Edited by PEF Chair Patrick Allen and council members Suzanne Konzelmann and Jan Toporowski

Publication Date 29th April 2021. Agenda Publishing

40 years of neoliberalism has failed to provide prosperity or stability to the UK economy. Instead it has led to low growth, turbulence, grotesque inequality , poverty and ill health for millions . This is the outcome of damaging economic polices driven by free market dogma, rentier capitalism and ideology. It’s time for a change.

This book contains 18 essays by PEF council members and academics who outline the essential features of a progressive economy dealing with the five massive challenges of our times to the economy – Covid-19, austerity, Brexit , inequality and climate change.

PEF calls for bold public intervention. Shrinking the state and weakening our public institutions has undermined social and community resilience and promoted an out-of-control, value-sapping and high-inequality model of capitalism. 

The authors say the resources of the state must build a fairer and more dynamic post-Covid society, using a mix of regional and industrial policy and investment to revolutionise our public health, housing and social services. A progressive new society should construct a new income floor and new measures to spread wealth and give everyone an equal stake in the economy. 

The financial crash of 2008 proved that only the state can rescue the economy when all else fails including the biggest banks. Covid has shown how only the state can rescue us from death and the collapse of the economy during a devastating pandemic. Only the state can steer the economy and deliver the investment needed to cope with climate change

The 2008 crash showed the breathtaking incompetence of the private financial sector. Now Covid has once again laid bare the myth than private is best – outsourcing to companies the job of track and trace at a cost of £37bn has so far failed to show any discernible benefit say the Public Accounts Committee.

By contrast, the selfless work of millions of NHS workers and volunteers has delivered one of the most outstanding vaccination programmes which has been the envy of the world. This has been done at modest cost and was only possible with a national health service drawing on the vocational drive of its workers for the common good.

The Biden adminstration is today showing the mighty power of the US State with Biden’s Covid and infrastructure bills. The results are expected to cut child poverty in half. The UK government should follow this lead and bring in new models of public intervention to deliver a pandemic-resistant, green economy which works for all citizens.

For an outline , list of chapters and authors and to order a copy go to this webpage

You can obtain a 25% discount on the cover price by entering code AGENDA25 on the Agenda page here

Launch event on Zoom – Wednesday 19th May 2021 at 11am . Joining details to follow.

The launch will be chaired Miatta Fahnbulleh , CEO of NEF and attended by Ed Miliband, Shadow Secretary of State for Business, Energy and Industrial Strategy . Martin Sandbu of the FT will attend as commentator.

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Dear Sir/Madam,

Chancellor Rishi Sunak plans to set up a National Infrastructure Bank to “channel billions of pounds into capital projects” (FT 20^th November, 2020).

We write to urge the Chancellor to broaden his vision. The regeneration of Britain’s ‘national infrastructure’ must include investment in ‘social infrastructure’ such as childcare, schools and universities, regional theatres, orchestras, common spaces, and local sports. The pandemic has shown these economic activities are just as vital to society and the economy as the physical infrastructure of tarmacked roads, green energy and safe bridges. And research demonstrates that investment in care has multiplier effects many times those of investing in construction, while generating far fewer GHG emissions.  Furthermore, these investments can be kick-started in less time than construction projects.

Under-investment in social infrastructure before the pandemic was a false economy; it would be even more so as we move into the recovery phase. Channelling money into Britain’s social infrastructure and especially into its care, education, arts and training sectors would create jobs, generate income for workers, the Treasury, and the wider economy, and contribute to a more robust and sustainable economy.

Yours faithfully,

Patrick Allen

Carolina Alves

Danny Dorling

Daniela Gabor

Stephany Griffith-Jones

Susan Himmelweit

Will Hutton

Michael Jacobs

Sue Konzelmann

Natalia Naqvi

Ann Pettifor

Kate Pickett

Josh Ryan-Collins

Guy Standing

Robert Skidelsky

Jan Toporowski

Council Members of the Progressive Economy Forum

photo credit flickr

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John Weeks was fundamental to the creation and launch of PEF and making it a success . I approached John in January 2018 inviting him to discuss the idea of a new economics forum.  He responded enthusiastically and at our first meeting it was obvious that we shared the same vision  and passion as to how progressive economics could be used to change the world for the better. Our mission was to provide analysis and intellectual and practical support to enable the next government to  bring progressive policies into action. We firmly opposed the madness of austerity. We saw the Labour opposition and John McDonnell as  our prime focus. John had excellent contacts and an early meeting with John McDonnell following our launch at Westminster confirmed that we were on the right track.

