What is the economy for?

By Bernadette Meaden
November 30, 2020

Speaking about restrictions to limit the spread of COVID-19, Conservative MP Sir Desmond Swayne said “We have chosen a course that is worse than deaths from the virus.” This view seemed to stem from his understanding of the impact of lockdown and the “years of underinvestment while we try and pay this off”.

When debating curent events, people often refer to WWII, invoking the Blitz spirit to suggest that the response to that existential threat was braver, and more admirable. But perhaps the most important lesson WWII has to teach us is that in a crisis, the economy takes second place –financial considerations are far from paramount.

Can we imagine Churchill, or any other politician during the war saying, ‘Hang on, can we afford all these bombs? Can we afford to employ this many soldiers? Of course they wouldn’t have asked that, because in a national crisis money was put in its true place, as a tool to facilitate the exchange of goods and services, not a commodity which is in short supply.

And when MPs like Desmond Swayne say it will all have to be paid back, and so will ruin our children’s futures, then again, the example of the post war period shows how misguided this is. After the war, when the UK had built up a very large national debt, the country elected a Labour government with the intention of making a country that was worthy of the greatest generation, and spending what was needed to do it. They built council houses, established the NHS and introduced the welfare state. The war debt had no ill effects on the next generations, in fact baby boomers enjoyed a quality of life which was unprecedented.

Alongside the debt, unemployment is also cited as a grave consequence of lockdowns or other public health measures. But for most people, whilst losing their jobs may be upsetting, it’s losing their incomes that is the disaster. If they could be sure of an income which enabled them to live decently until another job came along, most people would be far less stressed about it. That would be the role of a properly funded and functioning social security system. Yet, according to analysis by Human Rights Watch, between 2010 and 2018 spending on welfare support for children and families was halved as a proportion of GDP, whilst over the same period UK billionaires doubled their wealth. 

So we have to decide, what is the economy for? Does it exist to keep us all supplied with the means to live a decent life, or to funnel profits and wealth into the hands of a tiny minority? It can be the former, if we choose to prioritise people, not the national balance sheet. 

That is why, after the recent Spending Review, it was encouraging to see significant pushback against the government and media’s attempt to reintroduce austerity rhetoric. As the damaging ideology and flawed economics hit the airwaves, respected economists like  Ann Pettifor, Jonathan Portes, Frances Coppola and Richard Murphy commented on social media on the ‘economic illiteracy’ of such views. They were particularly critical of the BBC’s Laura Kuenssberg, who seemed to use every inaccurate and misleading metaphor in the book when talking about the UK’s economic situation. 

Jonathan Portes, professor of economics at Kings College, London tweeted, “Anyone making claims that we "can't afford" to support jobs and families during and after the pandemic, that there is "no money left", that we've "maxed out the nation's credit card", that we're "loading debt onto our children" is talking economically illiterate nonsense.” This has now been expanded upon in a letter to the BBC from a much larger group of eminent economists stating, 'It is the consensus amongst economists that the government should at this point in time not focus on reducing the deficit, but rather on delivering the spending necessary to secure a recovery from COVID-19.'

The national debt or deficit should no longer be used as a bogey man to scare us into damaging austerity. In a country where so many people are struggling to eat and public services are on their knees, this would not just be bad economics, it would be morally reprehensible. What is stopping us from doing things we want and need to do for the health of people and the planet is almost always politics, not economics. And no matter what some politicians may say, austerity does not improve the future prospects of our children – it blights their health and their future life chances.

And as with money, so with work. There are people doing jobs which they don’t enjoy and are not socially beneficial, but which they are obliged to do because they must earn a living. Meanwhile, there is work which desperately needs doing for the welfare of people and the survival of the planet, but which doesn’t get done, because the funding isn’t there. If we can only change our attitudes to work and to money, so that they both serve human dignity and wellbeing, rather than us being slaves to them, we can make our future so much better.   

John Ruskin said, “There is no wealth but life. ..That country is the richest which nourishes the greatest numbers of noble and happy human beings…” But it is now forecast that by next Spring, without a radical change of approach by the government, around a third of the population will be living on incomes below the Minimum Income Standard, the level considered necessary for a decent standard of living, and some will be in very dire straits.

So let’s stop sacrificing health and happiness to a national balance sheet, and start enabling people to live life in all its fullness.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden

 

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