‘Economics for the Many’ by John McDonnell (ed) reviewed by Bill Jefferies

Economics for the Many

Verso, London, 2018. 256 pp., £12.99 pb
ISBN 9781788732239

Reviewed by Bill Jefferies

About the reviewer

Bill Jefferies’ book Measuring National Income in the Centrally Planned Economies; Why the …


Economics for the Many edited and with an introduction by UK MP John McDonnell, Labour’s Shadow Chancellor, is a collection of essays by various academics who have contributed to the policy development of a future Labour government. It is an assortment of sensible reforms to, for example, tax collection, regional policy development and trade, combined with various modest castles in the sky. There is notable absence – socialism, which is not mentioned once in the entire collection, a palpable disconnect between the purpose of the book, to fundamentally transform the economy in the interests of working people, and the answers provided.

In the first chapter, Antonia Jennings complains about the difficulties of discussing economics in a post-truth world, believing that ‘poor economic literacy contributes to a democratic deficit’ (27). In what could be construed as a typo given the exclusion of heterodoxy from most curriculums, university economics here is said to be ‘not fit for purpose’ as its teaching is overwhelmingly ‘heterodox’. In difficulty illustrating the point, if the economic literacy of economics professors is illiterate, what is gained from a familiarity with it? In any case, the theoretical disputes within economics will not be overcome by an appeal to reason or even commonsense. In the subsequent chapter, Simon Wren-Lewis advocates Labour’s Fiscal Credibility Rule, a version of Gordon Brown’s golden rule that limits extra spending except investment to amounts, around 2.5% of GDP that can be easily raised through taxation. It is supposed to ensure a balance between spending during booms and slumps. Wren-Lewis notes that such a balance is unnecessary given the assumptions of Modern Monetary Theory (MMT) and indeed the wider Keynesian tradition. Indeed, no amount of guarantees around fiscal rectitude will salve nervous financial markets, so why make this appeal at all? Thereafter, Prem Sikka points out how much tax is avoided by multi-national corporations and explains some key steps to address that avoidance. Ann Pettifor presents a catastrophic justification for a Green New Deal, pointing out that the effects of climate change are already evident. She telescopes the impact however, asserting that the threat will directly impact the economy now. The whole point seems to be that short-term climate effects remain unlikely to precipitate recession in the short term. However, it can be countered that action is needed now precisely because its immediate effects are not evident. Nonetheless, her solution, which amounts to an extra £40bn a year in investment spending is wholly inadequate in comparison with her warning (77).

Costas Lapavitsas explains the problems of financialisation, the dominance of finance over manufacturing with in the UK economy with strong echoes of the Bennite Alternative Economic Strategy (AES) of the 1980s. Lapavitsas produces figures for the quantity of debt which paradoxically show that the private sector debt load has declined markedly since the financial crisis of 2008. It is the public sector that is now indebted although even here, the load is offset by Quantitative Easing. The Bank of England has printed around £400bn since 2008. Could this not provide a source of funds for investment in the economy and society, a so-called People’s Quantitative Easing? This idea has been widely raised by Keynesians and the radical tax movement. There is no discussion or even mention of McDonnell’s continual preference for monetary conservatism. Lapavitsas instead argues that the solution to financialisation is to create public banks to invest in designated sectors of the economy. Rob Calvert Jump argues for municipal and co-operative ownership and nationalisation of certain key monopolies like the railways, to be introduced by an Industrial Common Ownership Act (124). This continues the theme of Labour’s Alternative Ownership Proposals, published by McDonnell, which sees a wider role for co-ops and municipal ownership under some form of democratic accountability as a way of challenging the rule of finance capital. The proposals are no real alternative and could well become a limit on advance for any future Labour government.

