Economic Advisory Committee

Last updated

The British Labour Party's Economic Advisory Committee was in 2015-16 a group of economists, described as experts on globalisation, inequality and innovation, [1] convened by Shadow Chancellor John McDonnell and reporting to Labour Party Leader Jeremy Corbyn, announced on 27 September 2015 at the Labour Party Conference in Brighton, [2] and intended to meet on a quarterly basis to discuss and develop ideas around the official economic strategy to be advocated by the Labour Party, [3] but not to set policy. [4] It has been described as a way to give the Shadow Chancellor defensive cover. [5]

Contents

In June 2016 Piketty and Blanchflower left, and the remaining members of the Economic Advisory Committee announced they had decided to postpone any further meetings, in the wake of the resignation of numerous members of the Shadow Cabinet in protest over Jeremy Corbyn's leadership. Wren-Lewis cites the Labour leadership's acquiescence of Brexit as his reason for resigning from the Committee. [6]

Membership

The committee originally consisted of seven members, described by then BBC News Economics Editor Robert Peston as, "some of the world's most influential left-wing economists". [7]

The inclusion of Piketty and Stilgitz was seen as a particular coup for the Labour Party leadership due to their breakthrough success in mainstream publishing, [10] while the absence of Richard Murphy, who had advised Corbyn on his cornerstone policy of People's Quantitative Easing was noted. [11]

Following the formation of the committee, Economics Editors Robert Peston, then of BBC News , and Chris Giles, of the Financial Times , confirmed that the seven members were unified in their opposition to the spending cuts of Chancellor George Osborne, [4] [7] although the latter warned that they had less in common in other areas. [4]

History

Formation

Regarding the formation of the committee, its convener, John McDonnell later stated, as part of a series of public debates to present his Party's "New Economics", that the Economic Advisory Committee had initially been set up to conduct reviews into public institutions including HM Treasury, the Monetary Policy Committee and HM Revenue and Customs, and that it was due to the surprising number of people at the 2015 Labour Party Conference in Brighton who felt the Labour Party should be an anti-austerity party that the policy of anti-austerity was set. [12] Committee member David Blanchflower, who confirmed he was undertaking an independent review of the Bank of England for the shadow chancellor, had however stated that opposition to austerity on its own was not enough and that it would take some time to produce a coherent new economic strategy that party members share. [13]

The formation of the committee, according to Robert Peston, then BBC News Economics Editor, went some way to answering the common charge that Jeremy Corbyn and John McDonnell were "left-wing dinosaurs" and would ensure, "a properly emotional debate" between the Labour Party and the Conservative Party about, "how to maximise growth and prosperity". [7] Peston went on to contend that this was the first time since Conservative Party Leader Margaret Thatcher had drawn upon the ideas of Milton Friedman and Friedrich Hayek, that a leading British political party had, "attempted to establish an economic ideology outside the mainstream". [7] Chris Giles, The Financial Times Economics Editor, countered this claim by referencing relationships between former Labour Party Leaders and economists, such as Neil Kinnock with John Eatwell and Piero Sraffa, and Gordon Brown with Robert Reich and Richard B. Freeman, as well as Conservative Chancellor George Osborne with Alan Budd and Kenneth Rogoff. [4] Although, as Peston concludes, none of these had formed a similar committee. [7]

First meeting

The first meeting of the committee was convened at 2pm on 12 November 2015, at Labour Party’s Brewers Green headquarters, with Shadow Business Secretary Angela Eagle, Shadow Chief Secretary Seema Malhotra and the entire Shadow Treasury team in attendance. [14] At the meeting, Simon Wren-Lewis spoke about fiscal policy, Mariana Mazzucato about strategic investment, and Ann Pettifor about the importance of a strong economic narrative. [14] Although Anastasia Nesvetailova and David Blanchflower were also in attendance, the latter via Skype, [14] neither of the two most high-profile members, Thomas Piketty and Joseph Stiglitz, were present at this initial meeting. [15]

First "New Economics" Public Debates

On 26 January 2016, committee member Mariana Mazzucato, gave the first of the New Economics Tour , which had been announced by John McDonnell with the intention of broadening the political debate. [16]

