When Liz Truss and Kwasi Kwarteng drew up the plans that led to the turmoil of recent weeks, says Owen Jones in The Guardian, they were working to a blueprint devised in a Swiss mountain resort in 1947. Gathered there were the economists Friedrich Hayek and Milton Friedman, and the philosopher Karl Popper, and they were all “profoundly depressed”. The “central values of civilisation” were in danger, they declared, thanks to a “decline of belief in private property and the competitive market” after the Great Depression and two world wars. What turned their ideas into government policies was turmoil. “Only a crisis – actual or perceived – produces real change,” said Friedman. “When the crisis occurs, the actions that are taken depend on the ideas laying around.”
Today’s crisis is just such an opportunity, and Labour must grab it. When Kwarteng bemoans the “cycle of stagnation” and Truss damns “business-as-usual economic management”, they are right. But their remedies are “a nonsense”. Slashing corporation tax will lighten the public purse to the tune of £18.7bn, but the idea it will pay for itself with boosted investment is a fantasy. Rishi Sunak was right to point out that the period of lower corporation tax under George Osborne did “absolutely zilch for investment in our economy”. Labour has made a good start on proposing an alternative programme, “from nationalisation of rail to a sovereign wealth fund to a public energy generation company”. If it can find the same “courage and determination” that drove Hayek and Friedman to remake the global economy, now’s the time.