Your claim that “Rachel Reeves prefers a deadening consensus, sacrificing policies to placate business” is absurd, and fails to recognise the radicalism of Reeves’ recent Mais lecture (Editorial, 28 April). Although the need for fiscal stability was mentioned, the main theme of the lecture was quite different. It was about Britain’s increasing economic backwardness – “a failure to deliver the supply-side reform needed to equip Britain to compete in a fast-changing world”.
Reeves’s allocation of primacy to institutional reform recalls the analysis of economic backwardness by the great Harvard economic historian Alexander Gerschenkron. Gerschenkron argued that economic success derives from the development of new institutions that channel funds into the large-scale investment that is necessary not just to catch up but to surpass successful competitors.
In the Mais lecture, Reeves set out the rationale for “a new model of economic management”. She recognises that the dire state of Britain’s economy is of sufficient urgency as to motivate the “decade of national renewal, shaping the institutional architecture of the British economy in the direction of mission-led government”. Accordingly, she proposes new, focused institutions – a new British Infrastructure Council, a revived Industrial Strategy Council, a national wealth fund and Great British Energy.
The challenge Reeves faces is whether her “new model of economic management” is sufficiently strong to overcome the obstacles to change. Inevitably, in even the best-run reform, there will be mistakes and failures. Building momentum around confidence in the success of her programme of renewal is crucial to dealing with bumps in the road. Britain has undoubted economic potential that can be mobilised by investment in the science base and in the engineering and skills that transform invention into innovation, both in goods and services.
John Eatwell
Queens’ College, Cambridge
• Proponents of modern monetary theory, discussed in your editorial, have been plugging away for some time to break the stranglehold that neoliberal economic theory has on the discipline. Stephanie Kelton’s book The Deficit Myth, which you also mention, is an excellent example of this.
Such is this stranglehold that politicians, when expounding this, that or other policy to the media, are inevitably confronted with the simplistic question “How are you going to pay for it?”, and the usual reply is a mixture of jiggling about with the tax system, economies in other areas (cuts and productivity increases) and economic growth. The question should be “Have we the resources to do this?” Then the proper political debate can commence. It is refreshing to see that one section of our media is starting to address this.
John Boodle
Whitwick, Leicestershire
• At last, someone with a voice has brought modern monetary theory into the light. Please keep it there. More discussion needs to be had about the UK being a country that issues its own sovereign currency, which can therefore “print” the money it needs to invest and to support its citizens. After all, they found a way to do it for the banks with quantitive easing.
We must not fall for the “maxing out of the country’s credit card” scam, because it only serves those who wish to perpetuate austerity. Where to spend the money is a choice. And not to create the money when it is so desperately needed is a choice. Austerity is an ideological choice, not a necessity.
Clever minds could work out how to spend first and then make it work; avoiding inflation by appropriate taxation and borrowing after our spending priorities. Now is the time to pursue this seriously, because we already know the results of the alternative approach from the last 14 years. A government’s priority must be the welfare of its citizens.
Mark Williams
Bury St Edmunds, Suffolk
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