Goodbye New Labour

Sunder and Left Futures do a good job of rebutting Blair’s claim that Labour lost the election because it was insufficiently New Labour. But there’s something to add.
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.

Comments

[Luis Enrique]

What makes you sure that tax credits, the minimum wage and increased spending on education didn't achieve both (greater) economic efficiency and greater equality?

I don't understand this opposition to "top-down managerialist policies". A great many sensible policies are such, for example changing prices to reflect externalities (a carbon tax or subsidizing solar panels), taxing behaviour that increasing systemtic risk in banking, or a land value tax.

These type of policy are also distinct from some mythical conception of leadership.

Lots of left-wingers say they dislike New Labour, but my impression is that few of these also want to abandon policies like tax credits, the minimum wage and increased spending on education.

Also, if you actually have any concrete policies that will bring about this world in which power hierarchies are dismantled, mightn't you need a charismatic and skilled political leader to get elected on such a manifesto?

[Francis Sedgemore]

Chris – All five of your points above appear sound, but forgive me if I take issue with the conclusion, and offer instead a naively optimistic view.

The current concept of leadership is indeed at fault, but the British polity, like those of other liberal democracies, appears to be locked in a death spiral from which it cannot extricate itself. Or at least, any public attempt by senior politicians to break free from this cycle of bullshit will result in such a severe loss of face for one or more parties that the exercise is doomed to failure. A better approach may be for the wiser political leaders to continue talking the usual rubbish, and thus keep the media happy, but behind the scenes adopt an entirely new gait.

Paul Evans complains that there is nothing conversational in any of the Labour leadership candidates. On one level that may be so, but it doesn't necessarily mean that none of the candidates has the wit to take things forward. One of the reasons why I put my name to Miliband Minor's campaign is that Ed is more a doer than a waffler. Unlike his gobby sibbling, Ed Miliband leads by example, and is an highly capable facilitator.

Perhaps that is what Labour needs now: a facilitative leadership, rather than a charismatic leadership masking an inflexibly managerialist ideology.

So it's goodbye to New Labour; you'll be missed, but not for long.

[Forlornehope]

If you "empower" public sector workers why would they seek greater efficiencies that would only put them out of work? "Empowerment" only works in the private sector when there are both incentives and penalties. Usually that means a realisation that a company can only pay you if it stays in business and that you are out of a job if it doesn't.

[Morlock]

"New Labour’s promise of macroeconomic stability ... was mere good luck which has passed, not something which it is in the power of governments to create."

Really? I would agree with you _if_ one allows external forces to impact the nation's economy, but if such forces are restrained...? Or are we all neoliberals now?

[Paolo Siciliani]

Agree that the current market failure in the labour market is demand-side based, so that traditional supply-side policies are nowadays largely ineffective.
Then what about demand-side intervention?
How? We know a lot about this kind of intervention in markets from the fields of antitrust and consumer protection. What about then figuring the employee as a customer and applying the insights from antitrust and consumer protection? For example, is there any info asymmetry regarding salary levels and ranges face by current and prospective employees that needs some rebalancing, this is particularly so for those at their beginning, with too short a tenure to be able to guess. Is there a problem with rival employers pulling together their remunaration treatments to survey their relative positions - or, wouldn't it be only fair that these surveys were accessible also by employees? Would it be good practice that rival employers compete fairly to offer fairer payment, rather than enforcing those perfomance policies that are meant to put colleagues one against each other? Would this fairer system constitute a comparative advantage with which rival employers could compete for best resources, those more happy to work in a fairer and more collaborative job place? And so on and so forth. I believe this would constitute a (bottom-up, non-managerial) political platform fit for todays challanges.

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"New Labour’s redistributive policies were just about sufficient to offset the increased inequality generated by private sector forces."

Looks to me as though the Gini coefficent has been flat since 1990.

http://www.statistics.gov.uk/cci/nugget.asp?id=332

Apparently these market forces only began their forcing at almost the exact time these redistributative policies were enacted.