Archive for the ‘economy’ Category
I never expected to become a defender of New Labour’s record, let alone against its own most zealous supporters. At this point, I should clarify that I haven’t been kidnapped by Peter Mandelson and transformed into a Blairite drone. What I mean is that among all the disappointments and betrayals of the New Labour era, there were genuine social advances. They are now being shredded at lightning speed by a radical Tory government – but with the increasing complicity of the Labour leadership.
Just after news broke on Friday that Ed Balls had regretfully announced the next Labour Government is ‘going to have to keep all these cuts’ and declared his support for the Government’s public sector pay freeze, I spent my evening debating Tory ex-Minister Edwina Currie on Stephen Nolan’s 5 Live show.
Currie was in full-on triumphalist mode, gloating that Labour had accepted that the Tories were right all along. I couldn’t blame her. Before coming on air, I listened to a spokesperson for the hard-right Taxpayers Alliance similarly praising Balls to the hilt. At the same time, I scrolled through Twitter, wincing as prominent Tories and Liberal Democrats proclaimed victory. ‘You lose,’ tweeted right-wing blogger Harry Cole to Balls’ political advisor Alex Belardinelli.
Tory MP Robert Halfon couldn’t contain his glee, either: he promptly cobbled together a blog post entitled ‘Ed Balls comes out… as a Conservative’, bragging that the Shadow Chancellor had appeared ‘to sign up to Coalition economic policy’. ‘After months of opposition, the Labour Party appear to have conceded defeat,’ he boasted, adding that he thought ‘Coalition Ministers will be able to sleep safer in their beds in future’.
The stifling of Labour’s internal democracy is taken so much for granted that no-one has even bothered to pass comment on the lack of consultation before Ed Balls’ announcement. One leading MP was stunned, telling me that the Parliamentary Labour Party was given no prior warning and would be ‘shellshocked’ when they returned to Westminster. As for trade unions or party members — well, you are well within your rights to chuckle that I’ve even bothered to mention them.
Ed Balls’ surrender is a political disaster. It offers vindication for the Tories’ economic strategy, even as it is proven to fail. Growth has been sucked out of the economy. Consumer confidence has plummeted. Unemployment is soaring, with no sign of the promised ‘private sector-led recovery’. Even on its own terms, the Government’s austerity measures have failed disastrously: George Osborne will borrow more than Alistair Darling’s plan, so derided by the Tories at the last general election. As for the impact the cuts are beginning to have on our communities and those groups being pummelled hardest (women, young people, and the disabled, for instance) – well, that’s simply incalculable.
But rather than trying to push a coherent argument against this disastrous austerity programme, it is now being treated as a fait accompli. Sure, the cuts are now necessary because of George Osborne’s mistakes, but they are nonetheless here to stay. Labour can no longer talk about how these cuts are inherently destructive, because otherwise it would have to commit to reverse them. Neither can it aim fire at their ideological nature, as when Cameron announced they were permanent before the election: that is, after all, now Labour’s starting point too.
And it will surely fuel the sense that the Conservatives are making the necessary tough economic decisions, and Labour are simply playing catch-up. This is a large part of the catastrophe that has befallen Labour since the biggest economic crisis since the 1930s began. The Tories were allowed to transform a crisis of the market into one of public spending because Labour failed to offer a coherent alternative narrative. The role of collapsing tax revenues and rising welfare spending as unemployment rose barely got a mention; the Tories managed to get away with the fact they backed Labour’s spending plans pound for pound until the end of 2008.
When I complained about this suicidal strategy – or, rather, suicidal absence of one – to a shadow minister at Labour Party Conference in September, they responded quick as a flash that we did indeed have a deficit because Labour overspent. I confess that – at this point – I felt that if senior Labour figures were happy to accept dishonest blame handed out by the Tories, then it was hopeless.
This latest surrender to the Tory cuts agenda comes after a protracted struggle at the top of the leadership. One faction argued that, once you started specifying cuts, there would be a loss of focus on their deflationary impact, and that the Tories would come back for more and more detail on Labour’s spending plans. We now know this argument has been decisively defeated.
Arch-Blairite Jim Murphy – who harbours ambitions to stand for leadership should Ed Miliband fail – began rolling out the new strategy earlier in the month by calling for Labour to avoid ‘shallow and temporary’ populism over spending cuts, setting out his own proposed cuts as an example to his colleagues. The equally devout Blairite shadow education secretary Stephen Twigg has partly endorsed Michael Gove’s attacks on the scrapped Building Schools for Future programme, and has outlined £2bn of his own cuts. And Liam Byrne has committed Labour to a renewed attack on the welfare state, currently being hacked to pieces by the Government. I bet the word ‘vindicated’ will be used liberally around the corridors of Conservative Campaign Headquarters next week.
