Beyond New Labour

"All British parties seem to compete within the ideological and political bounds set by New Labour" writes Lilia Giugni. Ross McKibbin agrees, saying Miliband is surrounded by neo-Blairites. So does Eunice Goes, who laments that many Labour backbenchers are living in the past.

Insofar as this is the case, it is to be regretted. Labour must move beyond New Labour. I don't say this because I'm a loony lefty who hated Blair's embrace of "neo-liberalism", but because the economy has changed. Our problems today are not those which New Labour sought to solve.

To see what I mean, let's remember what New Labour was. It was a coherent (if, I believe, flawed) response to serious problems.

It believed - rightly at the time - that a mix of globalization and technical change was raising demand for skilled labour and depressing that for unskilled work: between the 70s and 90s, there were rising wage and unemployment differentials between the skilled and unskilled.

Also, New Labour believed - again, with some justification - that the economic instability of the mid-70s to mid-90s had created so much uncertainty that it deterred business investment.

Its distinctive economic policies were a response to all this. The expansion of university education was an attempt to increase the supply of skilled workers to meet the demand created by globalization. The attempt to create macroeconomic stability - not just Brown's hubristic claim of "no return to boom and bust" but also central bank independence - was intended to reduce uncertainty and boost investment and growth. And tax credits and minimum wages were intended to both help out the losers from globalization whilst creating incentives for the unemployed to move into work.

All this was quite reasonable. But the world has changed. For example:

 - The problem today is not just that unskilled workers face hard times, but that all workers do: real wages have fallen even in many skilled jobs.

 - The issue now isn't simply a shift in demand from unskilled to skilled work but rather job polarization; middlingly skilled work is in decline, whilst demand for unskilled workers is holding up.

 - The dearth of investment opportunities means that macroeconomic stability is not sufficient to raise capital spending. And maybe the lesson of 2008 is that governments can't guarantee stability anyway.

 - The inequality that New Labour worried about - the 90/10 ratio or that between skilled and unskilled workers - is not our main problem today. Instead, as Ed Miliband said this morning, the problem (if such it be) is the rising wealth and power of "the privileged few", the 1%.

 - It's not at all clear that the constraint on growth is simply a lack of skills. There's also the problem of weak aggregate demand.

 - New Labour was generally - and rightly - relaxed about immigration. Labour today at least needs to do something to placate voters' (misplaced) concerns.

 - Productivity in the public sector stagnated under New Labour; improvements in outputs were due only to increased inputs. If Labour is committed to austerity - as, sadly, it seems to be - it must think more about changing this than New Labour did.

Now, I don't point out these differences to call for more Leftist policies: the last of these differences might justify greater use of markets in public services than even mainstream Labour would like. I do so merely to claim that our world is no longer New Labour's world. Whether you think New Labour was a good thing or not, it is no longer relevant to our problems today.    

Comments

[Ed]

Really nice analysis

[Dave Timoney]

Job polarisation, stagnant median wage growth (at least for men), the dearth of investment opportunities, and the accelerating wealth of the top 1% are secular trends that were apparent by the mid-80s. (You could argue that some of these trends, like investment, didn't become obvious till the early 90s, but other observers, e.g. Robert Brenner, would argue that there were clear signs as early as the 70s.)

In other words, "New Labour's world" was always a construct that interpreted the facts to suit a particular ideological agenda. As there hasn't been a change in "relevance" - as opposed to a wider recognition of the facts and the systemic economic insecurity that they point to - I'm not so confident that the New Labour skin has been shed.

[Ben]

Really surprised to read this. Labour were hopeless. They didn't understand inflation. Print too much debt and you inflate assets making labour worthless. Print too many degrees and you make them worthless.

Really they couldn't have attacked the working, asset-less man any better if they tried.

Labour also helped create global instability. Many of the US problems were run through The City where Labour had given the green light to fraud which was well understood by all financiers. Their "regulatory arbitrage" forced the US to lower their standards.

Nu Labour were and remain a total disaster for the UK. They took 90/10 and made it 99/1.

Now hopefully the above you can see is from someone who is not unreasonable. So let me now say this:

I wouldn't piss on Blair or Brown if they were on fire.

[aragon]

Ed Miliband an empty suit, and Ed Balls is a accountant at best.

This is not just my view but that of John Rentoul too:

http://www.independent.co.uk/news/uk/politics/ed-miliband-speech-7-quotes-that-show-how-hell-go-down-fighting-9858701.html

"Anyone hoping for details gets slogans, rhetoric and guff followed by lists of micro-policies, such as freezing energy prices, that raise the question, “How?”"

Ede missed out the solutions, from his speech and the Ed's have diluted the most modest proposals (not like Jonathan Swifts) in some sort of political homeopathy.

By all means read Saez and Zuckman:

http://www.theguardian.com/business/2014/nov/13/us-wealth-inequality-top-01-worth-as-much-as-the-bottom-90

http://gabriel-zucman.eu/files/SaezZucman2014.pdf

But to offers us two aspirin and to call if we don't feel better in the morning.

The situation is chronic if not terminal, and the source is finance, but aspirin alone do not address the scale of the malady.

Wealth inequality falling until Thatcherism, (Top 0.1% = 7% in 1979 with that rising to 22% today)

The Ed's are at best placeholders and not up to the scale of the task.

[pablopatito]

I think the difference is that New Labour were gifted huge tax receipts, mainly from the booming City, plus I guess things like the sale of 3G licences and privatisation. So their role was how to spend all the money they had. Spend a bit on education, spend a bit on urban regeneration. They never tried to change the economy - the mentality was if it ain't broke, don't fix it.