Grace Blakely and Luke Raikes argue for the devolution of economic decision-making to the regions as economic and other decision-making is too London centric, reflecting the dominance of the City in the UK’s economy. This is followed by discussion of alternative ownership models. The assumption is that the old style post-war nationalisation of the major industries is not something to which we ought to return, but the alternatives are unclear. This is where these new ideas could again limit the scope of a Labour government. Compared with privatisation, nationalisation, where the state guarantees funding, does not set profitability as a precondition for that funding and ensures fundamental work rights such as national trade union bargaining, which would be a major step forward. The alternatives presented here are schemes like the “Preston Model” of the local council, where the council has mitigated the effects of the cuts through spending locally and using its pension fund to invest in environmentally friendly schemes. This may have slightly offset the impact of austerity, but it has still implemented it. Any Labour government must be predicated on the abolition of austerity altogether.

Further discussion features the threat of Artificial Intelligence (AI) in supporting tech monopolies, and problems with private and public debt and issues of data protection. What is really striking however is the abandonment of any idea of a new socialist world altogether. All of the various schemes presented are predicated on the dominance of capital. Traditionally, the socialist minimum programme is limited to immediate steps within the framework of capitalism: individual rights, necessary regulations and social reforms. The maximum programme is the socialist future itself. The two stages are linked as the impact of the minimum programme raises aspirations among the oppressed class, the working people, challenges capital, and so leads to the other stage. The proposals presented here never escape the limits of the market and if implemented would constrain any Labour government to a hotchpotch of reforms which patch capitalism up rather than replace it with a new society, an explicitly social future.

J Christopher Proctor, as part of the “Rethinking Economics” group, tries to explain the short-comings of neoclassical economics, although he does not actually provide a definition of it. Proctor claims, ‘one of the key innovations of neoclassical economics was that economic value derives not solely from the cost of producing something, but also from how much people want that thing’ (206). In actual fact, neoclassical economics is predicated on scarcity; quantities of commodities are assumed, not produced. They are initial endowments that are given. Prices do not in fact depend on supply, but allegedly upon marginal utility. They are subjective rather than objective. Neoclassical economics rejects the notion of economic value. Values have no measure. Surplus is not explained but assumed. Nonetheless, Proctor considers the neoclassical approach as ‘quite good’ (210) for studying markets. His critique of its application to the macro level repeats some commonplace criticisms. As with Jennings, the reader is left to wonder of what this alternative economics consists.

Ozlem Onaran discusses the proposals of the Women’s Budget Group and how investment in the national accounts is limited to certain types of capital goods rather than in people, child care, education and caring, jobs traditionally undertaken by women. Nonetheless her proposals repeat the notion that ultimately spending in these areas is justified by ‘higher national income, higher productivity and eventually higher tax revenues’ (226). This is a weak defence. Investment in social services does not create surplus value and workers cannot afford the services the state provides while much of what has been deemed to be “women’s work” remains unpaid. Either way it is unproductive from the point of view of capital, but so what? It is highly productive from the point of view of women and the working class. That is its justification and nothing further needs to be said. Guy Standing discusses the concept of a universal income, a palliative for the radical transformation of society we really need.

The ascension of Corbyn and McDonnell to the Labour leadership was as unexpected as it was welcome. Its positive effects are already manifest in the Tory crisis around Brexit. Any Labour government elected now would have a mammoth job reversing the effects of austerity. This is the essence of Labour’s minimum programme. Labour can go far further than the 2017 manifesto simply by ending austerity as promised. This will open people’s eyes to the possibility of a whole alternative socialist world. That is the point when the ideas presented here will have an impact, not in advancing the movement but in limiting the scope permitted by the theorists. These theorists are themselves a product of the highly privileged and economically conservative academic world. Their existence determines their consciousness too.

Some of their points about various reform proposals are well made, but the further the discussion moves from the everyday the weaker it becomes. What seems very radical and alternative now is firmly predicated on the existence of the market and will prevent measures that challenge or threaten that market in the future. The fact that socialism, a real alternative society and different world, plays no part at all in these alternatives is telling. Economics for the Many, in the words of McDonnell, aims to ‘inspire people with an alternative’ to neoliberalism by showing that another world is possible (21). Another world is possible but the arguments for it remain to be made.

