Saturday, January 17, 2015

Is Peter Hitchens a Keynesian?

I am currently interested in the British political scene at the moment, in view of the general election that is due on 7 May, 2015.

However, before I get to the main point below on the interesting British Conservative Peter Hitchens, some background is necessary.

The post-World War II Keynesian consensus in Britain – which regarded full employment as a major aim of government economic policy – died an unfortunate death in the 1970s and 1980s. It was unfairly blamed for the stagflationary crisis of the 1970s (for evidence and arguments to support this, see here and here).

If one wants to look at the data on UK unemployment, to see how low it was in the golden age of the post-WWII era, one can see it below in the long-run graph of unemployment from 1870 to 1999. The data come from Boyer and Hatton (2002), but the graph simply omits unemployment statistics from the two World Wars.

In the 1945 to mid-1970s era there was full employment. But it was not only the Labour party that engaged in responsible economic management in these years. The Conservative party deserves credit too.

While one should not gloss over its limitations, nevertheless there was a perfectly respectable Conservative form of Keynesian economics in Britain after World War II, and the Conservative governments, by and large, also maintained full employment policies.

While Thatcherism shattered Tory Keynesianism, even under the Iron Lady the Tories had their own fratricidal battles between the “Wets” and “Dries.” The former were old-style conservatives like Sir Ian Gilmour and Jim Prior who opposed Thatcher’s monetarism and more extreme free-market ideology.

In fact, Sir Ian Gilmour is a case in point. What were his economics? His Guardian obituary describes his views:
“Ian Gilmour, the liberal Conservative politician, Lord Gilmour of Craigmillar, … died aged 81, served briefly as Edward Heath’s defence secretary and for two years as lord privy seal under the less congenial leadership of Margaret Thatcher …. his reputation rests less upon his time in office than on his longer term opposition to Thatcher and Thatcherism. His background as proprietor (1954-67) and editor (1954-59) of the Spectator, and his books, made him a different kind of Tory. He was also one of the most consistent, and constructive opponents of Ricardian free market economics and their social consequences to be found in parliament. …. He first attracted attention with his purchase of the somnolent Spectator in 1954 .... Gilmour’s Spectator was humanitarian in social matters, anti-adventure in foreign affairs and Keynesian in economics.
Edward Pearce, “Obituary: Lord Gilmour of Craigmillar,” Guardian, 24 September 2007.
Are there any conservatives like this in Britain anymore?

Could one, for example, find a British conservative in favour of a social democratic state, a “substantial” welfare system, “strong” employment rights, support for some revived form of council housing, and nationalisation of the railways?

It would appear that one such unconventional conservative is Peter Hitchens, the brother of the late Christopher Hitchens. On economics, Peter Hitchens appears to be very unusual for someone who is generally reckoned to be a conservative.

We can see this clearly in the video interview below where he elaborates on his economic ideas.

The economic ideas here are remarkable from a modern British Conservative.

Now no doubt many people on the left loath Peter Hitchens, and would jeer and sneer at him, for his various views: his conservative stand on religion, rather hard views on punishment of criminals, and support for the death penalty. I am not in favour of these things myself and am a person of the secular left, but it seems to me that the negative treatment Hitchens often receives from the left is grossly unfair, irrational, and infantile. The British left, for example, ought to be extremely concerned about the train wreck that is the EU, and leaving it may not be such a bad idea, if it continues to be such a disaster. Certainly adopting the Euro as a currency in Britain would be sheer madness. Even left-wing Modern Monetary Theory (MMT) economists regularly make the case that many peripheral European nations would be better off leaving the EU and Euro zone.

But to return to Hitchens. He is an underrated conservative commentator and – whatever you think about his politics – he is highly eloquent, unconventional, and thought provoking, and well aware of how disillusioned the general British public is with their two main parties, which have no substantive differences on many issues.

But now it is time for my main question.

In the video above, Peter Hitchens says he wants a state “heavily social democratic in social policy … that maintains a substantial welfare state” (at 31.41–31.55 in the video), and with “strong employment rights.” In his view, some kind of council housing is to be restored too. Hitchens even makes it clear that he was no Thatcherite (but agreed with her to some degree on trade unions). In his column he even calls for nationalisation of the railways (see also the delightful video of him here
bashing both New Labour and the Tories in a way that would make an old-style social democrat’s heart swell).

But the trouble here is the following: it is unclear how a government “heavily social democratic in social policy … that maintains a substantial welfare state” with “strong employment rights” is to be achieved. The fine details are missing.

Is Peter Hitchens advocating Keynesian economics? Does he want to see a Britain with full employment again?

The only effective economic theory for achieving anything like what Hitchens seems to want is Keynesian economic policy, the tried and tested system for successfully managing capitalist economies, which avoids the extreme errors and follies of Marxism and communism. As we saw above, Keynesianism used to be mainstream Conservative policy too.

Furthermore, the feeble mainstream neoclassical version of Keynesianism is not up to the task, but it is Post Keynesian economics that is required.

The crucial point is that – as far as I can see – unconventional conservatives like Hitchens just have not thought out their economic program. How are they going to respond to and refute the mainstream Conservative economists and Thatcherites who will tell them their economic program is unattainable and incompatible with neoclassical economic theory? That “strong employment rights” and “nationalisation of the railways” is contrary to (alleged) economic laws, wage flexibility, and so on and so forth?

A look through the comments section of Hitchens’ column and the blogosphere shows that his economic program at times provokes strong attacks on him from libertarians and other conservatives of the laissez faire persuasion. This is not surprising because (even though the fine details are not clear) his economic ideas have their natural home on the left, not the right.

How is he going to defend his economic ideas without a coherent economic theory? These are the questions that Conservatives who wish to return their party to a social democratic/Keynesian system need to think over very carefully indeed.

Boyer, George R. and Timothy J. Hatton. 2002. “New Estimates of British Unemployment, 1870–1913,” The Journal of Economic History 62.3: 643–667.

1 comment:

  1. I agree. Peter Hitchens is not dogmatic and is unusually thoughtful for a conservative. I am sure this is because he can see that the neoliberal era involving monetarist policies has led to a lot of unemployment among other things. He can see this has led to the de-industrialization of Britain.