John agreed to be the coordinator of the council and was instrumental in bringing in most of the initial members. His impeccable academic credentials gave us credibility . John attended every one of the initial planning meetings as we devised our web site and mission statement. Quite simply we could not have done it without him. Our success in the first two years was a huge source of pleasure to John who often told me how important PEF was to him

John has been PEF’s greatest supporter and ambassador. He has written more blogs for us than anyone else. He has attended every lecture and spoke at many of them as discussant or contributor.  I found his thinking clear and informative on all the major issues. I always went to him to discuss our next moves and our ups and downs. His recent book The Debt Delusion has been by my side for many months. His dry wit enlivened debate and he was the source of endless quips and jokes about academics and the issues of the day

We saw that John’s health was failing him but still he managed to attend meetings and deliver the blogs. Even two months ago he willingly accepted the role of joint editor for our new book, the Return of the State. He soldiered on and took each health setback stoically. ‘Getting old is not for sissies’ he said.

I am pleased that we were able to film an interview with John about the March 2020 budget. See here . He was, as usual, crisp in his analysis and withering in his denunciation of the apparent retreat of the government from austerity.

John will be a huge loss to PEF and to us all personally – his energy, friendship,  companionship, contributions to our debate , practical and moral support. I will miss him badly

PEF ‘s continued success will be an important part of his legacy

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In his speech today, the Shadow Chancellor listed examples of the egregious harm inflicted on people in this country by eight years of austerity. Perhaps most shocking has been the impact on children in Britain – rising poverty, contracting resources to educate them and maintain their health, even the closing of playgrounds, a litany of parsimony to make Ebenezer Scrooge blush. (For more on the impacts of austerity, see the PEF publication 10 Years Since the Crash).

Photo credit from previous page: IBTimes

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Good evening everyone and a very warm welcome to this exciting occasion – the launch of the Progressive Economy Forum.

We are delighted and honoured to have here on our panel famous parliamentarians and economists I know you are keen to hear from them so I will be brief.

I wish to explain what the PEF is and why it has been created.

40 years ago, I became a solicitor because of my passion for social justice. I saw the law as a powerful weapon to help citizens overcome injustice and assert their rights. I created my firm to do that work and we have been helping people in thousands of cases ever since.

However, since 2010 I have become keenly aware of a broader injustice –– the destruction of our public services and our welfare state, by ill-advised austerity policies.

By this I mean unprecedented cuts in public spending which have caused harm to millions of people, particularly the poorest and most vulnerable.

The policies have increased poverty, insecurity, and inequality. It can only get worse as there is no end in sight.

The policies were devised by George Osborne in his first budget in 2010 and have continued unchanged by the current Chancellor.

Spending cuts are wrong, they are misguided, they are causing untold damage to our economy and our citizens and irretrievable loss of national income. They are completely unnecessary, and they are economically illiterate. The vast majority of economists oppose them.

I have created the Progressive Economy Forum to do something about this.

The harm caused by austerity was brought home to me when my firm became involved in the Grenfell Tower case. We act for 50 residents of the tower whose lives have been destroyed by the fire. Some have lost loved ones. They have lost their homes and possessions.

Some have still not been rehoused but austerity and ideology means that we have almost stopped building social housing in this country despite overwhelming need.

Lessons on how to run the economy were learned after the mistakes of the 1930s with the insight of Keynes and were successfully deployed between 1945 and 1975. In this period we achieved stability and the highest sustained annual growth we have ever known.

But Thatcher and Reagan turned to a different economic ideology. Financial deregulation was started by them and eventually led to the catastrophic 2008 crash.

This caused the UK to lose 6% of GNP in 12 months – itself an unprecedented event of our lifetimes.

Instead of re-regulating the banks and applying Keynesian policies to stimulate demand, the government:

1. implied that Labour had been responsible for the 2008 Global Financial crisis  

This never been properly rebutted, and many people still believe it.

1. Cut public spending to cure the deficit against the advice of economists.

The result has been disastrous.

We have had the slowest recovery since records began.

Wages have still not recovered back to their 2008 levels.

Economic growth in the last quarter was 0.2%.

Our council member and economist Simon Wren-Lewis estimates austerity has cost every household in the UK £10,000 in lost income.

Immigration was wrongly blamed for the pressure on public services caused by austerity and this was a major factor behind the Brexit vote.

Brexit will itself make us even poorer exacerbating the low growth caused by the cuts.

Something has to be done and that is where PEF comes in.

Not just to say austerity is wrong but to provide a truthful narrative of what has happened to explain and inform economics to all and to provide an updated macroeconomics for the modern world of climate change and IT.

We have recruited 12 of the best economists in the country who will come together to debate and create economic policy for the future.

We will counter the false narrative which says that our public debt is unaffordable and unsustainable.

We will explain the purpose of public debt, how it is used for public investment and a source of vital income for our pension funds.

We will show how the economy works and make it intelligible and accessible.

With the help of CLASS, we will create training materials, training courses on economics and an informative web site easy to understand materials.

We are not politically aligned but we will talk to any political party that wants to hear about our progressive policies.

Our recent survey shows how important economics is to people, 51% in the survey think they understand it, 69% would be interested in knowing more about the economy.