In January 2016, coinciding with the start of the party's series of public debates presenting their "New Economics", it was reported in the New Statesman that the committee had only met once and members had accused the party of having “stupid ideas” about economic policy. [15] In the article which the report was based upon David Blanchflower, committee member and New Statesman economics editor, confirmed that although the committee had only met once the plan was to convene every quarter from then on and that the "silly stuff" he referred to was companies not being able to pay dividends if they don’t do certain things. [13] Blanchflower, who admitted that it was early days and that the new Labour Party still did not have many economic policies to speak of, nonetheless confirmed that economists in the group were smart, left-leaning and credible, and that it was time to start thinking about how Labour could become a credible opposition. [13]

Leadership crisis

Blanchflower quit the panel and said he would also wind up his review of the role of the Bank of England on 28 June 2016 following the mass resignations of the Shadow Cabinet, joining them in calling for Corbyn to step down. [17] Piketty revealed that he had also left the panel in June, citing work commitments. He also criticised Labour's "very weak" referendum campaign to remain in the EU but said this was not a factor in his decision. [17]

Some other members of the panel, including Mazzucato, Pettifor and Wren-Lewis issued a statement saying the panel had agreed to delay further meetings as a result of mass resignations over the leadership of Jeremy Corbyn. They also criticised the Labour leadership over the EU campaign, but said they saw their role as "providing advice to the Labour party as a whole, and not as an endorsement of particular individuals within" and would be "honoured" to serve the party in future after the leadership situation was resolved [17] Simon Wren-Lewis later joined with Blanchflower endorsing Owen Smith over Corbyn for the leadership on 31 July 2016. [18]

Policies

People's Quantitative Easing

Shortly after the formation of the committee, Robert Peston contended that the composition of the panel signalled that People's Quantitative Easing, the policy of requiring the Bank of England to print money to finance government investment, which had up to that point been considered the cornerstone of Jeremy Corbyn's economic policy, was probably dead, as he felt that while this particular group of economists would, "back the notion of the government taking advantage of prevailing low interest rates to borrow considerably more for investment in infrastructure," they would not support the ultra formulation of the policy, "for fear that the anti-inflationary credentials of the Bank of England would be destroyed", and that if the policy survived it would be as, "a contingent rainy-day monetary tool, for when the economy is next in direst straits." [7]

See also

Related Research Articles

<span class="mw-page-title-main">Jeremy Corbyn</span> British politician (born 1949)

Jeremy Bernard Corbyn is a British politician who has been Member of Parliament (MP) for Islington North since 1983. An independent, Corbyn was a member of the Labour Party from 1965 until his expulsion in 2024, and is a member of the Socialist Campaign Group parliamentary caucus. He served as Leader of the Opposition and Leader of the Labour Party from 2015 to 2020. Corbyn identifies ideologically as a socialist on the political left.

<span class="mw-page-title-main">John McDonnell</span> British politician (born 1951)

John Martin McDonnell is a British politician who served as Shadow Chancellor of the Exchequer from 2015 to 2020. He has been the Member of Parliament (MP) for Hayes and Harlington since 1997, representing the Labour Party until the whip was withdrawn and his suspension on 23 July 2024 as a result of voting to scrap the two child benefit cap. On the political left, McDonnell is a member of the Socialist Campaign Group.

<span class="mw-page-title-main">Kelvin Hopkins</span> British Independent politician

Kelvin Peter Hopkins is a British politician. He was first elected as the Labour Member of Parliament for Luton North in 1997. Hopkins was suspended by the Labour Party in 2017 after allegations of sexual misconduct were made against him in the 2017 Westminster sexual misconduct allegations. Hopkins did not stand for re-election in the 2019 general election.

<span class="mw-page-title-main">Angela Eagle</span> British Labour politician

Dame Angela Eagle DBE is a British Labour Party politician serving as the Member of Parliament (MP) for Wallasey since 1992. Eagle has served as Minister of State for Border Security and Asylum since July 2024.

