A modest proposal

A suggestion for Labour’s broad strategy after the global economic crisis and the demise of New Labour.

Old wine in new bottles?
1. When New Labour came to power in 1997 it had some reasonably radical proposals, but then drifted ever further to the right and away from the party’s traditional values, distancing itself from its core, working class supporters as it sucked up to globalising “neo-liberalism”.
This familiar narrative, by now somewhat tired and formulaic, nevertheless remains popular among some who identify themselves with the left. An alternative, minority reading—one which seems less stirring but closer to the mark—is that New Labour’s strategy and practice was simply the latest manifestation, and by no means the least successful, of the central social democratic principle of using state power to make capitalism a bit fairer through increased redistribution. In its case, this was done by adapting to the dominant political-economic ideology of the day so as to channel a larger share of economic resources to social projects such as healthcare improvements and school-building.
2. I’d better say right away that, although I’m a member of the Labour Party, I couldn't really be called a social democrat, and especially not one of the New Labour kind. Rather, I count myself as some sort of democratic socialist and/or Marxist. (I used to think the word “democratic” superfluous in this connection, since it seemed to me that it was already automatically included to the idea of "socialism", meaning the extension of popular political and economic control. Certain developments during the past decade have since convinced me, reluctantly and belatedly, that, even after the historic and welcome defeat of the Stalinist regimes, this is not always necessarily the case.) Freedom and egalitarianism are the other indispensable values of this strand of political belief. It does not denigrate or underplay the tangible achievements and benefits of liberal democracy; rather, it values highly the political space that liberal democracy affords, compared with other contemporary and historical options. At the same time, it is confident about the desirability of, and popular capacity for, developing political arrangements that not only incorporate liberal democratic achievements, but that also considerably augment and go beyond them. As a starting point on imperialism—in our day, roughly, the world institutional set up designed to facilitate the expansion and reproduction of capitalist power—it is opposed on principle. That said, it is not oblivious to the existence of other repressive and reactionary forces in contemporary international politics, forces that cannot be traced back wholly satisfactorily to the complex and ever-mutating structures of Western imperialism. This is one of the reasons that—dare I say it?—in some contexts imperialism has been, and probably could be again, relatively progressive. To state the obvious, the characteristic social relations of capitalism, though exploitative, are nevertheless superior to those of feudalism (because…), and parliamentary democracy, for all its shortcomings, is superior politically and morally both to fascism (because…) and violent Islamism. Perhaps I’d better add at this point for good measure that, although my political preferences are, in the main, far to the left of those of Tony Blair, the more he has come in for criticism from the mainstream liberal-left media, and the more this criticism has become merely reflexive, a genuflection to conventional wisdom, a badge of belonging, the more I have warmed to him. I don’t know if any of this is very bad, or if there is anyone else who shares this rough combination of view: I’m just describing.

The end of the affair
3. The global economic and financial crisis of 2007-09 has changed the political, economic and intellectual terrain dramatically and for good. Emerging out of the US property market in 2007 and reaching a peak of intensity in late 2008 and 2009, it was not only the most severe such crisis of world capitalism in 60 years, but also the most important world political event since the implosion of the Soviet Union almost 20 years ago.
Nevertheless, the impact of the crash was not the same everywhere. In 2009 the world economy contracted, weighed down by the very poor performance of the advanced Western economies. Although sharp falls in real output were concentrated in the economies of north America and western Europe, many countries in eastern Europe and the former Soviet Union were hit especially hard. Real GDP in Canada and the US shrank by around 2.5% in annual terms, on IMF figures. Of the leading countries in the EU, France saw economic activity wither just as much, whereas in Germany (the largest economy in the group) and in Italy, output dropped by around 5%. In central Europe, apart from Poland, output falls were of a similar magnitude or a bit worse (Hungary and Romania). Countries that had previously been involved in heavy foreign borrowing and/or were reliant on the vicissitudes of commodities markets, such as the small Baltic states and the relatively large Ukrainian economy, suffered much deeper recessions, of 15-18% annually, comparable in size to those seen in the chaotic aftermath of the fall of communism two decades before. Although not quite so traumatic, the crisis in Russia exposed the multiple fragilities of its economy, the most important in the Commonwealth of Independent States (CIS; an institution that takes in many of the former Soviet countries), where national production fell by almost 8%. Only nations with a relative lack of integration into the world financial system came through comparatively unscathed (Azerbaijan, Uzbekistan). In contrast, in other emerging-market regions—notably, those in Asia—the impact, though marked, was much less severe. In the same year, in a far-flung and obscure corner of the globe known as Britain, real GDP shrank by 5%, by far its most severe post-war slump. Without the massive boost in government spending and the rapid and substantial monetary loosening undertaken by Gordon Brown, it would have been much worse, probably leading to the return of mass unemployment (though he shouldn't hold his breath if he expects to get any credit for avoiding this). Without the unprecedentedly large, swift and co-ordinated actions internationally, it would have been worse still. Bringing things a little more up to date, at the beginning of 2011 the on-going troubles in the peripheral economies of the Euro zone indicate that the crisis has not yet run its course. Most recently, the inspiring and momentous popular uprisings against corrupt and authoritarian regimes in Arab North Africa and the Arabian Peninsula may be another of its after-shocks, as economic eruptions can interact over time with existing, underlying weaknesses to trigger social and political crises.
