In bemoaning the coalition's lack of evidence-based policy, Simon Wren-Lewis inadvertently draws our attention to a difference between centrists and Marxists.
We Marxists are not surprised that policy-making should be uninformed by reason, simply because the function of the state is not so much to act as a Platonic philosopher-king disinterestedly aiming to maximize a social welfare function, but rather to advance the interests of capital.
Seen from this perspective, some of the failings Simon describes become more understandable. For example, the renunciation of Keynesianism is intended to ensure that capitalists retain power over the economy by ensuring that employment depends upon their "confidence" rather than upon the state. As Kalecki said, "The social function of the doctrine of 'sound finance' is to make the level of employment dependent on the state of confidence." And welfare cuts, plus the unemployment created by austerity, are intended to boost the supply of cheap labour, thus holding wage costs down.
This, though, poses the question: is the coalition really acting as the intelligent steward of capitalist interests? There are some reasons to suspect not:
- If we're in a "wage-led" regime, then the adverse effect upon consumer spending of low wages offsets the positive effect upon capital spending of decent profit margins. If so, then - depending upon the relative size of these effects - the coalition might be depressing profit rates. This is because its possible that a low output-capital ratio (relative to some counterfactual) is offsetting the high profit share.
- Growing inequality (in the sense of the share of income going to the very wealthy) might eventually trigger a backlash which jeopardizes the interests of the rich. There's little sign of this yet, but history suggests things can change quickly.
- Many of the wealthy are losing directly from the coalition's policies. "Fiscal conservatism and monetary activism" has caused years of negative real interest rates, to the pain of many richer savers.
In these senses, it could be that this government is - in effect - unThatcherite, insofar as it is not promoting the interests of the rich as well as she did.
Herein, though, lies a rather embarrassing question for us Marxists. If we concede that this is the case, what does it tell us? Does it tell us the coalition is so stupid that it's not acting even in capitalists' interests, let alone the public's? Or does it instead tell us that the (cruder) Marxian conceptions of the state are mistaken, and that the state doesn't always promote capitalists' interests? I walk away muttering about the relative autonomy of the state.