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Britain after Brexit & World Economic Outlook | Grace Blakeley | Podcast

Britain after Brexit & World Economic Outlook | Grace Blakeley | Podcast

Ben Lobel, Martin Essex, MSTA,

Talking points on this podcast:

  • Britain after Brexit: What next for trade talks?
  • Is the climate crisis a failure of the free market?
  • What is ‘democratic socialism’ and can it save us from a new crash?

A full transcript of this conversation can be found below.

This time on Trading Global Markets Decoded, our host Martin Essex is joined by Grace Blakeley, a British author, economic commentator and political activist. In this edition, we talk about the UK’s future at a pivotal time of trade talks, ask ‘Is the climate crisis a free market failure?’ and weigh up whether a financial market overhaul is needed. You can listen to this podcast by clicking on the YouTube link above or by using one of the alternative platforms listed below.

Brexit and UK economic outlook

Brexit’s arrival is the first topic on the agenda. How does Grace see the UK economic outlook now that the UK has left the EU? “If you start from a basic analysis of the business cycle, then we are going into a recession at some point in the next couple of years [and] that doesn't have to be particularly severe, [but] I think it will be a difficult one because of the very lackluster recovery we've had from the financial crisis.”

Lackluster in what way? “Wages and productivity have stagnated, investment in particular has been very poor for quite a while now. We’re also looking at more significant coordination of [global] business cycles, so it does look like the US is heading for recession, Germany is teetering on the brink, and China [while] not looking at recession is slowing down significantly, which is obviously going to have an impact on a lot of its trading partners.”

Potentially stormy weather ahead then, but when? “Undoubtedly before the next UK election, and in the US, obviously the big question is whether or not it comes before the presidential elections.”

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Grace Blakeley, author, commentator, activist

Is the climate crisis a failure of the free market?

On to more debatable ground: Grace has previously said that the climate crisis represents a failure of the free market. In what way? “The climate crisis results from the way in which capitalism works,” she says. “It results from the unbridled pursuit of profit even at the expense of people and planet.”

She suggests that certain fossil fuel companies have known about the mounting threat of climate change since the 1960s and have put huge amounts of money into repressing that information rather than actually attempting to solve it. “So I think that it's not surprising that these things happen when you have an economic system that places the pursuit of profit above all other human ends.

“But it's equally not surprising that the state hasn't stepped in and [addressed] climate change by properly regulating these corporations, and putting in place the kind of constraints on economic activity…to deal with this.”

For more ways of listening to the DailyFX podcast, click on one of the additional channels below.

Full transcript

Martin Essex: Good morning everybody, good afternoon, good evening, depending on where you are in the world, and welcome to this podcast. With me today is Grace Blakely, a British author, economics commentator and socialist political activist. She's a former research fellow at the UK Institute for Public Policy Research and has written a book entitled ‘Stolen: How to Save the World From Financialisation’. Grace, welcome.

Grace Blakeley: Thanks for having me.

Martin Essex: Well, let's start with Brexit. As the UK prepares to conduct trade talks with the US, the EU and others, how do you expect events to pan out ahead of the year-end deadline?

Grace Blakeley: Well I think we all know making any predictions about Brexit is generally a bit of a fool's game. On the basis of the information that we have at the moment things do seem to have stabilized,and it does seem as though the government is keen to diverge fairly substantially from the European Union which means that the negotiations are likely to be quite difficult because the government will retain as many benefitsof remaining with close access to the single market and having low tariffs and quotas and few non-tariff barriers to trade.

But they’ll also want to diverge significantly from a lot of EU rules and regulations; this argument about sovereignty means basically Johnson wants to be able to say, we are entirely in control of making our own laws, and the government obviously has said that it wants to put its focus on getting this trade deal with the US.

Martin Essex: Yes. If you listen to Michel Barnier, the chief EU negotiator, and also to Leo Varadkar the Irish Taoiseac, they both seem to think that the EU has the upper hand in these negotiations. Do you think that's right?

