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Editorial: Labour must forget ‘small state, small spending’ orthodoxy and invest in Britain

THE contours of Labour’s 2024 election pitch have emerged with the now standard warning from Keir Starmer that there is no “magic money tree.”
 
This routine response has its origin in the orthodox neoliberal wing of the party Establishment that was most recently voiced by Lord Mandelson who warned against “rushing” to implement labour law reforms. This is in line with the Confederation of British Industry pitch which warns against increased employment rights as a constraint on productivity. In big business language, for “productivity” read “profits.”
 
When pressed on whether Labour would carry through the changes in its first term the Labour leader — constrained somewhat by Anneliese Dodds’s forthright assertion that Labour’s priority lay in “boosting productivity and getting more money in people’s pockets” — gave a one-word and grudgingly positive answer.
 
We will see. But the wearying repetition of the worn-out notion that there exists a fixed pot of money available for public investment signifies Westminster Labour’s absolute poverty of imagination.
 
National economies are dynamic entities that respond more surely to government initiative than to private caprice. The difference — as exemplified by the scandalous but entirely predictable way in which Southern Water’s private owners diverted investment funds to dividends and loaded the enterprise with debt — is clear.
 
When Margaret Thatcher initiated the privatisation bacchanalia as “a new beginning” she was really signalling the end of the post-war compromise which compelled capitalism to meet a measure of working-class demands.
 
Labour’s insistence on maintaining the Tory spending plans in its first term of government will drive it into exactly the same kind of problems which beset Gordon Brown who, in order to meet the spending constraints that EU membership entailed, mortgaged public finances and public services to money market devices like PFI.
 
A Labour election victory will give expression to the almost universal demand of the British people for the government to get a grip. Where the Tories talk about diminishing the role of the state Labour needs to fashion a new narrative which places the state — acting for the people —  at the centre of a renewal process.
 
If they need some validation for such an approach they could perhaps cherry-pick one element from the US while abandoning Starmer’s support for the Gaza bloodbath.
 
The US government is carrying through the largest federal investment in decades.
 
The reason why can be found in the 2021 report by the US Society of Civil Engineers which asserted that if unaddressed the US’s infrastructure investment gap of nearly $2.6 trillion could cost the country $10tn in lost gross domestic product by 2039.
 
The parallels with Britain are striking.
 
One in three US bridges need replacing according to the US Road Builders Association. Amtrak has a railway repair backlog of $45 billion. The Environmental Protection Agency says the drinking water and wastewater systems need at least $744bn. Increased power outages are costing the economy billions of dollars.
Corporate capitalism cannot be trusted to manage modern society.
 
And it is to the US Council on Foreign Relations that we owe the insight that China’s infrastructure spending is ten times greater than the US by percentage of GDP. And for comparison where China spends 4.8 per cent of its GDP on infrastructure its nearest rival, Australia, spends 1.5 per cent. Number six in the global ranking is Britain at 0.9 per cent!
 
Of course, capitalist states are quite capable of taking the initiative and will do so if it serves the accumulation of capital or the state’s survival.
 
But the only guarantee that investment serves only the people is when land and property are in the hands of the people.

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