David Graham Blanchflower,, sometimes called Danny Blanchflower, is a British-American labour economist and academic. He is currently a tenured economics professor at Dartmouth College, Hanover, New Hampshire. He is also a research associate at the National Bureau of Economic Research, part-time professor at the University of Glasgow and a Bloomberg TV contributing editor. He was an external member of the Bank of England's interest rate-setting Monetary Policy Committee (MPC) from June 2006 to June 2009.

<span class="mw-page-title-main">Ann Pettifor</span> British economist

Ann Pettifor is a British economist who advises governments and organisations. She has published several books. Her work focuses on the global financial system, sovereign debt restructuring, international finance and sustainable development. Pettifor is best known for correctly predicting the financial crisis of 2007–08. She was one of the leaders of the Jubilee 2000 debt cancellation campaign.

The British left can refer to multiple concepts. It is sometimes used as shorthand for groups aligned with the Labour Party. It can also refer to other individuals, groups and political parties that have sought egalitarian changes in the economic, political, and cultural institutions of the United Kingdom. There are various sub-groups, split between reformist and revolutionary viewpoints. Progressives and social democrats believe that equality can be accommodated into existing capitalist structures, but they differ in their criticism of capitalism and on the extent of reform and the welfare state. Anarchists, communists, and socialists, among others on the far left, on the other hand argue for abolition of the capitalist system.

<span class="mw-page-title-main">Thomas Piketty</span> French economist (born 1971)

Thomas Piketty is a French economist who is a professor of economics at the School for Advanced Studies in the Social Sciences, associate chair at the Paris School of Economics and Centennial Professor of Economics in the International Inequalities Institute at the London School of Economics.

Richard Murphy is a British former chartered accountant and political economist who campaigns on issues of tax avoidance and tax evasion. He advises the Trades Union Congress on economics and taxation, and founded the Tax Justice Network. He is a Professor of Accounting Practice at University of Sheffield Management School.

Simon Wren-Lewis is a British economist. He is a professor of economic policy at the Blavatnik School of Government at Oxford University and a Fellow of Merton College.

<span class="mw-page-title-main">Cat Smith</span> British Labour politician

Catherine Jane Smith is a British Labour Party politician who served as Member of Parliament (MP) for Lancaster and Fleetwood from 2015 until 2024 when the constituency was abolished, and was elected in the 2024 general election to the new constituency of Lancaster and Wyre. She was a member of the shadow cabinets led by Jeremy Corbyn and Keir Starmer from 2016 to 2021 as Shadow Secretary of State, previously Shadow Minister, for Young People and Democracy.

The 2015 Labour Party leadership election was triggered by the resignation of Ed Miliband as Leader of the Labour Party on 8 May 2015, following the party's defeat at the 2015 general election. Harriet Harman, the Deputy Leader, became Acting Leader but announced that she would stand down following the leadership election. It was won by Jeremy Corbyn in the first round. Coterminous with the leadership election, in the 2015 Labour Party deputy leadership election, Tom Watson was elected to succeed Harman as deputy leader.

Jeremy Corbyn, the Member of Parliament for Islington North, stood as a candidate in the 2015 British Labour Party leadership election, in a successful campaign that made him the leader of the Labour Party.

People's Quantitative Easing (PQE) is a policy proposed by Jeremy Corbyn during the 2015 Labour leadership election in August. It would require the Bank of England to create money to finance government investment via a National Investment Bank.

<span class="mw-page-title-main">Andrew Fisher (political activist)</span> British political activist and author

Andrew Fisher is an English political adviser and researcher, writer, and trade unionist. He served as Director of Policy of the Labour Party, under leader Jeremy Corbyn, from 2015 to 2019.

The New Economics Tour is a series of free public events starting in 2016, sponsored by the British Labour Party, which were launched by its Shadow Chancellor John McDonnell with the stated aim of taking the economic debate away from the Westminster-dominated view.

The 2016 Labour Party leadership election was called when a challenge to Jeremy Corbyn as Leader of the Labour Party arose following criticism of his approach to the Remain campaign in the referendum on membership of the European Union and questions about his leadership of the party.

