IN THE discussion around the Budget, you may have noticed the odd reference to “modern supply-side economics,” much beloved of the Biden and now the Starmer administrations. 

Supply side economics in Britain was an ideological approach shared by both Labour’s last administration and of course the Tories. 

There were two key elements to it. The primary drivers were tax cuts and deregulation on the expectation that both would encourage growth by incentivising economic activity and consequently that this wealth would “trickle down” to the rest of society, because, it was argued, in the face of globalisation there was little else governments could do.

Except of course the other aspect associated with this approach — primarily but not exclusively labour supply and human capital (for which read a well-trained workforce). 

The Morning Star analysed Labour’s approach to education and training in April, while they were still in opposition. The article quoted Liz Kendall, then shadow, now the actual secretary of state for work and pensions: “We will invest in you and help you build a better future, with all the chances and choices this brings. But in return for these new opportunities, you will have a responsibility to take up the work or training that’s on offer. Under our changed Labour Party, if you can work there will be no option of a life on benefits.” 

From this perspective the value of a worker depends on their “employability,” whether they have the necessary skill set to be attractive to a world market. The state has no other role to play and certainly not one of creating employment through state ownership. 

Rachael Reeves’s version of “modern supply-side economics” which she calls “securonomics,” retains this, not so modern, element. 

There is even a question mark over the extent to which she is matching the US Secretary of the Treasury Janet L Yellen, in challenging the diminished role of the state as set out in “traditional” supply-side approaches. 

Speaking at the World Economic Forum in 2022 Yellen argued: “Our new approach is far more promising than the old supply-side economics, which I see as having been a failed strategy for increasing growth … Significant tax cuts on capital have not achieved their promised gains. And deregulation has a similarly poor track record in general and with respect to environmental policies — especially so with respect to curbing CO2 emissions.”

This does not sit well with Keir Starmer’s slightly desperate anti-regulation mantra. Nor do the actual sums of money that Reeves will dispense go anywhere near the stimulus provided by the Biden administration in his application of other options available to modern supply-side approaches — funding public infrastructure, research and development and supporting green economic development. 

In 2022, for example, Biden signed into law the Infrastructure Bill which amounted to $1.2 trillion, including $550 billion in new investments for bridges, airports, waterways and public transport.  

Even bearing in mind the vast size of the US economy compared to Britain’s increasingly diminished economic position, this dwarfs Reeves’s ambitions, and it may partly explain her attempts to find more money by changing the fiscal rules to free up billions of pounds for more investment in infrastructure — the kind of investment necessary to imitate, however palely, the US success.

For there is no doubt that the US economy has grown and at a rate beyond what most commentators had expected. Biden argues that investments in green energy, roads and infrastructure have made a significant contribution to this growth. Hence Reeves’s enthusiasm to emulate this approach if Labour is to retain power in five years’ time, or even last till then.

In case you mistake this for a defence of supply-side economics old or new, let me say that on the contrary, both approaches are designed to support capital, not control it. Both are replete with opportunities for the private sector to invest on the basis of infrastructure they did not pay for and on a workforce educated and trained by public provision. 

As an economic philosophy it is deeply hostile to state interference, especially public ownership, and it acts without concern or responsibility for workers who generate the wealth. Increased growth in the US, for example does not mean secure employment. In 2024 thousands of workers across many sectors lost their jobs. 

Exactly what this means for the working class in Britain can be seen in very stark terms in Grangemouth. The Grangemouth refinery is currently owned by Petroineos, a joint venture between Chinese state-owned PetroChina and London-based Ineos, the property of the billionaire Jim Ratcliffe. 

In September, the company announced the plant would close by next summer. The site would then become an import and export oil terminal facility requiring only 100 jobs. It currently employs 475 people.

As covered in the Morning Star, there is strong case for public ownership of the Grangemouth refinery. It would place the refinery directly under the control of the Scottish government, allowing that government to integrate it into an industrial strategy for Scotland. It would also allow greater transparency and accountability in its transition towards green technologies and provide the economic stability necessary to win the investment to develop those technologies. 

Depressingly, those like Brian Leishman MP who, with the support of Unite, has staged a staunch defence of retaining the plant, are unable to make any advances in in their discussions with the Scottish and British governments. They have instead been promised a joint £100 million package designed among other things to offer “Immediate career support for workers. Scottish and UK government to provide tailored support that will help affected workers in finding new employment.”

As long ago as 2001, under the first iteration of supply-side economics, Wendy Alexander, minister for enterprise and lifelong learning in the Scottish Parliament, exposed the impotence of government guided by such a philosophy. 

She wrote in the Sunday Herald: “The role of government is to say that instead of providing a safety net — we can’t guarantee you a job for life — we can provide you with a trampoline that makes you feel confident and makes you feel secure enough to move between jobs. My entire skills strategy is about making that trampoline.”

Across the nations and regions, Britain is pock-marked with disused pits, deserted factories and shuttered car plants where once there were thriving workplaces that supported vibrant communities. 

“Modern supply-side economics” is merely another means to facilitate the rapacity of contemporary capitalism. Workers are expected to climb on bikes or jump on trampolines. This time, we need to stay where we are and fight.