Imagine, if you can bear it, that you’re Ed Milliband. You inherited a party that had reclaimed its sense of moral purpose, however misguided, in opposition to cuts to a managerial state that it had spent thirteen years building, a state that provided many benefits and services to a population grown accustomed to its largesse. The economy was foundering in the wake of international money market pandemonium, and appeared to be being made worse by the muddled policies of a Chancellor of aristocratic descent. Opinion polls put you in the lead by a country mile.

And yet somehow you’ve found yourself in conflict with your most significant source of funding and are on course to voluntarily allow your opponents to outspend you at the next election. You’ve allowed the source of your party’s traditional strength to become a weakness, to allow organisations representing the working public to be vilified by a party made up of self-interested millionaires. You’re frantically trying to manage over-mighty bosses that should be coming to you in supplication for a hint of power, and are on course to somehow lose the next election.

In short, you’ve managed to ruin your own party, your election prospects, and any hope for class identity the British left may once have had. You’re literally your own worst enemy, and the bosom ally of the Conservatives. You’ve made this Liberal Democrat feel that even his party isn’t quite so bad in comparison. How did you come to this?

The Madness of King Ed

June 30, 2011

I love annoying people, because I’m a bit sociopathic like that. However, I do bow down to the efforts of the Labour Party in this regard, who appear to have engaged in a 15 year experiment on how much you can piss people off before they turn around and say, “Fuck you, we’re voting for someone else.”

The whole point of the Labour Party is to represent the interests of working people, working people without capital. Ostensibly a creation of the unions on the back of disappointing representation by the then Liberal Party, that representation remains central to its existence. Blair’s movement of the party away from outright socialism and into social democracy can be seen in this context; whatever else you may say about Tony Blair, it seems pretty clear that this move was intended to indenture capitalism into the service of the working public.

He did this while ignoring the reduction in the power of the unions that took place under the previous Conservative administration, but did actively praise unions as a force for good, only condemning a stupidly provocative RMT strike timed to take place during a General Election. He was never the unions’ man, and so his relationship with them could be construed as constructive, rather than something he was ashamed of.

Contrast that with Ed Milliband, who has condemned today’s strikes out of hand. He’s done this for the very real political reasons of not wanting to appear too close to the unions and to ensure that Labour is not perceived as the party of the public sector. I’m sure he believes he’s demonstrating ‘leadership’, that abstract quality beloved most by politicians who do not possess it.

But ‘leadership’ implies leading people somewhere. Milliband is ostensibly leading his party and the unions to a future in which strikes over significant changes to pay and conditions are not justified. This is not in the interests of working people. This is a trap by a Government which includes my party, to take advantage of public disquiet over union activity in order to restrict it. I don’t doubt that this is driven in main by the Conservatives, but our potential aquiesence to it is something about which I am deeply concerned.

A Labour leader, rather than simply warning of this trap, should actively work to disarm it. The boss of PCS, Mark Serwotka, pointed out this morning that the amount paid out under public sector pensions is actually predicted to decrease in the future as a percentage of GDP. This is something Milliband should be saying, in an effort to lead the public to the side of the people he’s ostensibly meant to represent. He would still be wrong – regardless of the percentage of GDP spent on pensions, public sector employees should be looking after their own future via defined contribution pensions rather than relying on the Government to do it for them post retirement – but it’s still something he should be saying. To not do so is to betray the very people he’s meant to represent, as has been Labour’s strategy for the last fifteen years. When even Blairite Dan Hodges disagrees with Milliband, you might hope he realises his own mistake.

This is a follow-up to my recent post on the Coalition’s Grand Strategy of reshaping Britain in such a way as to leave no political space open to their rivals. Here, I’d like to briefly examine one of the ways they plan on doing this – via the planning system.

