"I've read everything ever written in economics, and I've decided it's all rubbish." John McDonnell probably didn't mean to say something this cranky, but it's one interpretation of his call for a "a new economics."

The thing is, Labour doesn't need new economics at all. For one thing, given that George Osborne is the anti-economics Chancellor, any economics at all would be an improvement.

And for another, pretty much everything substantive Mr McDonnell wants to say is consistent with old conventional economics. Anti-austerity is basic undergraduate economics. The case for a national investment bank is founded on the view that finance is dis-serving the economy - which is held by mainstream figures such as John Kay or Adair Turner. "People's QE" - the idea that the central bank should, if necessary, buy bonds issued by the state investment bank - is no more radical than the Federal Reserve's purchases of agency bonds. Concerns about under-investment can be rooted in the notion of secular stagnation proposed by Alvin Hansen in 1938* and revived by Larry Summers and Paul Krugman. And McDonnell's call for worker participation in management can be justified by Hayek's claim that centralized knowledge of complex systems is impossible and so there must be institutions for gathering dispersed information.

Mr McDonnell, therefore, has no need for "new economics". Some of the old economics is good enough to justify his policies. Which poses the question: why call for a "new economics"?

One possibility is that he's engaging in fake radical posturing of a sort that's too common on the left and is attacking a straw man - failing to see that there's a difference between economics and right-wing prejudices. Another explanation is that he is approaching the issue not from the perspective of an economist but from that of the Bubble which has perpetuated the illusion that there's some economic justification for what Osborne is doing.

Whatever the reason, Mr McDonnell is missing a big trick here. It is vitally important for any potential party of government to create the impression of economic competence. Labour should be kicking at an open door here: Osborne's policies have no basis in conventional economics and are failing even by their own dim standards. If, however, Mr McDonnell poses as a radical when he is not, he'll miss the chance to tell the truth - that it is Labour that is in many ways the party of mainstream economics and Osborne who is the crank.

* In fact, it's very similar to an even older idea - that of the stationary state, a theory held by most classical economists such as John Stuart Mill and his predecessors.