Unfortunately this debate has become more about politics than economics. I see value and faults in both what you’re saying James and Richard Murphy’s responses. This article is a good defence of the “fiscal rule” but it for me it is framed in the mindset of the prevailing economic hegemony that has been adopted by most western governments and transnational monetary institutions. That is exactly the mindset that Labour needs to challenge.
This will definitely be a difficult task, weeding out deeply embedded neoclassical economic ideas and establishing an understanding of heterodox economics and sound monetary theory. I wish that you and Richard Murphy could focus on this vital task.
For the record I back Corbyn, but that is because he offers the only credible plan for fundamentally changing how this country is run. I have a great deal of time for Owen Smith and hope that he will work with Corbyn after the leadership election, but right now the Labour Party needs a bit of revolution or it will continue to slowly slide into irrelevance and self-contradiction. I challenge Corbyn and his team to be offer up some truly radical economic thinking, don’t play on the playing field that the established orthodoxy wants you to: you need to redefine the rules of the game on sound, simple, rules of monetary theory.