During the past year ERA Review has published various articles highlighting the possibility and desirability of funding essential public services and utilities entirely by government spending, rather than through market operations dedicated only to achieving corporate profits. This alternative to the current system used to be described as a mixed economy, long before major political parties succumbed to the pressure of neoliberal spin and decided to uncritically accept the self-interested recommendations of business and banking economists. The latter groups have never wasted an opportunity to inform us that there is no alternative to state support for corporations combined with austerity for the majority of our citizens (the TINA principle) at a time when corporate profits and corporate tax evasion have ballooned to record levels.
At present there exists, in Australia and other countries, considerable unused capacity for the production of goods and services. In such circumstances a monetarily sovereign government can make use of deficit spending in order to fund essential projects, without needing to worry about the possibility of inflation. Such spending always adds new financial assets to those held by the private sector as a whole, thereby boosting its ability to spend, save and invest, which in consequence exerts downward pressure on unemployment. Public borrowing is the conventional route, however direct funding from the central bank is entirely possible and the latter route has been employed in the past, especially during times of crisis.
There is no shortage of useful projects to which such funding can be directed. Topical and important examples include (a) the provision of government grants to research bodies concerned with developing alternative methods for electrical power generation to those which depend upon burning fossil fuels; (b) increased grants to citizens for the purpose of assisting them to install solar panels on their houses; (c) making education affordable at all levels to those who desire it and are qualified to undertake it, without obliging those at the start of their working life to service crippling education debt – in other words, recognising that education is an investment in the future of our country; and (d) grants to local governments for justified projects.
All of these things, and much more, are possible. What needs to change is the mindset of those who have not understood that the dysfunctionalities in the prevailing economic system can be successfully tackled and eliminated. The first line of attack must include educating the average citizen and the journalists who write for them, who continue to misunderstand the nature of the forces which are moulding and controlling their lives, and also the groupthink of those in positions of power and influence in our society who – in many cases – have been led unwittingly to believe that there is no alternative.
* Quote from the late Prof John Hotson (cofounder of COMER, the sister Canadian organisation to ERA)