29.05.2025

Gabriel von Max ‘Monkeys as judges of art’ (1889)

Patching up capitalism

Rose-tinted images of the past were interspersed with absurd recipes for the future - Michael Roberts reports on a day spent with the ‘eminent’ members of the Progressive Economy Forum

I recently attended a one-day conference organised by the Progressive Economy Forum, entitled ‘Economic policy in the age of Trump’.

The PEF is a leftist economic think tank that advised the Corbyn-McDonnell leadership when they were in charge of the Labour Party. Its aim is to “bring together a council of eminent economists and academics to develop a new macroeconomic programme for the UK”.¹ The PEF council wants to “advance macroeconomic policies that address the modern challenges of environmental breakdown, economic insecurity, social and economic inequalities, and technological change, and encourage the implementation of these policies by working with progressive policymakers and improving public understanding of economics.” The only specific policy proposal that I could find in its mission statement was that the PEF “opposes austerity and the current ideology and narrative of neoliberalism, campaigns to bring austerity to an end and ensure that austerity is never used again as an instrument of economic policy”.

Former lawyer Patrick Allen is the founder, chair and principal funder of the PEF. He sees its task as to “bring together the finest progressive economists and like-minded academics in the country to join with progressive politicians to show the failure of neoliberalism, the futility of austerity and provide credible, Keynesian-inspired policies to achieve a stable, equitable, green, sustainable economy free of poverty”.²

The specific mention of Keynesian economics does identify where the PEF is coming from. It is ‘progressive’, not socialist, economics - and definitely not Marxist economics. That was clear from the many eminent speakers at the PEF conference. All were well-known Keynesian or post-Keynesian economists. The only whiff of Marxism came from a pre-recorded video opening the conference by Yanis Varoufakis from his home in Greece. Former Greek finance minister for the leftist Syriza government during the debt crisis of 2014-15, Varoufakis is a self-confessed “erratic Marxist”, as he called himself once.³

In his short address, he outlined his well-known thesis that the fault-lines in capitalism are due to global imbalances in trade and capital flows, as well as the crumbling of American imperialism in trying to sustain its hegemonic position as the “global minotaur”,⁴ the consumer of all that is produced. He also briefly mentioned his latest thesis that capitalism, as we have known it, is now ‘dead’ and has been replaced by ‘techno-feudalism’ in the shape of the mega media and tech companies in the US, known as the Magnificent Seven, who extract ‘cloud rents’ from the rest of capitalism.⁵ Varoufakis’s policy alternatives to this perceived new feudalism was to: push for a ‘green’ bank to provide credit for investment to stop global warming etc; introduce more democracy in the corporate workplace; and provide universal basic income for all. Taking over the Magnificent Seven, the major global banks or the fossil fuel companies was not mentioned.

But that fitted in with the theme of the PEF conference. This started from the premise that capitalism had to be “re-purposed”, not replaced, and that ‘rentierism’ should be constrained and social protection revised. A succession of speakers followed, talking about the failures and inequalities of ‘rentier’ capitalism (PEF), ‘extractive’ capitalism (Stewart Lansley) and ‘dystopian’ capitalism (Özlem Onaran) - as though these variations had replaced some original ‘productive’ capitalism, as we knew back in the 1950s and 1960s, which ‘worked for all’ then (or at least did so if managed by governments using Keynesian macro policies).

Bretton Woods

All was well under the global management of the ‘Bretton Woods institutions’ of the post-war period (the International Monetary Fund, World Bank, World Trade Organisation, etc). It seems it was only when neoliberalism and rentierism took over from the 1980s onwards that capitalism became destructive and no longer ‘progressive’ - with crises, rising inequalities, global warming and emerging global conflicts.

There was no explanation of why this ‘progressive’ capitalism of the 1960s came to be replaced by the neoliberal, extractive, rentier capitalism we have now. Why did capitalists and their policy strategists change things that were working so well for them? Nor was there mention of the global decline in the profitability of productive capital in the 1970s and thus the switch to financial investment and speculation; and the move of investment from the global north by the multinationals to exploitation of labour in the global south.

Stewart Lansley presented some startling facts about inequality of wealth since the 1980s, with the rise of the billionaires and finance: “In the post-war years financial and economic elites acquiesced, with reluctance, in the politics of equalisation, and pre-war levels of extraction fell. With capital’s patience exhausted, extraction is back.” So it was a ‘lack of patience’ that led to the switch, not a lack of profitability.⁶

Several speakers highlighted the way that American capital had now taken over large chunks of the British economy, turning it into what Angus Hanton called a “vassal state” and what Will Hutton, the economist and author, reckoned has destroyed the technical development of British industry. Europe and the UK were falling further and further behind American productivity levels. But what was the answer to this American takeover? It was nationalism, not nationalisation, apparently. Hanton: “buy British”; Hutton: develop a “British business bank” - but don’t take into public ownership the utilities, the banks and big companies now owned and controlled by foreign capital (mainly American).

