Beyond living with capitalism (Renewal 21.2,3, Summer / Autumn 2013)
Author: Duncan Weldon
In 1994 Dan Corry wrote an article in Renewal on the shape of Labour‚Äôs macroeconomic policy (Corry, 1994). After almost twenty years it is striking how relevant much of the article still feels. The original piece was entitled ‚ÄòLiving with capitalism‚Äô but today‚Äôs Labour economic policy appears to have moved beyond simply living with capitalism and is setting out an active agenda of how to change and shape¬†it.
Labour‚Äôs macroeconomic policy has moved through several distinct stages over the past two decades and the very definition of what exactly constitutes a ‚Äòmacroeconomic policy‚Äô has been contested. In the early 1990s traditional macroeconomic policy (defined as the use of fiscal and monetary policy to impact upon macroeconomic variables such as growth, inflation and unemployment) was downplayed in favour of an agenda of supply-side reforms. In the mid-1990s a brief flirtation occurred with a more rounded approach to ‚Äòpolitical economy‚Äô, as opposed to simple macroeconomics, focused on the concept of a stakeholder economy. But this eventually gave way to a macroeco- nomic framework of ‚Äòconstrained discretion‚Äô for policy-makers (Bank of England independence and fiscal rules) and a renewed focus on straightforward supply-side reforms. The notion of fundamentally changing the UK‚Äôs national business model was quietly¬†dropped.