Responding to criticisms that the Left have produced no alternative to Osborne’s plans for the economy, Compass has offered its proposals in a new publication.
Plan B seeks to provide an alternative way forward for the UK. It relies on a set of emergency measures to kickstart the economy, using quantitative easing to finance a ‘green new deal’. Compass argue that further cuts will make the economy worse rather than better, and that the current austerity programme should be halted.
The macro-economic case for Plan B over Plan A remains deeply contested. Meanwhile Compass has some good points to make on banking reform:
‘Under the current financial system, the government effectively franchises the creation of credit to the commercial banks whose lening has created unsustainable asset price inflation, in housing notably, while poorly serving ‘useful’ economic activity. The franchisees, the banks, have been appalling at allocating resources, even as they have benefited hugely from having the privelege to create and issue credit’.
And ‘understanding the deep resistance to change from within, and finance’s pathological lack of concern for the broader economic and social infrastructure on which it depends, is an imporant background to framing an alternative to banking’.
The solution proposed in Plan B is the full separation of retail and investment banking, with measures to curb excess pay and bonuses in the banking sector. It is not made clear what form such measures would take.