68% say that economics affects their voting decisions – so the credibility of the parties and their economic policies is fundamental to winning elections.

Austerity has failed. It has always failed.

Deregulation of finance caused the 2008 crash. The cost of bank failure was then picked up by the public purse while the bank bonus culture continues unchanged.

A judge and jury assessing the evidence would have no hesitation in rejecting austerity out of hand.

PEF will create the alternative and bring about a sea change in the understanding and implementation of macroeconomic policy.

This will transform our future economy to make it dynamic, equitable, sustainable and prosperous.

Our first Council meeting is tomorrow.

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I have spent the last 40 years as a solicitor in private practice building up a law firm, so you might wonder why I am choosing to create an economics forum and why now. There is a common theme.

I became a solicitor because of a passion for social justice. I saw the law as a powerful weapon to be used by citizens to overcome injustice and assert or defend their rights. My firm has been helping people to do that and in thousands of cases we have helped people to improve their lives, protect their homes and families, obtain compensation for injury or death, and correct injustice.

At the same time, I have always had a passion for economics as the tool for creating a prosperous and secure society. But we are currently using the wrong tools – the wrong policies – and these have weakened our economy and caused unnecessary poverty and suffering.

I see that harm every day in my legal practice, where the lives of our clients have been made worse by austerity. Spending cuts at the Ministry of Justice have removed legal aid from our clients in most family and civil claims. Courts are closing, court fees are astronomical. Delays are endemic due to shortage of judges, court rooms and staff.

I want a society that provides all citizens with happiness and security. This requires an economy which is equitable, dynamic and sustainable, and achieves maximum prosperity from our available resources. Macroeconomics gives us the tools to create such an economy, and it is the role of government to use these to best effect.

At present, our government is not fulfilling this duty. I am therefore creating the Progressive Economy Forum as I wish to do something to reverse the current catastrophic management of the UK economy brought about by a misguided lurch towards austerity economics.

History

We are ignoring the lessons of history. In the 1930s, economist J. M. Keynes had the insight to work out that if the economy is in recession and individuals and firms lack the confidence to spend or invest, then cutting government spending will make matters worse by reducing economic activity still further. To stop the downwards spiral into deeper and deeper depression, the government has to intervene and stimulate the economy – it has to spend more, even if that means that the government incurs debt to do so.

This insight was crucial for the recovery from the Great Depression of the 1930s. President Franklin D. Roosevelt, responsible for the Keynesian ‘New Deal’ that stimulated the economy out of recession, summarised as follows: “To balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people… We accepted the final responsibility of Government, after all else had failed, to spend money when no one else had money left to spend.”

In 2008, in the immediate aftermath of the Global Financial Crisis (GFC), Prime Minister at the time Gordon Brown recognised the need to stimulate the economy and allow deficits to rise, and on a global level he spearheaded the initial Keynesian response to the deepest recession since the 1930s. For this he was widely praised: economics Nobel Laureate Paul Krugman argued Brown had “saved the world financial system”.

However, in 2010 the coalition government came into power and George Osborne became Chancellor. We have since been subjected to an economic experiment which has caused great suffering, poverty and avoidable loss of national income.

The public was led to believe that the large deficit was a danger, caused by excessive public borrowing by the Labour government. In fact, this borrowing was vital to support the economy after a reckless, unregulated financial sector plunged the world into recession.

Undeterred by history, Osborne declared that reduction of the deficit was the top priority and this would be achieved by savage and unprecedented cuts in public spending. But just as in the 1930s, the cuts in public spending have had the predictable effect of reducing economic activity, and therefore government revenue. The recovery which was underway in 2010 was stopped in its tracks.

The recovery from the recession has been the slowest since records began in 1830 and the economy has never returned to its trend growth rate of 2.5% pa. Economist and PEF Council member Simon Wren-Lewis estimates that austerity measures have cost the country 15% of GDP per date – an average of £10,000 per households. (For more on the social impact of austerity, see here.)

What is the Progressive Economy Forum?

In frustration with the above series of events, I decided to found the Progressive Economy Forum. Our aim is to launch a new macroeconomic programme – a progressive alternative to austerity economics – and we have a recruited a Council of eminent economists who will help bring this to life.

We will also create informational and training materials on economics to inform the public of the possibilities offered by such a programme. As our experience shows, economics is too important not to be understood.

“Those who cannot remember the past are condemned to repeat it” said George Santayana in 1905.

The lesson of the 1930s was that trying to balance a budget by the application of austerity – spending cuts after the 1929 crash – inflicts needless social harm, which in turn can have devastating political implications. We need only remember that the dire economic conditions of Weimar Germany – themselves a consequence of the Great Depression – were crucial to the rise of the Nazi party.

Austerity is a very dangerous and damaging doctrine and we must reverse its pernicious effects before it is too late.

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