And so former arch-critics of Blair and Brown such as myself are forced to defend large chunks of their record from their acolytes. New Labour’s major departure from Thatcherite orthodoxy was investment in public services. It is now being torched with the approval of Blairites and Brownites. Clement Attlee and Margaret Thatcher headed the two transformative governments of post-war Britain, each establishing a new political consensus by forcing their oppositions to accept the key tenets of their programmes. Cameron looks set to follow in their footsteps, with New Labour an interregnum that temporarily tinkered with the Thatcher consensus, much like the Tory governments of the 1950s and the Attlee consensus.
As the usually thoughtful Tory Peter Oborne put it:
A sea change is at work. In practically every area of British public life – state spending, the economy, education, welfare, the European Union (where Ed Miliband refused to condemn Cameron’s pre-Christmas veto), mass immigration, law and order – Conservatives are winning the argument and taking policy in their direction.
It is not inevitable, of course. It is being allowed to happen because there is a lack of countervailing pressure from below. If a broad coalition of Labour activists and trade unions united around a coherent alternative and put concerted pressure on the leadership, this surrender can be stopped in its tracks. With the Shadow Cabinet set to continue its suicidal course, time is running out – but it is the only hope to stop Cameron transforming Britain forever.
If ‘typical Labour left policies’ had ever (bizarrely) turned up on ITV’s Family Fortunes, I’d place a pretty safe bet that ‘nationalisation’ would top the poll. But there is something deeply ironic about this, because nationalisation – as conceived and implemented by post-war Labour governments – had very little to do with the Labour left.
It was Peter Mandelson’s granddad and icon of the Labour Right, Herbert Morrison, who was the architect of Labour’s model of public ownership. The new industries were top-down, bureaucratic public corporations. Many workers felt as alienated from their new employers as they did when they were under private ownership. This wasn’t socialism: it was state capitalism.
Neither did it help that, with the exception of steel and road haulage, all of the industries taken over were running at a loss, or in some cases practically bankrupt.
When Thatcherism sold the family silver (as former Tory PM Harold Macmillan famously put it), the Labour left retreated into purely defensive postures. When calls have been made to bring the railways back into public ownership, for example, the intention has generally been to bring British Rail back from the dead.
But it’s easy to forget that, in the 1970s, the Labour left had developed detailed critiques of Morrisonian nationalisation. As Tony Benn put it in the early 1970s: “Nationalisation does not, of itself, shift the balance of power in society, democratise industry, nor entrench new values in work which will automatically enrich the lives of those in nationalised concerns.”
Many of these nationalised industries were, undoubtedly, unresponsive to the needs of consumers. I’ve heard plenty of anecdotes complaining about how long it took a BT engineer to fix your phone in the 1970s. As for the workers: well, let’s not forget that Thatcherism trashed the mining industry when it was under public ownership in the form of the National Coal Board.
Nationalisation was scrubbed from the country’s political vocabulary in the 1980s. But, in the aftermath of the near-collapse of the global financial sector, it unexpectedly returned for a comeback tour. Huge chunks of the world’s banking industry were snapped up by the state. In the heartland of free-market capitalism, Comrade George Bush undertook the biggest de facto nationalisations in world history.
Of course, it’s all proven to be a missed opportunity. Western governments intervened in ways that ideologically disgusted them because they had no other options. Commentators chuckled about Labour realising its 1983 Manifesto and taking over the banks. In reality, although the Government had controlling stakes, it refused to exercise any real power. There were no Government delegates sitting in boardrooms and dictating the banks’ policies.
I think there’s a real opportunity to put alternatives to the market back on the agenda. That doesn’t mean a rewind to top-down nationalisation. There’s another alternative: democratic, social ownership (for want of a catchier name).
Consider a proposal from the RMT union for publicly run railways fit for the 21st century, written for left-wing economic think-tank the Left Economics Advisory Panel. The industry would be run by a board: a third of which would be elected by workers, and a third by passengers. The remaining third would be reserved for Government representatives.
Such a board would be forced to work together to find common solutions that would benefit those who worked on and used the railways, as well as keeping in mind the long-term interests of society as a whole. Issues like safety and rail prices would no longer be looked at through a prism of maximising profits.
