Ed Balls speech to the Fabian Society

Ed Balls speech to the Fabian Society; Balls speech SOT- As it happens, that conference was the occasion of the infamous ‘post neo-classical endogenous growth theory’ moment - which, for those who don’t know what it means, says that the rules of the game that the government sets on taxes, spending and regulation are not irrelevant to growth but can have a profound impact - for good or bad - on how the economy works. Of course, those were very different times, and the policy debates of that time emphatically do not offer a blueprint based on the past when today we face such different economic and political challenges. But the unspoken purpose of that 1994 conference and its emphasis on Bank of England reform and fiscal discipline was to address Labour’s economic credibility deficit, and dispel the idea that the party was addicted to the short-term, quick fix, vested-interest-appeasing solution to every problem. I went back this week to look at the reporting of that conference - and in particular a preview piece in the Independent on Sunday with an anonymous briefing from ‘a senior party insider’. The article started by saying Tony Blair and Gordon Brown will "ceremoniously ditch Labour’s traditional 'tax, spend and borrow' image this week, in a fundamental re-positioning of his party’s economic strategy." All under the headline Labour Ditches Keynes. As someone who had only recently studied ‘New Keynesian’ economics at Harvard, with Democrat Keynesians like Larry Summers and Republican Keynesians like Greg Mankiw, I must admit I was pretty appalled to see the greatest economist of the twentieth century traduced like that. But the fact was that in the Monetarists versus Keynesians economic debates of the 1970s and 80s, the label ‘Keynesian’ had become, certainly in Conservative circles, a dirty word: profligate, irresponsible, statist, inflation-loving, not to be trusted. A caricature that clearly could not be allowed to be a Labour carica...