The left needs direction

[T_i_B]

Quite a UK centered article, but a very interesting one nonetheless

http://www.guardian.co.uk/commentisfree/2009/apr/03/left-wing-politics

Seven months after the collapse of Lehman Brothers, the left is still failing to put forward a coherent agenda for change. We've heard too much about the "opportunity to build a better society", and too little about what it looks like or how to get there. To move forward, the left must get over its insecurities about the market and make the economic case for the society it wants to see.

Most lefties who criticise the market tend to misunderstand it. In one of The Crash's contributory articles, Clive Dilnot argues that economics assumes the market always delivers the most efficient outcome. It doesn't. It assumes that the market will deliver an efficient outcome given certain assumptions, including perfect information, aligned incentives and fully internalised costs. When these assumptions aren't met, a good economist will tell you that the most efficient outcome will almost certainly fail to result. A good economist will be the first to argue against an incentive structure that encourages bankers to take irrational risks, or to advocate a tax on carbon if the social costs of emissions are higher than the private costs. Note that these progressive policies do not seek to overthrow the market; they simply aim to correct it.

This leads to the left's second mistake: a failure to make the economic case for a fairer, more equal society. In the wake of the financial crisis, the left has inherited the economic high ground, but we are failing to capitalise on it. Take, for example, the fight for social housing. If the US had instituted a proper system of state support, less well-off Americans wouldn't have had to rely on dodgy private loans as the only way to get a roof over their heads. No bad loans would have meant no subprime crisis. Yet, despite strong emotional pleas for more social housing in The Crash, this argument isn't highlighted.

These two problems – the failure to frame the problems and the solutions of the financial crisis through credible economic analysis – leads to a third. A lack of coherence in the left's agenda. Cruddas's article in The Crash ends in a confused manner, calling for a fluffy "economic democracy" where workers have more say, and more "diverse economic systems" come into play. This is not enough. Next week, Compass is launching a new project to build a leftwing consensus on what a post-crisis Europe might look like. Let's hope it breaks the mould, and gives us a more coherent economic policy agenda around which to unite. Until then, the left's admirable aim of building a fairer, more equal society will remain rhetoric rather than reality.

[Demeter]

1. The Left Needs a Hammer, A Bell and a Song

and Obama ain't it. We thought he was, but we were overly optimistic.

[balantz]

2. The Left is the ONLY direction to go. n/t