Jo Swinson has long been interested in challenging the conventional way of determining economic success. She’s a graduate of the London School of Economics and when she was a Lib Dem MP, and leader, she promoted the idea of measuring wellbeing and not just GDP.
She has spent the past five years as the Director of Partners for a New Economy. This week she was interviewed about the work of PANE in the Observer.
She had some important observations to make about the timidity of some centre-left governments:
We are in this moment of rupture, where the old economic consensus around neoliberalism has lost credibility and is going away but the new economic paradigm has not yet become clear,” says Jo Swinson.
“The irony is that the defenders of the neoliberal status quo seem to be centre-left governments in different parts of the world.” That, she argues, is one reason the left is struggling: “People have sussed out that this economic system doesn’t work.” By contrast, “the part of the right that is being successful has stopped defending neoliberalism, because they know that it’s not popular and that defending it is not going to win them votes.”
She was positive about the direction Mark Carney might take in Canada:
Canada’s government has worked with the Wellbeing Economy Alliance. Whether it continues to focus beyond GDP under its new prime minister, Mark Carney, or instead follows UK Labour’s emphasis on growth, will be a key test of the immediate prospects for the new paradigm. Some see neoliberalism in Carney’s early actions on carbon and trade. But Swinson is optimistic about him, given his past leadership on climate issues, including when he ran the Bank of England, and his public statements about the importance of values. While the growth obsession of Britain’s Labour government is understandable, Swinson would like more focus on “how to make sure that people are thriving even when there are economic headwinds”.
But what will philanthropists do in the age of populism:
In the US, some big foundations seem scared of being targeted by the Trump administration for their past support of so-called “woke capitalism” initiatives that take ESG (environmental, social and governance) and DEI (diversity, equity and inclusion) factors into consideration.
Swinson argues that polarisation is pushing more funders to lean into tackling root causes. For instance, climate funders who used to think it was enough to fund scientific research are now saying “we need to be thinking about the political economy of this”. In general, she says, “the economic system is a more obvious entry point for philanthropy than it was five years ago, and certainly than 10 years ago”. Hopefully that idealism comes with a thick skin.
You can read the whole interview here.
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7 Comments
There is no rule that says that governments have to deliver growth in GDP per head to get re-elected, but plenty evidence that governments lose elections if most people do not feel better off than they were a few years ago. Governments can produce and publicise any number of statistics to illustrate that wellbeing is improving, but if people don’t feel better off, the statistics will achieve nothing – governments will still be booted from office.
Fascinating to see her use the word neoliberalism. I remember the during the Coalition years when I got a lot of blowback from other Lib Dems who told me the word should not be used because cannot be defined, which at the time seemed to me to be a deflection tactic to avoid talking about the impact of us supporting neoliberalism back then. I went ahead and defined neo-liberalism anyway and for some reason that didn’t count.
Anyway since we lost in 2015 and barely recovered since – using the metric of the national percentage of the vote – we have had to shift away from the neo-liberal dream of David Laws to reduce the size of the state to 35% of GDP.
There hasn’t been much debate about the economy since then, an anodyne economic policy for the party seems to appear by magic in our general election manifesto and then goes back to bed again after the general election.
I have read the interview and there are a lot of questions that should have been asked but weren’t in my view. There is considerable political blowback from the right against ESG and DEI, how do we respond to that? And Net Zero? We have a public sector funding crises, how do we pay for that? 52% or people voted for Brexit, mostly non-graduates on low incomes. The flagship taxation policy of the Lib Dems in Coalition to raise tax thresholds totally failed to win their support, why was that, why are they still angry and voting for Reform?
An interesting piece. I have tried for some time to persuade our economic spokespeople not to regurgutate orthodox economic models, to no avail. I despair when our party talks about black holes in the economy, the laffer curve and the aparent impossibility of having higher rates of income tax on those who have more money than they can possibly use.
We do indeed need a new economic policy, one based on heterodox economics which accepts the premise that there can be more than one approach to economic policy. Most importantly we need to stop pretending that the government’s finances are the same as a family’s. Many time government spending precedes taxation not the other way round. Consider the public sector. Until the people who work in it are paid – by the government – they have no income to tax. The same is true of private businesses who contract with the government. Until they are paid they can’t be liable for tax.
Much of orthodox economics is back to front. LibDems need a different way.
“The irony is that the defenders of the neoliberal status quo seem to be centre-left governments in different parts of the world.” That, she argues, is one reason the left is struggling: “People have sussed out that this economic system doesn’t work”
Jo is spot on with that analysis. But it’s a shame the party worships the EU which has it in abundance. Surprising and refreshing interview.
There is no serious economic thinker who believes state finances are similar to household finances. A total Aunt Sally.
MMT has been around for decades and its roots and influences longer; there’s nothing new or non-orthodox about it.
Spending doesn’t precede taxation as a category or vice versa. In any case, time stamping monetary quanta tells us nothing about overall spending or taxation decisions.
“neoliberalism: political approach that favours free-market capitalism, deregulation and a reduction in government spending” [Oxford Languages]
Alas, such is fundamentally flawed:
* Free has at least at least two meanings 1) Freedom to and 2) Freedom from Neoliberalism only uses 1 and ignores 2, which is no less important for a whole population.
* Why does deregulation apply only to markets when we need regulation for traffic, behaviour, democracy etc., etc? [Might “Optimal Regulation be more appropriate?]
* Reduction in government spending is similarly logically and practically dangerous, assuming we need government. [Might a valid objective be “optimal government spending”?]
* Neoliberalism fails to specify which sort of capitalism it espouses. Currently we have “Financial Capitalism”, which replaced “Industrial Capitalism”. The latter came with care for regular citizens and their children as it lowered essential costs such as housing, health, education etc. so that employment costs/pay were lower and citizens were in better shape thus making our country more market competitive.
As the data on homelessness, home prices, hunger, medical waiting times etc. demonstrates, neoliberalism has reduced the well-being and efficient functioning of an increasing number of citizens and their children.
Another possible factor in the continuation of this political approach may be that our current form of democracy has significant deficiencies.
57.8% of voters are not represented in our current Parliament.
https://election2024.electoral-reform.org.uk/
We get what taxation pays for. Those with high levels of wealth should contribute more. Companies which cause harm to individuals and/or the planet should not be allowed to pay more than say, 1% in dividend until they stop doing so. CEO’s and Board Members of those Companies should not be allowed to receive any increases in remuneration or other benefits until they stop.