Grace Blakeley: Yes. If you were looking at this just from an observer's perspective and you were looking at the UK going into a trade deal with either the EU, a huge trading bloc or the US you would say without a shadow of a doubt that the UK was in a subordinate position. It just seems to be some sort of very strange British plucky self-confidence that Johnson is building to try and suggest otherwise. But based on the fact that the government wants to demand all these things, and doesn't I suppose have a lot of political leeway although obviously has a big majority, but since the election was really all about Brexit it doesn’t have too much leeway to be able to back down on some of this stuff.

I don't think a year is going to be long enough to negotiate the deal. And I think they're going to find themselves in a bit of a sticky situation when it comes to America as well because Trump is not going to feel sorry for Johnson and think ‘oh you're in a similar situation, we have similar political priorities so I'm going to give you an easy trade deal’. He is going to put America's interestsfirst which is going to make the negotiations difficult.

Martin Essex: So against that background do you think that the UK economy will suffer in the long term or are you more optimistic than that?

Grace Blakeley: Well if you just start from a basic analysis of the business cycle then we are going into a recession at some point in the next couple of years, a downturn of some kind. That doesn't have to be particularly severe. Doesn’t have to be another huge crash with its originsin financial markets but there will be a slowdown. And I think that it will be a difficult one because of the very lackluster recovery we've had from the financial crisis.

Wages have stagnated, productivity stagnated. Investment in particular has been very poor for quite a while now. And what also seems to be happening is… usually historically you haven't had that much coordination between business cycles in different countriesor global economies become more globalized, more integrated; that's shifted somewhat and obviously because so many countries went into recession in 2008.

Now you’re looking at much more significant coordination of that business cycle. So it does look like the US is heading for a recession in the next couple of years. Obviously Germany is teetering on the brink as are a couple of other Eurozone countries and China is not looking at recession but it is slowing down significantly, which is obviously going to have an impact on a lot of its trading partners. So as well as the UK economy not looking particularly strong, we're also looking at global context which is not particularly propitious so the combined impact of all those things… then you add in Brexit which will obviously have some impact even if a trade deal is reached.

I do think that there is going to be some some stormy weather, shall we say, over the next couple of years. The question obviously on everyone's minds is going to be when that happens. But it is undoubtedly going to come before the next election for the UK government in the US obviously the big question is whether or not it comes before the presidential elections.

Martin Essex: Yes because one could argue that the recession is coming but then the big question is when and that's kind of unanswerable. So let's turn to the global economy. You mentioned briefly the US and Germany; a synchronized downturn or are there some countries that might perform better than others?

Grace Blakeley: I mean there will always be some countries that perform better than others but I do think there will be more a more synchronized downturn this time around than there has been before 2008. I mentioned obviously the fact that we are X number of years since the last financial crisis and the various different indicators in different countries, from investment to the Purchasing Managers Index to various other things suggests that particularly countries like the US, UK and Germany all are headed that way but there are also I think some, what economists would call risk factors or exogenous variables that might push particular countries into earlier recessions.

Martin Essex: Are you thinking for example of the coronavirus there?

Grace Blakeley: I wasn't actually thinking of the coronavirus. But along with kind of general political instability that is a worry. And I think particularly when you've had this really long bull market in equity markets in the US but also another other parts of the world… I think a lot of people are waiting for the thing that is going to spook investors enough to turn a little bit of fear into a proper kind of correction in those markets.

I think some people were relatively surprised when the Iran conflict didn’t have a bigger impact especially in America. But I think there's certainly a lot of uncertainty and people are getting a bit slippery about about what's going to happen and in equity markets. But I mean so much of that depends on what what central banks do at the moment.

It's very difficult to predict. The one thing that I would say and again this also relates to monetary policy is that in the US, you have this huge corporate debt bubble really where corporations have been able to borrow large sums of money at relatively low interest rates which has meant some people have said this has led to this… kind of zombie firms where firms that otherwise would have collapsed have been sustained by very low interest rates and so aren’t in particularly good health.