The Localism Bill does something very interesting to the relationship between the public and private companies when it comes to development. Whereas previously applications for planning permission happened without legal regard to the priorities of people in the extreme locality of a development, now those people will, via Neighbourhood Plans, be able to determine what sort of development is appropriate to that area. Furthermore, neighbourhoods will have the ability to grant planning permission to whatever development they want via Neighbourhood Development Orders. It would therefore seem that, unless one happens to be lucky enough to want to build in an area about which none of its inhabitants care, any developer will be compelled to win the support of local people – a majority of local people, because of the new referendum powers – in order to build.

In the information age, the key to winning public support is openness and honesty – because everything you do is recorded somewhere and is available with a wave of the magic Google. It requires genuinely good works – building community centres, or refurbishing local libraries, and so on – all those projects funded out of Section 106 monies well-known to local campaigners. The scope for this activity will only expand as the requirements vouchsafed by the watching public expand in the wake of the new powers granted in the Localism Bill. Private development companies will be compelled to be good, not through legislation but from compulsion wrought of public opinion.

While they only represent part of the UK’s economy, this forced transparency is mirrored elsewhere – the Fair Trade Movement, Which? and many similar civil society organisations. The increasing glare of public view, abetted by legislation exposing private investment decisions to democratic oversight (which, lefties, is exactly what you’re constantly calling for and is to be found in the Localism Bill), will have a very precise impact. It will be to reduce the ethical premium the public sector has over the private.

It’s fair to say that the public sector is seen as more moral than the private sector – the concept of co-operative work that it’s meant to represent is more ethically appealing than private competition, which historically has been blamed for all manner of ills. What happens to that perception if the private sector begins to hold itself – irrespective of outside intervention – to extremely high ethical standards? There’ll always be exceptions, but the repeated day-to-day exposure of the public to a more ethical private sector will diminish support for a party seen to represent the public sector to the exclusion of private – a fully left-wing Labour party.

With this in mind, I’d like to make a few predictions:

(1) Labour will find it impossible to move further left. Ed Milliband will continue to denounce public sector strike actions, for fear of being out of touch with the popular mood.

(2) The star offenders of the private sector, the banks, will be reined in again – not using taxes, but from some kind of regulatory solution that exposes them to the same force of democratic will as that beginning to come to bear on the development industry. This is the prime policy challenge facing the coalition – if they fail to do this, their overall project of reshaping Britain’s political landscape will also fail, as the private sector will continue to be tarnished by association.

As I said in my previous post, it promises to be an interesting five years.

It’s clear that Ed Milliband has decided to take Coalition accusations of Labour’s economic incompetence head-on. He’s recognised this incompetence (sorry, perceived incompetence) is his party’s biggest challenge. And so, he’s claimed that the Coalition is promulgating a deceit:

“What is this deceit? It is that the deficit was caused by chronic overspending rather than a global financial crisis that resulted in recession and a calamitous collapse in tax revenues. One pound in every five of corporation tax disappeared in 2009-10. Their deceit ignores the evidence from around the world that a global credit crunch caused deficits to rise on every continent. The US and Japan face deficits of the same scale and for the same reason.”

There’s so much deceit in this paragraph that it’s difficult to know where to begin. For example, the argument that there’s only one cause to the deficit is not one that anyone’s making. Secondly, the magnitude of the deficit would be significantly less if Labour had not been running a deficit before the recession. Here’s a graph, courtesy of the ONS, with the deficit on the left and debt on the right:

Even this conceals the true picture, as it’s in percentage rather than absolute terms – and the economy shrunk over this period. The deficit in 2006 was a record £8.7bn, before the financial crisis. By November 2009, this had climbed to £14bn. The growth in percentage terms was more driven by the relative decline of the economy than the Government’s response to the financial crisis. Labour left us in a terrible state to weather the financial storm – and fully deserve their reputation for economic incompetence. Don’t forget that they were predicting in 2006 that by this year we’d have a surplus of £14bn.