In another session, speakers outlined the huge imbalances in trade and capital flows globally, the signs of the weakening of US hegemony and of the dollar as the international currency, and the rise of China as the rival economic power. What was the answer to this? Well, the hope that maybe the Brics+ grouping can reduce imbalances and restore multilateralism in the face of Trump’s tariff-driven nationalism!

In this session, Ann Pettifor argued that crises in capitalism were the result of excessive debt (trends in profits or investment were not mentioned) and that we should look to the work of American leftist economist and Nobel prize winner Joseph Stiglitz, and his recent book, The road to freedom, where Stiglitz reiterated his call for the creation of a “progressive capitalism”.⁷ According to Stiglitz, “Things don’t have to be that way. There is an alternative: progressive capitalism. Progressive capitalism is not an oxymoron - we can indeed channel the power of the market to serve society.” You see, it is not capitalism that is the problem, but ‘vested interests’, especially among monopolists and bankers. The answer is to return to the days of ‘managed capitalism’ that Stiglitz believes existed in the golden age of the 1950s and 1960s.

He writes: “The form of capitalism that we’ve seen over the last 40 years has not been working for most people. We have to have progressive capitalism. We have to tame capitalism and redirect capitalism, so it serves our society. You know, people are not supposed to serve the economy: the economy is supposed to serve our people.”

In another session, the shocking inequalities of income and wealth were discussed. Interestingly, some speakers like Ben Tippett argued that introducing a wealth tax in Britain would do little to reduce inequality or provide much in the way of government revenue. A wealth tax was no “silver bullet”. Tippett was right. A wealth tax would not solve inequality or provide enough funds for public investment. But nobody asked the question, ‘Why do we have billionaires and high inequality in the first place?’ Inequality is the result of the exploitation of labour by capital before redistribution. Taxation attempts redistribution of wealth or income after the event, with limited success.

In similar vein, we were told by Josh Ryan-Collins that building more homes would not solve the housing crisis in Britain, because that was driven by low mortgage rates (cheap loans) that just drove up demand. His answer: encourage older people with big houses to ‘downsize’ and free up the existing housing stock for younger buyers. Apparently, a state-funded programme to build publicly owned homes for rent, as was done in the 1950s and 1960s with great success, was not the way forward now.

Fiscal rules

Jo Michell attacked the ludicrous self-imposed fiscal rules that the Labour government is applying in order to ‘balance the government books’. But he opposed them only because they were too ‘short-term’ in their casting. The implication was that there were no radical alternatives to raise revenue that could avoid the Starmer government going ahead with imposing fiscal austerity through planned cuts in benefits to the aged, disabled and families.

The Bank of England was criticised for its mismanagement and now tightening of quantitative easing, which was running up costs equivalent to £20 billion on the government finances (Frances Coppola). But it seemed nobody was in favour of ending the BoE’s subservience to the City of London by reversing its so-called ‘independence’. You see, the BoE’s job was to “preserve price stability” (France Coppola) - a strange view, given the total failure of central banks to handle the post-Covid inflationary spike. Apparently, keeping central banks out of democratic control by elected governments ensured that no ‘profligate’ government (even if democratically elected) could play with interest rates, etc, and so cause a financial crisis with markets. After all, markets rule and nothing can be done about that, apparently. Taking the major banks and financial institutions into public ownership was not on the agenda of any speaker.

In the final sessions, a broader alternative to ‘rentier’, ‘extractive’ or ‘dystopian’ capitalism was considered. PEF council member Guy Standing, author of The precariat, raised the growing risk of fascism and its threat to the ‘progressive agenda’. In his theory, the traditional working class is being replaced globally and in Britain by a ‘precarious’ class, whose members have no permanent work or decent wages and conditions and are being ‘left behind’.⁸

This growing class is open to reactionary ideas that the ‘plutocracy’ aims to encourage and promote; and there is a real danger of class collaboration between the extreme rich and the precariat against the ‘salariat’ (a term I took to mean ‘the traditional working class’). What is the answer? Embrace the precariat, says Standing, instead of the working class; and dismantle ‘extractive capitalism’, replacing it with ‘the commons’. Standing did not really explain what ‘the commons’ meant, apart from its historic term of ‘common land’. Did he mean socialism? I am not sure, because throughout the conference, the word ‘socialism’ (I think the real meaning of ‘the commons’) was not uttered once.

John McDonnell and Nadia Whittome are two of Britain’s best leftist Labour politicians. McDonnell told the conference that he has never been so depressed about the situation in Britain and globally in his 50 years in politics. What to do? We must try to get the Starmer government ‘back on track’ to adopt policies to help working people. A vain hope, in my view. Whittome also outlined the horrendous impact of capitalism at home and abroad. But what was the answer? Surely not better management of capitalism?

The PEF on its conference literature quotes a slogan from William Beveridge in 1942: “A revolutionary moment in the world’s history is a time for revolutions, not for patching”. Indeed. But, for now, the PEF advocates patching!

Michael Roberts blogs at thenextrecession.wordpress.com