Jeremy Corbyn and Michael Foot

Much has been made of the ‘unelectability’ of Jeremy Corbyn, on the grounds that the British people won’t vote for a party led by a self-described socialist.  Apart from a reliance on this apparently being self-evident to the speaker and their presumed audience, this is normally demonstrated by citing Labour’s disastrous result in the 1983 election under Michael Foot.  I’d like to examine three things about this: who is talking about this comparison and why; what actually happened in 1983; and what I feel the genuine likely outcomes are in the event of Corbyn taking the Labour leadership.

Firstly, I’d note that I don’t expect Labour to win the next general election regardless of the outcome of the contest to become leader.  This is not to say that it isn’t a possibility, whether with a small minority, or in a coalition of some kind, but none of the contenders seem to possess whatever spark is necessary to drag their party to greater heights (of course, this quality might become evident at a later date, but nothing says that such people must always be around.  Certainly the nearest we seem to have in the higher echelons of British politics at the moment is Nicola Sturgeon).  It is a truism that governments lose elections, so the matter may be in the hands of Cameron et al, but an effective Opposition should be attempting to force errors, as I shall later observe.

Who and why?

There are two chief groups attempting to talk down Corbyn’s chances as leader, one inside and one outside the party.  The first are generally more obviously entitled to be listened to on the matter, being as they presumably support one of the other candidates; it is only natural for them to talk down the merits of an opponent.  The worrying aspect is any notion of an ABC movement – Anyone But Corbyn.  The grounds being mentioned for this are that Corbyn will ‘tear the party apart’ by being too far to the left, but this is to entirely misplace the blame for such a possibility, as it is they themselves who are threatening to damage the party they pledge their allegiance to.  If Corbyn is duly elected, they should really be able to bite their tongues and get behind the new leader, at least until he has had a fair chance to show what he might achieve.  To do otherwise would be to reject the notion of a democratic party (albeit in the rarefied form that internal Labour elections practice).  Of course, once they have sufficient evidence that Corbyn isn’t going to lead them into government they may feel free to trigger another leadership contest in the prescribed fashion, should they choose.

The second group are broadly Tories, either members of the party, or those whose inclinations lie that way but whose primary allegiance is to their own financial and business interests.  That the first group should be given any credence regarding an internal Labour election is frankly ludicrous.  They clearly want the outcome mostly likely to lead to a Tory victory in the next general election, and will say whatever they think will produce that result.  But it is a trap to think that one can prognosticate on this basis, since some are talking Corbyn down, while the rest are trying (including via the Telegraph’s rather distasteful campaign to interfere in the matter) to push Labour towards a Corbyn victory, on the grounds that he will be the weakest opponent for Cameron or whoever succeeds him.  Quite simply, Labour voters should not be listening to their opposition.

More complicated is the matter of what business and the majority of the mainstream media are up to.  It is perfectly possible that they are working towards multiple goals: a Corbyn victory to – apparently – secure a future Tory government (with the associated low tax rates and regulation they prefer); a victory for any of the other candidates, but one who has been pushed towards adopting policies (particularly economic, again) that will favour their interests, should the Tories contrive to lose the next general election; or even a full schism in the Labour party, thereby apparently securing a Conservative government in perpetuity.  The single thing most likely to head off all of these is a unified Labour party, under whatever leader the members select, and this is where an examination of the party in and up to 1983.

1983 and Michael Foot

The received wisdom, which we should, as always, be extremely sceptical of, is that Michael Foot’s leadership was the cause of one of Labour’s lowest points when they were roundly beaten by Thatcher’s Conservative party.  And this has been attributed, particularly by those making the link to Corbyn, due to the fact that he was the most left-wing of recent Labour leaders.  Of course, whichever way one wants to read depends very much on personal interpretation, but I think it is pretty easy to show that this version of events is at least highly questionable.  Which is not to say that Foot’s position wasn’t a, even the single biggest, factor, but merely to show that things were considerably more complex (which should be enough to undermine the Foot-Corbyn link).

The simplest matter is the simple question of how, if Foot-style socialism is anathema to the British public, his party polled so strongly against Thatcher’s newly elected government?  Of course this also speaks of the weakness of the Tories at the time, before any of the Prime Minister’s signature policies had been accepted.  But it hardly characterises Foot as unelectable.  The fact is that a lot happened in the intermediate period between general elections, and I think that it is these events that provide us with a more plausible series of explanations than something inherent to Foot’s character.

