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In many ways Maurice Glasman – now Lord Glasman – is an old-fashioned socialist. In other ways, however, this sometime guru to Ed Miliband is one of the most authentically conservative thinkers in the country.

Consider the following piece for the Guardian, in which he gives both barrels to Keynesian stimulus and – by implication (no doubt unintended) – to Labour’s current economic policy: 

  • "There is nothing distinctively Keynesian about public spending in a recession. What is distinctive is the reliance on the Treasury to achieve this, on taxation and centrally administered spending as a method of generating growth… 
  • "Keynesians have an instinctive preference for the big bazooka over the guerrilla army, for the centralised state rather than the small platoon, the coup rather than the insurgency, the stimulus package over the long-term relationship. This hints at its lineage in the liberal colonial state, rather than the Labour tradition which prioritised democratic governance, vocational sectoral institutions and land reform. Many of those insights were blocked out by the emergence of Keynesian macromanagement, which effectively excluded worker participation, local ownership or strong regional democracy from the postwar settlement. No one considered that tradition might be an aspect of modernity." 

This is where the reference to Viagra comes in: 

  • "Another way of saying all this is that if a stimulus package is conceived without embedding that investment in a strategic plan that will lead to the creation new institutions, then we have a fundamental problem: we are generating debt, not value. It is the economic equivalent of Viagra, so to speak: what happens when the external stimulus wears off?" 

Wonderful stuff. But there’s a huge challenge here for Conservative economic policy too: 

  • "The practical predicament we confront is that the combination of finance capital and public administration – the dominant drivers of employment and growth over the past 30 years – has not generated very much value. Of the £1.3 trillion lent by banks in the British economy between 1997 and 2007, 84% was in mortgages and financial services." 

This is an absolutely crucial point. Instead of developing the relationships and expertise necessary to identify opportunities for investment in real world wealth creation, the banks became focused on pushing debt as a commoditised product. This was for three reasons: firstly, because there’s a lot of money to made by inflating credit bubbles (at least for a while); secondly, government guarantees provide protection when the bubbles burst; and, thirdly, because a business based on standardised products can operate through centralised management systems as opposed decentralised networks of expertise, thereby allowing power and profit to be concentrated in fewer hands.

Until we rebuild the networks through which capital can be allocated on the basis of local knowledge and face-to-face relationships, no amount of stimulus – whether fiscal, monetary or otherwise – is likely to get through to genuine value-creating businesses in the real economy.

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