Going for Growth
Thompson, Noel, Renewal
Will Straw (ed.) ippr, 2011
'In the long run we are all dead. Economists set themselves too easy a task if in tempestuous seasons they can only say that when the storm is long past the ocean will be flat once again'. Keynes's challenge to economists in his Tract on Monetary Reform is as relevant today as it was in the 1920s. Iterated in a context where Great War public expenditure had significantly inflated the National Debt and contributed to the turbulence of the immediate post-war period, Keynes warned against any notion that fiscal retrenchment and the equilibrating properties of the market would be sufficient to move the economy back to full employment and sustained growth. The Tract itself proposed a more active and imaginative monetary policy but his later work emphasised the need for state intervention in the form of increased public expenditure, both to supplement private sector activity and to create the kind of infrastructure and confidence that would allow that sector to flourish. Again, there are powerful parallels with contemporary concerns; rendered even more powerful by recent events.
The Institute for Public Policy Research's Going for Growth can be seen as a response to the Keynesian call for creative and positive thinking in difficult circumstances. Certainly it is a refreshing antidote to the Coalition's focus on front-end-loaded fiscal retrenchment and unquestioning faith in the power of market forces to rebalance the economy in favour of an employment-generating private sector; a faith which recent GDP figures suggest rests on a belief that dead cats do indeed bounce.
Contributors to this volume would seem to have the necessary credentials to rise to the Keynesian challenge: ex-civil servants (the Treasury, the Department of Innovation, Universities and Skills, the Department for Work and Pensions); luminaries and directors of European, British and American think tanks (the ippr, the Institute for Welsh Affairs, Demos, the Hans Brockler Foundation, the German Institute for Economic Research, the British National Endowment for Science, Technology and the Arts); financial analysts (Merrill Lynch, Lehman Brothers, McKinsey and Company); academics at or associated with universities such as Oxford, the LSE, Columbia, Flensburg, London South Bank, Buckingham Cardiff Business School; employees/associates of international agencies (OECD, WTO); senior trade unionists; private and public sector advisers to the great, the good and the prestigious (the European Parliament, the Welsh Assembly Government, the Downing Street Policy Unit, the European Commission, the government of Shanghai and Chancellors and Presidents of US academic institutions) and, more generally, economic gurus of varying degrees of leftish persuasion. All were assembled for three roundtable discussions in the autumn of 2010 under the auspices of the Friedrich Ebert Stiftung, Left Foot Forward and the Progressive Economics Panel and it is these discussions and deliberations which form the basis of this short book.
What emerges is what might be expected from such an assemblage: an authoritative assessment of our present predicament and policy prescriptions of an activist and, essentially, 'progressive' kind. Ussher considers how within existing constraints fiscal and monetary policy might best be used to accelerate recovery, making the point that as regards the banking sector it is unfair to ask it simultaneously to lend and to effect a prudential rebuilding of its balance sheets. In this regard the Bank of England should consider the purchase of corporate bonds, rather than quantitative easing, to furnish the requisite investment to the private sector.
Philippe Legrain emphasises the importance of playing to the high-skill, high-value-added activity that will allow us to meet the formidable challenge of the emerging and emerged economic giants of the global economy; something that will require Britain to address the perennial issue of ensuring a suitably skilled workforce (Adam Lent), but also adopt a multifaceted approach to innovation involving, amongst other things, an innovation-focused public procurement strategy. …