Now in the UK you've seen a lot of firms go into administration or become insolvent over the last couple of years, partly that's been because of currency fluctuations but a big part of it has also been that debt problem and a similar sort of thing applies in the US. So that problem of the US and to a lesser extent UK corporate debt…if we start to see a lot of companies struggling to deal with those debt burdens…that could lead to an early recession.

You’ve obviously got Brexit… a lot of people are talking about the tensions between US and China over trade as potentially leading to an early recession. But I'm not so sure about that. So to me I think the biggest danger when it comes to China is again this problem of this massive buildup of debt that China has. And that is again partly corporate debt. Also municipal debt and increasingly household debt as well.

And whilst a lot of that is owed to state-owned banks it still represents potentially a bit of a source of instability particularly when you add in the dynamics going on in certain certain parts of the housing market in China.That would be my my larger worry in China particularly when it seems like the government is prioritizing maintaining economic growth over financial stability. It continues to kind of loosen monetary policy and encourage banks to lend even even in the context of this instability.

So there are a lot of potential harbingers of…negative…I didn’t want to say doom.

Martin Essex: You could argue that also the central banks having already put lots of money into their economies and cut interest rates there's actually very little room for maneuver for them without making that debt bubble that you talked about worse.

Grace Blakeley: Yes exactly. This is a huge problem for central banks all over the world. And you've seen the Fed probably be the most successful in trying to slightly edge up interest rates. But actually that's another thing I didn't talk about. That's created some problems in sovereign debt markets in various parts of the Global South because obviously those countries have been able to borrow quite a lot at low interest rates over the last ten years.

And now many of them are starting to struggle as well. But obviously in the UK, the Eurozone, Japan, there there's very little room for maneuver when it comes to monetary policy… most of these governments… I mean the Eurozone obviously completely constrained by Stability and Growth Pact.

But as a rule most governments don't seem to want to use fiscal policy in place of monetary policy. And that's just I suppose because that's just become the economic orthodoxy of the last ten years.

Martin Essex: Although you might argue that governments actually want to spend more money on infrastructure because that makes them more popular.

Grace Blakeley: Yeah I mean we're in this very strange political scenario where permanent austerity seems to be not just politically viable but actually preferable for some governments. So if you look at Germany this idea they have, Schwartze Null, or Black Zero where the government runs a permanent surplus. I mean obviously it's a special case because you've basically got permanent current account surplus in Germany because of the Euro. But that's pretty remarkable and if you speak to some people in Germany they’ll say particularly in places like Berlin the infrastructure has become really poor.

And yet there seems to be this general societal commitment to wanting to maintain that budget surplus. And partly this has to do with the ideology that's been massively promulgated since the financial crisis that government can't spend more than it earns and austerity is sensible economics and all that sort of stuff which I obviously heartily disagree with. But I think also it has to do with governments deciding which interests they want to placate.

I think particularly in the UK the decision to move towards austerity was very much a decision that the financial crisis wasn't going to be allowed to benefit workers at the expense of corporations and particularly the City which means that there is always going to be limits on spending, attempts to make sure that bargaining power didn't increase too much in the wake of the crisis. The government wasn't going to step in and do what it did in the post-war period and make sure that unemployment didn't get too high.

And I think that's also the case in a lot of different parts of the world. Basically the corporate elites and to an extent a kind of international financial elite which is represented by big international financial institutions has gained huge control of government policy and that is a big part of the reason that we're less likely to see them use fiscal levers compared to monetary ones.

Martin Essex: Now I could perhaps explain at that point to those listeners who are outside the UK that you’re maybe best known here as a political activist supporting the opposition Labour Party and you've been described or perhaps described yourself as a Democratic Socialist: what does that mean?