20 April 2019


  1. Oof quite a brutal review but I can’t really disagree. It’s quite telling to have the suggestions of the book compared with the real alternatives. I got a bit of this reading the book… I remember the chapter on the Fiscal Credibility Rule, it seemed as though it was written almost explicitly from the position of “this is completely unnecessary but maybe worth doing to satiate the naysayers”, which is just such a weird pose to take. But I think this review quite helpfully puts into context how liberal and lacking some of these suggestions are.

    1. It is not that the review is “brutal”; it is the brutality of a conservative British society that would not even allow social democratic reforms.

  2. It seems to me disingenious to blame the British Labour Party for their lack of socialism, in the first place because the party policy has never been socialist in more than a hundred years, they have always been social democrats. Indeed, that is why Leon Trotsky aimed some of his most blistering polemics at them. It is also disingenious, because the Left today does not have any coherent socialist alternative that goes beyond capitalism. In the real world, Marxism is in disarray. Its proponents cannot even agree whether the Soviet Union was socialist, capitalist or something else, that is how analytically weak they are. At a deeper level, very few Marxists today understand what capitalism actually is, in reality. It has even been mooted by fashionable intellectuals, that Marxists never understood much about Marx at all.

    It is more that the “spectre of socialism” is bandied about nowadays in haute bourgeois and petty-bourgeois circles to scare middleclass voters, and to stigmatize *any* kind of reform that would improve the lot of the poor and the needy, or that would contest the power of financial parasites. What worries the bourgeoisie, is the finding that more than half of the new generation of youngsters is sympathetic to socialism, even although, spectacularly, the number of socialist educators is very tiny and not even very persuasive. It is not just that the young are saddled with large bills and debts, and that realistic opportunities are scarce, but also that the youngsters reject the neoliberal model of human development, consciously or unconsciously. When the elite people focus on the “scourge of socialism”, they don’t have to talk about their own obligations with regard to improving people’s lives, and confront uncomfortable truths about what masses of people really have to deal with, in life. Then the elite people don’t have to admit, that they owe something to the workers who facilitate and support their opulent lives – workers who are still there, after the elites have gambled away the future.

    So, whereas I have never been a social democrat myself, I don’t blame Labour Party theorists for not talking about socialism, and for focusing more simply on what you can do to improve society as it is, for ordinary working people. Actions speak louder than rhetorics, and one great practical example sells much better than a thousand words.
    The open question I have, like many other people, is more about whether the policy proposals will indeed lead to improvement. Something has to be done, yes, but if it is done, what is the likely effect? These are political issues as much as economic ones, since, however good the proposals might be, if you cannot get the political backing and popular support for them, they are likely to fail.

    Corbyn’s team is aiming primarily for policies that really improve things, and that he can also get sufficient backing for. They want some “sure-fire winners”, that huge numbers of people are going to agree with. In practice, however, things get much more complicated, because of all the divisions there are, not just in society, but within the party itself. You always have to split the opposition and unite your own people, but in the end you also have to be able to bring the majority on board, for what a new Labour government wants to do. Meanwhile you battle with a lot of skepticism about the ability of *any* would-be future British government to resolve the important problems there are.

    The message of McDonnell’s book is not just that realistic alternatives are possible, but also that you have to think the alternatives. Thinking the alternatives is work. So you need real thinkers to do this real work, and they have to volunteer for it. On the one side, you have the elite people ranting about the “scourge of socialism”. On the other side you have the British Marxists complaining that the Labour Party is “not socialist”, or “not socialist enough”. Neither of these types of sideline critics is going to change things to improve the lot of the workers and their dependents. You need thinkers who can rise above and beyond the petty squabbles there are, to create policies that really work and win people over. That is what I take to be McDonnell’s prime concern.

  3. I don’t really see what disingenuousness has got to do with it. This is about what we want a Labour government to achieve and the prospects is opens up. A Labour government offers much simply by the promise to end austerity. The problem is, and this book encapsulates it neatly, that there are a great many academics/advisers/commentators, including the self-defined “Marxists”, who want to limit it to that. I do not accept those limits and do not think Labour members or voters should either. I write as a Labour Party activist and Secretary of my local branch.