4. Probably the most important long-term consequence of the crisis is that it has seriously shaken the dominant intellectual and ideological edifice in place over the past 30 years—namely, the idea that no alternative to unrestrained free-market capitalism was possible—as the crisis was in large part the unforeseen by-product of untrammelled deregulation, as well as a specific and dogmatic-idealist view of the nature of capitalism. In the interim, however, the standing of this set of ideas was only enhanced by the collapse of the Soviet bloc.
5. Perhaps it is understandable that, with a definite phase of capitalist expansion and ideological dominance in effect over, greatly undermined by the scale of the global economic crisis, only its adherents and beneficiaries seem not so far to have noticed. This could just be a testament to the power of habitual thinking, or perhaps it is this in combination with the narrowness of the Anglo-American economic education syllabus, which means that, whatever happens, most insiders are left swinging on the bars of a cage that is tightly framed by the parameters of what they have been taught. There must also be some emotional resistance to loosening one’s hold of ideas that are in places moderately complicated and possibly hard to master. Whatever the reasons, having escaped the looming catastrophe of a wholesale breakdown of the international financial system and a rerun of the Great Depression, the City and its newspapers, its legions of commentators and economic journalists whose job is to tailor the news to suit businessmen, not to mention the multilateral organisations, seem almost immediately to have returned blithely to business as usual, intoning pretty much the same formulas about economic probity and reform, wheeling out the same tired and implausible texts about the necessity of rewarding investment bankers and CEOs with enormous bonuses if they are to continue to compete successfully in the international market by attracting “talented” staff. Presumably, among such staff are some of the geniuses who cleverly ignored every warning sign in the run-up to the crisis­—and, indeed, the bonus system may have been one of the factors that systematically incentivised them to do so.
In Britain, the social composition of the new government, made up of the parties of the landed aristocracy and their hangers on aligned with big finance and the spokesmen of the business class, of course predisposes it to try to take advantage of the crisis to push developments in the direction of the interests of its constituents, according to their overlapping world views and the familiar policy prescriptions that go with them. Hence the institution of a programme of cuts beyond the scale immediately required as a follow up to the UK’s stimulus package and the large cyclical (recession-induced) deficit, so as to make a permanent reduction in the size of the state. Hence also the necessary exaggeration of the dangers of a Greece-like financial destabilisation linked to the size of the fiscal deficit.
6. Another obvious consequence of the discrediting of the model of development with which it made its creative social democratic compromise is that the raison d'être of New Labour has fallen away beneath it, as a new and probably more timid, less self-confident phase of capitalist development gets under way. There is nothing surprising in the right reacting strictly according to the dictates of its shop-worn worldview. But one of the things that the left must be careful of, whether it is the old New Labour centrists or Old Labour in a new disguise, is that it doesn’t do the same—that is, react exclusively and unthinkingly from within the network of its pre-existing ideological and rhetorical reference points. Rather, it must react to create a new political machinery and policy framework that render Labour values appropriate and relevant to the changed national and global situations. Thus the difference for us, for the Labour Party, is that this presents a fresh and exciting opportunity, rather than, as for the right, a dead end, a chance to rerun the glory days of the 1980s, "the second time as farce".
