Thread by @meadwaj

Rachel Reeves' Mais Lecture was a restatement of the path she's laid out since becoming Chancellor - a clear analysis of how the world is changing, and of a break with neoliberalism. It was also significantly better than the choice morsels briefed to the Tory press. But.. 1/n

2/n …An exit from neoliberalism does *not* necessarily imply some return to social democracy, with increased state spending, increased share for workers in national wealth. But nor is Reeves' programme Thatcherism...

3/n ...which Reeves directly (and correctly) criticises. What she has laid out is something more sophisticated, which the broader left will need to understand and adapt its strategies to...

4/n This is urgent, since whilst Starmer’s Labour has generally been characterised by a crude, short-term and factional approach to political questions, what Reeves has pulled together is a significantly more sophisticated political economy and strategy that follows from this...

5/n …If our view of the next government is that it is *only* crisis and inevitable failure, “reformism without reforms”, we are likely to be blindsided. At the very least, the Reeves programme suggests that there has been some recognition of the institutional shift required...

6/n ...to rebuild Britain’s political economy, and (related to that) the politics needed to secure consent to do so. Our baseline understanding of the world should be that crises will be worse, and the British institutional failures are worse, than Reeves and her team recognise..

7/n (at least in public). Nor, without direct and dramatic increases in public spending, will political consent for the programme be secured. (The Johnson government, after its own fashion, also identified much of this, but also failed to build consent.)...

8/n …However, depending on the size of Labour’s majority, Labour may not immediately drive hard into a brick wall - not, at least, if the domestic leadership is in the hands of the Treasury team rather than LOTO/No.10...

9/n …So on the positive side for them, Reeves has a clear recognition of the major weaknesses of British capitalism, as capitalism itself might recognise them, centred on low productivity which is the product of low investment, and therefore results in low growth…

10/n …So, too, is the recognition of the key features of the “new age of insecurity”: geopolitical instability, tech change, climate crises. “Globalisation…” she says “is dead”. And anyone who has followed Reeves’ thinking recently will recognise "everyday economy"...

11/n …The response to this changed world she says has been labelled variously, noting Yellen’s “modern supply side economics”. This is new consensus & to this extent it is hard to disagree with Reeves’ account of some big, obvious changes in how the global economy operates...

12/n …What she describes in response to it is not a “retreat” to protectionism, nor what she calls “stumbling blindfolded” into a bigger state, as is now happening. Nor does she favour leaning into the instability in the style of “Global Britain”/“Singapore-on-Thames"...

13/n …Instead, if we think of the boundary between “state” and “private sector” as a line, this looks like also a *rotation* of that line - more state intervention in some parts (industrial strategy), potentially less in others (ongoing NHS data privatisation)...

14/n Not a movement inwards, shrinking the state, like Thatcherism, nor a movement outwards, growing the state like classical social democracy. The nearest parallel I can think of, in recent British history, is the rescue of the British car industry after the 2008 crisis...

15/n ...which involved industrial strategy and government intervention - overseen by Peter Mandelson! - for a key sector, supporting demand and rebuilding supply chains, whilst also continuing with the broad outlines of neoliberal policy elsewhere...

16/n ...Notably, there appears to be an offer - the closest policy for winning consent - around improvements in workplace bargaining & rights at work. “New Deal” in workplace remains, promises of its adoption have helped keep union leaderships quiet over the last 2 years or so…

17/n …This will come fwd in some form in govt, and complicate picture. In the context of instability that Reeves details, it looks like version of insider/outsider politics we saw in covid: furlough protection for those on standard contracts; insecurity for millions outside…

18/n …Unions themselves could well accept something along these lines - the 2011 pension reforms in the civil service had this dynamic. Germany’s efforts in the mid-2000s to “reform” its labour market, Hartz IV, created this sort of two-tier workforce...

19/n …But nonetheless, moves in this direction look likely to complicate opposition to Labour in government. The broader left may find itself having to rely, as it did with the Don’t Pay campaign, on structures outside the conventional trade unions…

20/n …That opposition will likely mobilise in 2 parts: 1, because beyond initial cash injection Reeves flags it remains unclear *how* Labour will improve public services. The NHS repair bill alone is £10bn, for example...

21/n …And inflation will not return stably to 2%. Second, because the institutional reform programme involves essentially asking institutions *that have driven the failure* to marginally reform themselves. Handing *more* power to the Treasury is a recipe for continued decline...

22/n & forcing the Bank of England to take climate change seriously again is good, doesn’t get to the central problem of “independence” & the inability of monetary policy to cope with today’s inflationary shocks...

23/n (Amongst many cited economists, Reeves didn’t mention the work of Isabella Weber, but should have done.)

24/n …Fundamentally, the entire programme is premised on a smooth return to “broad-based” growth, which Reeves insists is viable. In a world as subject to the shocks she described earlier, it is not...

25/n For Britain in particular, without government investment this is unlikely to be achieved. Planning reform is a habitual Treasury nonstarter. Their best cost-free hope is the Trade and Cooperation Agreement renegotiation, due in 2025...

26/n …So this isn’t neoliberalism. It’s continuing the global exit from that earlier mode of governance. But nor is this replacing neoliberalism with something more agreeable to the left...

27/n Nonetheless, by defining the terms like this Reeves has clarified some of the political tasks ahead: what should a plausible exit from neoliberalism look like, in these conditions of crisis, and what is the real agency needed to effect it? /end