What's the point of Labour's right?

Richard Murphy asks a good question: what’s the point of Labour’s right-wing?

Let’s face it: Corbyn did not become Labour leader because he’s a political genius – he’s not – but because his rivals were offering so pitifully little; apart from Liz Kendall’s talk of empowerment, they were bereft of ideas. Jolyon has a point when he says that candidates shouldn’t have fully-formed ideas and that leaders should develop policy later. But Burnham and Cooper didn’t seem even to be asking good questions – of the sort which Jolyon himself poses.  Jonathan Todd is right: “something must have gone awry with centrist thinking for Corbynism to be ascendant.”

As Brendan O’Neill has said, Corbyn’s opponents have been offering only “technocratic, principle-free blather about electability.” This wouldn’t be so bad if they actually knew how to get elected, but the loss of two general elections and their abject showing in the Labour leadership contest suggests that the anti-Corbynites don’t even know this. The problem isn’t that they are technocrats: it’s that they are bad technocrats.  They use the word “electable” not as a way of describing how to be actually elected, but as the whine of over-entitled narcissists upset that Corbyintes have taken away their toys.

The problem, here, however, is an old one: Gordon Brown spent years plotting to be prime minister, only for us to discover that he didn’t know what to do when he got there. And given that so many Labour MPs’ path to the Cabinet consisted in impressing a mentor rather than in developing outside support or independent thought, it’s small wonder that they should have lost contact with those outside the Westminster Bubble, or even with the ability to think for themselves.  

Herein, though, lies something I find regrettable. There are many ideas in politics which aren’t heard as much as I’d like,such as free market pessimism. Left Hayekianism or small-state Keynesianism.  Centre-leftism is one such. If I were them, I’d be arguing for some of the following:

 - “Make work pay”. Shift taxes from labour to land and inheritances, and defend tax credits as a better way of topping up low pay than minimum wages.

 - Openness. Leaving the EU, or controlling immigration, are no solutions at all, but simply mean-spirited little Englanderism.

 - Empowerment. It’s possible– with careful institutional design - that giving people more choice (pdf) in public services will improve outcomes.

 - Public sector investment. As Simon says, you can combine this with “fiscal responsibility” in the sense of wanting governments to run a balance on the current budget.

 - Improve productivity. UK productivity lags well behind that of other countries. Policies to tackle this might include investment in early years education and freer migration (pdf).

Personally, I don’t think these policies are sufficient. But they are coherent, useful and substantive. There could, and should, be more to anti-Corbynism than mere whining about "electability".

Comments

[Luis Enrique]

these look like good ideas to me, although its not obvious that they escape the accusation of merely being Tory lite (not an accusation that concerns me, but I'm not representative) nor that they'd prove any more popular with voters than what the "bad technocrats" offered. Surprised not to see citizens basic income on the list.

on that front, I gather inheritance taxes remain hugely unpopular (for what are imo irrational reasons) so perhaps one thing the labour right could do is come up with ways of shifting taxes to land and inherited wealth that sell well.

[Guano]

I think that we've learnt in the last three months, is that anti-Corbynism actually is incapable of generating sets of ideas of this type.

[Chris E]

Liz Kendall's pitch reminded me of nothing so much as Nicola Murray's tactic that she would agree with two government policies in order to surprise them.

[Dave Timoney]

In terms of electability, political parties ultimately reduce their message to the issue of trust. Not in themselves, but in a higher power or ideal: the nation, the leader, the constitution etc.

The message of the social-democratic era was broadly "trust the people" (the reality may have been somewhat different, but this is about ideological persuasion). The ensuing era, from the early-70s to the mid-90s, centred on a message of "trust the state". Despite waving copies of Hayek about, Thatcher used the power of the state to break labour and her economic policy was as much about activism as deregulation (e.g. Westland).

Though Thatcher is seen as a neoliberal, she actually played more of a John the Baptist role in using government to prepare the ground for the triumph of neoliberalism under Blair. The message of the New Labour era was "trust the market" - i.e. market discipline could make up for the public sector's failings and allow government activism to focus on improving labour. Being "relaxed" about the rich and "friendly" to business was performative of this trust.

The period since 2010 has been marked by a lack of a clear message, both on the left and in the centre, whch has allowed the Tories to opportunistically campaign on a negative: "don't trust them". Corbyn clearly seeks to revive the first message (though without yet having crystallised what trusting the people means today), while Miliband and other centrists (like Burnham and Cooper) were inching painfully back towards the second message and the idea of an actvist (and trustworthy) state.