So May 2010 saw a significant defeat for social democratic Labour in one of its incarnations. At the same time, there is now a genuine political opportunity, and, first of all, a genuine chance for a thoroughgoing rethink of what comes next. This is why I choose to read positively Ed Miliband’s alleged slow start as Labour leader (another media narrative that has quickly hardened into cliché) as him having decided to take time to try to reforge both strategy and policies for a new era, just as New Labour did before. I’m especially pleased to see the attempt to rethink policy with the goal of democratising the party still further, in part by eliciting greater input from and involvement of grassroots members, as well as from progressive groups and movements more broadly. If Labour can’t be the most democratic party, pushing the democratic agenda both internally and in society more widely, then it can’t possibly hope to represent effectively the interests of the majority of ordinary working Britons.

Down but not yet out
7. That said, to double back for a moment, although the economic crisis has raised considerable doubts about the Anglo-Saxon model of global economic development, it would be premature to imagine that it yet augurs the decline or transcendence of capitalism itself. There are good reasons for believing this. First, in many places in the world, capitalist social relations—the dynamic conjoining of private property with market competition, the handle and cord of the whip the drives firms on and keeps them innovating—are still “forms of development”, propelling rapid economic growth and increases in productivity. In the past two decades this has probably lifted hundreds of millions of people out of absolute poverty in large, populous countries such as China, India and Brazil. At the same time, in the advanced economies this arrangement has continued to generate all sorts of interesting technological innovations that are opening up new possibilities for the future all the time.
But its was never the dynamism of capitalism, its ability to force firms to constantly raise the productivity on pain of bankruptcy and extinction, that troubled us: it is its social and environmental destructiveness, the wasteful, uncertain and stunted lives that, even in the rich countries, it imposes on the majority, in part as a corollary of the division of labour, in jobs which, if they have them, are either too demanding physically, leaving little time for the development of a fuller range of human faculties, or too repetitious and undemanding mentally, presenting little challenge or prospect for self-development, leading to disengagement and withdrawal, the coasting through working life on autopilot. The structures which ensure this, the arbitrary and debilitating hierarchies at work just as much as the arbitrary life chances doled out by the underlying socio-economic patterns of property ownership and resource access, are the flip side of the cult of entrepreneurship, the narrow form into which a particular strand of creative human potential is selectively channelled in class society, stultifying and depressing the many so that the few might fly free and live.
Second, despite widespread pessimism on the left in the wake of the fall of the Soviet Union and the understandable phase of capitalist triumphalism that followed, and although some promising new developments are now starting to emerge, the left has not yet come close, as far as I know, to solving the central problem of what kinds of institutional arrangements might serve as the basis for an improved social set up in which a mechanism of innovation could become socially ingrained.
8. One positive long-term result of the fall of the Soviet bloc has been the gradual coming together—still nascent, still tentative—of the two broad sides of the left split asunder by the October Revolution of 1917: roughly, the social democrats and the Marxists. Potentially, this is a very positive development, even if it is unlikely, or desirable, that it leads to the seamless fusion of the two. It shows itself, at least among the more thoughtful elements on each side, as a slow diffusion of political concerns and suggestions in both directions, a focus on common problems, with each arriving at possible workable solutions using reference points from within their own tradition. Signs of this potentially productive cross-fertilisation can be seen in the common language and similar conceptualisations of certain problems and goals by representatives of the two sides. For example, something of this kind can bee seen in the similarity of the approaches of James Purnell, a former Labour minister, and Erik Olin-Wright, an old New Lefter, to the issue of real (as opposed to nominal) freedom, even though Purnell appeals in his analysis to thinkers, such as Tawney and Sen, who come firmly from within the social democratic tradition, whereas Olin-Wright addresses the issue from the perspective of creative and self-critical analytical Marxism. Trends of this kind should recognised and nurtured, as they could be very helpful in negotiating the uncharted waters ahead, now that the twin "inferior mirages" of the Soviet dictatorship and of unrestrained free-market capitalism have disappeared.