Grace Blakeley: So I suppose when people ask what's the difference between democratic socialism and social democracy… social democracy is a kind of capitalist economy where you have what I was just talking about really which is higher levels of state intervention, stronger bargaining rights for labor, where you have greater constraints on the financial sector, you have higher taxes all these sorts of things that are familiar to Nordic economies and actually a lot of other economies like the US the UK in the post-war period.

Democratic socialism is I suppose a step on from that which actually does all those things but also tackles the root cause of issues like inequality, climate change, the problems we're seeing in terms of the labor share of national income in various different economies. Which is to challenge the dominance of private ownership as the only model of ownership that we have in most economies, in neoliberal financialized economies as I would call them and basically rehabilitate public ownership which again was often the norm for large sections of the economy in the post-war period but also to think about other forms of ownership…the Labour Party in the UK has put forward various ideas under the banner of alternative models of ownership which look at cooperative ownership, worker ownership in particular.

And all this I suppose is based on the premise that it's really the kind of job of a socialist government to try and boost the power of workers relative to owners or bosses, so boost the power of what Marxists would call labor relative to capital and doing so by on the one hand ensuring that they have a decent standard of living, public services are working well, but also that working people have a much greater stake in terms of what Marxists would call ownership of the means of production, what we could just callwealth or ownership.

So that's kind of basically where the Democratic Socialist angle comes in and the final point of course which is where the democratic angle comes in is the assumption is that all of those forms of ownership would be governed in a way that would be democratic. So giving a voice to say workers or consumers or the public at large in determining how those services are run.

Martin Essex: Which brings us rather neatly to your book Stolen: How to Save the World From Financialisation. So you argue that I think that the recovery from the 2007/08 crash mostly benefited the rich and that Democratic Socialism can save us from a new crash and climate catastrophe. What's your thesis?

Grace Blakeley: I think coming to the first point I don't really think it's controversial to suggest that in a lot of developed economies the recovery from the crisis predominantly has benefited the rich, even if they did suffer more than average during downturn. I think that's largely been the combination of loose monetary policy and tight fiscal policy whichas we've seen…the combination of quantitative easing and low interest rates has really quite significantly pushed up asset prices.

In the UK you can particularly see that with house prices which has not only generated a huge amount of wealth for those who currently own housing stock which is quite unevenly distributed but also is preventing young people from getting on the housing ladder. In the US in particular you can see it with equity prices. And as I said kind of relative low interest rates also played into that and tight fiscal policy has obviously exacerbated the problem by, on the one hand reducing the bargaining power of workers relative to capital and you can see that in employment shall we say, I suppose some would call increasing flexibility and others would call insecurity and precarity of work and also the stagnation in wages associated with that since 2008 as well as the general decline in public services and an infrastructure provision as we've already discussed.

And I suppose the book looks back really over the last 40 years of particularly British political economy but it also touches on on the the US and the lessons that can be applied to other financialized economies…Spain, Iceland…and it basically looks at how the changing nature of a British political economy has given rise to a new phase of economic growth. So the breakdown of the post-war consensus that social democratic model in the 1970s in the UK and the US allowed basically for a redistribution of power and wealth in British society away from labor and towards capital and towards a particular section of capital - international financial capital - and that gave rise to a new phase of economic growth which I called finance-lead growth which kind of changed the nature of all areas of economic activity so it's not just kind of growing finance sector it's also the financialization of corporations which is to do with the dominance of shareholder value, rising corporate debt and the financialization of the household.

So rising household debt and this idea of asset-based welfare. So households increasingly becoming kind of investors to to secure their long-term economic health; financialization of the state, the state increasingly becoming involved in financial markets and encouraging investors to undertake state spending on its behalf. And I look at the way in which all of those things conspired to create the underlying conditions for the financial crisis if not to actually kind of catalyze the crash itself.

