The three different approaches to Tory cuts

11:14 am - June 27th 2010

by Jim Jepps    

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One of the interesting themes that came up yesterday at Blog Nation was about how to most effectively oppose the budget cuts, as bloggers.

As always with Liberal Conspiracy there was a bit too much of a focus on ‘framing’ and ‘narrative’ for my tastes, but I’m not criticising that – it’s just I find that kind of language a little bit alienating.

Some people were talking about using anecdotal “stories” that help personalise the cuts and demonstrate the effect they have on people’s lives. I think there is value in that, but it can only go so far.

The problem is that both the Lib Dems and the Conservatives are happy to admit that cuts are painful and cause hardship – this is not contested.

What is contested is whether the cuts are necessary. That’s economics, not story telling – which may help illustrate your point, but it cannot be the point your making.

What we need to articulate in a more accessible form is the case against cuts, which is broadly a debate between the economics of Hayek and Keynes, certainly in the mainstream of the debate.

However, in ‘our’ camp we have three different approaches to this question.

First we have the approach that the cuts are too deep, too soon, but deficit reduction along these lines is inevitable. These people want to slow the cuts, and ensure they don’t hit critical services.

Second we have those who oppose cuts as a deficit reduction measure on the basis that we can use equality and growth to combat the crisis. Savage cuts will wreak the economy, at a time when we should be investing, boosting jobs and raising extra funds from progressive taxation and schemes like the Robin Hood tax. These people argue that cuts full stop are bad for the economy, that laying people off as the dole queues grow is a recipe for a vicious cycle of decline.

Lastly we have anti-capitalists. This group steals arguments from the other two but essentially places the blame for the crisis on the economic framework itself and seeks to challenge that in a more fundamental way. Splenetic venting about bankers and fat cats is part of that, but it actually goes far further. The crisis was not caused by Leaman Brothers or Freddie Mac but the priorities of a system where profits come before people, and the millions come second to the millionaires.

Actually many people are mix of the three, but I think the categories stand.

How to find a unified voice then? Well it’s not as tricky as it sounds as long as you don’t expect everyone to sing from the same hymn sheet all of the time.

As of right now there are probably hundreds of campaign groups set up, formally or informally, up and down the country to defend local communities against specific cuts. All these groups will be alliances and, on the whole, they are an embryonic eco-system of resistance. Bloggers can be part of linking those campaigns, putting them in touch with each other and creating a more conscious movement against the cuts.

Those campaigns will be providing the arguments on the human cost of the cuts, these are useful for us all to remind us what we are fighting for. What that network of citizen journalists and campaigners should be doing is providing a digestible economic alternative that shows not just why cutting public services in dangerous and painful, but also why it is the wrong economic strategy. They can also provide resources, some fun some serious and weighty, that are useful campaigning tools that can be used and adapted across the country.

To my mind this approach needs to be supporting those resistance campaigns from the bottom up, rather than attempting to create a national army of clone campaigns under the auspices of a central command. I don’t think that will work and it’s not necessary because those community groups are already springing up ‘organically’.

The left Keynsians and the anti-capitalists (I hope you forgive the crude generalisations there) can actually unite pretty easily on this and the wet left who think cuts are being managed poorly will find it harder to fit into that framework than they will when they become involved in the local campaigns to defend specific services. We can’t play to the lowest common denominator so they’ll just have to catch up.

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About the author
Jim Jepps is a socialist in the Green Party and formerly blogged at the Daily (Maybe). He currently writes on London politics, community and the environment at Big Smoke.
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Reader comments

1. Stuart White

Jim: unfortunately I couldn’t be at the LIb Con conference yesterday and regret missing this interesting discussion. I thought I’d add a few words on the testimony-based approach, which I’m not sure you’ve fully taken the measure of in this helpful post.

First off, there are going to be a number of different ways of campaigning against the cuts. Nobody thinks this is the only way to campaign against the cuts.

The starting-point for the testimony approach is that while cutting the deficit (over some time frame) might be necessary, doing it on an 80/20 spending cuts/tax rises basis is no sense an economic necessity, but a political choice. So one objective of the campaign against the cuts must be to prompt renewed discussion about whether this is the right ratio for cuts versus tax increases.

Second, while everyone can accept that cuts will be painful in the abstract, and politicians can acknowledge this, there is a very big difference between an abstract intellectual appreciation of this point and a vivid perception of the concrete realities involved. Solidaristic, generous impulses are not triggered by generalities about cuts and pain. But they can be engaged by a growing sense of how thousands upon thousands of real people stand to suffer in specific, concrete ways as a result of the cuts.

