Labour Research February 2010


No way to run an economy

Why the system failed and how to put it right

Graham Turner, Pluto Press, 222 pages, paperback, £12.99

This book illuminates how the greatest credit boom of all time has calamitously ended. Turner records how the massive amounts of spare capital sloshing around the global economy were ploughed into ever more implausible investments. Yet despite this surfeit of cash, the average worker’s salary has stagnated. Specifically, while the bankers and mergers lawyers grew rich beyond their dreams, the median US wage did not rise at all between 2000 and 2008.

Turner is as alarmed by the systemic failures that allowed the crisis to occur, as with the response of central banks to the chaos. In particular, he argues that quantititative easing should have been more aggressive and begun earlier.

He is understandably most concerned about the future. All the weapons at the disposal of the central banks are now close to spent — quantitative easing is coming to an end, and interest rates are already at rock bottom. So there remains little standing between us and a decade of Japanese-style spiralling deflation.

The author is passionate about the injustice of a situation where we pick up the tab for reckless lending by banks and argues for greater worker participation to moderate capitalist excess. To this end, he makes a convincing case for companies being obliged to seek approval for their decisions (such as offshoring) from worker representatives.