Rachel Reeves, Shadow Chancellor of the Exchequer with Labour Party Leader Keir Starmer

The annual Mais Lecture at City University in London is an opportunity for senior economic figures to show off their intellectual wares.
Nigel Lawson used it in 1984 to set out the neoliberal economic policies he would implement as Margaret Thatcher’s Chancellor of the Exchequer. 
In 1999 another chancellor, Labour’s Gordon Brown, offered a clumsy rewrite of Lawson’s lecture that essentially accepted his basic framework.
Last week it was Rachel Reeves’s turn. She will herself become Chancellor of the Exchequer in a few months’ time if, as seems probable, Labour wins the forthcoming general election.
After the appallingly conservative economic commentary from Reeves, Keir Starmer, and other shadow ministers, the lecture came as something of a pleasant surprise.
It is coherently written and acknowledges the reality that a stagnant British economy is adrift in a new “age of insecurity, marked first by stalling growth, stagnant living standards and political turbulence and increasingly by global shocks, escalating geopolitical tensions, and the challenges of climate change and the net zero transition”. 
Where Tony Blair unthinkingly celebrated the wave of economic globalisation in the last decades of the 20th century, Reeves declares “globalisation, as we once knew it, is dead”.
But, although she namechecks critical economists from Karl Polanyi and Joan Robinson to Adam Tooze, Reeves doesn’t stray far from the framework laid down by Lawson and Brown. 
Following the founding fathers of neoliberalism, Milton Friedman and Friedrich von Hayek, they argued that the task of government was simply to maintain monetary and fiscal stability—to keep inflation low and prevent public spending and borrowing rising too fast.
Economic growth and high employment would come from the “supply side” by increasing firms’ profitability through making their workers more productive, flexible—and exploitable.
Under Thatcher and Lawson this meant attacking organised labour through anti-union laws and crushing the miners’ strike. 
Brown kept the anti-union laws but sought to make workers more productive through better education and training.
But, like Lawson before him, he relied on what Reeves calls “an underregulated financial sector” to drive the economy.
The result was the Global Financial Crisis of 2007‑9 that destroyed Brown’s premiership and ushered in the present “age of insecurity”. 
Reeves promises to restore and indeed strengthen the monetary and fiscal stability that, she reasonably claims, collapsed under the Tories.
But she argues that the “supply side” policies required to restore economic growth and security depend on an “active state”.
This is what she calls “securonomics”, which “advances not the big state but the smart and strategic state”.
Reeves can call it what she likes but her strategy plainly originates in Bidenomics.
Joe Biden’s administration has borrowed and spent massively to enhance the competitiveness of the United States against China and to shift towards a low-emissions economy. 
For Reeves, “securonomics” means “partnership” with both bosses and workers, lubricated by selective public investment.
The lecture has been denounced for “depravity” by the progressive economist Richard Murphy.
“What Reeves is, in effect, saying is that businesses should have the right to trample over the interests of anyone else in society in the pursuit of profit,” he said. 
Blairite veteran Peter Mandelson endorsed her general approach but warned, “Labour’s union reforms must not be rushed. They can’t betray business.” But the fundamental problem with the lecture lies deeper.
Reeves criticises the austerity imposed by David Cameron and George Osborne in the 2010s. But she will inherit from their heirs high levels of public spending and taxation.
Her promise to restore monetary and fiscal stability is intended to reassure big business. But if she sticks to it, she will have very little money to promote growth.
We’ve already seen the drastic shrinking of Labour’s initially ambitious “Green Prosperity Plan” to prepare for climate change.
Bidenomics on the cheap will make it much harder for a Starmer government to keep both bosses and workers happy.
It will have to choose between them. There are no prizes for guessing which way it will jump.
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