The next government won't have any money, and the economy is broken.

[aragon]

Ben,

I don't wish to defend New Labour, but who deregulated the City in the Big Bang? Who demutualised the building societies in the UK? (hint: Thatcher) Who introduced the PPP/PFI (hint: Major: 1992).

What about Bubbles Greenspan (Fed Reserve 1987 to 2006), although I will concede that it was President Clinton who abolished Glass-Stegall, and what about American International Group (insurance) the credit rating agencies and securitisation?

Of course Blair and Brown did exacerbate the problems e.g. more PFI and light regulation of the City.

[Ben]

pablopatito - I think that puts the cart before the horse. We had a "booming" city because Nu Labour threw out all regulation and let them lend which tripled house prices. This pushed up consumer spending even more and ensured the eventual crash.

aragon - Thatcher was also a waste of space. PFI was a bad idea but Labour took it to new levels so I wouldn't hang that on Major.

Labour near trebled house prices. That was and remains a total disaster for the working man. It is, more than anything else this side of WWII, the worst thing. I can't understand why people can't see this.

And yes Thatcher precipitated this with right2buy.

AIG London was were all the crap went through under Brown btw.

[Guano]

"All British parties seem to compete within the ideological and political bounds set by New Labour"

Indeed, in that there is a lack of any in-depth analysis of the challenges that the UK faces. New Labour was held together by a set of policies that wrong-footed the Tories yet appeared to be progressive. The criticism of Miliband that he is "out of touch" is irrelevant. He should be criticised for not being clear about where the UK is today, though I suspect that if he did he would be criticised for being Re Ed.

[shorebreeze]

If I could recommend this post a thousand times and repost it to a thousand blogs, I would. It's probably the best one-paragraph encapsulation I have seen of what is wrong with NuLabor® and in general wrong with Third Way reinventions of center-left parties; they're reinventing for conditions that have become steadily less characteristic of developed economies for the past 15 years in the UK's case, the past 40 in the United States' case (the Clinton presidency excepted, thanks largely to the tech boom keeping the broader trends temporarily at bay). We get both why the Third Way movement temporarily appeared to succeed and why it is now stuck, all in one easy to read blog post that ought to be essential for everyone who is interested in the integrity of their paycheque and the security of their job.

[rogerh]

Maybe the problem is our human nature, most of us are not very talented and manufacturing was a good way to leverage ordinary people. Manufactured product was storable, transportable and desirable everywhere and employed many. But that world has moved, so how can we leverage ordinary people in today's world? We can beat up on the teachers a bit - more training etc - but unlikely to dramatically improve Jack/Jill Average in any numbers. We could punish the offshorers through tax and we could redistribute - but here our human natures bring out ideas of the undeserving poor - no work - no eat. Inefficient and unlikely to work.

So what to do, how can we leverage ordinary people - or indeed any people to produce a product or service for a world market that is not instantly offshorable? We can't but we could ameliorate the situation, make manufacturing here more feasible - sell off Yorkshire and Norfolk, rescind all planning law in those places and lease them off to China and South Korea. But be quick, before the Spanish and Italians catch on.

[McDuff]

In what sense was New Labour "relaxed about immigration"?

They put a race baiter from Bradford in charge of immigration policy. They locked people up in detention centres. Under them, the terminology shifted from "refugees" to "asylum seekers" - the former people in need, the latter reaching graspers who wanted things off us. "OUR HARD EARNED TAX MONEY etc etc etc."

Do you genuinely believe that any party could "placate people's fears" about immigration without being a bunch of actual fascists?

[McDuff]

Pablopatito:

In what sense does the government of the UK "not have any money"?

That's a ridiculous assertion. The UK has as much money as it needs to have. It holds a monopoly on a sovereign currency. It has slack capacity in abundance.

This notion that "the UK" needs to tighten its belt while all the people in the UK need to accept a lowering of wages, an increase in private debts, and an increase in unemployment makes absolutely no sense whatsoever, unless you are pre-committed to the idea of austerity.

[e]

@ McDuff
The reality is indeed as you say: immigration has been an agenda item for decades characterised by a succession of ‘benefit’ reduction policies, all “getting tough” and all applied to immigrant, and don’t forget, indigenous communities alike. The net result, without graphs, being would-be communities weighted down by hardships compounded. Couple this with ignorant, though I tend towards wilfully blind, journalism, and naturally we, by which I mean the multicultural working class community I have known since my 1960’s school days, get shafted and consequently increasingly fearful. New Labour was bad, but Tories go much further, willing to sacrifice all that is best of working class life, which is not bigoted, at the altar of elitism which simply is – how could it be anything else?

[pablopatito]

@McDuff In the sense that the next government will be forced to operate within certain constraints set by the electorate. You could call it being forced to operate within the Overton window.

[Deviation From The Mean]

"because the economy has changed. Our problems today are not those which New Labour sought to solve."

Rather than trying to fundamentally change things you are in fact a slave to 'material' 'actually existing' 'conditions'. Your outlook takes you wherever the 'actually existing material conditions' tell you to go! You will never break out of a logic that doesn't see beyond capitalism with this approach and it backs up all my previous suspicions about your politics. Marxism my arse!

[jungle]

You say: "Productivity in the public sector stagnated under New Labour; improvements in outputs were due only to increased inputs."

Yes, but then you argue this could justify increased use of markets in public services, perhaps in an effort to refute accusations of loonyleftism.

I think this neglects to recognise that despite being a Labour government, the Blair government in fact was a huge proponent of marketising everything in sight, and did so as far as it could without provoking backbench rebellions. Introducing markets, it seems, could either be the culprit or the solution depending on who you listen to...