  4. Actually, the dreaded “s” word does appear in the book. McDonnell affirms that: “We are seeking nothing less than to build a society that is radically fairer, more democratic and more sustainable, in which the wealth of society is shared by all. The historic name for that society is socialism”. (p. xvii).

    “The intellectual traditions of the British left”, McDonnell argues, “run deep, encompassing everything from Marxism to G. D. H. Cole and the guild socialists; from feminist economics to radical localism. If we want a movement that can provide a viable alternative, we need to know how to draw those strands together to weave a coherent, popular, democratic new narrative for our economy”(p. x).

    The question then is, how you could achieve that, and the book provides many ideas about that, with plenty references to “socializing” the ownership and control of organizations. These ideas are not necessarily policy prescriptions, but possible alternatives.

    Two authors, Joe Guinan and Thomas M. Hanna, point out their contribution that “For socialists, responses to capitalist private ownership of the economy have traditionally been divided along two main lines. In vastly simplified terms, state socialism placed ownership and control of capital with the state, whereas social democracy left it largely in private hands but sought to redistribute the returns through taxation and transfers via the welfare state. A neglected third tradition, however, largely eclipsed by the left’s two great twentieth-century projects, is to be found in the long-running libertarian socialist commitment to economic democracy”. (p. 113).

    The suggestion of these authors is, that the Labour Party precisely has to go beyond social democracy in the mentioned sense, and plot a course to “economic democracy”. The question then arises, how exactly that would work, what it would involve, and whether it could be economically effective and politically viable in present circumstances. It is obviously not merely an economic issue, but also a political issue, since you have to have enough support for the economic democracy initiative.

    If, for example, businesspeople don’t like the proposals, they are likely to take their money out of the country, and you would get massive “capital flight” and international economic sabotage. As soon as you tried to block and police that, then you would have a massive revolt of the business class on your hands. But you might get such a revolt already, long before such a situation arose, simply because businesspeople consider they want to be able to run their own business, without workers’ democracy getting in the way.

    In the past, social democrats in many European countries proposed or implemented schemes for worker participation in management. But private ownership of enterprises remained, this was not the same as “socialist ownership of the means of production and exchange”. It was a legal construction to empower workers’ representatives in management, with the belief that enterprises and the people who worked in them would be better off.

    There already exists a mix of public and private ownership in Britain right now, but the current Labour idea seems to be, to give workers a greater say, in the management of the private sector as well as the state sector. This however would not involve the wholesale abolition and statization of private enterprise, though “some” private enterprise might be “socialized” in some way. A mixed economy (combining a state sector and a private sector) would remain, but it would just be a different kind of mix, that satisfies both business requirements and socially responsible requirements. The issue then is, whether this could be a “stable” mix, or whether it would just be an “explosive” mix.

  5. Fair point, I evidently missed those couple of places. The description provided my John McDonnell of a socialist society emphasises my essential point however, the disjunction between the claims for the book and the proposals made by the various theorists in it. Socialism might be where the wealth of society is shared for all, but you won’t find that proposed anywhere here, as John knows full well.
    All the points about “socialising” or “democraticising” enterprises etc. remain firmly within the market and so are not really alternatives at all.
    The appellation of the proponents seems to bear no relation to how “socialist” their proposals are. At various meetings I’ve heard “Marxists” explaining why widening share ownership will increase industrial democracy and from ex-Blairites explaining how muncipalisation is what we need. I’ve heard Marxists asserting the need for sound monetary policy, and Keynesians being far more adventurous. From what I can tell the precondition for economic democracy is being used as an excuse not to propose more wide ranging nationalisation of major industries. The issue is whether Labour’s programme meets the needs of Labour’s voters. That should be our starting point.

  6. A few thoughts on this. Modern Marxism today is largely a literary activity, it is no longer much concerned with really tackling the great problems and issues of the epoch, with science and political engagement (there are, of course, exceptions). And therefore it often does not help a great deal, to refer to modern Marxist thought. It often does not help much to refer to socialism, if people don’t know what you mean, or they disagree about what it means. You actually have to show specific examples.