The problem for the Labour right is that their preferred message no longer sells. Their hysteria arises because they are viscerally opposed to trusting the people (they are authoritarians at heart) and believe that trust in the state is impossible (they've drunk the neoliberal Kool-Aid). The policies you suggest are perfectly sensible, but they're also the sort of thing that Miliband might have had the nerve to pursue if he'd been elected. That makes them unpalatable to the right.

At the moment, there is no point to the Labour right. This doesn't mean they should evaporate or do anything silly, but that they should go away and have a long think instead of hyperventilating in the media. Logically, their best bet is to make peace with the centrists and try and reimagine a trustworthy state, not least because the corruption of government activism will become ever more acute as the Tories cut public services and subsidise the privileged.

[RES]

I wonder whether political parties feel that they have very limited ability to change the status quo. Consequently they feel the electorate are more to be appeased - at least in talk if rather than policy - with safe platitudes rather than wowed with grand ideas. (Of course, maybe they have no grand ideas.) The Labour Party also operates knowing that the majority of the British media are hostile. It's much harder to introduce novel policy for a party that knows it is going to be battered for it.

Blairism seemed to me to be tacking some lefty slants onto centre-right wing assumptions of how everything worked and should work. This got him elected, but was hardly a recipe for ideological innovation in the left. Also relevant to Blairites is that that I suppose that even as the opposition, MPs become subsumed by the institution of government. Thus one may find it harder and harder to think outside the framework of the way things currently are. The think tanks may be free of this, but they won't be the ones choosing what policy to present.

[An Alien Visitor]

This article makes a good point, that the 'centre left' are so focused on being electable that they are crippled on policy. And they can't put forward simple 'centre left' policies such as freer immigration because this is not the electable thing to do.

Their problem is that if they deviate from this path they have nothing left to target Corbyn with. The current tactic of the 'centre left' is to undermine Corbyn at every turn and then wait for an electoral drubbing before pouncing.

The 'centre left' best reflects the careerist politician and the bubble mindset.

The 'centre left' are the enemy!

[Magnus]

Looks correct to me. At some point the movement you described morphed from Blairism - which like it or not included distinct policy prescriptions not unlike the ones you propose - to what might be termed 'aping the Tories' (aka Electability).

The puzzle is why did they do this?

[Metatone]

Just for reference, Propper's research is pretty low quality and ignores some important confounding variables & effects. (For my sins at one point I had to read just about everything the CMPO had put out.)

That's not to say that some kinds of choice might not be helpful, but I wouldn't trust CMPO to have a clue about how to design it.

[Magnus]

@Metatone I would rather the Labour Party (or some part thereof) at least engaged with academic research. I agree the CMPO output is patchy but in general it's a sight better than ignoring evidence and just aping the Tories because of electoral reality...

[Bob]

As usual disagree with a few points but well done.

"defend tax credits as a better way of topping up low pay than minimum wages."

Have a look at this graph Chris:
https://pbs.twimg.com/media/CVIjBPvWUAA1Owd.png
Heck of a correlation. Publicly paid output has been appropriated by the private sector. What if you just paid the recipients without requiring them to work in crap subsidised jobs, either 'useful work' or an income guarantee.

Then they'd have to compete to get the staff, which would require higher wages, which would then stop you having to pay the recipients since they would then have jobs at a higher wage.

More than one way to skin a rabbit.

"Leaving the EU, or controlling immigration, are no solutions at all, but simply mean-spirited little Englanderism."

I disagree. Making visas very expensive for business helps drive productivity improvements as they have to work with the staff they have and pay them more or train people or replace labour with machines.

Aren't there other reasons for leaving the EU amongst the left? TTIP? (in the long term obviously, the current Tory government is cut from the same cloth)

The freedom from state aid and banking restrictions allows the state in UK to then do what it wants within the UK - including providing full employment, eliminate poverty and invest in UK businesses, research and development without limit.

This is not about the UK leaving the EU, but about the UK rejoining the rest of the world.

The obsession with 'free trade' amongst the left is quite remarkable - given the dubious benefits of it come from some very dodgy assumptions. Largely turning your country into a near monoculture. Which of course makes it very susceptible to shocks.

[Bob]

"This article makes a good point, that the 'centre left' are so focused on being electable that they are crippled on policy. And they can't put forward simple 'centre left' policies such as freer immigration because this is not the electable thing to do.