And why since 2008 we're kind of in this elongated period of almost ongoing crisis or stagnation where that old model of finance-led growth can really no longer provide the rising living standards that it once did but no economy has yet chanced upon a new kind of economic model, be that social democratic, democratic socialist, or even more kind of neoliberal or financialized that can fix many of the problems that we've seen emerge since 2008.

So we're really in…I suppose quite a febrile moment and I think that's reflected in a lot of what is going on in politics which is just that there is very little institutional stability. And I think that's basically arising from the fact that there is little economic stability. Most people know that things cannot carry on going on the way they are when it comes to the economy but no one really has any answers as to as to how he can shift things.

Martin Essex: With me today is Greece Blakely, author, economics commentator and political activistand the kind of take a short break now and then come back with a bit more about financial markets politics and so on.

Grace, you were talking about the lack of ‘trickle down’ - that's perhaps not very contentious but you also said the climate crisis was a free market failure; that perhaps is more surprising. Why do you think that?

Grace Blakely: I kind of take issue with this idea of market failure as the way to describe not just the climate crisis but also a whole series of other problems because it really starts from the premise that there is a market which is a self-contained field and outside of that field there is the state and at certain points when the market doesn't deliver outcomes that people like, the state will step into the self-contained bubble that is the market and start shifting things around. Of course that isn’t really how the economy works. Markets are very much jointly constructed by the coordination between economic actors, predominantly corporations, and governments. And you can see that in terms of all the laws that exist. The plethora of laws that have massively expanded around the economy over the last…since the Second World War.

The economy is increasingly not a self-contained sphere and I also really take objection to the idea of talking about the economy in and of itself rather than talking about what I like to talk about which is political economies and the interaction between those two spheres and the outcomes that it generates. So when it comes to the climate crisis I mean obviously the climate crisis results from the way in which capitalism works. It results from the kind of unbridled pursuit of profit even at the expense of people and planet.

And there's now a lot of evidence that a lot of the big fossil fuel companies have known about the mounting threat of climate change since the 1960s and have put huge amounts of money into repressing that information rather than actually attempting to solve it. So I think that it's not surprising that these things happen when you have an economic system that places the pursuit of profit above all other human ends. But it's equally not surprising that the state hasn't stepped in and done what you think that it might do and say ‘let's stop climate change by properly regulating these corporations and putting in place the kind of constraints on economic activity that needs to be put in place to deal with this’.

And that's as I said a result of political economy, a result that states and markets are very much intertwined. And yes you have a capitalist economy but you also have capitalist states that see that role I suppose as promoting the proper functioning of markets. And that has meant that even as the scale of the climate crisis has become obvious governments have always stepped back from actually doing what needs to be done to deal with that.

And the focus has always been on internalizing externalities through carbon pricing. But even that which may have made a difference if if governments had been willing to put the right price on carbon you've just seen completely fail because it has been influenced far more by the corporations, particularly the fossil fuel corporations than it has in the interests of the public. So not so much a market failure as really a failure of capitalism.

Martin Essex: So I suspect I know the answer to this already but how would you rate the recent meeting of government and corporate leaders at Davos, do you think anything was achieved at the forum?

Grace Blakeley: I think it gets beyond farce more and more each year. It was notable last year that there were some kind of dissenting voices that were invited and caused quite a stir, Rutger Bregman challenging the various CEOs that he was on a panel with to pay their taxes properly which went viral on Twitter, I hadn't seen anything like that this year. But you know obviously what we have seen is hundreds of executives, investors, very important people of the world taking their private jets to Davos to kind of pontificate about climate change whilst being completely unwilling to recognize their role in causing it and being completely unwilling to pursue the kinds of policies necessary to tackle it.

I mean it is just for me the kind of peak example of why liberal democracy is struggling so much to deal with many of these massive crises that been created by capitalism. Because you know it's premised upon the idea that it's possible to just get lots of important people in a room and compromise overthese big issues like climate change, presuming that the most powerful will be willing to give up some of their power and wealth in order to move towards a kind of more sustainable system,but constantly faced with the obvious evidence that they won't do that.