On the government’s side, it managed to win a lot of public support.  Winning a war certainly helps, notwithstanding the way that Churchill managed to get himself booted out in the aftermath of WW2 (which incidentally demonstrates not only the possibility of a truly left-wing party winning the popular vote, but the virtue of having a clear plan – they won not only on the promise of the welfare state, but by convincing that they knew how to bring it into being).  And they also put themselves in a strong position by framing the conflict with organised labour, which had blighted the country through the 70s, as another war that could and must be won.  They were aided in this by the vast majority of the popular press (only the Daily Mirror publicly endorsed Labour) which, then as now, was controlled by a small number of people who were naturally disinclined to support the notion of unions and strike action.  This also forced Labour into making a choice between backing the ‘fifth column’ unions that comprised much of their traditional support, or taking a proto-Blair position that keeping business happy is the best way to secure social goods.

Lastly,  most importantly, and very much tied to the final point above, the Labour party split.  To expect Foot to win a victory when a good portion of the party he led had departed (and let’s not forget that Foot was the ‘compromise candidate’, so it is hard to say what the outcome might have been had one of the other contenders taken the party leadership).  Imagine if, in a post-Cameron Conservative party, their next leader is somebody happy to proclaim the necessity, if not desirability, of remaining in Europe, only to trigger an exodus by a good portion of the party (including several senior figures) to form a new alliance with UKIP.  While this is not exactly equivalent to the circumstances that led to the SDP-Liberal alliance, I hope it does give an idea of the nature of the split.  One could hardly be surprised at a poor Tory showing in the next general election.

In summary, Foot didn’t lose the election purely because he was too left-wing.  There were many factors, and while there were members who felt that that party was too far to the left, this concern pre-dated his leadership.  Given that the departures were of those on the right of the party, it is possible that a leader more to their tastes might have forestalled the split as it occurred, but it is not unreasonable to think that those on the left might have acted in a parallel fashion if they felt that the party had lost touch with its roots.  Certainly, no alternative candidate could have promised the certainty of entering government that would, just over a decade late, allow Blair to pacify the old guard as he launched New Labour.

Corbyn the candidate

The most striking thing about Jeremy Corbyn’s proposals, notwithstanding the picture painted by his opponents both within and without his party is just how moderate they are.  For a self-described socialist in an era where that has, following the USA, become a dirty word (although it has been pleasing to see Bernie Sanders reclaiming the term over there as something reasonable, even desirable), he really doesn’t seem to display a desire to overturn the existing order.  He is not talking about a massive expansion of welfare, but a mere return to the previous status quo before the Tories began their enthusiastic dismantling of systems.  This is not to say that he may not entertain longer-term ambitions in this, but he is clearly aware of what the public will accept for now.  Neither is he suggesting a massive overhaul of taxation.  He has been very careful to only talk of paying fair shares, and to tie talk of the very well-off paying ‘a little’ more to secure the wellbeing of children and the most deprived.  Rather, he has focussed on how much can be done by making the collection of existingly expected revenues more efficient.  And I realise that every potential government likes to talk about efficiency, but some of this is as simple as increasing the staffing and funds available to HMRC.  While I am sure that there is some level at which diminishing returns cut in, it seems both self-evident and under examination true to observe that monies spent here reap an almost automatic increase in tax revenues that can hardly be objected to as the money is already owed.  In fact, I would go so far as to suggest that cutting resources to HMRC to the extent that has occurred of late can only make sense if viewed in highly ideological terms, i.e. that taxation is inherently bad and inimical to a just and prosperous society.  Anyway, I think that few who take a more objective view will object to the plausibility of the suggestion on Corbyn’s part.

Without wanting to carry out a full analysis of Corbyn’s positions – which I may either save for another day, or leave to those more qualified than I – I think that few of them smack of the extreme left.  This is not to say that he might personally prefer a more socialist party, and indeed government.  But he is smart and pragmatic enough to realise that an offer to return to the recent period of the Blair administrations (if without the foreign adventures, and creep against civil liberties) is both appealing and plausible.  The Tories have only been able to remove and reduce tax credits, benefits, and the like on the grounds that it is necessary for a return to prosperity.  And in this they sow the seeds of their own fall, since their ideology requires them both to proclaim the success of their methods and declare their insufficiency.  They and their immediate supporters will only truly be happy with the complete dismantling of the welfare state.  And I think it is pretty clear that very few member of the British public at large want this.  Moreover, an ever increasing proportion are finding that, despite the proclamations of growth, they aren’t feeling any richer, and in many cases are still worse off than before the financial crisis began in 2008.