    If you want to share the wealth, the best policy is usually to produce more wealth than there was before, by employing workers to create goods and services that people need. Either the state provides finance, or the private sector can do that, or there is some kind of joint venture arrangement (which has been a quite popular strategy around the world). Another method is redistribution, about which more below.

    After world war 2, for example, the New Zealand government embarked on an ambitious state housing building programme together with Fletcher Corporation and other business partners, and up to 1978 they built 100,000 state houses, mainly stand-alone rental family homes, which nowadays represents about 5.4% of the total homes there are (including apartments – many of these houses were gradually also sold off with mortgages, as residents were in the position to buy them). Financially that worked out quite well, the state got its money back, and Fletcher’s grew huge. Among other things, when you build a home, you need a lot of materials, so building stimulates the economy in many different ways.

    Nowadays there is a serious shortage of affordable housing in New Zealand though. This has to do with (1) the fact that builders prefer to build larger, more expensive houses which earn more money, (2) there is a great shortage of construction workers, (3) rich people buy extra houses that they don’t live in fulltime (about 10% of the housing stock), (4) the financing of housebuilding at the lower end of the market isn’t so great, compared to other, more lucrative investments, (5) the price of housing in urban areas (owner-occupied or rental) has skyrocketed, so that a lot of people are priced out of the market, (6) particularly in aftermath of the financial crisis, total housebuilding dropped by roughly 2/3, and today, although the building programme recovered substantially, about a third more houses ought to be built than are actually built. Technically, about one out of a hundred people in NZ is homeless now, they can’t get housing at a price they can afford, they have to stay with family or friends or in motels or sleep in cars etc.

    This problem could be solved, but it isn’t very much so far, you probably don’t get there by singing the famous New Seekers tune, it takes a political will to solve it, and broad popular support for it. It’s not that people don’t care, but that they don’t care enough. A similar situation exists in the US, although clever real estate people actually found that if they lowered price, they could sell more homes in less time, and thus still make an acceptable profit.

    Another way to share the wealth is through state redistribution, but if it is to succeed, then it has to be very well targeted, and that is a complex problem, including the problem of moral consistency. Citizens also redistribute wealth informally, of course, for example in the yuppie or hustler circuit, or through legacies and philanthropic grants.

    State redistribution is often a morally confused area these days, a consensual morality is lacking, and people ask themselves, why some people should get money for nothing, as by right, while others have to work for it, and what the real consequences are, for people’s behaviour. That makes it politically a hornet’s nest often.

    Most often the state uses both a value-added strategy and a redistribution strategy, but in “neoliberal” thinking redistribution and subsidization should be curbed and restricted to a “social safety net”, on the ground that poverty is primarily a matter of individual choice. Some people are willing to improve their position and do what it takes, others do not. That theory is existentially not very realistic, but quite popular, and therefore there are severe limits to what politicians are willing to do.

    In reality, many states in Western countries are in need of very substantial fiscal and legal overhaul and renewal (getting rid of old systems and introducing new systems which correspond much better to where people are at), but it does not happen, because it is again a political, intellectual and legal hornet’s nest, and most often you can’t get the political backing for it. You can get backing for it, only in a very severe crisis, but even then it is difficult to find the visionary political people who can really implement the correct things, and get the support they need for that as well.

    Nationalization can work well in some areas of the economy (for example, a people’s bank for ordinary savers, or the rail network) but in other areas it is just not a great help.

    The core problem of the neoliberal ideology in vogue since about 1980 is the mistaken belief, that people’s social and economic behaviour is best steered mainly by financial incentives and disincentives, and as a corollary, that power is best wielded by the granting or witholding money (“if you want money, you have to do as I say”).

    It is a sort of conflation of “the economy” with “the market” and with “society”. Even Kenneth Arrow, who was one of the inventors of the Arrow-Debreu theorem, recognizes that this conception is just not very realistic, it is an “impoverished” view of human motivations and an “impoverished” view of social power.

    The attraction of this sort of belief is, that you can reduce all human behaviour and motivations to seemingly neutral and objective numbers and prices, within an input-output calculus, or a cost-benefit analysis. Therefore you don’t have to deal with complicated moral and political issues and find answers to them, anymore. That is especially attractive, in a situation where a broad consensus about norms and values has broken down, and people live more and more in groups and areas with quite different lifeworlds.