9. As a quick aside, I should have thought it obvious, but have not always found it so, that no socialist or social democrat should regret the fall of the Stalinist regimes, and neither should they defend or apologise for their disastrous records, in some sort of inept attempt to keep open a political alternative—any political alternative, no matter how bad—in the face of the encroachment of voracious neo-liberalism. As the societies of the Soviet bloc fell a long way short of socialist ideals of democracy, freedom and even egalitarianism, both in their methods and their results, they are inherently beyond any progressive defence. Indeed, the grim egalitarianism of Soviet life, such as it was, was conditioned by the failure to develop living mechanisms for social, political and, crucially, economic innovation. On the contrary, innovation, and the free and frank exchange of ideas necessary for it, was actively inhibited by the authoritarian political structures necessary, in the absence of a strong self-reproducing ideology of consent, to hold the social form together, to force it to cohere. That is, the so-called state socialist regimes failed even on basic Marxist terms, because the rigid and sclerotic socio-political form prevented the continuous revolutionising of the forces of production that would be necessary to pave the way for freer and more widely creative social form than capitalism. Neither should anyone on the left feel sorry for their passing, as they were an impediment to human progress, a historical blind alley. Of course, this is different from feeling sorry for the people who had to go though the capitalist retransformation of those societies, many of whom experienced it as a catastrophic loss—of income, status, security, purpose.

In the womb of the old society
10. In the short term, the Labour Party's priority must be to expose the ideological, class character of the government’s cuts agenda, which, masked by the inevitable “we’re all in it together” routine, could yet endanger Britain’s faltering economic recovery. We must also offer a clear, alternative policy approach to the problems of weak growth, a large fiscal deficit and the burgeoning of cost-push inflation internationally that is economically realistic—ie that shows that it grasps the way in which a national capitalist economy really works in an international context. So far, so social democratic.
Over the medium and longer term, however, more promising prospects arise. Drawing on some recent ideas, it is possible to sketch out a broad new strategic road-map for Labour. This approach differs from other sketches I have seen in the press or on left-leaning websites (such as from the centrist Compass organisation, or from so-called conservative social democrats or “Blue Labour” theorists). It adapts to the new, uncertain political territory we are entering, but less defensively, less passively, more positively, more excitingly and with greater ambition than its rivals, by means of a strategy that pursues two apparently contradictory policy paths at once.
The first path would follow policies that are almost as pro-market and pro-globalisation as New Labour (bear with me for a moment), although without shying away from the reforms needed to prevent a rapid repetition of the near-collapse of the financial system that was seen in 2008-09, which could again threaten millions with unemployment and poverty. In this way, state resources available for pursuing the second, more radical path are maximised, using a proven economic tool-kit (albeit one with known, significant limitations), while also pursuing traditional social democratic redistributive goals (which, however, have the drawback of being impermanent and reversible, as we are seeing with the current round of cuts in social welfare and support). In short, in lieu of a good idea of alternative, realistic and proven socio-economic mechanisms that can provide dynamic innovation and poverty-reduction, and which are ready to put to work straight away, at this stage the goal should be to improve the functioning of markets rather than to restrain them, to encourage conditions favourable to rapid economic growth as actively, though perhaps not as credulously, as New Labour. Similarly, it is of both practical and of pragmatic self-interest to remain in favour of globalisation, albeit a globalisation of a different kind than we have seen to date. For example, Labour and the unions should work together to promote vigorously an improvement in working conditions, wages and workers’ rights internationally, not least as a means of protecting living standards at home. We actively want people abroad to be better off, to have greater control over their own lives, but we don't necessarily think that this should be—or even that it is necessary that it should be—achieved at our expense. The aim should be to match the trend towards the ever-freer movement of large-scale capital flows across borders—which has characterised advanced capitalism over the past 20 years, but which was also one of the main factors that almost brought it to its knees—not just with the freer movement of labour, but also with the internationalisation of the labour movement and the “export” of advanced labour legislation and practices. Behind this stance, then, is a dual motivation that is both self-interested and internationalist.
