You cannot lead a social democratic party without an economic project. Respect them as we do, none of the ‘Anyone But Corbyn’ candidates had one. Each had economic policy but no project. Andy Burnham’s attempt to be pro-business spurred his hard-left supporters to put Jeremy Corbyn on the ballot paper; Yvette Cooper had good ideas on science and technology; and Liz Kendall – who, it could be argued, had the most comprehensive ideas – gave her ‘pro-worker, pro-business’ speech late in the day when no one was listening.
So why no project? There are three reasons.
First, the economic legacy of the last Labour government. Its first 10 years were a huge triumph. Labour’s able management of the economy should be in no doubt and, following 18 years of Thatcherism, bringing a social face to markets was a step-change on what had been before.
While New Labour was the creation of both Tony Blair and Gordon Brown, the price paid by the former to be the frontman of the project was – from Granita onwards – to give the latter almost total control over economic policy. This became the jealously guarded domain of the Treasury team, so much so that the prime minister in 2006 did not know the contents of his last budget. This left the ‘Blairites’ with limited levers like welfare and public services – tools insufficient to create the transformation the economy needed, and still needs. New Labour transferred power to workers early on – the minimum wage, rights to join and recruit for a trade union, the social chapter – but after 2002 the focus became almost solely income transfers in the form of tax credits. The two should have continued in tandem. Add to this the squeeze on living standards and transfer of profit from wages to the dividends of shareholders that occurred from 2004 (but which was apparent later once a pattern had emerged). Fast-forward to 2015 and the inheritors of Labour’s two big beasts were left wanting and in need – separated by the global crash – of something new.
Second, the party’s ‘economic credibility’, or lack thereof. In May this year, the voters’ message was clear. In 2010 Brown’s handling of the crash denied the Tories a majority. But, while Labour had managed the crisis well in the eyes of the public, it lacked credibility on future economic policy, having picked an ‘investment versus cuts’ dividing lines campaign. Regardless, the coalition effectively trashed 13 years of economic management. With little done to counter this, in 2015 this proved fatal.
This sent everyone on a wild goose chase in search of ‘economic credibility’. This elevated it to both ‘means’ and ‘ends’ when in reality it is neither. ‘Economic credibility’ is the test you pass if the ‘means’ – your policies – when implemented appear likely to meet your ‘ends’ – your vision – and when those ‘means’ are acceptable to voters in the country. There is no shortcut to this. Ed Balls – with the best intentions – used a ‘cut to create credibility’ strategy to convey that Labour would be responsible, but it did not succeed. A not dissimilar deficit-to-invest policy did not work out too badly for Justin Trudeau in October. It is important to remember, however, that Canada’s debt-to-GDP ratio is a world away from the United Kingdom’s. More importantly for Labour, Trudeau’s Liberal party did not avoid the heavy-lifting and deep thinking needed to create confidence in their plans. Bill Clinton – and the best Labour leaders in local government – still provide the best model for this, with a ‘cut to invest’ approach. Short-term pain for long-term gain allows a reprioritisation of budgets and a focus on productive spending that creates the good jobs and economy desired. More importantly, it neither concedes to the ‘austerity’ lobby that public spending is bad, but proves we understand the limits to spending and the desire from the public for efficiency.
Third, Ed Miliband. The reason a leadership election was happening was because the party had suffered a second terrible and avoidable loss. The problem for the candidates in this regard was that Miliband was right about his central insight – that Britain wants a more responsible capitalism and the ‘rigged market’ holds people back. But, while he got the essay question right, he got the politics wholly wrong and the policy continually fell short. Immediately after Miliband’s 2011 conference speech, Progress magazine’s editorial said, ‘the distinction between firms that are “producers” and “predators” made better prose than policy’ and allowed Labour to be seen as the ‘anti-business left’. In the years that followed, little was done to correct this. Labour’s leader never sought to build bridges with business and economic leaders, even though they were also expressing their own concern about rising inequality, including at Davos. Labour’s conversation appeared to be taking place in parallel, entirely with itself, and, critically, never considered what non-state actors it might need to bring its vision about.
The simple fact remains that the market is indeed rigged against the people Labour members came into politics to help. This must be the focus for everyone on the left. John McDonnell’s ‘socialism with an iPad’ is one approach and might not be bad if iPad sales were not in decline. The polite words of the shadow chancellor will in time give way to the Corbynomics of the summer – ‘people’s quantitive easing’ and the like – and more insights from the Little Red Book. It will fall to the modernisers – future-focused, pro-business and fiscal realists, enthusiastically grappling with and really understanding business and the economy – to put together a big vision for the economy distinct from the Tories’, one that will deliver for those left behind by globalisation and which a future Labour government will be able to realise. This is the only way to win the party back, and to face the British public with a Labour party deserving of power. Social democracy in an Uber society.
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