    But in fact the “financialization of morality” actually worsens the quality of moral behaviour, since people more and more just pursue self-interest as the main thing they get tangibly rewarded for. The underlying self-contradictory factor becomes the inability to get people to work together for common goals, “except” through dishing out money. You want it done? Show us the cash! Managers will come and go, they have to show some innovative ability, but soon they enough move on to the next lucrative project, and do not carry any further responsibility for their previous activity. The polity is continually suffering crises, with a high turnover of political personnel, etc.

    So probably – this is a hunch – one of the best ways to resolve the “sharing of wealth” problem is to invent more useful systems which show people that “it really pays off” for them to cooperate, share things, etc. The original credit unions, mutual funds and worker’s insurance schemes were set up specifically because people realized, that if they all put in a little, all of them could be covered. But this is just one example of how cooperation and sharing can “pay off” personally, socially and financially. There are oodles more things you can try out and test. There is of course much more to say, but this is all I have time for…

  7. Yes I don’t think a nominal affiliation to “Marxism” has much bearing on politics at all. The only real standard is to judge people by what they do, or in this instance, propose to do.
    That’s why I think the focus should be on what Labour’s voters, members and supporters, in other words, the vast bulk of working people need. That’s very practical, build council housing, nationalise utilities, reverse all cuts, end all privatisation of public services etc. Once that programme is begun it has a dynamic all of its own, and that’s when the arbitrary and artificial schemas proposed here will come into play, not to advance the movement but to limit it. That’s why I’m against them.

  8. I would basically agree with you about that. Theoretical schematism is probably not very helpful, outside of the lecture hall.

    Yet the intellectuals might also have a role to play, by doing research into the state of society, setting out alternative possibilities, and giving the project more credibility in public opinion. They can create a “narrative” which explains why the policies are feasible, necessary and just. Probably that was what McDonnell had in mind with the book.

    Of course you cannot base state policy on a “narrative” (it has to be based on facts, solid analysis, and clear priorities), but politicians weave “narratives” all the time, they tell a story, for better or worse, to make things understandable, and so, it is also necessary to be able to unpack those narratives critically, and examine their merits or demerits in the light of experience. And intellectuals can do that, and create a better story.

    Contrary to impressions that many people have, Marx and Engels never simply dismissed “utopian” thought as “unprogressive”, because they recognized that, for all its faults or flights of fancy, it enlivened the social imagination, and broadened the realm of possibilities, i.e. the domain of what “could” be done, and what “could” be achieved. The utopians affirmed, that “another world is possible”, and that people could indeed create it. If you don’t at least believe that, then you are not going act, are you.

    You can be a “realistic utopian” today, by starting out from all the resources and potentials which already exist for creating a better society. Instead of saying “there is no alternative”, you can show that there are many alternatives. It can help to give people the hope and the will to take action.

    There do exist some fine Marxian economists and political scientists too, with a good understanding of both orthodox and heterodox theory, who can verify what is likely to succeed and what isn’t. It is just that in the last thirty years or so, there have been a lot of new developments and insights in financial economics, in the theory of public finance and in monetary theory, and Marxian theorists haven’t always kept up with those very well. What we have to deal with nowadays goes far beyond the theory that Marx created.

    The enormous growth of international trade in goods and services, currency and capital creates completely new problems. Previously “globalization” was promoted as a good and progressive thing, but now people are concerned about “sovereignty” and the loss of the good things in a way of life they had cherished. International competition sounds healthy when you are winning, but when you are losing badly, well, then it becomes a different story.

    I was reading about the results of a Gallup global poll, which revealed that some 750 million people (!) express the wish to emigrate to another country, although only a smallish fraction actually do so. https://news.gallup.com/poll/245255/750-million-worldwide-migrate.aspx

    We are talking here about roughly one in every ten people on the planet, who “would migrate if they could”. Apparently, they have no faith anymore in the ability to improve their own society, and improve their own lot in that society. This is a phenomenon of a scale, that has never been seen before in history. Globalization has come to town, but now, ironically, people want to leave their own country!