Martin Essex: Here at DailyFX we try to be politically neutral but I know in the battle to become the new Labour leader to succeed Jeremy Corbyn you're backing RebeccaLong-Bailey. What do you think she'd bring to the party her rivals wouldn't? Do you think she would stand a chance of defeating Boris Johnson in another general election?

Grace Blakeley: I've actually known Becky for quite a while now. She was my MP when I lived up in Salford a couple of years ago. Well a while ago now actually. And I've worked with her quite a lot over the last couple of years on various elements of policy particularly around the idea of the Green New Deal which she has obviously been a very passionate advocate of. And I've always thought of her as someone who is incredibly hardworking. She has a very acute grasp of a lot of different areas of policy.

But she's also really quite passionate and determined and I did actually always think that there was going to be some sort of role for her at the top end of the party fromthe first time I met her really.

I think the vision that she's laying out for the Labour Party is what's needed…which is we know that during the election a lot of the policies when you hold them individually were very popular. The big problem that we had was the kind of scattergun approach of putting too many policies in the manifesto as well as obviously the issue of Brexit, which it didn't really seem as though the Labour Party could have a winning position on. And obviously the unpopularity of Jeremy Corbyn particularly after several years of really severe attacks by the media and also what looked like decisiveness over Brexit and all of those things conspired to really deliver a pretty bad general election result although incidentally in terms of vote share, better than some of the performances that we've seen from less left wing Labour leaders over the last ten years. And yes, Rebecca I think gets that and wants to maintain some of the policies particularly this idea of the Green New Deal which was really popular and I think will only grow in popularity.

Rebecca wants to combine it with quite a different message and the message that she's talking about is really the idea of aspirational socialism, which is… rather than kind of presenting the public with a list of these policies which are going to be implemented and that make your life amazing, a free lunch approach...her ideas are basically to say, look, we are in a very difficult situation as a country. People are in very difficult situations as families.What we want to do as a government is put in place the conditions to allow us to work together as a society to solve those problems, whether that's creating jobs through the Green New Deal, whether that's improving people's rights at work to allow them to fight for better conditions,improving our public services to allow people to get a good education. And I think that message is going to be a lot more appealing than the approach that was pursued at this last election.

I also think on a personal level…Boris Johnson is an opportunist, he's a kind of buffoon but he's very charismatic and it is difficult to go head to head with him on that level. It's going to be difficult to find a political leader that can be more charismatic and more persuasive in that area. What I think Rebecca has is just a real unflappable authenticity and an intelligence that will allow her to kind of cut through Johnson's buffoonery and expose him and his politics for what he is. And I think in five years when we started to see a lot of the problems that we've talked about in this book come to the fore that is going to be a message that a lot more people are going to be open to listening to.

Martin Essex: You've also written about millennial socialism and you're a young woman yourself, do you think that young people are rebelling against capitalism more than their parents and grandparents?

Grace Blakeley: I mean I wouldn't necessarily call it rebelling against capitalism; I suppose I'd say they were expressing a preference for a different kind of economy and it's really hardly surprising given the material circumstances that most young people are facing when they enter the economy. Obviously you had the immediate impact of the financial crisis which meant that a lot of young people who graduated then struggled to get work, and there's a lot of research that shows that graduating ina downturn affects your employment opportunities and employment outcomes for the rest of your life.

But there's also the fact that we've had a decade of wage stagnation, growing precarity at work, but I think one of the biggest things is the housing situation. I know that this is particularly a big thing in the UK when it comes to the growing popularity of millennial socialism which is that before the crisis it was obviously very easy to get a mortgage and buy a house which would increase in value and generate quite a lot of wealth over the course of your life. Today we've got this problem where house prices did not correct themselves in the way that they should after the crisis because largely of quantitative easing and low interest rates.