You could apply the same principle to other industries: like gas or water. In both cases, the neo-liberal argument that competition always benefits the consumer lies in tatters. All socially owned industries would be forced to defend the interests of consumers if they had representatives sitting at the table.
It’s an argument in favour of democracy, too. There is nothing democratic about free-market capitalism. We are ruled by economic despots who wield huge power over our lives, and yet they are not properly accountable to us.
The economic crisis has provoked a real questioning of neo-liberal assumptions, particular of the idea that the market should be allowed to rip. It’s time the Labour leadership started tapping into this yearning for an alternative – and started talking about social ownership. And I’m sure the spin doctors could think of a far catchier name.
Cast your mind back to the autumn of 2008. The world’s financial system was tottering on the brink of collapse. Robert Peston was giving round-the-clock commentary on the BBC: a sure sign that we were indeed approaching economic Armageddon.
You may have felt some fear about the future but – admit it – if you were on the left, you were full of schadenfreude. The three-decade-long neo-liberal experiment had apparently choked it, and its funeral was being broadcast on 24-hour news. No-one could blame the unions for this crisis, like they got away with doing in the 1970s. A shameless banking elite was clearly the guilty party. As the state seized large portions of the country’s financial assets, ‘nationalisation’ re-entered the popular vocabulary. Column inches abounded with talk of the left’s big chance; the Tories, until then apparently coasting to a landslide victory, were forced on to the back foot; and in the US, the despised Bush administration was set to give way to Obama’s “audacity of hope”.
Seems like a world away, doesn’t it? In one of the most spectacular acts of political genius in history, the right transformed a clear-cut crisis of the private sector into a crisis of public spending. Welfare capitalism is being rolled back across the Western world. As the Economist has crowed, the left has been smashed across Europe. Obama may have been elected US President, but a newly resurgent right spearheaded by the Tea Party has seized the House of Representatives and is setting the political agenda.
What went wrong? It’s an interesting question: but I’m more intrigued by how it’s all so familiar. Why is it, counter-intuitively, that it is the right and not the left that benefits from crises in capitalism?
Take the Great Depression of the 1930s. In Britain, a minority Labour government had been elected before the crisis had begun. It’s response were fiscally conservative, deflationary economic policies that would make George Osborne blush, including a 10% cut in unemployment benefit. The Government fell when Labour Prime Minister Ramsay MacDonald betrayed his party and entered a National Government with the Tories. Labour was wiped out in the subsequent election. Depressed by the 2010 general election results? Labour won just 52 seats in the 1931 election.
It was a whole lot worse in the rest of Europe. The left was crushed by fascism. Germany’s labour movement was the strongest in the world, but Nazism shut it down virtually overnight. A military uprising against Spain’s reformist government in 1936 triggered a three-year Civil War that ended in the slaughter of hundreds of thousands of leftists and the victory of far-right dictator General Francisco Franco. Italian leftists had been languishing in Fascist jails since the 1920s. The only glimmer of hope for the left was France’s Popular Front, a coalition of Socialists, Communists and Radicals: but it was an unwieldy government that lasted two years, and the right were growing ever more aggressive and militant.
The other major economic crisis of the last hundred years erupted in the 1970s, when the ‘oil shock‘ of 1973 signalled the end of the ‘Golden Age of Capitalism‘. The historically unprecedented post-war boom came to an abrupt end, leading to a period of stagflation: poor economic growth and rampant levels of inflation. The economy was tanking but it was boomtime for the New Right, at first in the shape of British Thatcherism and American Reaganism, but politics began swinging to the right across the rest of Europe, too. There was a last hurrah for the left when François Mitterand swept to power in 1981 with one of the most radical left-wing programmes in post-war Europe. The experiment had ended by 1983 with the then-novelty of neo-liberalism being introduced by Socialist ministers.
Is it an accident that the right always seems to benefit from crises of capitalism? It was perhaps naive to have imagined that the left would have benefited from the current crisis: after all, it barely existed as a force when Lehman Brothers collapsed. But it seems as though a new, radical right always emerges triumphant when capitalism goes into meltdown. The left did exist as a powerful force in the 1930s and 1970s – but it was outmaneuvered and destroyed.
If the radical left is about anything, it is about opposing the injustices of an inherently unstable capitalist system. Those who suffer most from economic crisis are working-class people, who are the left’s base. So why doesn’t the left get a boost? Historically, the left always seems to come out on top after war – the “midwife of revolution”, as it has been called. Indeed, the great left surges took place after the two World Wars. But despite many far left sects practically owing their existence to promising an imminent collapse of capitalism, it is the Right that always seems to prosper in economic crisis.