If new Labour Leader Jeremy Corbyn and his shadow finance minister, John McDonnell, had their way, Britain would create a workers fantasy land. Conservative-inspired austerity measures would die, the Bank of England printing presses would spew out billions of pounds for public projects, banks would be broken up, university tuition would be free and utilities would be nationalized.
The policies sound awfully like a throwback to pre-Thatcherite Britain, with a dash of Venezuela thrown in, but they were enough to win Mr. Corbyn a landslide victory in the Labour leadership race on the weekend. He captured the imagination of party supporters who think that the British government exists largely to please the bankers, oligarchs and other rich bastards.
During the leadership competition, Mr. Corbyn won the plaudits of more than a few sober-minded economists, among them a former adviser to the Bank of England.
"Corbynomics," as his economic policies have been dubbed, are not as dubious and unworkable as they are billed by the hysterical British press. But you would not realize that by reading the papers, which consider Mr. Corbyn and his team unelectable loonies – the gift that will keep on giving for Prime Minister David Cameron's Conservatives.
The Financial Times pronounced Mr. Corbyn's leadership victory "a disastrous choice for Labour." In a headline, The Telegraph called Mr. McDonnell a "nutjob." The paper later watered down the insult, accusing him of "cloud cuckoo land economics." The Economist magazine dismissed Mr. Corbyn as "boring," perhaps the most cutting insult of them all in a country that prizes its politicians for their entertainment value. Even the lefty Guardian could not bring itself to endorse Mr. Corbyn.
Mr. Corbyn was a 100-to-1 shot to get the job when Ed Miliband self-destructed in Britain's spring election. He is 66, perennially crumpled and bearded and has been a north London Labour MP since 1983. During his tenure, he has been identified with the far socialist left of the Labour Party and made a name for himself as a Sinn Fein and Palestine sympathizer and tireless union supporter and anti-war activist. He was one of the key organizers of the February, 2003, mass march against Britain's involvement in the Iraqi war, which is thought to be the biggest protest in British history.
To his credit, he is a real tightwad when it comes to spending taxpayers' money. In the 2009 parliamentary expenses scandal, an investigation found that his claimed expenses were the lowest among all of the 650 MPs.
Mr. McDonnell, 64, seems cut from the same red cloth. He is a former union official and was deputy to Ken Livingstone when Mr. Livingstone was leader of the Greater London Council. He is billed by the mainstream press as an anti-capitalist, which may not be misleading, given that, in Who's Who, he listed his hobby as "generally fomenting the overthrow of capitalism." He once joked that he would have loved to have assassinated Maggie Thatcher. He is somewhat of a Europhobe, like his boss, and has admitted that he might support Britain's withdrawal from the European Union.
Taken together, the economic policies of Mr. Corbyn and Mr. McDonnell are broadly similar, which is why Mr. McDonnell was handed the shadow chancellor of the exchequer's job.
To be sure, Corbynomics has some truly wacky bits. Mr. McConnell wants to end the cherished independence of the Bank of England, which would make the bank the cynical political plaything of the reigning chancellor. Both men support the nationalization of strategic industries, including rail and banks, which is not a radical idea in itself, although Mr. McConnell has said he would snatch them back without compensation, which is radical.
But some Corbynomics policies would be considered mainstream. Mr. Corbyn and Mr. Donnell think that austerity has gone too far. In the era of essentially free money, they are right. Nobel-winning American economist Paul Krugman has made a career of denouncing austerity.
The duo would separate investment and retail banking to shield taxpayers from losses piled up by the "casino" end of the business if the banks were to fail. Again, nothing bone-headed here. In the United States, at least, banks were divided until the 1990s, when the Glass-Steagall laws were finally whittled away to nothing – a great mistake in retrospect, given what happened a decade later.
One Corbynomics idea – people's quantitative easing, or PQE – might be a huge win for Labour if the party were to get into power. PQE would be a variation on standard QE, which sees central banks create money to lubricate the economy and stimulate inflation, through the purchase of bonds in vast quantities. But QE has been criticized because, by inflating the value of financial assets, it makes the rich richer. PQE would print money and, in essence, hand it indirectly to the people through spending on infrastructure, social welfare, schools and the like.
PQE is a fine idea, but has one essential flaw, as economics writer Anatole Kaletsky pointed out in recent column in Prospect magazine: Public spending under PQE would be hard to turn off. Once it has started, no one likes to see social spending disappear.
A variation of PQE might be the solution. It would see the direct distribution of newly created money by handing every citizen, say, £20 ($40) a week until Britain returns to its precrisis growth. (The European Central Bank could do the same.)
Once direct PQE achieves its economic and inflation goals, it could be easily turned off. PQE would be egalitarian and would stand a good chance of being effective. A lot of economists think that the idea is worth exploring. Offering free money to the people would also help Labour win the next election.
Jeremy Corbyn opposes the Conservative government's spending cuts and wants to make the tax system more progressive. He wants to bring in a higher rate of national insurance social security payments for the highest earners, increase the rate of corporation tax and reduce tax relief for businesses. Mr. Corbyn has called for the railways, postal service and energy networks to be returned to public ownership. He has said he would create a national investment bank which would use public funds to invest in infrastructure and housing, and said he would consider giving the Bank of England a mandate to print money to invest in new large-scale housing, energy, transport and digital projects.
As vice-chair of the Campaign for Nuclear Disarmament and national chair of the Stop the War Coalition, Mr. Corbyn favours scrapping Britain's nuclear weapons and pulling out of the NATO military alliance. Last year, he said the crisis in Ukraine was partly the result of NATO's expansion in Eastern Europe and that Russia was "not unprovoked." Euroskeptic Mr. Corbyn initially refused to rule out campaigning to leave the European Union at a membership referendum promised by Prime Minister David Cameron by the end of 2017. He has since said Labour should fight to reform the EU from within.
Mr. Corbyn has criticized the United States for putting pressure on Britain to boost its military expenditure and has said the long-term impact of U.S. foreign policy will be to divide the world. He has described members of the Palestinian group Hamas and Lebanon's Hezbollah as "friends." He has a history of political sympathy for Gerry Adams, the leader of Sinn Fein, the former political wing of the Irish Republican Army which ran a 30-year armed campaign against British rule in Northern Ireland.
Mr. Corbyn has called for the re-establishment of a labour ministry to help bring in workers' rights legislation and deal with working conditions and repeal measures brought in to restrict the influence of trade unions. He wants to abolish university tuition fees, ban employment contracts that do not give any guarantee of work and build more social housing. He has also called for rent controls on private housing.