Despite what its left and right critics say, New Labour was not just a marketing ploy. It was also an intellectual project intended to put new life into social democracy. New Labour thought that top-down managerialist policies - such as tax credits, the minimum wage, increased spending on education - could achieve both economic efficiency and greater equality.
Labour’s problem is that this conception of social democracy has just run its course, just as post-war social democracy had in the 1970s. I mean this in five ways:
1. The banking crisis has shown us that top-down managerialism can fail catastrophically. Bosses do not - cannot - control large organizations. They are (in some/many cases) not the “courageous leaders” and “wealth creators” of New Labour fiction, but charlatans and plunderers.
2. New Labour’s promise of macroeconomic stability - which it hoped would stimulate investment and job creation - was a false one. Macroeconomic stability was mere good luck which has passed, not something which it is in the power of governments to create.
The challenge for an intelligent left is to ask: how can we protect the worst off from macroeconomic fluctuations, given that macro management is insufficient? This requires either more use of insurance markets, or a welfare state that puts a higher weight upon reducing risk than upon incentives.
3. New Labour’s redistributive policies were just about sufficient to offset the increased inequality generated by private sector forces. They were not enough to increase equality, and did nothing to rein in bosses’ rent-seeking.
4. New Labour’s belief that education and upskilling were necessary to get people into work might have made sense in good economic times, when the labour market faced supply constraints. But this less the case now. The labour market problem is more a demand-side one than a supply-side one.
5. The inefficiencies in the public sector generated by top-down management might have been tolerable when no-one worried about government borrowing. However, even though concern about the deficit is grotesquely overblown, this is not the world we’ll live in in the foreseeable future. Governments will have to pay more attention to value for money. This requires that public sector workers be empowered, as they know best where inefficiencies really lie. But New Labour’s managerialism prevented it from seeing this.
My point here is simple. New Labour - whatever merits it might have had in the 90s and 00s - is in no position to tackle the challenges we face now.
But do its leadership candidates sufficiently appreciate this? I fear not, as they all seem still in thrall to the New Labour myth that “leadership” is enough. As Paul so rightly says:
I’ve not seen anything conversational in any of the candidates. I've not seen any pretense that the party itself may have more brains or experience as a whole than any of these Sonnenkind can draw upon from within their small circle of temporary allies...
We need the concept of leadership - as it is currently understood - to be contested and defeated.