Hain: ‘Public investment is key to regenerating economy’

Peter Hain’s Back to the future of socialism publishes today. In his guest blog post to celebrate the launch of the book Hain questions how we got into the current financial situation of cuts and austerity. He shares his views on the need for a radical response from all politicians, but most especially the left, to take us back to a fairer future…

Labour MP Photocall

Rt Hon Peter Hain, MP

Did Big Government or Big Banking cause the global financial crisis? And what should be done?

Go for cuts and austerity, or investment in growth and jobs? Give market forces a free hand, or harness and regulate them for the common good? Forget about fairness or share the proceeds of growth?

And, one of the key questions for me is, quite simply, is democratic socialism outdated or the answer to today’s challenges?

Sense of purpose

In 1956 Anthony Crosland’s classic text, The Future of Socialism, furnished the democratic left with a new sense of purpose. By freeing Labour from past fixations, and by giving traditional Labour values a contemporary appeal, he gave the party a controversial fresh focus, reviving its spirit and restoring its impatience for progress.

Crosland’s approach – essentially one in which the state sought to spread the benefits of economic growth within, and without challenging the capitalist framework – underpinned Labour’s approach until the global economic crisis of 2008.

But the kind of capitalism we have faced since is a more internationally and financially integrated, more unstable and a more unfair system than Crosland’s generation ever anticipated: productive but prone to paralysis, dynamic but discriminatory.

It is a capitalism whose self-destructive tendencies require far more radical responses than the neoliberal, right wing orthodoxy of the post banking crisis era could ever provide. Responses that pose acute challenges to a Labour Party intent on getting the economy growing again whilst putting the public finances back in order. Responses to be made against a constant, and seemingly resonant, message through the media for more cuts to cure ‘the deficit, stupid’.

“Governments across the world allowed the financial system…to become a law unto itself”

I strongly dispute this, and believe that public investment, not ever more austerity is the answer – both to regenerate our economy and get the deficit down. It is a case for faster fairer greener growth where an active role for Government holds the key.

In truth – at the very least in terms of banking – governments were too small and too passive, not too big and too active as the right repetitively insists. Governments across the world (including Labour’s) allowed the financial system over a 30-year period to get out of control and become a law unto itself. Takeovers and mergers led to banks so big they couldn’t be allowed by government to fail. Bankers bent rules to lend ever more riskily without anything like enough capital cover, until it all unravelled to catastrophic effect.

The real choice facing Britain should be between the right’s insistence on minimalist government and the left’s belief in active government; between the right’s insistence on a free market free-for-all, and the left’s belief in harnessing markets for the common good. Politics has to change, with Labour becoming a different type of political party. And Britain’s future must be at the heart of Europe, leading a new progressive internationalism.

Back to The Future of Socialism aspires to be a defining book for the democratic left in this era, just as past generations saw Tony Crosland’s seminal book in his era. You can be the judge of whether it meets that test!

Follow @PeterHain on twitter and for latest news on the book search #backtothefutureofsocialism

Back to the future of socialism [FC]Back to the future of socialism publishes today and copies can be purchased at a 20% discount from the Policy Press website – here.

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

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