It was enough to temporarily stifle the argument that it is in danger of becoming the party of the liberal middle class and a clientist public sector. Labour as both a unionist and a national political force is under threat.
This is not a temporary setback, but part of longer-term trends. First, historical forces – end of empire, devolution, the EU, globalisation, the rise of the BRIC countries – are weakening Britain’s unitary state. Second, Labour has lost its cultural moorings. It has never been a class-based party, but one based on particular communities and occupations. With deindustrialisation, many of these have disappeared. New forms of production and consumption are transforming the cultures and structures of class. Who and what does Labour stand for?
Labour has to understand these sociological and cultural changes, attune itself to their moods and become the party of national renascence in each country of the union. It needs to be a genuinely federated party that champions a new settlement of nations and devolves power from Westminster. In England we need an English Labour party, and we need to start a debate about the democratic representation of England, and the issue of English votes for English laws.
England is a country defined by an empire and an open trading economy. We have spread ourselves through the world and in turn the world has come to our shores. We are a country of many roots but without a clear sense of national identity. Where do we fit in and belong? Who are our people and who will watch out for us?
Anxieties and conflicts around identity and culture are a reaction to the insecurities created by three decades of global economic transformation. The cultural devastation caused by deindustrialisation and unemployment has meant for many the loss of our grandparents’ ways of life. People are faced with the cultural differences of mass immigration and many live alongside strangers, their own families distant.
During the boom years, the externalities of ‘neoliberal’ capitalism were contained by rising living standards and easy credit. People of the middling sort gained through asset inflation. But the financial crash has brought those gains to an end and exposed the heavy social costs that neoliberalism has inflicted on large sections of both working and middle classes.
Economic insecurity, falling living standards and a belief that our national culture is under threat resonate powerfully in public life. These are ‘pre-political’ structures of feeling and they erupt into public political life as rage against immigration and ‘benefit scroungers’. The fear of crime is because it threatens to shatter a fragile sense of order.
Labour fears the intolerance and racism of this populism. It has ignored it, morally condemned it, and tried to emulate it. Each tactic has revealed its political weakness. Labour’s national renascence depends upon confronting the causes of social insecurity – and seizing the politics of identity and belonging – from the right, in the name of the country and the common good.
The task is hampered by a cosmopolitanism whose abstract universalism is dismissive of the insecurities of perpetual change and of people’s desire for familiarity and for home. It has stigmatised the solidarities of ethnicity, community, and local place. In turn, third way social democracy has recoiled from the visceral politics of belonging and the pain of social death and cultural devastation. Its promotion of liberal individualism and market choice has undermined the value of society and relationships, and left people to fend for themselves against powerful economic forces. It has ended up in a transactional approach to politics that favoured those who were most able to get what they wanted by individual action. Across Europe its traditional supporters reacted to its utilitarianism and meritocracy by deserting it. Many turned to the xenophobic social movements which combine ethnic absolutism with a promise to look after ‘our people’.
Labour needs to respond with its own vision of England. Nation and culture are the places where people make meaning, and where they create a sense of belonging and identity. But there is also something more at stake. ‘The national’ must be won politically, culturally and socially, because it is key to rebuilding the economy and creating a common prosperity.
In his 1933 essay on ‘National Self Sufficiency’ JM Keynes confronts the ‘decadent international but individualistic capitalism’ that caused the Wall Street Crash. Its ‘self-destructive financial calculation governs every walk of life’, he writes. ‘It is not just, it is not virtuous – and it doesn’t deliver the goods’. But what, he asks, shall we put in its place?
Today we face the same dilemma. A second phase of ‘neoliberal’ globalisation has resulted in economic crisis. Britain has a failed open economy and a state-supported system of capitalism. Its private sector is anaemic and its financial sector dominates like an imperial cantonment which takes and takes – and gives nothing back. A selfish elite has embraced a cosmopolitan global culture, while across the country people face the loss of national purpose. What is England without an empire?
For Keynes the question was an opportunity to forge an English cultural renascence. His economic theory is grounded in the idea of an economic community; a shared set of national cultural values drawn from the conservatism of Burke and Coleridge. Shared traditions provide the language of collective experience and belonging, which create a bulwark against the ideology of laissez faire. Keynesian economic theory was in part a reimagining of English national culture. This cultural reimagining has continued with EP Thompson, Raymond Williams and Stuart Hall. Labour needs to delve into its own traditions and take up the baton.
A Labour politics of national renascence depends upon macroeconomic policies that can ‘renationalise’ the economy. US economist Dani Rodrick argues that transnational regulatory institutions such as the Basel Committee, the WTO, IMF, and the Group of 20 are important but remain weak. The nation state remains the political unit best equipped for managing globalisation and rebuilding the national economy.
Labour needs to create policy spaces of democratic deliberation to restructure and diversify the economy. Keynes wrote in his 1926 essay ‘The End of Laissez Faire’ that the ideal size for the unit of control and organisation of the economy is the semi-autonomous body that lies between the individual and the state, and whose criterion of action is the public good. These intermediary institutions can bring together the public sector, the private sector and the third sector in the English tradition of a ‘balance of powers’.
Three themes underpin renationalising the economy. First, ownership matters. Keynes argues that ‘remoteness between ownership and operation is an evil in the relations between men.’ Unlike our economic competitors, the UK has failed to keep control of its key industries. Sir Alan Rudge, in a paper given to Civitas in 2010, argued that we are well on the way to owning virtually none of our key economic assets. Second, investment matters. The British economy is suffering a lack of capital investment. Renationalisation requires a national investment bank and radical reform of the banking sector – no bank should be too big to fail. Regional banks can contribute to spreading wealth creation, and a system of community banking will help to capitalise localities. A cap on interest rates will reduce personal indebtedness and undercut loan sharks.
Third, protection matters. Britain has one of the least regulated labour markets in the rich world. The flexible labour market has not realised the economic gains promised by its advocates. Reform of European regulation can end low-pay, low-skill and casualised labour, and create a level playing field for both migrant and indigenous workers. Strong trade unions are the best defence against exploitation. A living wage would improve the lives of over-worked, time-poor families.
The last time Labour was confronted with this kind of political crisis was during its 1931 electoral rout. It had tenaciously clung to economic orthodoxy at the expense of its own traditions and good sense. As RH Tawney despaired, it ‘crawled slowly to its doom’. Sometime soon Labour will need a little boldness of purpose.
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