The Courageous State: Rethinking Economics, Society and the Role of Government [Paperback]

Having read this book once, I need to re-read it to fully appreciate the range and depth of the ideas Richard Murphy offers. There are books which analyse the economic crisis and those which deprecate the tax havens and activities of the bankers. This book does that to an extent but also offers solutions based on a through rejection of the Washington Consensus which has dominated political and economic thinking over the last thirty years. The Consensus says the government should be restrained to vital functions and its attempts control the economy are bound to be ineffective. The markets know what's best. De-regulation, privatisation, low taxation and abandonment of capital controls will liberate entrepreneurial energy. Of course,(as it seems to me) it may also mean 'downsizing and five people taking on the work of ten for no extra pay while the CEO and shareholders receive large rewards. Final income pensions may have to go and government social expenditure restrained but that is the price worth paying. He says 'politicians of the cowardly state think it is true that we should trust the market and not politicians.'
Murphy rejects all that, what he calls 'neo-liberalism', saying democracy means the state has a right to demand taxes to be used for the general good. The courageous state is one where politicians act to carry this out. The first part of the book deals with the failings of the present system. This is not done in depth as, he says, one either recognises it and agrees with it or one does not. The second part is about his economic analysis which looks at our needs, emotional, mental,purpose as well as material needs. Conventional economics doesn't usually do this. He does this using a series of diagrams employing a circle divided into a quadrant. He sees life as being able to achieve as much as possible of our potential but not in a solely individualistic way. The community can enhance our lives by cooperation, and the limitations of the planet are part of his economic analysis. This is not full of statistics and jargon but written in clear, plain English. Some might prefer it this way,I suspect some might not. An index might have been useful.
The third part is how to deliver the courageous state. I found it refreshing that he includes more radical ideas such as recognising that most money is created by bank lending on which they charge interest(seigniorage)and which could be reclaimed by the state. Too little attention is paid to money reform by the media or the politicians. I would like to have seen more about this but that might be too much to fit into one book. Murphy is a tax accountant and blogger at Tax Research UK. Therefore, he writes a lot about the role of tax and its role in delivering a better society. 'Feral finance' needs to be brought under control. He believes poverty is incompatible with democracy and admires politicans with vision. I can't recall whether it's here or his blog he praises Catherine Lucas the UK's only green MP.
Murphy has links with Labour, TUC and the Greens. He is not a conventional 'leftie', probably more of a Roundhead in that he has strong egalitarian principles, gives his opponents short shrift, rarely jokes and even lives in East Anglia, the Roundhead heartland. However, he has Quaker connections ( reformers like Cadbury, Rowntree and lady on the back of the £5 note, Elizabeth Fry)people who have sought justice and practical reform. This is what makes this book so valuable. I am often unsure of some financial concepts but Murphy explains them clearly and gives cogent reasons for his opinions. His prescriptions are not a final blueprint but a framework for another way of thinking about values and economics: one that challenges the Divine Right of the Kings of Finance.

A great read for anyone looking for concrete, left-wing solutions to the present economic crisis and to counter the neo-liberal political trends of the past 30 years.

Like one of the other reviewers, I was led to Richard Murphy's work after reading the excellent Treasure Islands by Nicolas Shaxson. I particularly liked the circular diagrams Murphy uses to explain his theory of how people and societies can achieve their potential in the 4 key areas of life: Material, Emotional, Intellectual and Purpose.

The only criticisms I have of the book are:

a) as someone without formal training in economics, a few more concrete examples woven into the text would have helped me understand the more complex arguments and have saved me re-reading some passages;

b) some of the arguments are repeated in different sections and I feel the book could have been edited together a bit more coherently;

c) it's fair to say that the Kindle edition of the book is riddled with errors (missing words, superfluous words, sentences which seemed to have been hacked many times and left in an unreadable state etc.) I can only imagine is down to the short time frame that the book was written in (Murphy acknowledges as much in the prologue) and maybe some poor character recognition technology, if this was scanned in.

This doesn't distract from the fact that this is an important book and a must-read for anyone looking for an alternative take on how we can restructure our society to face the challenges of the 21st Century.

Richard Murphy is a political economist, chartered accountant and an adviser to the TUC and others. His Tax Research UK blog is ranked the UK's number 1 economics blog.

In this fascinating book, he refutes in detail the libertarian view of the state and presents excellent arguments against the whole range of Thatcherite, neo-liberal policies which have created a `feral, neoliberal state'.

Capitalism is destroying government to give our tax revenues to private companies. So we now hugely subsidise the private sector, for example, we gave £38 billion to the pensions industry in 2008.

Murphy points out, "profit maximisation ... increases the well-being of the tiny minority at the expense of the rest of society." From 1996-97 to 2007-08, the top 0.5 per cent's incomes grew far more than the economy as a whole, while the incomes of 99.3 per cent of us grew less.

The over-large financial sector crowds out the productive sector. Speculative investment grows at the expense of the real investment that creates jobs. This leads to more inequality and so to worse human and social outcomes, as Richard Wilkinson and Kate Pickett showed in their fine book, The Spirit Level.

Markets breed monopoly and monopoly breeds what Murphy calls `feral finance'. Every working day $4 trillion is traded in speculation, $1 quadrillion a year, 16 times world GDP. World debt is $150 trillion. With interest at 6 per cent, that yields $9 trillion interest a year, taking 15 per cent of world income from poor to rich.

Murphy urges us to ban short selling, split up the banks, end tax havens, impose capital controls, stop buy-to-let, stop privatisations, cancel all PFI and PPP contracts, and create a state investment bank. We should revive apprenticeships, set a maximum for working hours, and restore free higher education, local democracy and social housing.

He also proposes that we fund investment by getting the Bank of England to lend to the Treasury. This would break EU laws, which require these loans to be routed solely through commercial banks, via `Quantitative Easing' that profits these banks while not benefiting the rest of us. If the Bank printed money, we could invest what we wanted, without adding to the debt.