This is important, because the purposeful mystification of economics by its academic practitioners remains one of the biggest obstacles to progress towards a more just and democratic society.

In a recent article for the Guardian, Skidelsky assesses the likely outcome of the UK government’s programme of deficit reduction through cuts in public spending. He begins by demolishing the idea that the deficit is entirely the fault of the previous Labour government. As he makes clear, before the crash of  2008 the Conservatives had no quarrel with Labour’s revenue predictions. George Osborne even boasted he would match labour spending plans for the first three years of a Tory government. There is little doubt that the deficit would be the same today had the Conservatives been in power for the last decade. They may have invested more in tax cuts and less in public services, but the budgetary consequences would be largely the same.
 

The 64 Dollar Question

But Skidelsky’s main question is the 64 dollar question as far as the UK economy is concerned: what will be the impact of extracting £122 billion from the economy over the next four years? George Osborne hopes and believes that the money saved will effectively be transferred to the private sector, encouraging investment and job creation and thus driving economic growth. Keynesians, like Skidelsky, think this is nonsense. They believe such cuts in public spending necessarily lead to an equivalent reduction in aggregate demand and, instead of encouraging growth, are therefore likely to tip the economy into another downward spiral.
 

Skidelsky suggests we need a National Investment Bank, capitalised to the tune of £10 billion and allowed to borrow in the market. Such an scheme, a kind of New Deal light would doubtless get people back to work and facilitate much-needed infrastructure renewal, but it would do nothing to address the underlying causes of the current crisis.
 

Surface Solutions to Structural Problems

While the devoutly Keynesian Skidelsky may differ from the archly neoliberal Osborne in terms of their response to the crisis; what unites them, along with the key players in all three established political parties, is that none is sufficiently engaged with economic reality either to make credible economic decisions on our behalf, or assume the mantle of expert advisor. None has the first idea what it is required to create an economy that is naturally immune to the vicissitudes of the business cycle because none is prepared seriously to investigate the underlying causes of boom and bust. 
 

This is a tragedy, because, while there are no easy routes out of the current mess, there are clear indications as to why we repeatedly fail to come up with a formula that promotes stability and fairness within a dynamic economy.  Until politicians and economists are prepared to acknowledge the intrinsic shortcomings of the tax system, the financial system and the means by which money is created, there is little hope of improvement. Over the coming weeks I hope to cast a Renegade Economist’s eye over these three systemic shortcomings, and to assess the prospects for progress.

Go here for the full Skidelsky article at the Guardian

Mark Braund is a freelance writer with a specific interest in the prospects for transformative social change towards a more just, inclusive and sustainable society. He is a regular contributor to the Guardian and lives with his family in London.
 

His latest book: The Possibility of Progress - Is an analysis of how the ideas of the great classical economists/philosophers were selectively applied to preserve privilege and power. How can ordinary people take control of their lives and communities?