A letter in the Guardian has gone viral as it calls into question what are Labour’s values under Sir Keir Starmer. Professor Mary Mellor wrote: “Labour is failing to promote core Labour values such as equality and welfare (Labour remains a mystery to most voters Leader 5th April) because it is still wedded to the ‘handbag economics’ of neoliberals such as the late Nigel Lawson.
“The view of the state as like a household, constrained by a shortage of money, bears no relation to the public monetary largesse of 21st century states. Since the 1990s deflation crisis in Japan, the financial crisis of 2007-8 and the pandemic, central banks in key economies have been in full flow. However, this has mainly supported the financial sector and the market generally, rather than public welfare.
“To open up this new agenda, fundamental questions need to be asked about the creation and circulation of money in the 21st century. Why is publicly generated money (QE) used to bolster the (financial) market rather than public services? Why can banks borrow from the central bank, when governments have to borrow from private finance? Why is that government debt ,when bought back by the central bank using publicly generated QE, not then cancelled?
“If Labour is to win the next election (rather than the Tories lose it) it must open a debate about the issue of publicly generated money, and the role of the public economy in building the true wealth (wellth) of the people.”
Her book Money: Myths, Truths and Alternatives (21st Century Standpoints) is available here.
Response
In response to Mellor’s letter Colin Hines Convenor UK Green New Deal Group wrote: “Professor Mary Mellor is absolutely correct to ask the crucial question so far ignored by all opposition parties i.e. why was ‘publicly generated money (QE)’ predominantly used to prop up banking and the private sector threatened by Covid, rather than rebuilding public services and protecting the environment?
“Something likely to prompt such a rethink was Larry Elliott’s warning that AI threatens whole swaths of middle-class, white-collar jobs
“To counter this, massive resources must be put into generating work that can’t easily be automated, but which can tackle the vast shortfalls in the UK’s social and environmental needs. This would range from face to face work requiring complex interaction with other humans, such as in the health, education, police and justice systems, as well as building new infrastructure, and making all 19 million properties that need it energy efficient.
“This is made even more urgent when this Government’s crass indifference to adequately tackling the climate crisis is highlighted by the projection that it will take 300 years for present UK insulation scheme to meet government targets.
“All the opposition parties wring their hands about these problems. It’s time they joined Professor Mellors in calling for ‘publicly generated’ Social and Green QE. Alongside some borrowing and a fairer taxation system this could result in the Social and Green New Deal that the country and its voters so desperately need.”
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Related: Stark letter warning Starmer of electoral failure is going viral
