A long article in the Socialist Economic Bulletin (15 February) and on the Labour Left website Left Futures argues that the “centrepiece” of Labour Party economic policy should be a national investment bank. This would be a publicly-owned bank, able to borrow more cheaply than commercial banks because of its government backing, and lending for infrastructure and industrial projects.
The model is the KfW, the German state’s federal investment bank, set up under the Marshall Plan in the 1940s and still going strong. A safe, conservative model, maybe a useful capitalist technique, but in no way anti-capitalist. The current chair of the KfW Supervisory Board is German finance minister Wolfgang Schäuble, Europe's sternest austerity-hawk.
The authors of the SEB/ LF article are Michael Burke, a regular contributor to SEB (which describes itself as “published by Ken Livingstone”), and John Ross, a professor at a Chinese university who is connected to the Socialist Action group in Britain.
The odd thing is why they think there is anything specially socialist or left-wing about the proposals for a Schäuble-bank in Britain. Yet they think it so left-wing that in return for it they are willing to write that Labour “should not borrow over the course of the business cycle for current expenditure”, a superstitious and unnecessary limitation. They denounce George Osborne not so much for class war as for “profligate international borrowing”.
Germany, with the KfW, has since 2002 had some of the harshest attacks on lower-paid workers' conditions and welfare in Europe. A socialist policy needs, not just a national investment bank, but public ownership and democratic control of all the banks.
World trade crashes
The Financial Times (26 February), bases itself on the first official estimate of total world trade in 2015, from the Netherlands government, to say that global exports and imports of goods fell 13.8% in dollar terms in 2015. Before the 2008 crash, world trade had been growing fairly steadily at about 7% a year, and markedly faster than world output for decades. The 2015 decline is partly down to the slump in the price of oil and some other basic commodities. But there is more to it than that. World trade has grown very slowly, by previous standards, since 2009. Some declines have been startling, like the 60% reduction in container traffic from China to Brazil in January 2016 compared to January 2015. The elements are gathering for a new crash. Even if that is avoided, a protracted depression is likely.