Labour’s promises: What if there is no growth?

 The Labour Party seems to be relying a lot on being able to conjure up “growth” to honour its rash election promises.

Last week, Darren Jones who is the would-be chief secretary to the Treasury was reported as saying:

“If we are successful in growing the economy in the way that we think we will be, then that creates more investment” (Times, 4 January).

This is a strange argument as business investment is what brings about growth. So any growth that might take place would be as a result, not the cause, of business investment. He’s put the cart before the horse and expects it to pull the horse.

But it’s not only creating new business investment that they say the growth they think they can conjure up will bring about. A speech by their would-be Health Secretary, god-botherer Wes Street, was reported under the headline: “Labour says it would rely on growth to fund pay rises to the NHS” (i paper, 6 January). 

On the same page the same paper reported the clueless Labour Leader himself:

“Sir Keith reiterated his comments on Thursday that economic growth was key to creating wealth and improving living standards.”

But if a Labour government under Starmer is not as lucky as the Blair Labour government was in happening to be in office during a period of growth, and there is no growth at the rate Labour think they can bring about?

Back to Darren Jones:

“If we are not [successful in growing the economy], then the fiscal rules come first and are non-negotiable.”

So. fiscal conservatism, otherwise known as austerity. 

In any event, no government can control growth — that depends on business investment which in turn depends on the prospects for making a profit. Growth may or may not happen when a Labour government is in office but, if it does, it won’t be due to anything that government did. It would have happened anyway, even under a Tory government.

Governments don’t and can’t control capitalism. It’s rather the other way round — it is the operation of capitalism, as it passes through its cycles of boom and slump, that sets severe limits to what they can and cannot do.