― Taking a look at UK debt over the long-term shows that it is historically at a very low level. It is also incorrect to claim that we cannot afford the interest on debt.
― The reality is that there has rarely been a more favourable time for the UK Government to borrow in order to invest in renewing its infrastructure and fostering new industries.
― It is testament to the outright failure of the Thatcherite project – the deregulation and privatisation of much of the UK economy and the increasing emphasis placed on the financial sector – that the UK’s growth has declined every decade since the former Prime Minister began the process in the 1980s.
― The case of Private Finance Initiatives (PFI), which has dominated infrastructure investment since the 1990s, exemplifies how private finance provides poor value for money.
― The financial system in the UK, which by its nature, distributes wealth from the productive economy to the financial sector from the indebted poor to the wealthy shareholders of banks and from regions to financial centres, is not capable of delivering the kinds of economic and social outcomes people have a right to demand.
― Investment is what the UK lacks, not money.
The financial system in the UK, as this report has shown, which by its nature distributes wealth from the productive economy to the financial sector, from the indebted poor to the wealthy shareholders of banks and from regions to financial centres, is not capable of delivering the kinds of economic and social outcomes people have a right to demand. Moreover, it threatens to create a kind of‘perpetual state of crisis’which acts as a justification for the utterly destructive rounds of austerity to which all mainstream parties at Westminster have committed.
This report shows another way forward.
Governments and central banks must once again regard monetary policy as being about more than merely the quantity of money in an economy, which is supposedly controlled by the price of money (i.e. interest rates). Governments and central banks must also be concerned with the ‘quality’ of money in the economy, i.e. for what purposes the money is allocated, how it is allocated and what kind of institutions allocate it.
Central bank credit controls or guidance is a tried and tested method of improving productive investment while reducing speculation.
Also at the national level, a National Investment Bank should be the central component of a new and accountable financial architecture. But the financial sector must also be remodelled around democratically accountable, locally responsive banks and credit co-operatives, run by communities for communities.
Investment is what the UK lacks, not money.
Not only will this create stability in the financial sector. It will be a huge boost to the productive economy, including for co-ops and social enterprises which seek to put people before profit. It is self-evident that if we are to have an economy which is run in the interests of communities rather than shareholders, communities must be in control of directing the flow of financial resources towards their chosen outcomes.
Our current economy - characterised by low-skilled work, disempowered employees and enterprises concerned almost exclusively with profit - is to a large extent a reflection of the priorities of a financial sector which itself is dominated by the desire for profit above all else.
A Common Weal society needs a Common Weal financial sector. And considering the current debate about Scotland’s constitutional status, it is worthwhile emphasising that viewing monetary policy in these broader terms would allow Scotland, even without its own currency, to pursue its own independent monetary policy through the strategies outlined in this paper, which promote diversity in the financial sector.
Finally the austerity narrative must be challenged. The current rounds of austerity in the UK are justified neither by the level of debt nor the rate of interest paid on that debt, both of which are currently low by historical standards.
Investment is what the UK lacks, not money.