poor declined. This, to repeat, is socially intolerable; a firm stand for a more equitable sharing of income must be strongly a part of our platform. The rich will desert us; to speak more precisely, they already have. That the interests of the average citizen are different must be the focus of our persuasion. We do not accept the arguments so elegantly contrived to protect the financially privileged the case that the rich need the incentive of more income as the poor need the spur of their own poverty. \(The rural Canadian version of a slightly different point, one with which I grew up, was: If you feed the horse enough oats, some will pass through the road The progressive income tax was one of the civilizing and sustaining supports to capitalism. In pressing effort to sustain aftertax income and living standards we must note that it also has affirmative economic effect. A reasonably equitable distribution of income is a stabilizing economic influence is macro-economically functional. The poor and the middle class spend their income; their support to aggregate demand is stable and assured. Only the affluent have the privilege of withholding income from the spending stream for the uncertainties of investment use. Some of the present economic difficulties of the United States must be attributed to the Reagan largess to the rich. Iturn now to our major task. That is to assure that we are the political community that can make the modern mixed economy work. The prime weakness of the conservative position, as present American and British experience both affirm, is the inability to deal effectively with economic depression. I use the word “depression” advisedly; the term recession implies an automatic tendency of the economy to a high-level equilibrium. The modem reality is an underemployment equilibrium like the one experienced more severely in the decade of the 1930s. It will not, as conservatives believe or assume, correct itself and return the economy automatically to full employment. Our political future depends more than anything else on our ability to keep the economy at reasonably full employment to assure the voting public that we are the political force that can there sustain it. We do not accept, as do Conservatives and Republicans, that the economy has inherent restorative powers; we do not imagine that high-level stability can be assured by the magic of monetary action that involving no bureaucracy, no public cost, no public effort, just the right decision by the central bank. The magic of monetarism. It is none of our belief that there is some unique association between money, banking and human intelligence. Ours must be a continuing program with a commitment to real and effective action. It is, to repeat, basic to our political reputation and success that we make the mod em economy work. To this end, when there is unemployment, we must provide the alternative of work. This we must do by having a wide range of needed public investment public wealth creation available as an alternative. And to this end we must accept as necessary a deficit in the public accounts; that is the other name for public investment. Then, when the private market is functioning adequately, we must reverse this course. Ours must be the course of intelligent, disciplined and economically supportive budget policy. To those who say that this design has a slightly antique sound, only one answer is possible: There is no other. Those who in depression, as now, urge reduction of taxes do so on the hope, or more often the glib assertion, that the money so saved will be spent or invested. Of this there is no certainty of any kind. Much of the case for tax reduction as a counter-cyclical measure derives not from its probable effectiveness but from its compelling appeal to those whose income would be so enhanced. The disutility of monetary policy has already been mentioned. It does work against inflation by creating unemployment, soft business conditions, a recession cum depression. Not often is a cure so visibly worse than the disease. As a weapon against recession, it is nearly worthless. This, as often before, we are now seeing. One cites the old metaphor: You can pull on a string but you cannot shove on a string. There is a further requirement for basic business stability that must be part of our program, must be central to our economic reputation. That is a wage-negotiating process that is consistent with overall price stability. In urging this, I have no great sense of originality; this is a matter on which it has been adequately observed that the English-speaking countries and their tradeunion tradition have lagged behind our European and Japanese counterparts. But it is a matter on which there has been a major change in modern times. Once this was seen as a surrender to corporate power; now it must be seen as a counterpart of corporate weakness and not infrequent incompetence. This means that the modern trade union has a cooperative, even protective role it did not have in the past. This a party and government allied with labour must now accept and avow. It is essential to our claim that we offer stable, progressive government. It is essential also to a macro-economic policy that does not rely in dealing with microeconomic inflation on repressive monetary and depressive fiscal policy. It accommodates to an age when we on the left must see ourselves and be seen as a strongly affirmative, not merely a protective, economic force. There is a final and greatly disputatious matter with which we must be concerned. That is our international position and role. On the social left, needless to say, we reject narrow, mindless nationalism as we reject ethnic and racial conflict. All give voice to the emotionally aggressive but mentally deprived. We are sensitive to the repression, death and destruction that have emerged from such emotion in this century and that continue in our own day. We accept that the modern advanced economy, in trade, capital movements, travel, communications and corporate management, is international in its effect. That it draws participant nations closer together is its undoubted virtue. It is the poor countries that now slaughter each other and, notably, their own people. Economic determinism, we cannot doubt, can be a benign force. That it diminishes the authority of the nation-state and moves toward international unity we cannot doubt. This we approve and applaud. But all things must be in their own time. There cannot be exchange stability and common currency until there is an alignment of domestic fiscal and monetary policy. The latter, in turn, are an expression of internal social need and more general economic policy. These have a strong, even primary claim. As I’ve observed, they were what made capitalism tolerable, saved the market system. So we must take things in their order first, the alignment of social policy and other internal policy, then the unifying currency and other action that become possible. We do not stand against the broad thrust to an international order. We accept the trade adjustment that this requires, reserving only the need on occasion to soften their human effects. But internal social action and the move to larger international authority must be in step with each other. It renders no service to international order that it be seen as a cost to civilizing domestic action. Iconclude and stress again: Ours is not an age of broad theory; it is an age of pragmatic thought and action. We are not the advocates of a revolution; our past achievements removed this from consideration. The broad outlines of the modern mixed economy are here to stay. What remains is the task of making the system work better and for all the people. That does not mean that we take comfort in the status quo; we do not appeal to the economically contented community that does. We are the agents of responsible, compassionate change with a special sense of our responsibility for those the many in the United States and the not few in Britain who now subsist outside the larger system. We are the advocate and voice of those who, accepting the present system, believe that it can be more truly in the service of all. 8 NOVEMBER 12, 1993
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