Their problem is that if they deviate from this path they have nothing left to target Corbyn with. The current tactic of the 'centre left' is to undermine Corbyn at every turn and then wait for an electoral drubbing before pouncing.

The 'centre left' best reflects the careerist politician and the bubble mindset.

The 'centre left' are the enemy!"

Are we now? Not all centre left people surely.

IMV it is time for the PLP to accept that the view of the Labour party have changed and if they want to continue with the Labour whip and the support of the Labour party they need to back the views of the leadership.

Unfortunately Corbyn lacks a Mandelson like enforcer who will lay out the terms in a clear and unambiguous form. Back the leadership or expect the whip to be withdrawn - along with any Labour support or funding for their parliamentary position.

There was a democratic election. Those factions that lost the election must accept the result or be brought to heel in the same way Militant was in the 1980s. To pretend that you can operate in any other manner in a party is frankly deluded.

I mean look at this. The hypocrisy:

http://www.bbc.co.uk/news/uk-politics-33868771

"Mr Loach hit back at Labour's claim he had been prevented from taking part in the leadership election.
The film director quit the Labour Party some years ago over its "drift to the right" and is now a member of Left Unity, a left wing group formed last year."

And the whining about Momentum. Disgusting.

[Dan]

Land taxes improve productivity by directing investment to productivity improving businesses instead of rent seeking

[Bob]

Correct Dan. Stable house prices should be as much a goal as stable bread prices.

[aragon]

There is no purpose to Labour, Jeremy Corbyn, is as mush an intellectual vacuum as the right. He got elected on a quote from Paul Krugman or Mark Blyth - Austerity is self-0defeating. But quoting leading economists, does not ensure comprehension of the issues. In practice he will just continue the long decline/short demise of the Labour Party.

As for other polices, they (the Parliamentary Labour Party) cannot grasp them, present them or implement them. They cannot imagine anything but the smallest change from the status quo. In power Labour would further disappoint, anyone who supported them.

Power without purpose applies just as much to Labour as the Tories.

A isolationist foreign policy and open door immigration do not a marketable platform make. (Yoda).

http://www.theguardian.com/commentisfree/2015/jan/06/power-without-purpose-david-cameron-prime-minister-general-election

[Boursin]

"Making visas very expensive for business helps drive productivity improvements as they have to work with the staff they have and pay them more or train people or replace labour with machines."

Only if we're living in some kind of 17th-century mercantilism. Otherwise, the only thing it will drive is capital flight.

[Bill Posters]

The purpose of Labour's Right is to keep down Labour's Left.

Labour's Right are living in a horrible nightmare at the moment, sadly they will re-group.

For entertainment it's on a par with watching ferrets in sack.

Meanwhile Osborne wakes up every morning pinches himself and says another easy day.

[Keith]

The trouble with "centrism" in side the Labour Party or outside is that it is valueless balls.

The SDP looked good to many,in their day, Clegg had them all saying what a nice young man lets vote for him etc The net result of Clegg, cable, and Poor Roy Jenkins was Tory cuts and class war. What are you actually going to deliver? Real change or fake hand wringing about inequality?

As for Osbourne to answer BIll Posters, his lies are far more easy to sell thanks to the inability of the "centrist" Labour faction to argue for mainstream economics and financial regulation. Gorgeous George had it right, two sides of the same Bum cheek.

[Bob]

"Only if we're living in some kind of 17th-century mercantilism. Otherwise, the only thing it will drive is capital flight."

Does the capital take plane or does it have wings?

Or the more important question -

Are you a corporate liar shill or a complete moron?

The use of the term ‘capital flight’ is designed to scare people. That is the sole purpose of it. And since it is possible to dismiss the idea as inapplicable in the floating rate system we should do so.

The resources, land and labour remain in the UK.

All the terminology within the economic sphere is twisted wilfully to scare and frighten. None of it has any concrete definitions. They are all humpty dumpty words.

You can’t have classic capital flight in a floating rate system. It is a meaningless concept.

All you have is some people selling and other people buying. Those that are buying may or may not be getting a bargain and those that are selling may or may not be losing money – and they might run out of market liquidity before they can sell at all.

So what you get is a price change and a redistribution based upon that. And if some entities permanently ‘leave’ a currency area then the currency area shrinks – potentially within the political boundaries of the state issuing the currency (which is what dollarisation is).