In a sense, and in my view, its about trying to make the spending cuts as vivid to people as the idea of a tax increase already is – so that we can then get a renewed conversation of about the cuts/tax mix and, hopefully, a more balanced policy.

The possible implications of forthcoming departmental public spending cuts are analysed in detail by the FT:

The analysis in Saturday’s Economist is especially illuminating because it shows up the differences between Osborne’s budgetary prescription, announced last Tuesday, and what Alistair Darling had planned:

The details of the departmental spending cuts will become clear(er) when the Comprehensive Spending Review is published on 20 October.

Just one question. But given that govt spending is to continue going up in cash terms, what cuts are these that we’re talking about?

4. Left Not Liberal

Great post Jim. The focus on the budget on this blog, like on most other subjects, has been overwhelmingly technocratic. It’s all about “persuading” those in power that what they’re doing is wrong and that the need to adopt a different set of policies. Do any of you really think Cameron gives a toss about what any of you think? It’s a goverment of millionaires, by millionaires for millionaires for fucks sake – they couldn’t give a fuck if you all died tomorrow. They don’t give a shit about mass unemployment, double dip recessions, economic recovery or anything like that. They want to break up the welfare state, destroy the unions and ensure the super rich that caused the crisis get of scot-free. Ditto their lib dem stooges. The only way to beat the budget is tooth and nail class struggle. There is no guarantee that this will succeed, but it’s the only hope.

what cuts are these that we’re talking about?

real terms

‘The problem is that both the Lib Dems and the Conservatives are happy to admit that cuts are painful and cause hardship – this is not contested.

It’s not contested because all three main parties are still signed up to the neo-liberal consensus despite the huge economic crisis and recession it has caused. Remember Alastair Darling promising us ‘cuts worse than Thatcher’s’?

And none of the likely winners of the New Labour leadership look likely to dump neo-liberalism either, just tweak it here and there till we sleep walk into another economic crash even worse than this one.

At the moment the ConDems can get away with merely saying “it was all Labour’s fault” as cover for cuts and people will believe them.

But wait 18 months when this line no longer has traction and as cuts bite deeper and actually effect people. Wait till the ‘middle England’ Tory voter’s new Beemer is damaged by a pot hole in the road because the council can’t afford to repair them and he see’s his middle-class welfare benefits (something rarely mentioned) disappearing.

Then we’ll see the tensions in the ConDem coalition. Watch the coaltion fall apart as Nick Clegg and other Orange Book LibDems join the Tories and the parliamentary Lib-Dem party is reduced to a small rump.

@4: ” The focus on the budget on this blog, like on most other subjects, has been overwhelmingly technocratic. It’s all about persuading’ those in power that what they’re doing is wrong and that the need to adopt a different set of policies.”

This (important) insight of John Kay relates:

“The macroeconomics taught in advanced economics today is largely based on analysis labelled dynamic stochastic general equilibrium. The unappealing title gives the game away: the theorists are mostly talking to themselves. Their theories proved virtually useless in anticipating the crisis, analysing its development and recommending measures to deal with it.

“Recent economic policy debates have not only largely ignored DSGE, but have also been remarkably similar to the economic policy debates of the 1930s, although they have been resolved differently. The economists quoted most often are John Maynard Keynes and Hyman Minsky, both of whom are dead.”

The real experiences of the depression of the inter-war years were, indeed, harrowing and generated a huge, evocative literature as a result. But an often impenetrable technocratic debate eventually changed the ways in which governments came to interpret recessions and their causes and shaped policy responses. The ascendancy of keynesian economics in policy decisions from the late 1930s through to the late 1970s was the outcome of that impenetrable debate.

President Roosevelt and his policy advisers never understood what Keynes was on about so his administration acted to rein back the Federal budget deficit. The outcome was that the American economy turned down again in 1937:

For those with the interest – and stamina – the text of Keynes’s seminal book: The General Theory of Employment, Interest and Money (1936) is here:

Btw Keynes was a signed-up member of the Liberal Party and certainly no socialist. Most avowed neo-liberals of my acquaintance would firmly disown Keynes and his economics.

Worth reading David Miliband on: This budget’s legacy will be a lost generation

Quote: “The Tories stuck with a half-billion tax break for married couples, but have cut money from pregnant women and young families. They are sticking with subsidies to private schools – which costs the same as the expansion of free school meals that Labour was planning and the Tories have cancelled. Labour’s deficit reduction plan had market support – interest rates were low, the cost of government borrowing remained stable. George Osborne chose to cut public services by an extra £32bn and to take £11bn from people on benefits. The Tories are now due to eliminate the deficit 15 years quicker than the IMF thought necessary.”