So a lot of people who gained from that model have been able to hold onto that wealth but young people are now finding it much more difficult to get a mortgage. A lot of those mortgages are now being issued actually to people who already own their own homes and are buying buy to let properties. And there's this this question which I think is quite well posed which is… why should young people support capitalism when they're never going to be able to afford to own any capital. And you can see that a lot of different areas of the economy and there's this idea that young people don't want to own things they only want to rent things.

Well no, it's just that they can't afford to own things because they simply don't earn enough money and then able to save. So the economy really isn't working for young people and that's that's the case in the UK and the US but also in in other economies around the Eurozone, we have very high levels of youth unemployment, poor public services and increasingly people having to pay or take out loans to go to university. So in a whole load of metrics the economy isn't working for young people and it's not surprising that they are increasingly agitating for a break with that.

Martin Essex: I suppose the counter-argument to that is that a lot of people are invested in the stock market for example not directly but also through their pension funds and so on. If things went the way you'd like them to, wouldn't those people suffer quite badly?

Grace Blakeley: Well those people are already going to suffer quite badly if you look at the state of the private pensions market in most of the world. I mean the pensions crisis is a crisis that people just haven’t yet clocked onto. Most pension funds are simply not going to be able to meet their liabilities. Particularly if we do see some sort of downturn that impacts stock markets over the next couple of years but they're not going be able to meet them anyway. And really the model that we've seen pursued particularly over the last 40 years where people have been encouraged to take out private pensions and collective public pension provision has been eroded, is just a mad system… because retirement is one of those things that almost everyone is going to experience and it just makes sense that that risk is socialized to as great an extent as possible. Just on the basic actuarial logic of how insurance works, having a bigger pool with more people makes it more stable and the private pension system is really quite broken at the moment.

So I think that that system is already significantly under threat. And what I would say is that the best way to organize pensions provision and actually welfare more generally is to have a very substantive state pension that everyone is entitled to and everyone paid into and allow others who wanted to save on top of that and actually not only with that deal with a lot of problems that we're seeing in financial markets… there's this big idea that actually secular stagnation is down to very high rates of saving amongst older people trying to save for their pensions - it would also deal with the fact that we have this big crisis that is just around the corner in pensions markets.

Martin Essex: Can the financial markets be overhauled or would you say that they need to be abandoned?

Grace Blakeley: I do think the financial markets can be overhauled. I don't think any area of finance is in itself bad. I think that any economic tool I suppose...the way in which it plays itself out is determined by in whose interests it’s being used.

So the financial system at the moment is a private financial system that is owned by and governed in the interests of the tiny number of people who control it. What I would like to see is a financial system that works in everyone's interest because it is collectively owned and democratically governed. So the national investment banks, public retail banking. I've argued for a people's asset manager that could invest collectively on behalf of the whole of society.

And I think that the more that those public actors were involved in financial markets actually the better financial markets as a whole would perform. Because financial markets are not left to their own devices efficient. The fact that anyone continues to hold that perspective after what we've seen over the last several decades is amazing to me. Obviously financial markets need an overhaul but I think that more comes down to the interests in which they're operating rather than the kind of specific ways in which that the financial markets work.

Martin Essex: Putting you on the spot. What do you think is the probability of another market collapse and when?

Grace Blakeley: Oh that is a good question. My answer would be different depending on which markets we were looking at.

Martin Essex: Well let's say stock market.

Grace Blakeley: The probability of some kind of stock market correction over the next three years is I think 70%.

Martin Essex: Finally Grace, what do you do when you're not thinking about economics and politics. What do you do in your free time. If you have any?

Grace Blakeley: I'm actually in the wake of the election finding myself with much more free time than than I've had over the last year because I was on a book tour and then I was campaigning. So I'm kind of struggling to find new things to do with my time. I like yoga. I do quite a bit of that and mainly I'm justactually spending my free time hanging out with groups of friends that I've abandoned.

Martin Essex: Grace Blakely, thank you very much for joining me today.

Grace Blakeley: Thank you for having me.

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