What’s your narrative?

George Osborne got quite an ear bashing from Sarah Montague on Radio 4’s Today programme yesterday (starts at 2:10:00).   He had to stick to his guns to insist that getting the deficit under control must take priority while she repeatedly asked why the government did not have a more activist growth strategy – saying, “You have got to stimulate the economy somehow, you have got to get the economy growing“.   She seemed fixated on the importance of tax cuts to do this coming back to the point again and again, at one point asking, “As a Conservative, who must believe that tax cuts boost growth – and I presume you do …?”   The question tailed off into silence and, tellingly Osborne did not say “yes, of course” although he later went on to affirm, although in a rather theological way, his belief in low taxes as a long run goal.

So, amazingly, it was the presenter pushing a particular policy while the Chancellor was more guarded and nuanced.

Sarah Montague’s simple faith that tax cuts will get the economy growing is shared by many Conservatives so maybe the Today programme has simply forgotten it’s duty to be impartial but I suspect that something a little more complicated is going on.   Perhaps, along with much of the rest of the population, some BBC presenters have unwittingly swallowed the neoliberal narrative that says that we should unshackle the market.  We should, they say, go easy on regulation and give firms and their bosses everything they want – including lower taxes.  And with it goes a threat; that if we don’t cut regulations and taxes, firms will flee the country for more benign locations taking their jobs with them.

As a narrative this works quite well; it offers a sufficiently joined up account of how things work to be credible at first sight and neatly sidesteps some problems.  Like, for example, that governments have worked hard to make it a self-fulfilling prophecy by making capital as elusive and globalised as possible by promoting London and various island outposts of Empire as tax havens while steadily shifting the tax burden from capital onto labour.

As a way of running the country it has been a disaster; given the huge pools of capital accumulated in recent years, the neoliberal narrative implies that there should by now be a tidal wave of money pouring into productive investments in the real economy but there isn’t.  Money stays in the financial casino or is cashed out into high living and country estates.  Neoliberals might argue that this is because we haven’t gone far enough down their road, but just how bad does it have to get for the majority before they’re satisfied?  What they are actually promoting is a race to the bottom.

We need an alternative narrative, a different story of how things work.  I suggest it might go as follows.

Companies are just like people; they have great potential but must live within a framework of rules to realise their potential and these rules must reward good behaviour and punish bad behaviour.  With good rules they will become responsible (corporate) citizens.  With bad or poor rules they are at great individual risk of going off the rails.  Some will certainly do just that; the bad will then drive out the good.  In particular, and again just like real people, companies tend to bunk off and take the easiest course – the path of least resistance – so the rules must work to keep them on the straight and narrow, focussed on activities that support public and community goals.

Note that this is very different from the regime we have had in recent years.  Then “light touch” regulation (meaning usually none) meant that firms could and did take the easiest route and in practice that meant financial speculation, casino capitalism, asset stripping and, increasingly, outright criminality.   In short, the neoliberal narrative is largely responsible for the mess the real economy is in and it’s time we changed it for a better one.

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