With the Marx-reading campaigner as shadow chancellor, renationalisation is back on the agenda along with wealth tax and a higher living wage

Chris Leslie, Labour’s short-lived post-election shadow chancellor, said the party should pitch its appeal to “the Which? magazine strata of society” made up of cost-conscious middle-class consumers and buy-to-let landlords. His successor, the veteran leftwing campaigner John McDonnell, is more likely to be found reading Karl Marx.

Marx’s Capital, with its prognosis – as yet unrealised almost 150 years on – that capitalism’s inherent contradictions and periodic crises would eventually bring about its collapse, is the first book O’Donnell recommends reading to understand the thinking behind Labour’s new economic policy.

More contemporary thinkers cited by the shadow chancellor include Mariana Mazzucato, of the University of Sussex, who has argued about the need for more creative state involvement in business and innovation. Paul Mason, Channel 4’s economics editor and a Guardian columnist, whose book PostCapitalism explores the impact of rapid technological change on old economic models, is also an influence; as is Andrew Fisher, a trade union researcher who advocates wholesale renationalisation of swaths of the economy.

John McDonnell: unreconstructed on the left, but with allies on the right Read more

McDonnell’s ideological clarity springs from precisely the opposite analysis to Leslie’s contention that Labour lost the general election because it tacked too far to the left under Ed Miliband, frightening centrist voters by appearing too ready to seize control of chunks of the private sector.

Instead, Jeremy Corbyn and his supporters believe Miliband was too cautious. They hope their message will find a ready hearing in an economy where the booming housing market has created a deep schism between the haves and the have nots; boardroom pay has rocketed since the recession while average wages have flatlined; and City traders are back to their bad old bonus-winning ways.

So when it comes to concrete policy, McDonnell’s approach is likely to be Milibandism liberated from the New Labour dread of alarming Britain’s boardrooms.

Widespread renationalisation is back on the agenda; so is a much more progressive tax system, including exploring the potential for a wealth tax, as recommended by the French economist Thomas Piketty, and the repeal of George Osborne’s planned corporation tax cuts.

McDonnell would outbid the chancellor’s “national living wage”, aiming at £10 instead of the £9 or so that Osborne has said the minimum wage will reach by 2020; and he will be full-throated in his opposition to the chancellor’s £12bn of welfare cuts, instead of running scared of being branded the benefit scroungers’ friend.

One New Labour shibboleth that McDonnell appears not to be prepared to ditch, though, is the need to echo the Conservatives’ determination to keep a tight rein on the public finances.



Richard Murphy, the tax justice campaigner regarded as the inspiration for much of the “Corbynomics” agenda, in particular the notion of “people’s QE”, says he is disappointed that McDonnell has insisted that he is not a “deficit denier” – a phrase repeated by Corbyn in his speech to the TUC yesterday.

“If anything, I’m afraid that at the moment he’s being too cautious. I certainly would not be saying there’s a need to balance the budget,” Murphy says.

Yet as he takes over the job occupied by some of Labour’s towering figures, including John Smith and Gordon Brown, McDonnell may ultimately believe he is at the vanguard of a revolution.

His hero, Marx, believed that over time, the growing concentration of power and wealth in the capitalist economy would intensify the “misery, oppression, slavery, degradation, exploitation” of the workforce, who would eventually revolt. At that point, as Marx put it: “The knell of capitalist private property sounds. The expropriators are expropriated.” Perhaps, finally, Labour’s new shadow chancellor believes that time has come.