The 1929-31 Labour government tore itself apart because it thought the gold standard was a binding constraint which demanded fiscal austerity. But in fact, the constraint was imaginary. Abandoning the gold standard had no great ill-effects.
European social democrats are in the same position Webb was. They are seeing binding constraints when in fact there are only illusory ones. In the euro area, a relaxation of the stability and growth pact to permit fiscal expansion would probably have the same benign consequences as Britain's leaving the gold standard. And in the UK, Ed Miliband's claim that "we won’t have the money" after the next election is illiterate drivel; he's imagining a constraint where none really exists.
This question broadens way beyond fiscal policy. Hopi says that "the constraints on the next government will be so tight". But which of these are genuine, and which imaginary?
To some extent, it's a matter of degree. For example, a living wage of £50 an hour is obviously infeasible, but one of (say) £8 isn't. And a top tax rate of 100% is infeasible, but one of (say) 50% might not be. (Note: feasible isn't the same as desirable.)
In another respect, the issue here is the old one of the role of MPs. If you think politicians should enact voter preferences, then you'll regard their demands for (say) immigration controls as a binding constraint. But if you take the Burkean view that politicians should serve interests rather than preferences, you won't.
It's a cliche on the left that we need a debate about something. But here the cliche is true. We should ask which of the many alleged constraints on a future social democratic government are real and which imaginary. Richard Murphy complains that politicians "choose to shackle themselves to the interests of the corporation and so voluntarily curtail their capacity to act." To what extent is he right?
My personal suspicion is that Labour is not constrained much by the fiscal position, nor by the power of the media, but it is tightly constrained in its ability to raise long-term growth. I suspect that some shadow cabinet members believe the exact opposite.
Herein, though, lies a problem and two paradoxes.
The problem - and first paradox - is that a debate about constraints is unlikely because of a constraint imposed by the Overton window and the traditions of politcal discourse. In recent years, politicians have tried - often successfully - to close off debate. Be it Thatcher's claim that "there is no alternative" or Blair's appeals to modernity, some of the most successful political rhetoric of our time has been the pretence that constraints rule out all policy options bar one. To debate whether constraints are real or imaginary requires a break with this managerialist mindset.
Which brings me to the second paradox. We Marxists are somtimes accused of believing in historical determinism. And yet on this point the opposite is the case. It is a Marxist who is inviting you to believe that politicians might have room to manoeuvre whilst it is rightist social democrats who seem to be the determinists who deny that freedom.