“I want to make it absolutely explicit that capital controls would not happen under a Labour government”, said Shadow Chancellor John McDonnell to the Financial Times on 23 January. That, he said, is the answer he gives to reassure City plutocrats in a series of meetings now underway.
In the faster-moving global financial markets which have developed since the early 80s, even mildly reformist governments can suffer capital flights like the one which in 1983 switched the Mitterrand administration in France from its initial policies (nationalisations, shorter working week by law, increased social benefits, etc.) to an “austerity turn”. Without controls on capital, movements governments cannot stop that blackmail.
Lexiters often argue that, inside the EU, international (EU) constraints would hobble a Corbyn government. But McDonnell was making his promise of “no capital controls” on the basis of expecting Brexit. And capital controls are possible within the EU: Greece has had them since 2015. To exclude capital controls is to exclude any policies which disturb high finance.