The wait is over. You can now download the first in the series of SPERI Papers here.
In the opening paragraph of SPERI Paper No.1 The British Crisis: a Crisis of and for Growth by C0-Director Colin Hay; Professor Hay argues:
“It is only by acknowledging the complicity and culpability of a decidedly and distinctly Anglo-American conception of capitalism in the inflation and then bursting of the bubble, that we can begin to see the full extent of what is broken and what now must be fixed. It is to this agenda that the present paper speaks. It draws on a now substantial body of empirical research, but it seeks to do so in a rather novel way – to argue that the crisis is best seen as a crisis of and indeed for growth and not as a crisis of debt. It is, moreover, a crisis of and for an excessively liberalised Anglo-American form of capitalism and the Anglo-liberal growth model (as I will call it) to which it gave rise. This is a form of capitalism and a growth model that was inherently unstable and threatened the entire world economy – its excesses cannot be tolerated again.”
After detailing what he sees as the main problems with the current model of growth, he then outlines some serious solutions including:
- The shaming of the banks into reducing the exorbitant interest rates they are charging consumers and home-owners as well as commercial borrowers on their debt ‑ for mortgagees, these are now typically 10 times the base rate.
- To politicise the cost of borrowing and call for Government and the Bank of England to assert downward pressure on the actual cost of borrowing and stop banks from effectively recapitalising themselves by charging commercial borrowers, mortgage holders and those servicing consumer debt a sizeable interest-rate premium which is suppressing demand and investment and prEvents|News the investment required to make the transition to a new more sustainable model of growth.
- More public investment which could prove to be a highly cost-effective way of providing the public goods on which the transition to a new model of growth relies.
- Deficit reduction must be made conditional on growth
- It is imperative that steps are taken at an international and ideally global level to agree a coordinated strategy for managing debt and growth.
- British policy-makers to reconsider the relationship between investment banking and commercial banking which is allowing commercial banking to subsidise investment banking in a way that impairs the capacity to build a new growth model.
The paper echoes the key part of the SPERI ongoing research agenda – to develop the kind of political economy needed to ensure a sustainable recovery.