The following list contains a run down of politicians, individuals, Constituency Labour Parties, trade unions, socialist societies, newspapers, magazines and other organisations that endorsed a candidate in the 2016 leadership election

<span class="mw-page-title-main">Owen Smith 2016 Labour Party leadership campaign</span> UK political campaign

In 2016, Owen Smith, the Member of Parliament for Pontypridd, challenged Jeremy Corbyn for the leadership of the Labour Party, triggering an election in the United Kingdom, one year following the previous leadership ballot. His candidacy was announced in a statement on 13 July 2016, in which he declared himself to be a supporter of many of Corbyn's policies but that Corbyn did not possess the qualities necessary to win the next general election. He pledged to prevent the party from splitting and to lead Labour back into government.

On 26–29 June 2016, 21 members of the Shadow Cabinet resigned from the frontbench. Following the Leave result in the referendum on Britain's membership of the European Union, Jeremy Corbyn faced heavy criticism for the perceived reluctance of his involvement in the campaign to Remain and his perceived weakness as leader of the Labour Party.

References

  1. ↑ Boland, Stephanie (28 September 2015). "Who is advising Jeremy Corbyn on economics?". New Statesman . Retrieved 11 March 2016.
  2. ↑ "Labour conference: Economists Piketty and Stiglitz to advise Corbyn". BBC News . 27 September 2015. Retrieved 11 March 2016.
  3. ↑ "Corbyn reveals big names in new Economic Advisory Committee". LabourList. 27 September 2015. Retrieved 11 March 2016.
  4. 1 2 3 4 Giles, Chris (28 September 2015). "Team McDonnell: meet Labour's seven economic advisers". Financial Times . Retrieved 11 March 2016.
  5. ↑ Pickard, Jim (29 January 2016). "Enfant terrible of hard left learns language of conciliation". Financial Times . Retrieved 20 March 2016.
  6. ↑ Wren-Lewis, Simon (30 December 2018). "Labour's refusal to oppose Brexit is becoming a historic error". New Statesman . Retrieved 31 December 2018.
  7. 1 2 3 4 5 6 Peston, Robert (27 September 2015). "Corbynomics' Thatcher moment". BBC News . Retrieved 11 March 2016.
  8. 1 2 3 Mason, Paul (14 September 2015). "John McDonnell: what will Corbynomics look like?". Channel 4 News . Retrieved 20 March 2016.
  9. ↑ "Le Français Thomas Piketty claque la porte du parti travailliste anglais". BFM BUSINESS (in French). Retrieved 12 September 2024.
  10. ↑ Williams-Grut, Oscar (28 September 2015). "Meet the team shaping the Labour Party's 'New Economics'". Business Insider . Retrieved 11 March 2016.
  11. ↑ Silvera, Ian (27 September 2015). "Rock star academic Thomas Piketty joins Jeremy Corbyn's economy team". International Business Times . Retrieved 11 March 2016.
  12. ↑ Sheffield, Hazel (17 February 2016). "Labour's economic policy will rest on two watchwords: democracy and decentralisation, John McDonnell says". The Independent . Retrieved 11 March 2016.
  13. 1 2 3 Blanchflower, David (27 January 2016). "Opposing austerity is not enough – Labour's leaders need lessons in economics, fast". New Statesman . Retrieved 11 March 2016.
  14. 1 2 3 "What's happening at the first meeting of Labour's star-studded Economic Advisory Committee?". LabourList. 12 November 2015. Retrieved 11 March 2016.
  15. 1 2 Chakelian, Anoosh (27 January 2016). ""Labour must get real about the economy": is Corbyn's economic advisory board unravelling?". New Statesman . Retrieved 11 March 2016.
  16. ↑ "John McDonnell launches 'New Economics' public debate tour". LabourList. 18 January 2016. Retrieved 11 March 2016.
  17. 1 2 3 Inman, Phillip (29 June 2016). "Former Corbyn adviser Thomas Piketty criticises Labour's 'weak' EU fight". Guardian. Retrieved 27 July 2016.
  18. ↑ Mason, Rowena (31 July 2016). "Former economic advisers to Corbyn back rival for Labour leader". Guardian. Retrieved 1 August 2016.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.