If you want a single book about the depression in the ’30s and how it effected the UK, I suggest ‘The Slump by Chris Cook and John Stevenson, it was first published in 1977 but a new updated edition was released last year.

They look at poverty, mass unemployment and rise of political extremism following the economic crisis, but they also look at those who in the ’30s who experienced prosperity and growth.

Cook and Stevenson claim it is relevant to today situation. I’m not so sure about that. There is no sign of anyone starting a house building boom as in the ’30s and our manufacturing industial base has been decimated. “The British motor industry”, what British motor industry?

Make your own mind up.

We should also remind ourselves that the Tories told us they were going to cut ‘admin ‘non jobs’ and waste in the public sector. When home helps, teaching assistants, nurses and police go, as well as front line services in general suffer, it is perfectly legitimate to point that out and shove that into the faces of the Tories and Lib Dems. We need to make sure that every cut they make is exposed.

“real terms”

Well, yes, except….we’re not even talking about 25% cuts in real terms, are we?

A real terms cut would be to take current spending, upgrade for inflation, and then say that spending is being cut from that.

But we’re not talking about that, are we?

We’re talking about current spending, plus inflation, plus the previously planned increase in spending that the last government had pencilled in. Then we cut from that.

If we were to try to think of these cuts in “real terms” they would come nowhere near 25%.

Just imagine, for a moment.

2% inflation.

So, with £100 in spending this year, in 5 years that would be spending of £110 (£110.41 actually).

If we were to keep nominal spending static (and let us just pretend that this is what the Tories are doing) then this could, possibly, be described as a 9% (10% of 110% is 9%, not 10%) cut.

Now, given that nominal spending is forecast to rise (by not very much) what is in fact the decline in spending in real terms?

No, not using future spending plans, but using current spending plus inflation?

Your turn with the math Sunny.


I have that book: The Slump, by Chris Cook and John Stevenson, besides me. It provides a detailed and graphic account of the history of the slump during the inter-war years but it does not even attempt to explain how a capitalist market economy could get stuck at a low equilibrium position, with persisting high unemployment, and that is what Keynes’s General Theory set out to do:

“In particular, it is an outstanding characteristic of the economic system in which we live that, whilst it is subject to severe fluctuations in respect of output and employment, it is not violently unstable. Indeed it seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse.” [GT p.249]

Before Keynes, the prevailing conventional wisdom was that slumps were temporary disequilibrium aberrations, not equilibrium situations, let alone long-term situations, which could be rectified but only if the workers accepted big enough general wage cuts to reduce business costs and governments curbed budget deficits.

An excellent book on the development of what came to be called “keynesian economics” in its historic context, including Keynes’s criticism of prevailing Treasury orthodoxy at that time, is: Peter Clark: The Keynesian Revolution in the Making, 1924-36 (OUP, P/B 1990).

It is noteworthy, as John Kay observed, how recent public controversies over policy have in many respects echoed the debates of the inter-war years.

A topical book on our times by Keynes’s biographer: Robert Skidelsky: Keynes – The Master (Penguin, P/B 2010)

@Tim W

It must be nice to be secure enough to merely pick at numbers and scratch your chin with maths and whatnot from your Portugese villa, sadly for the rest of us poor sods stuck in the UK we actually are facing job losses, benefit freezes, tax rises and cuts in services. That is the reality. Have you read the budget? And yes, I know your solution is “leave the EU” before you mention it…


Try this in the FT (24 June): How a 25% cut might hit departments’ spending

And in Saturday’s The Economist: The Meaning of Austerity:

With this: Austerity may undermine the government’s fight against dependency:

Well, yes, except….we’re not even talking about 25% cuts in real terms, are we?

I don’t remember mentioning an exact percentage. Oh right, you pulled that out of your ass so you could stroke your ego in trying to smack me down. I have an idea – why not write a letter to Osborne and getting him to clarify his cuts a bit more.

Also, perhaps you’d like the tell the victim of cuts that they’re moaning about nothing:

Readers may like to see the reflections in the Sunday Indy of Nobel Laureate Joe Stiglitz on Osborne’s first budget here:

Stiglitz is the author or editor of many books, including: Whither Socialism? (MIT Press, 1994), but it’s not for the faint hearted.

