Fiscal Responsibility

Labour took its first step to economic credibility by Jeremy Corbyn’s appointment of John McDonnell as Shadow Chancellor. It was vital to appoint someone who would break from the confused economic policies pursued by previous Labour administrations and in opposition. John McDonnell’s was the correct appointment and he proved it immediately and at Labour conference. His establishing the position that Labour would not run a budget deficit over the course of the business cycle on current expenditure, but would borrow for investment, was precisely the correct position. It was in line with the theoretical analyses of both Marx and Keynes. It provided the framework for the other correct polices that began to be laid out at the Labour Party conference – for example on the National Investment Bank, opposition to removing the budget deficit by cuts to welfare.