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From: Labour & Trade Union Review: Editorials
Date: February, 2012
By: Editorial

Milliband's New Labour Runs Up The White Flag

For the present we are stuck with the politics and the party system that we have, together with the electorate that shapes and is shaped by them. Neither is capable of bringing about a just society with which we can identify. There is therefore a two-fold task of changing the parameters of the debate —setting out a different perspective of development—whilst also making sense of what the parties are up to at the present time. By making sense to our readers in this way, it is hoped to generate new thinking that will gradually come to capture the public imagination and replace the liberal attitudes which have become deeply ingrained into the social consciousness of our society.

This journal has never entertained great expectations of the reconstituted New Labour project under Ed Miliband, but the swiftness and abject nature of the surrender of Miliband and Balls to the Mandelson-Blair cuts agenda is quite sobering. The Labour Party has now trussed itself up in a way that will make it difficult to put any space between itself and the Coalition.

Not only has Miliband in effect endorsed the austerity programme initiated by the government, even though it is manifestly creating a new recession, but Miliband has undertaken to leave the cuts in place indefinitely, thus endorsing the shrinking of the state envisaged by Cameron and Osborne as a long term project. It is very difficult now to see how it is possible for Labour to protest against the government’s austerity programme even when it now seems to be running into terminal trouble. The Conservatives do have a liberal project of shrinking the welfare state and the economic crisis provided convenient cover for getting on with it in a serious way. The danger of a credit downgrade was used by them as a convenient excuse for making the cuts an apparently pragmatic economic imperative.

However, the credit agencies have their own agenda which is, in turn, largely influenced by their own paymasters. They may well have been inclined, under the influence of these paymasters, to threaten dire consequences to the economy of not pursuing an austerity package which involves rolling back the state. However, these agencies do not have responsibility for what they advocate and there are clear signs that they are realising the damage to the nation’s finances and to their own interests that their own policies are leading to, with low growth and the cutting of state expenditure continuing well into the middle of this decade, with consequent disastrous effects on economic activity. So some of them at least are warning of the dangers of simultaneous international austerity. It is evident that if everyone reduces their economic activity at the same time, then the individual capitalist economies are going to shrink and their chance of raising revenues to pay down cyclically incurred debt is going to decrease.

But Osborne, having hitched his star to the rating agencies and their paymasters in the first place, is well placed to change economic tack if that is what they would like him to do. He can argue that the cuts are no longer necessary if they threaten the UK’s credit rating. We do not know if this development will occur, but it is evident that his general approach gives him some flexibility should he need it.

This is not an option open to Labour, however. Having decided that it is absolutely necessary for the purposes of public credibility to have cuts and to keep them as a sign of fiscal virtue, it is much more difficult to bend with the changing political winds and to say that they are no longer necessary. In his bid to win ‘economic credibility’ with the electorate, Miliband has had to adopt an ideological stance about public expenditure which it will be difficult to slough off when the times demand it. A further Blairite attempt at increasing his ‘credibility’ came with an announcement of the desirability of an ongoing pay freeze for public sector workers. It remains to be seen whether Labour’s contemptuous ‘something for nothing’ attitude to the Unions continues to be sustainable. Currently making growling noises, the Unions are probably too gutless to introduce a conditional element into their continuing funding of Britain’s second largest liberal party (the Liberals are the third). It might be said in Miliband’s defence that public expenditure cannot occur until revenues justify it, and that the currently disastrous course pursued by the Coalition makes that unlikely, even after a Labour victory in 2015. The point, however, is that such expenditure has got to be counter-cyclical (spending in a recession in order to boost economic activity and hence state revenue) if the economy is to recover. By forswearing expenditure on boosting the productive economy, Miliband has closed off the possibility of financing a government-led recovery through increased expenditure of any kind, including the financing of productive activity through loans from state-controlled banks.

This situation has come about because Miliband New Labour (MNL) has followed the Blair practice of seeing what the public appear to want through consulting opinion polls and focus groups and then tailoring policies to suit these perceived opinions, rather than deciding on what needs to be done and then attempting to persuade the public of its desirability. The Eighteenth Century Tory philosopher David Hume defined the task of politics as one of dealing with the necessarily short term perspective of the public. The politician, he thought, had to make the long term interests of the country his own short term interests. This is what the best politicians do. But it often involves going against the short term opinions of the public and that it turn requires courage, patience and a willingness to provide leadership to the public. What Miliband has in effect achieved is the transformation of the public’s short term prejudices into Labour’s long term programme, a disastrous perversion of Hume’s formula. It can only lead to electoral ignominy.

A responsibility rests on the Unions to remind MNL of what the long term interests of employees in both the public and private sector actually are. They include stable and satisfying work, some say in how their companies are run, good vocational education, a sustainable economic policy which involves counter-cyclical balancing of surpluses, a proper balance of free trade and protection of vital economic interests and, last but not least, the bringing of finance capital under the control of the state, so that its antisocial activities are restricted and the constructive social role of banks in promoting productive investment is ensured.

The most that Miliband can offer is employee representation on remuneration committees of companies, a proposal so feeble that Cameron had no problem in taking it up for the Conservatives. It is absurd of people like Polly Toynbee to suggest that this gesture opens up a vista of German-style co-determination in the economy. MNL are desperate to avoid anything so radical. Those, like Maurice Glasman and Blue Labour who adopt it are destined to be marginalised. Labour’s future is steadily set on a course of economic liberalism echoing the current policies of the Coalition, but through monumental political ineptitude being tied into them for the foreseeable future. At the moment the Conservatives can claim, justifiably, that MNL agrees with them. If they change their views they can ridicule MNL if they try to follow suit. The electoral prospects of the Coalition must look very favourable in this situation. No wonder they are so pleased with themselves.

There is currently no meaningful choice in the politics of this country. We have a Conservative liberal party which is, in effect, an old-style advocate of an extreme form of economic liberalism. We have two other, less successful, liberal parties whose policies are a pale shadow of the Conservative liberals. The trade unions represent millions of citizens, they have the resources to influence political parties. We would like to think that they will try to do so in order to break the liberal monopoly. Experience, however, suggests that they won’t.

At the moment the Unions are fighting a rearguard action to defend the economic interests of their members under a general ideology of free collective bargaining. On the occasions when they make wider points about social interests, their remarks can be easily dismissed on the basis that they are merely defending the interests of their members. And the fact is, so long as they can look no further than the wages/conditions struggle, they are simply part of the liberal economic system. The question, however, is: can the Unions cut adrift from the old way of thinking and set out to defend their members within a wider social context? After all, trade union members exist in society: they have parents, spouses, children. Their conditions are governed not merely by what they earn each month, but also by the social wage and by how society is structured. It is time to get off the free collective bargaining treadmill and consider the wider social horizon. In two articles in this issue different writers suggest ways in which we might begin to do this.