In short, I think that Corbyn is electable, although his challenge is to show this is the case in the teeth of concerted opposition and mudslinging by his opponents and the mainstream press.  Even if he loses the party leadership contest, the eventual victor needs to realise that taking on many of his positions is the only way that Labour stand to win a general election, barring a complete collapse from their opponents.  They need to emphasise that – as in the Blair years (and I don’t mean to look at them through rose-tinted glasses, because there were many major problems and the economic gains were largely cyclic, but they were marked – at least until Iraq really took off the sheen – by a general feeling of optimism, in contrast to the pessimism since 2008) it is perfectly possible to combine prosperity with a state that at least aims to provide for all of its citizens.  Against this is the fact that austerity has not done what was promised.  Most people do not feel more wealthy, more secure; London seems to have recovered, but even here much of the affluence is tied to the unsustainable rise of the property market.  The main mark of austerity has instead been the increasing rate of transfer of assets from the poor and middle classes to the very wealthy.  Corbyn has begun, and Labour need under whatever leader they choose, to offer an alternative.  Only by fighting, rather than being coopted into supporting, the notion that There Is No Alternative to continuing austerity, do they argue for their own electability, even existence.  And to ‘admit’ that the current situation is the result of Labour profligacy – it isn’t; it was due to buccaneering bankers and light-touch regulation – is only to hark back to the idea that you cannot trust Labour with the finances.  The way to fight the Conservative proclamation of doom – with the rider that only a harsh Tory government can save us – is not to go along with this narrative, but to announce and explain how things could be better under a Labour administration.  Without this, the question is going to be, as now: what exactly is the Labour party for?

Some thoughts on Greece, debt, and morality

So, in the wake of the Greek referendum result, the haggling continues.  And let’s not ignore the fact that this referendum took place as a negotiation tool.  Whether or not it turns out to be useful probably depends on how public the Greeks can keep the negotiations (their opponents across the table don’t really care about the claimed ‘democratic mandate’, not least because they are, at least theoretically, backed by the support of the other 496 million EU citizens who didn’t get a vote).  In a public arena, it benefits them to be thought of as the underdogs; the Germans in particular have shown a sensitivity to coming across as bullies.

The ground may have shifted somewhat – how much remains to be seen – but this vote was never the make-or-break matter that either side pretended it was.  Of course they had to maintain that it was critical, not least because it’s pretty hard to get people to turn out to the polling stations if they’re being told that their ballots make little or no difference.  These things never end; the Greek government will continue to work to maintain as much control as possible of its domestic finances, and the Troika – on behalf of the creditors – will try and maximise the amount and security of the return on its ‘investment’.

Assuming, at least behind closed doors, that both parties understand that this is merely a business negotiation, it’s more interesting to me to look at how the rest of the world views it.  And it appears either that, egged on by much of the media, this is a matter of morality.  On the one hand, plenty of people take the view that, quite simply, one *must* pay one’s debts.  On the other, that forcing Greece into a continuing spiral of cuts and austerity, as a punitive measure and one that shows no sign of returning them to a secure footing from which they might be able to enjoy solvency, is both cruel and unethical.  I admittedly have more sympathy with the latter group, not least because the past few years of austerity in Greece have failed to produce the promised result.  It appears that neither side have an answer to the financial situation, so I’ll take the one that is less reliant on the general misery of the ordinary Greek people, thank you very much.  Anyway, with that given I’d like to look at the bases for insisting on the debt being repaid (aside from those with a direct interest in the matter, for whom the basis should go without saying).

Why repay debts?

Clearly, most people need to repay debts most of the time, otherwise no system of lending money could work.  Just as linguistic communication relies on the fact that the majority of us tell the truth to the best of our ability, any arrangement of financial communication that relied on constant monitoring and coercion would be practically unworkable.  However the conversational analogy works the other way too: any sensible person maintains some kind of measurement of reliability, and is in the habit of confirming important facts.  This may not be due to outright dishonesty; we are all prone to spreading gossip and information the veracity of which is unknown.  Likewise, we may overestimate our own solvency and ability to repay.