Vast reams of paper and oceans of ink have already been spilled over the interplay of personalities during the New Labour years, and the conflicts and mutual loathings within the government of the period have already been well-chronicled. However, there’s another interesting story to tell, and that’s the intellectual journey Labour took over the period. I can only hope to briefly sketch it in the space of a single blog post, but the outlines themselves are interesting and have implications for the future of the party as a whole.

New Labour is intimately identified with the Third Way, the ideology espoused by Blair and Brown. Broadly, the thinking behind the Third Way is that the State can be a force for good, and is to be empowered to achieve moral goals, and is enabled to do so by the dynamism of the private sector, both in service provision and in the taxation of private enterprise. More bluntly, the social goals of the Labour Party are to be achieved by allowing the private sector to flourish and using its profits to fund the achievement of those goals. The moral justification for New Labour’s adherence to capitalism was given by the social goals it funded; the markets are moral inasmuch as they can be used to achieve the good.

It’s immediately clear that the ‘third way’ was not as much of a compromise between liberal capitalism and socialism as may otherwise have been perceived; rather, its focus was always on putting private enterprise at the service of the state. This results in something of a bizarre moral doublethink: “We will give you freedom to produce in order that we might enslave your product”.

The financial crisis has revealed this doublethink in harsh relief, and given a new edge to Gordon Brown’s claim to have ended boom and bust. This should not be interpreted as an ironic stupidity, as is often the case, but rather as a moral requirement for the New Labour project. If markets are moral inasmuch as they provide the wherewithal to achieve social goals, then if they fail to provide that wherewithal they cease to be moral. This explains the very emotive and moralistic language used by many on the left about the banks – they must be ‘made to pay’ for their mistakes, which impacted on their moral duty to produce profits. The problem is that this language fails to understand the real nature of the doublethink involved in the Third Way – while profits were acquired to achieve social goals, those social goals themselves were as a consequence enslaved to the markets. When they failed, so did the chance of achieving the moral ends at which the Third Way aimed. This is why the key intellectual conceit of New Labour was that the State could prevent boom and bust, that State intervention could halt the business cycle.

This was never going to be the case. There are multiple theories of the business cycle; I would advocate an approach which says that capital is plunged into new inventions and new fields until the potential profit from that invention is exhausted – but owing to poor information that limit is not identified by the people plunging in capital. In this sense, cheap credit is the ‘product’ that was overextended. However, none of those theories suggests that State intervention can make a difference – given the freedom to do so, people will continue to invest in exciting products regardless of the information available on expected rate of return. Economic freedom means that someone will always lose money. Putting the good of the most vulnerable in our society in hock to this process means that eventually they were always going to lose out too.

The problem for the left is that the exposure of New Labour’s intellectual failure leaves them with little room for intellectual manoeuvre. We can chart the progression of more and more limited aspiration; from the Marxist notion of direct ownership of the means of production by the workers, through the state socialism and ownership of key industries by Labour in the 70s, and the socialisation of the products of the market by New Labour. With each step, the domain of conflated economic and moral values grows smaller and more limited, and the scope for achieving social goals decreases. This is the steady impact of economic reality on the socialist project, which was always about trying to achieve moral ends through economic means.

This is why the Labour Party were right to reject David Milliband; the heir to Blair could only ever espouse an ideology that had already failed. Ed Milliband may yet herald the final division of Labour between the special interest groups of the unions and the state-backed moralism of the Fabians; the creed of the latter has few other places to go than towards a liberalism viewed from above rather than below. It was always the economic means of achieving their moral goals that the unions represented to the Fabians; and the likelihood is that the unions will overplay their hand over the next few years. A reconfiguration of Labour away from a broad moral consensus into a more narrowly focused political arm of the trade union movement seems likely, as the only intellectual space left open to the left is to accept the vagaries of the business cycle and to aim to achieve social goals regardless. At this point, their interests and those of the unions begin to diverge – even more so than under New Labour. I would not be entirely surprised to see a new centre-left party forming as a consequence, to accommodate disaffected Liberal Democrats and ex-Labourites turned off by the militancy of the trade union movement.