectures, the aim of which is to explain why in rich countries growth should not be the objective. It is not possible here to do justice to the sustained thinking behind the lectures, so reading the texts or watching the podcasts is very much worth the time, especially on dark post-festive evenings by a fireside. Or read Turner’s book based on his lectures, Economics After The Crisis (reviewed here by Robert Skidelsky).

Adair Turner was once a member of the Social Democrats. He sits in the House of Lords. He ends his job very soon at the Financial Services Authority. We should seek to involve him in the development of our thinking about the future of capitalism and, thus, the future political direction of the Liberal Democrats.

Or go listen to The Byrds.

A new capitalism for a new year

Nick Clegg has been going on lately about the need to occupy the ‘centre ground’, as if there were a big space between the Conservatives and Labour. But that hasn’t been the case since Margaret Thatcher and Micheal Foot battled it out thirty years ago.

Actually, the most striking thing about the three main parties, certainly since Tony Blair took over the Labour Party, is how close they are on matters of economics. None of the party leaders seriously questions the orthodoxy that took hold in the 1980s; indeed, they do not even recognise it as an ideology, preferring to see themselves as post-ideological pragmatists. Their argument is basically managerialist, about who can best manage the old orthodoxy rather than who has the best ideas for replacing it.

Whether the party leaders like it or not, the banking crisis of 2007/8 signalled that the dominance of the old orthodoxy is coming to an end. On The Browser, Anatole Kaletsky discusses the new capitalism that will replace it:

This crisis is going to be viewed as the fourth historic transition that capitalism has gone through since the modern market economy was created in the late 18th century. The argument that I make in my book on the crisis – perhaps one of the few predictions in it that has been fully realised – is that this was not just another financial boom and bust, nor a crisis in one particular country or one part of economy. This was, and still is, a crisis of the entire global economy of a kind that has only happened three times before.

I compare this crisis with the great inflation of the late 1960s and 1970s, which created a completely new form of capitalism – Thatcherism and Reaganomics were totally different from the Keynesian social democracy they replaced. The previous systemic transformation started with the Russian Revolution and culminated with the Great Depression. This also created a new form of capitalism, almost unrecognisable from the classical capitalism of the 19th century. And the systemic crisis before that was the one that created liberal capitalism in the first place – the American and French revolutions that broke down agrarian aristocratic economies and established the market-oriented capitalist globalisation that Marx so vividly described.

So in my view this is the fourth systemic crisis of capitalism, and it’s going to give rise to a new kind of capitalist system. One still based on private property, competition and profits, but fundamentally distinct from the classic capitalism of the 19th century – from the government-led Keynesian economics of the postwar period, and from the Reagan and Thatcher market fundamentalism of the last 30 years.

You can quibble with the details of Kaletsky’s analysis (and do read the complete article, not just this extract, before you quibble), but it is clear that the version of capitalism established by Reagan and Thatcher is now a busted flush – in Adair Turner’s phrase, it is “a fairly complete train wreck of a predominant theory of economics and finance”.

The global economy is at an historical turning point; its future is the really big issue of the decade, not the trivial gossip and the public relations games that normally preoccupy the Westminster Village.

The Liberal Democrats cannot put off recognising this situation any longer. The party’s new year resolution should be to start a serious debate about the sort of economy it wants to see emerge from the wreckage. One can argue about the precise form that economy might take, but one thing is clear: the past is not an option. Any party, not just the Liberal Democrats, that believes its role is nothing more than to tweak a dying economic orthodoxy will become increasingly irrelevant. The advantage will lie with the party that is first to have the courage to admit that the old orthodoxy is a dead loss and articulate a replacement.

And it is no good dismissing this debate as ‘academic’ and nothing to do with ‘real life’ or ‘ordinary people’. For most people, the effects of a failed economic dogma are only too real.

Stay “on message” or be EXTERMINATED!

This morning, Liberal Democrat HQ sent an e-mail to parliamentarians, PPCs, council group leaders and various other office holders about the party’s new ‘message script’.

This e-mail is highly instructive, though not in the way party HQ intended. It reveals much about what is wrong with the way the Liberal Democrats are being run and the state of British politics in general.

Here is the full unexpurgated text (the italics, underlining and emboldening are as in the original):

I hope you’ve had a very enjoyable Christmas.

Today Nick Clegg will release his New Year message to the media. You can see it here now.

This broadcast is the first full external use of our new Party message script – the product of Ryan Coetzee’s research into what works with our electoral market and also an extensive consultation with many Party stakeholders.

The full message script is below.

If you’re at a post-Christmas, pre-New Year lull over the next couple of days – please take a look at this script – read it, learn it, work out how to use it.

In communications terms, we know that if we as a Party don’t collectively communicate one message clearly, the public end up hearing nothing.

It is therefore absolutely critical that we all focus on this message in the New Year and make it the basis for every communication we make – whether it is in the media, online, in leaflets or when speaking to an internal or external audience.

