Investment can benefit society and help stabilise the economy. A separate capital budget, distanced from political interference, is the best way forwardby Robert Skidelsky / August 8, 2017 / Leave a comment
Published in September 2017 issue of Prospect Magazine
Deficit fetishism has finally been defeated. As I recently wrote in these pages, this year’s Queen’s speech finally put “strengthening the economy” ahead of “the public finances.”
This is progress. But there is still no agreement on what should replace austerity. If the doctrine that a country can cut its way back to prosperity is dead, the hunt for new answers should start with the most obvious alternative—enriching ourselves by investing in valuable things.
The state must reaffirm its own role here. In the Keynesian post-war age, it was accepted that the state had an important—and probably increasing—part to play in capital formation. Yet since the 1970s, things have gone the other way. In the UK, public investment as a share of total investment fell from 42 per cent from 1960-75, to 20 per cent from 1975-2013.