Nothing without Labour

It will take several years at least to return to rational economic policies for domestic and global economies. That is if – at last – we begin right now to do the right things.

What are the "right things"?

The quote from 1973 said "we need to do two things?"

What are they?

The first is to acknowledge that we are dealing with a new economic and financial situation. We must make fundamental changes, not just tinker with details at the margin. In this context a solution to Greek debt will not solve the problem of global debt – sovereign, commercial and personal. Nor will it correct the range of financial and economic policies which caused the perilous and ultimately devastating accumulation of financial disequilibria.

The second thing we must do is to look again at our broad macroeconomic policies so that they deliver full employment and stable growth within the sort of society that Keynes and others envisaged. At the same time, we must take account of the many revolutions that have occurred in production, distribution and exchange over the last several decades.

To tackle these changes, we must imagine we are at a point of reflection on policies similar to that at the end of the 1930s. We need to consider what should now replace the ineffectual United Nations and its Specialised Agencies as well as global financial institutions. We need to reflect on urgent practical issues such as what our reserve currency for international transactions should be. What should be the role, if any, of a reserve currency? What should be the role of gold?

What we do know is that while the market must be allowed to play a vital part in our economic and financial life, it cannot be allowed a completely free run. It may be funny to declare that "the market is toast" but we must devise a new "toaster" – not necessarily through more regulations but smarter regulations if we are not to continue to burn our toast to a cinder.

What then should we do?

I cannot set out all the detail in this article. I have done that already in "America's Suicidal Statecraft". However, in broad terms -

The current UNGA should appoint a small but distinguished and gifted group (DIGG) charged with examining data and proposals connected with the current global financial situation. It should produce a report of practical measures before the end of 2011 based on proposals for sustainable growth through fixed capital investment, productivity and production instead of policies of restriction and austerity.

The measures should aim at full employment through public enterprise, wise public banking and direct public investment. The emphasis should be on production of goods and services for a stable and growing market and the effective elimination of the massive current speculation in capital, currencies, commodities and commerce.