There was wonderfully revealing moment on BBC 1's Question Time last Thursday when Vince Cable's mask - or rather his thin veil - slipped. The Lib Dem Business Secretary was taunted about the way his party had ditched the ideas of the greatest modern economist, the Liberal John Maynard Keynes. Mr Cable fulminated - I do not recall his words exactly but I am confident I have them broadly right: "I was taught by disciples of Keynes. Keynes said 'When the facts change, I change my mind'. He did not experience the near complete collapse of the banking system that we have had to deal with."
Why is this revealing? Well, it does say something about the tension in the minds of Liberal Democrats. Keynesian economics is fundamentally predicated on the collapse of the banking system that Keynes saw first hand in the 1920s. It was then that Governments sought to cut public expenditure in response and the consequence was the downward spiral of decline which led to the Depression. It is very simple: increasing taxes and slashing public spending takes money out of people's pockets. When people spend less, businesses can't sell as much, they therefore reduce production, and thus must cut back on wage bills. Cutting wages and jobs takes money from people's pockets and the vicious spiral continues. Keynes said that during such periods Government should put more money into the economy.
That was why Governments worldwide - learning from Keynes and the failure of free market prescriptions - pumped so much money into the global economy. And it succeeded. Unemployment and misery on the scale of the Depression, a very real threat, was avoided. It was a costly exercise but the alternative would have been costlier. The money must be paid back. But paying back too much too soon will risk the recovery. The economic data published this week showing growth in France and Germany while the UK economy bumps along suggests that the Government is cutting too much too soon.
My point is that Mr Cable used to think so too, as he wrote in The Independent before the general election: "Now, the issue is whether the priority is to embark on large-scale, long- term, roof repairs or to rescue the inhabitants from a flood. The former, clearly, has to happen, but it is perverse [of Tories] to treat it as the most urgent task. The perversity undoubtedly has some deep ideological roots: a suspicion of the Keynesian legacy which is to champion the use of fiscal deficits to counter economic slump.". He used to think so; and his emotive reaction to the suggestion that he had abandoned Keynesianism suggests he still does. But he cannot say so.
Mr Cable's more significant revelation was the way he laid the blame for the economic crisis on the banking system.This was in stark contrast to his Conservative counterpart whose insistence, on the same television programme, that it was all Labour's fault drew howls of derision from the audience. One of the most unattractive aspects of the Lib Dem MPs has been the way they have ceased o speak for themselves and recited instead Tory slogans.
Mr Cable's slip was that he forgot to refer to 'Labour's mess' and he instead put the blame on the 'bankers' mess'. He knows the truth. The paltry turnout of 350 pro-cuts demonstrators was dwarfed by the million or so anti-cuts protestors. The public know the truth too.
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