If we all stick to and get some volume behind this script, by this time next year our voters will know that the Liberal Democrats are building a stronger economy in a fairer society, enabling every person to get on in life. That Labour can’t be trusted with their money, and the Tories can’t be trusted to build a fair society. And also just a few of the things we have achieved in government.

So, if you make one New Year resolution this year, please make it to help us be “On Message, In Volume, Over Time” and communicate from this script at every opportunity.

Many thanks,

Tim Snowball

Director of Communications (LDHQ)

MESSAGE SCRIPT:

Building a Stronger Economy in a Fairer Society

The Liberal Democrats are building a stronger economy in a fairer society, enabling every person to get on in life.

That’s why we have:

1. Fixed the mess left by Labour. We have reduced the deficit by a quarter, kept interest rates down and created over a million private sector jobs.

2. Ensured that 24 million people will not pay any income tax on the first £9,440 of earnings, putting £600 back into their pockets from April 2013.

3. Put an extra £2.5 billion into schools targeted at the least well-off pupils, raising standards for everyone.

4. Created a Green Investment Bank that will unlock billions of pounds of private investment in renewable energy and create thousands more jobs in the green economy.

5. Got young people off the dole and into work through apprenticeships, work placement or training with our £1 billion Youth Contract.

6. Delivered the biggest ever cash rise in the state pension.

The Labour Party can’t be trusted to manage the economy. Labour borrowed and borrowed and nearly bankrupted Britain. In power they cared more about bankers, media bosses and union barons than they did about ordinary, working people.

The Conservatives can’t be trusted to build a fair society. Until the Lib Dems got into government, no one could stop the Tories from looking after the super rich who fund their party, while ignoring the needs of normal people who struggle to make ends meet. That’s why we have blocked Tory plans to:

1. Allow bosses to fire staff at will.

2. Let local schools be run for profit.

3. Cut inheritance tax for millionaires.

4. Introduce lower rates of pay for public sector workers outside of the South East.

Now, with your support, we want to keep building a stronger economy in a fairer society. Over the next two years we will:

1. Increase our tax cut for low and middle earners to £700 for 24 million people.

2. Dramatically increase parents’ access to child care so that it’s easier for parents to get back into jobs.

3. Reform the welfare system to get people off benefits and into work.

4. Create tens of thousands of jobs across Britain in the new, green economy.

Let’s never go back to the way things were, because Labour can’t be trusted with your money, and the Tories can’t be trusted to build a fair society.

Only the Lib Dems can be trusted to build a stronger economy and a fairer society, enabling every person to get on in life.

STRONGER ECONOMY. FAIRER SOCIETY.

[ENDS]

Where to begin? Alarm bells start ringing in Tim Snowball’s introduction, which is littered with dreadful PR-speak (“electoral market”, “stakeholders”, “get some volume behind this script”, “on message”). The recipients of this e-mail are not political novices, yet they are treated like idiots by both the general tone and the didactic politics-by-numbers approach (“If you’re at a post-Christmas, pre-New Year lull over the next couple of days – please take a look at this script – read it, learn it, work out how to use it.”).

More fundamentally, there is the idea that we should all speak according to a ‘message script’ (moreover, a script that fails on its own terms because it contains far too many messages to achieve any focus or discipline, even if bits of it are written in bold type). For all “Ryan Coetzee’s research”, this sort of wooden language is precisely the thing that turns people off because it makes politicians sound rehearsed, false and insincere. It sounds scripted because it is scripted. Indeed, scripting isn’t a solution – it’s part of the problem because it makes politicians sound more like Daleks than human beings.

More fundamentally still, this set of instructions is the voice of a party in denial. The coalition government’s economic policy – the overarching policy of austerity that dwarfs everything else – is not working, for the reason the Liberal Democrats’ own 2010 manifesto said it wouldn’t. (More detailed explanation here). Because of a failed economic dogma, the economy isn’t getting stronger and the deficit isn’t being reduced. And this dogma means that the poorest people are paying the highest price for economic failure, so society isn’t getting fairer. All the Liberal Democrats have been able to do in government is ameliorate the situation – a valuable role but one that should not be oversold.

What we have here is an object lesson in how politics has been hollowed out and reduced to a matter of managerialism and public relations. It seems no-one at the top of the party has any intellectual grasp of the gravity of the situation. The global economy is in deep crisis and the problem cannot be reduced to facile slogans about “the mess left by Labour”. We are at an historical turning point where the global economy will undergo a fundamental transformation (as it has before in the 1880s-90s, 1930s-40s and 1970s-80s). This situation requires radical thinking and radical responses. Yet all the British political establishment can do is fret about staying “on message”.

And then politicians wonder why they continue to lose popular trust and support.

POSTSCRIPT (1): A perceptive response on Nick Barlow’s blog and an unbiased report by BBC News.

POSTSCRIPT (2): See the subsequent post on this topic.

POSTSCRIPT (3): The party has responded by trying to claim the credit for the media coverage of the leak.