John McDonnell’s Marxist ideas for financing would be a disastrous experiment
While the Brexit process pushes the British constitution to its limits, the Labour party continues to develop and promote policy proposals that, if implemented, would make the UK’s torturous departure from the European Union look like a modest tweak to our political operating system.
While all of Westminster focuses on the near collapse of functioning government and the prospect of a general election, John McDonnell, Labour’s Marxist shadow chancellor, is putting the finishing touches to a radical programme of change to which he has devoted his entire political life.
If he does make it through the doors of Number 11, he won’t waste a minute. If he’s learnt anything from his years in the political wilderness, it’s that the revolution – when it comes – must be swift, deep and defended ruthlessly.
He has written to the Treasury’s most senior civil servant, outlining the steps that would be taken to get his revolution off the ground.
An emergency tax-raising budget would be the first order of business, accompanied by a programme of political re-education for civil servants, to ensure that “the Treasury will widen the range of economic theories and approaches in which its officials and those in the rest of the government are trained”.
Remember, this comes from the man who held up Mao’s little red book when making a point in Parliament.
Yesterday, McDonnell reiterated his idea to inject £250bn of public money into a state-run network of regional investment banks, saying “finance is the central nervous system of the economy.
It directs investment, deciding which businesses and projects get off the ground and which fail. For too long, this vital part of our economy has been solely in the hands of the big banks and the speculators.”
It’s true that the market determines the allocation of capital, but it's also true that (while imperfect) the system has proven itself to be far superior to the preferences of politicians and the planning of civil servants.
Capital markets, whether through bank lending, venture capital, private equity or any of the new challenger business-banks or crowd-funding platforms, will remain a far safer, more efficient and fairer system of finance than anything McDonnell cooks up in Whitehall.
Whenever the times comes, Tory MPs (and any advocates of the market economy) must be prepared to fight Labour on this point or risk being subjected to its modern Marxist experiment.