However, while acknowledging that a small number of defaults are unavoidable due to unforeseen circumstances, I think most people would still maintain that a debt should be repaid whenever possible.  And when I say ‘whenever’ this usually includes the possibility of extreme discomfort to the debtor (and his or her dependants).  It’s odd how strongly moral the talk around is: debts *must* be repaid or, it is implied, the whole system breaks down.  But just as we can cope with the possibility that some people may not be telling the truth – however unwittingly – we are actually perfectly capable of dealing with defaults.

Initially, I’d demonstrate that the system is perfectly capable of dealing with defaults by observing that pretty much every country has experienced one at some point.  Most several times.  Plenty of observers have gleefully pointed out that Germany, in particular, did several times in the last century.  And in the long term it doesn’t seem to have done them, or their creditor en masse (I’m not disputing that some people will have done very badly at the time) that much harm, as demonstrated by the fact that people and banks continue to lend to them.  More immediately, in the wake of its own banking crisis, Iceland was threatened with being cut off from the world banking system, and ultimately economic destruction, if it failed to make food for its own bad banks.  It refused, and bounced back.  The threats and predictions were fairly rapidly shown to be groundless, little more than hard negotiating tools.

Actually, I’m going to go further and argue that not only are some bad debts inevitable, but they are a necessary part of the system.  This is borne out by the existence of interest; why else is it charged.  Few people can be ignorant of the fact that the rate of interest charged reflects, in large part, the risk that the debt will not be repaid.  But I don’t think they’d be as quick to realise that this is the reason that one expects to receive more than one lent out in the first place.  Of course they might say, Greece or a country in its situation should expect to pay a high rate of interest because of the high risk, but this starts from the basis that creditors would already expect to receive a return on their money.  If one is certain of receiving X amount on their money, then a dubious prospect must offer, say 2X, or more (proportionate to the assesses risk).  Germany can borrow at 1%, where Venezuela must pay 20%, for example.  But even the 1% that Germany pays is based on an amount of risk, however small.  Nowhere is entirely safe.  The fact that *everybody* must pay interest reflects this.  We have grown so used to this that we ignore the fact that money doesn’t actually grow by itself.  It grows because somebody thinks that they can do something else with it while we don’t (or that they can do more with it than we can).  And this is why the possibility of default, and even the necessity of some degree of it, is essential to the financial system.  If nobody ever defaults, why should anybody expect to receive (or pay) interest on their money?

If I have a billion idle pounds and you need it, why shouldn’t I just give it to you?  I ask for 10% interest, but that’s predicated on the fact that I could get 9% elsewhere, with somebody who looks like a safer prospect.  Of course I could just sit on it, leave it under the mattress (assuming that robbery isn’t a concern), but that benefits nobody.  And I think that most people are relatively altruistic: if a friend – i.e. somebody who I don’t consider a risk at all – asks to borrow a tenner from me (which I have spare), I hand it over with no questions asked.  For anybody else I might ask for some kind of collateral or interest, but that is based on risk.  And we all benefit from a world in which the lending of money is not only possible, but common.  Not only might we find ourselves a bit short sometimes, but it allows for economic growth with all of the comforts and possibilities that that affords.

Given this lack of a purely financial justification for arguing against default, it’s unsurprising that we feel the need to fall back on a moral one.  Which isn’t a bad thing, because it’s certainly still true that default should remain relatively rare.  But when appropriate – i.e. when the costs of repaying the debts are too high in either financial or social terms – we shouldn’t feel too guilty about it.

Postscript 1

Of course any specific claims I’ve made about the permissibility of Greece (or any other country) defaulting again are tempered somewhat by the newness of the situation.  The Euro is a new thing, so there are additional potential complications.  But the uncertainty is mirrored – it might ultimately bring down the single currency, but then it might actually strengthen it by allowing all the members to know that there is no inevitability – since neither side knows the future.

Postscript 2

Those with an interest in the connection between morality and debt will no doubt be aware of the commonality, linguistic and otherwise, between religion and finance.  Plenty of people more erudite than I have written on the subject, so I’ll just observe here that the word ‘redemption’ being used in both is merely one of the more prominent exmaples.