The second path involves a commitment, over time, not just to the redistribution of state funds, but also to substantial and sustained material and practical support for experimental political and economic institution-building. The aim would be to deepen democratic involvement, to address the well-known shortcomings of capitalist production and, ultimately, to develop alternative methods of economic organisation capable of ingraining innovation systematically, within the social structure, so that creative economic opportunity is not in effect restricted to the few. Unhindered by capital restrictions, what we now call “free enterprise” would gradually be made a practical possibility for all, or almost all, with social relations that structure alternative drives and motivations for productive innovation encroaching more and more on the social relations of private property and wage labour, two halves of the socio-economic form currently dominant. This could be conceived as something like R&D investment, but in this case, what is being researched and developed need not be a technology or a product, but rather experimental institutions favouring alternative motivations for dynamic innovation as possible basis for a new, more sustainable, human-centred social form. So, state revenue would be distributed to schools and hospitals—Blair’s essential and, in its way, brilliant, if necessarily temporary compromise—but also to civil society to fund alternative, experimental institutions capable of extending social control over political and economic life, and of undertaking social production based on incentives other than just profit, but with the room to risk failure. I don't see why it couldn't be modelled something along the lines of arts funding, the purpose of which, ideally, is to afford space for the experimental exploration of meaning and beauty without the need to turn a profit, outside of any immediate commercial considerations and constraints. What might such alternative institutions look like? Luckily, a lot of work has been done on this in the past 20 years. To concretise this idea, I shall pinch a couple of examples from Olin-Wright’s recent book, Envisioning Real Utopias, one on deepening political democracy, one on extending economic democracy, as a means to achieving, among other things, what is sometimes called real freedom. [[EXAMPLES TO CHOOSE FROM AND ELABORATE A BIT, to concretise: social economy: wikipedia, Quebec; unconditional basic income; social capitalism; co-operative market econ, mondragon; market socialism; parecon]].
Of course, the choice of goals would have to recognise the political starting points, the processes of production and reproduction of British political culture as it is, which would condition their "sellability".
Thus, although capitalism might not automatically equip its own gravediggers as fast as some of us might hope, we could at least try to ensure that it supplies sufficient taxes to pay for the gravediggers’ advanced vocational training.

Comparative advantage
11. Unlike New Labour, therefore, the purpose isn’t just a temporary compromise, but rather the construction of viable economic and political alternatives, within the existing systems, to be tested and improved over time so that we may be surer of their effectiveness and durability. It contrasts also with the old left’s statism, in that, rather than emphasising state ownership, it favours public funding to support and develop social ownership, civil society ownership, the dispersal of economic and political power within civil society, heavily backed up by the state. In contrast to the old Marxist left, it does not think that violent revolutionary transformation is necessarily the best terrain on which to conduct the possibly longish phase of democratic economic and political experimentation needed to "unsheathe" or “declass” the “entrepreneurial spirit”—and thus unleash alternative incentives and drives as the basis for economic development—in the advanced capitalist countries, at least. In contrast with the Conservative’s Big Society concept—itself designed to clothe in vaguely centre-left-sounding terms a reactionary policy of reducing social provision—the absorption of economic activities into civil society is not only to be encouraged, but also heavily backed by the state by means of training and funding, perhaps first of all using a number of pilot schemes based on the most promising real examples from historical and contemporary experience.
12. There are several advantages to this approach. First, by synthesising aspects of New and Old Labours in a way that addresses the difficulties promising opportunities in period of regeneration ahead, following a phase of crisis and defeat, it has the potential to unite the two largest parts of the Labour Party. It could also draw the support of the disappointed left-wing of the Liberal Democrats, without scaring them, and appeal to progressive, liberal-left opinion more broadly—the elusive “progressive majority”. This will be necessary to beat the Tories. Second, this is not an attempt to reject Labour’s achievements and its traditional values, but rather to adapt them again to the specific intellectual, ideological and political terrain of the day. However, it is more forward-looking, less cringingly passive, less defeatist, less fearful, less insipid, and more inspirational than some of its alternatives (“conservative” social democracy, “Blue Labour”, Compass). And above all, at the moment Labour needs a broad programme that is credible, inspiring and easy to grasp. There’s nothing wrong with being passionate and angry about living in a country that is still incredibly unequal and wasteful of human potential, and there’s nothing wrong with being utopian, of aiming for the highest peaks of achievement. What’s wrong is if these qualities aren’t tempered with a heavy dose of learning from the past, and with realism, which means having a clear knowledge of your own political culture, of where you are starting from. Lastly, one of the most striking features of the global crisis was the absence of a coherent left-wing response to it. Instead, there was a certain paralysis, or the resort to the safe but windy rhetorical formulas of yesteryear. The approach outlined above could help to be better prepared when the next crisis hits.

13. Some terms in need of definition: neo-liberalism, democracy, socialism, nominal freedom, real freedom, egalitarianism, imperialism, liberal democracy, social democracy.