2015 03 – March Editorial

What’s Labour For?

As the General election approaches, the cautious approach of the Labour Party looks less and less likely to connect with the general public. The modest, under the radar, safety-first approach of Miliband and Balls – tick-tacking and triangulating for marginal gain – appears unable to gain traction with a disillusioned electorate.

The problem for Labour is simply that it has failed to digest the scale of the response required to address the fundamental collapse in speculative, financialised, capitalism in 2008.

How did we get here?  Just as the Attlee-Bevin welfare and full employment era ran for 40 years from 1940 to 1979, so too did the free-market Thatcherite era of speculative, finance driven capitalism come crashing down with Lehman Brothers in 2008.  Labour will pay dearly for failing to recognize or acknowledge the opportunity presented by the end of an era. George Osborne and his “shrink the state” vision hasn’t missed and hit the wall.

Labour Affairs has long argued that the welfare and full employment consensus developed under Attlee and Bevin from 1940 onwards put people first.  Housing was built, a National Health Service constructed, a free education provided for all, with a mixed industrial base providing a productive outlet in a close to full employment. Having determined what needed to be done, the means to do it was found as a political imperative. That consensus broke down in the 1970s at least in part due to the failure of the trade union movement to orientate its energies to responsible management of the economy, rather than acting as permanent adversarial protagonists.

Despite de-industrialisation, Thatcherism initially co-opted an element of working class support. Policies such as Council house sales chimed with a freer individualistic, less deferential era. The pride of a winning war in the Falklands restored British confidence, opening the doors for wider interventiions in the Blair era. Eventually, the financial deregulation of the 1980s and aggressive financialisation of more and more of the economy had effects, too. The North Sea oil bonanza was not productively invested – rather used to raze the industries of the North, Midlands, Scotland and Wales and to subsidize the benefits of those left on the scrapheap. The steady decline of industrial work produced the by-product of a neutered trade union movement.

The Blair-Brown era New Labour adaptation to Thatcherism presided over a more humane managerialism – but financialisation continued apace. Easy credit, pain-free “Get now, Pay later”, housing booms and a Faustian pact with the all-powerful City of London. The City would pay a bit of tax in return for free reign, with the public realm, degraded under Thatcher, renewed a bit – often on the “never-never” of off-books PFI schemes. Blair’s Britain was urged to live a dream of new-tech work, and entrepreneurs within the “knowledge economy” or in creative design and services.  No-one talked about the old fashioned Balance of Payments, worsening year on year. The City and “invisibles” would bridge the gap, if anyone looked. The rhetoric never quite matched the reality of a distinctively service driven economy – low waged, and low skilled equilibrium, with immigration substituting for vocational and industrial decline.

Right into the teeth of the crash, Gordon Brown was making cringe-worthy, fawning speeches to the Masters of the Universe at the City of London’s Mansion House. That orientation led to Brown wrongly describing the crash as a “global” crisis, rather than a crisis in Anglo-Saxon or neo-liberal capitalism. There wasn’t much of a crisis in Germany which continued to produce massive trade surpluses – even when its bankers misbehaved abroad.

The crash in 2008 should have woken Labour up. All the quick fixes that papered over the UK’s declining economic performance had run their course – from Imperial preference, EEC membership, North Sea Oil, or financial de-regulation,  to asset stripping and occasional property bubbles. In short, the game is up for Team GB. The UK has the biggest deficit in the G20 and has borrowed more in the past 8 years than in the rest of its 300 plus year history. Deep in debt, the UK manufacturing base shrivelled to less than 10% and could not even take advantage of a significantly depreciated currency. Savers were impoverished by below inflation interest rates, whilst UK money creation policies (quaintly marketed as Quantitative Easing) are no better  than a 1970s South American banana Republic .

The electorate know this in their bones. They know it through uncertain employment, through zero hours contracts, through food banks, through GP or A&E waiting times, through rip off public transport, though rip-off banks and utilities, through a hundred other daily occurrences. But ‘Westminster bubble’ Labour doesn’t.

Miliband’s Labour, compared to the scale of the task, can’t raise a cheer, can’t connect. Labour no longer represents a social interest. It takes money from trade unions with barely a squeak in return. Unions, to their discredit, let them. Jon Cruddas, initially put in charge of Labour’s policy review, could probably have made a difference if given his head. He wasn’t. Lord Maurice Glasman and his Blue Labour raised issues such as tax evasion and industrial strategy but fell foul to political correctness. Credible, even modest, policy forums such as the Compass group and IPPR have been all but ignored. The result is that very few outside the world of political wonks have a clue what Labour’s for, or what it would do.

Ask me and I’d say it’s for cutting the deficit a bit less, a bit slower. That’s it!

For the Tories, a marginal fall in the unemployment claimant rate, a fall in oil prices leaving people feeling a bit better off and a re-egging of the housing market in London and the South East through “Help to Buy” may just be enough to squeak home in May. Maybe with Liberal support, or UKIP support, or even the support of Northern Ireland’s DUP.

The mid February ICM/Guardian poll showing the Conservatives ahead of Labour by 36% to 32% came as UKIP support began to erode under the scrutiny a General Election inevitably brings. It is less likely that the heavy SNP lead over Labour in Scotland will dissolve in the same way. Scots know “once bitten, twice shy”. Labour looks likely to pay, North of the Border, for the failure of the unionist parties to deliver anything close to the Brown “Pledge”. An SNP landslide is hardly a long shot..

So, what to do?  In the short time remaining, Miliband could go for bust and flesh out his “predatory capitalism” sound-byte.  Let him develop a serious narrative on finance and banking reform, and a serious effort to rebalance the economy. Start by describing the City as a criminal conspiracy, whether rigging the LIBOR rate to defraud the public, or laundering the loot of the Mexican drug gangsters, the Russian mafia or the Columbian cartels, or facilitating industrial scale tax evasion for corporations and HNW (high net worth) individuals in the British global network of tax havens. Make a pledge to civilize the city and finance; promise a Usury Bill as the first act of the new Parliament;  provide for utility banking, separate and cut loose casino/investment banking and implement unilaterally the ‘Robin-Hood’ Financial Transactions Tax. Use the state bank shareholdings to develop an industrial and infrastructure development bank, and encourage regional banking along German lines. Pick a fight. Describe these amoral old-era Masters as the greedy parasites that they are. The public would understand that language. And promise to regulate the parasites off the field.

Follow that up with a pledge to develop industrial strategy, the Green New Deal that Green Party MP Caroline Lucas so easily articulates, married to a modern approach to industrial democracy, adopting the approach of the Mather Review’s “Working Better Together” strategy in Scotland. Let Alex Salmond lead the charge for greater Home Rule, more powers to regions and to cities. This will require a commitment to company law reform, and to fair taxation, which Margaret Hodge, Richard Murphy and John Christensen could credibly lead from now to May. Promise a higher share of GDP to wages and lower profits, a new deal partnership with trades unions. Alan Johnson could leave Andrew Neill’s sofa to lead this effort from the House of Lords. Commit to Industrial training boards, with powers to levy companies and provide real, productive, work related vocational education routes to our young people. Commit to building housing, social and low cost, to meet need. In short, provide hope.

Triangulation and modest, poll driven, small steps aren’t working and cannot win. What’s to lose by trying?

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