The problem as I see it is that we have a floating rate system being managed and regulated by control points and notions that were designed for fixed exchange rate structures. The containment system is still stuck in a Bretton Woods mindset and the traders who actually understand what is going on are able to run rings around them.

But nobody seems to want to discuss the issue. Instead they retreat to their religious texts and hide behind aggregations and assumptions.

The economists fail to see the difference between ‘conversion’ and exchange. In conversion the supply of the liability shrinks. So the Bristol pound is deleted when the UK pound is issued. The UK pound is deleted when the pound of sterling silver is issued in a metallic system. The Barclays bank deposit is deleted when the £20 note is drawn from the ATM. That is what conversion is.

Exchange is different. There is no deletion. When you exchange USD for GBP at the desk, the USD stays in circulation. It becomes the assets of the desk.

That’s why the price floats, because the quantity is fixed. If the price stays the same the quantity has to adjust.

The problem is *always* foreign central banks trying to make domestic entities whole in foreign currencies. Don't do that. Make it very clear if you take a foreign currency loan, the CB will let you fail.

Current account balances and capital flight are really fixed exchange rate ideas. They have a different effect in a floating rate system and I’m not sure we’re really clear what that is.

Currency markets are very simple. It's raw supply and demand. There are no market makers and every open trade has to be settled with delivery of the currency at 10pm GMT every day.

That means you have to get hold of the real thing and give it to somebody else or get out of the market. So the actual final liquidity in the market that allows things to move comes from people actually changing what they hold over a daily basis. Those playing Contracts for Differences and throwing 'forward next' are just greasing the daily wheels with liquidity. Overall net short positions from an aggregator still have to be delivered.

Let's take Russia's 'capital flight' and see how we can improve the situation there using a correct (MMT) approach.

You have to supply roubles and take US dollars. That means getting the roubles in the first place and is an obvious control point in the system.

The insights from MMT show that exports are a real cost and imports are a real benefit. The sanctions in place are stopping imports coming into the country. So there is no need for the exports. Russia should just turn the taps off, which would bring Europe to its knees in a second. That they haven't done that suggests that Russia has the same problem as Argentina - the country is actually run by an Oligarchy that prefers to operate their export industry mostly in a foreign currency.

So actually you can discount the entire oil and gas industry as a different country almost - I call it Gasistan - operating largely outside the Russian currency area.

If there is a shortage of food and basic items brought about by the sanctions should be solved using a simple wartime approach - rationing. If there isn't enough buckwheat to go around, then you can't use price to resolve the distributional struggle. You'll end up with starvation and riots and stockpiling of food. So assuming you care, then you'd ration the real goods for which there is a shortage and work at relieving the supply shortage. Set a price limit and a quantity limit. Start issuing ration coupons. And ban imports of Leah Jets, etc. You don't need luxury goods when the country hasn't enough food.

The correct approach of any nation is to offer exclusive contracts to those nations that will take the state currency. Which of course they can if they do the necessary liquidity operations. That ensures a demand for the rouble.

You don't use foreign currency to pay for things. The deal never happens *at all* unless the financing arm is in place so that the customer can use their currency and the supplier gets their currency.

Rationing is also there to stop hoarding - which is happening in foodstuffs. Domestic production can be initiated by the state simply causing it to happen.

In terms of financing the Russian Central bank has to narrow the scope of Russian banks. Any lending to settle currency transactions in roubles should be banned. The Central bank should bar itself from directly intervening in the currency markets. And it should not be doing swaps into USDs, but offering to settle foreign debts for needed commodities - like buckwheat.

In addition it should be offering financing in roubles to pre-pack administration proposals for any important business crippled by foreign currency debt. That forces losses onto foreign creditors in foreign currencies - as well as Russian USD holders. If you get moaning from foreign creditors blame the currency war. Then perhaps they'll put political pressure on their own central bank to act and stem the losses.

Beyond that the fiscal authorities need to start taxing in Roubles more - preferably the oil and gas pipelines. And then turning them off if they don't get paid. The power play in Russia determines whether that is viable. Beyond that taxing USD accounts held at Russian Banks in roubles would help eliminate balances in those accounts as would a financial transaction tax on roubles (offsetable against real activity).

You need more taxes to widen the currency area. And then you need more spending to offset that any get to full employment.

In other words the government has to get bigger and pump more oil around the engine so that it doesn't seize up.