John McDonnell's Very Political Economics

What have they been putting in John McDonnell's coffee? According to some, John's embrace of fiscal responsibility, tight spending, and deficit reduction is a surrender to "the capitalist parasites". And proving you cannot please some people no matter what you say, there have been criticisms from the right of the party arguing that his economics are the same kind that were rejected last year and in 2010.

I don't know if the memory-loss associated with politics is a recent thing brought by social media churn, or is something deeply structural. But there wasn't a great deal John said in his speech on Friday that hadn't already been trailed previously. A good deal of this was mentioned in his first conference address as shadow chancellor. As the Tories have successfully managed to identify economic competency with the project of deficit reduction in the minds of a plurality of the electorate, John's speech then - and now - signals his willingness to fight them on their own turf. In this he's aided by the self-described "political genius" George Osborne's inability to meet his own targets, and absurd, dogmatic desire to pull public spending out of the economy, which will only thwart his ambition in the long run.

As John has maintained all along, austerity is a choice. He is not offering the Darling plan with its author's claim of "worse cuts than Thatcher". It's the beginning of an economic plan, a long-term one if you will, that marries a radical agenda to a recognisably orthodox policy framework. So while pledging a business environment more benign for cooperatives, as well as "the right to own", John is also committing Labour to a programme that says the public debt should be lower at the end of a Parliament than the beginning of one. This is the 'Fiscal Credibility Rule', which has proven beyond Osborne seeing as borrowing and the debt has spiralled ever-upwards on his watch.

Those criticising this position from the right are indulging in the kind of comfort politics the left are often accused of. Firstly, there is a difference between John's position and that of Balls/Miliband. John's is consistent and systematic, whereas our plans going into the general election were confused and contradictory. It's all very well making arguments about Tory cuts and how they damage the economy, but when you're proposing cuts of your very own it does look as if you haven't a clue what you're talking about, as well as hypocritical. Secondly, and despite the myths spun by Jon Cruddas, we didn't win last year because we were "too anti-austerity" but rather that we were not seen to be offering a credible position on the economy and deficit - a subtle but crucial distinction. You'll remember the manifesto was fully costed and had been raked over by all manner of wonks. You'll also remember that, bizarrely, the Tories promised to spray money everywhere without a clue about where those funds were going to come. Voters made a certain choice in sufficient numbers, and we are where we are now. But again, it wasn't because Labour had a platform that was anti-austerity. And lastly, supposing John or whoever succeeds him unveils a set of rules that do include commitments to cuts and privatisation, a la Liz Kendall's leadership programme, is that going to catch the attention of the floating voter-types we need to win back? Absolutely not.

What John has done is adapt his political economy to the cut and thrust of politics. He hasn't subordinated it, however, in the way Osborne subordinates economic necessity to the needs of Tory party management. However, the problems remain the same - a lack of investment by business, a reluctance of banks to lend, falling productivity, widening balance of payments, and chronic underemployment. Osborne can pretend none of these things matter as the buying and selling of financial flimflam and the housing price boom can fool those who want to be fooled that everything is going fine, but it isn't. John and his team's task is to go beyond iPad rhetoric and come up with compelling and convincing policies that can pull Britain out of its entrenched structural sclerocity.