    As you suggest, whether people will believe Labour’s project or not, will depend very much on how things work out in practical experience. The biggest controversies will arise, when action is really taken to do something about the problems of British society, and to improve the conditions of people who right now consider they have “no future”. You don’t actually need a lot of radical rhetoric, because when things are actually done, it will unleash plenty controversy anyway.

    Something has to be done, it can be done, and if it is not done, things will get worse instead of better. That is what I take to be Corbyn’s basic message. His striving and commitment is to express the concerns of ordinary working people in Britain, and create the political will to take action. Even if he does not succeed, or not entirely, his initiative has already changed the political landscape, by giving a voice to all those people who are ordinarily shut out from political influence. That already is a major achievement.

  9. It is true, on some indicators, that the total UK private debt has come down somewhat in recent years, but this is hardly a spectacular finding, among others things because:

    (1) the magnitude of real change in total private debt is not so significant overall, but to the order of perhaps 6-7% depending on what measure or concept you use (there has been some deleveraging, the use of credit is subject to stricter rules, and many people cannot borrow anymore).

    (2) the aggregate statistics do not tell you anything about what type of debt it is, who owns the debt, or who is liable for this debt, the distribution of the debt burden, the terms of repayment, the ability to repay, the difference between gross and net debt etc.

    (3) the UK is home to one of the biggest financial centres in the world.

    Ordinarily, the grand total of UK private debt does not change all that much nowadays, just a few billion pounds more or a few billions less, depending on the conjuncture. By contrast, after the global financial crisis, the UK’s net public debt liability roughly doubled. However, there again, you have to distinguish between different measures and types of debt.

    Broadly, the nation’s private sector debt consists of banking debt, corporate business debt, non-corporate business debt, and household debt. Even so, how a business calculates its debt liability is quite different from how a householder would do that.

    After the financial crisis, a large chunk of the debt liability of private enterprise was effectively “socialized”, and on the basis of such government assurance, capitalists could again leverage plenty more assets for profit (the “bailout”). The “lender of the last resort” is the taxpayers, who cannot excape from paying tax.

    Earlier this year, it was reported that there was a “record rise in average household debt” in the UK, but this is rather meaningless, in view of the highly skewed distribution of UK household debt, and what the debts actually refer to.

    The main difference was, that as the economic outlook improved, well-off people bought more expensive houses and cars, pushing up the average. The average personal debt holding of poor people does not change all that much across time, in real terms.

    The richer you are, the more you can borrow, and inversely, the poorer you are, the less you can borrow. That has definite quantitative implications for society as a whole.

    The Right and the Left always fool the people by dangling “grand average” statistics in front of them. In reality, there are the rich and the poor, and a corporate business world which contrasts with a smaller business world, and these two exhibit completely different characteristics and magnitudes. That is, they are qualitatively and quantitatively in a different category.

    For a simple example, in the US nowadays, 35 corporations own half of the assets of all US stocklisted corporations, and 30 corporations receive half the total net income of all US stocklisted corporations.

    This corporate stratosphere is just a very different world, from the world of hundreds of thousands small and medium-sized businesses that employ the most workers, and if this quantittive and qualitative difference is not recognized in business and income statistics, you get a very warped understanding of the true proportions.

  10. Bill, just to illustrate what I said, Bloomberg News featured a brief debate about Corbyn and the UBI. See: Leonid Bershidsky and Ferdinando Giugliano, “What If Corbyn Introduced Universal Basic Income? A Debate”. Bloomberg News, 10 May 2019. https://www.bloomberg.com/opinion/articles/2019-05-10/is-the-u-k-ready-for-a-basic-income-a-debate

    Some people don’t like Bloomberg News, but I appreciate them, because they try to report what they consider to be the essence of what is happening out there, in plain and concise language. It may sound a bit “brash” or “hardhitting” at times, but at least you don’t fall asleep halfway through the story. Leonid Bershidsky is a sharp analyst, and I hope he will write a book sometime. I haven’t read anything by Ferdinando Giugliano before.

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