On Saturday June 16th a line-up of well-known Labour politicians and left-wing commentators and little-known music acts took to the stage in North London for the Labour Live festival (or Jezzfest). Emboldened by Jeremy Corbyn’s triumphant appearance at Glastonbury last year, where chants of ‘Oh, Jeremy Corbyn’ greeted the Absolute Boy, the party decided to stage their own version. Here was the chance to combine music with listening to high-profile Corbynites rage against the establishment and plot the elusive ‘overthrow of capitalism’ of John McDonnell’s dreams. But ticket sales were sluggish. With two weeks left 85 percent remained unsold despite the trade union Unite buying 1,000 tickets which were given away to members. The hefty £35 ticket price was dropped to £25 and then to £10. In the end organisers claim 13,000 tickets were sold or given away in advance and more turned up on the day. The leadership is now hailing the event as a success. But Labour could use the festival and the events surrounding it as a learning experience. To the inquisitive mind, valuable lessons can be gleaned.
Let’s start with the ticket price fiasco: it created a predictable backlash. On Twitter, an account named Socialist Workers in Europe complained about paying full price for two tickets for something that was now given away and inquired about a refund process. The irony of a socialist learning the hard way how bestowing for free on some what others are required to pay for corrupts incentives and breeds discontent, was certainly not lost on the Twittersphere. We can hope it’s not lost on Labour either. That is lesson #1.
It has been rumoured that Stormzy, a hip hop artist and Corbyn supporter, was approached as headline act but demanded a 6-figure sum to perform. This is something John McDonnell, a self-confessed Marxist, will have found hard to square with Karl Marx’s labour theory of value. This theory purports that what determines the value of a good or service is the number of labour hours needed to produce it and not the value put on it by the end user. This is the basis for Marxist theory of labour exploitation, where capitalists get away with paying workers a subsistence wage and extract so-called surplus labour for profit. Carl Menger, credited with founding the Austrian economic school, was amongst the first to dismantle Marx’s theory by pointing out that value is of course subjective. Stormzy’s market value is not based on the man-hours needed to produce a catchy tune but on the commercial appeal of his material. It should be redundant to say in 2018, but Corbyn’s Labour party has changed the rules: lesson #2 is that Marx was wrong.
Back to the North London socialist get-together: in the ludicrously named ‘Solidarity Tent’, one of the questions debated was the deluded ‘Should we allow shareholders to make a profit?’. In the Labour party of 2018, profit is a dirty word. But all commercial activity has a profit/loss, whether one decides to calculate it or not. As for Labour Live, ‘We haven’t done all the sums on it – that will come later’, Corbyn says. Eventually, someone will do the tally and conclude that the party lost upwards of a million pounds. This hasn’t stopped Corbyn predicting a repeat in 2019, and next time Labour has some guidance: the profit/ loss of Labour Live 2018. That is how capitalism works. Loss-making ventures are dropped or tweaked – no one has the appetite for a repeat. Had Labour Live been a publicly funded event with free access, no such calculation would be possible. Free access might have guaranteed a capacity crowd, creating an illusion of value for money. This phenomenon is known as the economic calculation problem, first formulated by Ludwig von Mises in 1920, which occurs when the information contained in the market-based price system is done away with and substituted by economic central planning. The theory of the socialist calculation problem is lesson #3.
Labour is predictably spinning Labour Live as a success, despite the lacklustre advance interest, slashing of ticket prices and substantial economic loss. The dogmatic socialists in the leadership will surely learn nothing from this fleetly encounter with the real world. They will retreat to the Westminster bubble and the important lessons about why and how capitalism works and about the pitfalls of socialism will fall on deaf ears. What a fiasco.