LibDem natives restless and the ConDem coalition is barely a month old.

‘Half of Liberal Democrat voters ready to defect after VAT rise’

If the governing coalition comes apart, the most likely outcome is an early general election and this YouGov poll after the Budget on 22 June relates:

“The Coalition Government’s approval rating has risen by five points since yesterday’s Budget. 46% said they approved of the Government’s record so far, up from 41% yesterday. Disapproval remains steady at 28%, with those saying don’t know dropping from 31% to 25%. This is the highest government approval rating we have recorded since the General Election, and it would appear that many of those who had been reserving judgement upon the coalition have taken a positive view on the back of the Budget.

Never underestimate the popular resonance of bashing “benefits scroungers”:

“Britain’s 2.6m claimants of incapacity benefit were put on notice by George Osborne on Sunday that their payments had joined a list of benefits to be targeted by the government in its spending review.”

The political reality is that a sizeable part of the electorate regards unemployment as being the fault of the unemployed, which is why we hear the populist nostrums about getting on your bike or moving home whenever the economy turns down and unemployment rises. Of course, the interesting question is about why so many countries are experiencing a rise in unemployment rates at about the same time. It seems unlikely that an aversion to cycling has suddenly become a pandemic.

“I don’t remember mentioning an exact percentage. Oh right, you pulled that out of your ass so you could stroke your ego in trying to smack me down.”

No, “25%” is the general number that’s being bandied about by all sorts of people, from the FT to, I seem to remember, R. Murphy, here in these very pages.

And @13…..Murphy’s numbers were based on exactly the error I’m trying to point out. As cash spending, in total, isn’t being cut, then it’s cuts from planned future spending that is, not from the current baseline.

Yes, this is important: just as important as correcting for inflation when looking at wage rises for example: a 4% pay rise when inflation is 8% isn’t a real pay rise at all, it’s a pay cut.

At last. We are on the way to a Conservative solution for Britain’s unemployment problem:

“Pensioners could be forced to move out of their large council homes to free them up for families as the coalition Government was yesterday accused of going further than Margaret Thatcher in its shake up of welfare.”

The question is: But does this go nearly far enough?

As mentioned previously, a modest investment in a network of local terminator stations could work wonders for facilitating cuts in public spending.

Let’s face it: pensioners are a national liability. They not only draw state pensions and continually cost the NHS but there are all those preserved entitlements to benefits such as bus passes and the winter fuel allowance. Exterminating pensioners could eliminate swathes of public spending and help bring to earlier fruition a cut in the higher rate of income tax.

“The only way to beat the budget is tooth and nail class struggle. There is no guarantee that this will succeed, but it’s the only hope.”

I guess we’re fucked then.

When was the last time an approach based on “tooth and nail class struggle” succceeded in the UK?

Jim said: “To my mind this approach needs to be supporting those resistance campaigns from the bottom up, rather than attempting to create a national army of clone campaigns under the auspices of a central command. I don’t think that will work and it’s not necessary because those community groups are already springing up ‘organically’.”

Agree there’s no point cloning campaigns and wrong to put them under central command. But there’s still a space for something at national level that promotes public spending with the same effectiveness that the TaxPayers’ Alliance opposes it (and it would seem that TPA chief Matthew Elliott agrees – see 3rd question from bottom:

Also, grassroots resistance campaigns on their own do not necessarily tackle the issue that you mention above and which Sunny wrote about recently: if people think there is no alternative to Osborne’s austerity then they’ll accept cuts as inevitable whether they like them or not.

@21: “When was the last time an approach based on ‘tooth and nail class struggle’ succceeded in the UK?”

Even the venerable Marx reportedly gave up on the idea according to the preface by Engles for the English edition of Capital in 1886:

“Surely, at such a moment, the voice ought to be heard of a man whose whole theory is the result of a lifelong study of the economic history and condition of England, and whom that study led to the conclusion that, at least in Europe, England is the only country where the inevitable social revolution might be effected entirely by peaceful and legal means. He certainly never forgot to add that he hardly expected the English ruling classes to submit, without a ‘pro-slavery rebellion,’ to this peaceful and legal revolution.”

The response of the British electorate to the slump in the 1930s was to overwhelmingly vote Conservative at the general elections of October 1931 and November 1935.

One interesting incidental question is why did Marx and family choose to seek asylumn in London after he was hounded out of mainland Europe following the revolutions of 1848? A Blue Plaque on the premises of the Quo Vadis Restaurant at 26 Dean Street, Soho, marks one of the places where the family lived:


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