Neither Islington nor Scunthorpe, but a few modest steps towards international socialism!

On Ed Miliband's alleged swerve to the right on budget policy, I find myself in between the "Blairite neo-liberals", if I can combine familiar insults, and the old Labour stalwarts. First, this is because the longer-term question isn't really about fiscal policy. Fiscal policy can offset a slump in demand to some extent and for some time. If you cut too far and too fast, you risk tipping the economy back into recession. If you don't make the right noises and some progress on cutting the budget deficit, at some point borrowing costs will soar: even more so in the febrile atmosphere of today's international financial markets. That is, both positions are true, depending on the specific circumstances. Also, the level of spending that was affordable in the 2000-07 bubble (the greatest bubble in human history) is affordable no longer now that the bubble has burst. The system of private ownership and generalised commodity production is not neutral between possible solutions: it favours making working people rather than property owners pay. These are really technical questions about how capitalism works now.

But I think where the unions and the old Labourites—and those on the left of the party more generally—miss a trick against the "Blairite neo-liberals" is over the longer-term and ultimately more important questions of the kind of society we would like to live in: What kinds economic and social structures? Are any of these are plausible? If so, how might we practically develop them?

On this second set of questions of practical social and moral philosophy—which will be at the heart of what the Labour Party becomes, assuming it is capable of change in time—the old Left seems to have very few, new positive creative proposals, which is unfortunate.

As for Ed, I think that, for practical short-term political purposes, to keep the two main halves of the party on side, he needs to stick to "fiscal conservatism" (if that means addressing the structural budget deficit over the longer term)—especially as 2012 could well be a very bumpy year economically around the globe—while at the same time offering the unions and the old Labourites something positive and attractive and big on the practical social and moral front that they can hold on to. What that might be, I'll try to make some concrete suggestions later.