• An Economic Policy for Labour

    It was significant that, in the seven issues that Tony Blair – in his article last week in the New Statesman – advised Ed Miliband to focus on, there was no mention of the state of the economy.

    It is true that Tony never had much interest in or knowledge of economic policy – a deficiency that might have been an exacerbating factor in his precarious relationship with Gordon Brown. But it is nevertheless surprising that, in identifying the big issues that warrant attention, the parlous state of the economy slipped under the radar.

    Tony Blair is not, of course, alone among leading politicians in disavowing any interest in economic affairs. Most are content to accept advice from supposed experts, which usually means (and was certainly true in the case of Gordon Brown) that they have no option but to go along with whatever may be the prevailing orthodoxy.

    Yet the issue of how an economy should be run and in whose interests is surely the central issue in democratic politics. The ability to think for oneself and to judge the merits of conflicting views should surely be a minimum requirement of anyone who seeks to run the country.

    We see today where the orthodoxy of the past thirty years has got us. It is one of the welcome changes that Eds Miliband and Balls have brought about that there is now a disposition in the Labour party to challenge that orthodoxy. There is certainly an appetite for such a change by virtue of a growing if belated realisation in the general public that the old nostrums have failed.

    What is needed now is more courage, not less – a focus on positive change (which these days means no more than a moderate Keynesianism) and a conscious effort to move the debate’s centre of gravity; the Blair advice to fight shy of any genuine clash of ideas is surely misplaced – not only representing a missed electoral opportunity but a betrayal of the interests that Labour should be fighting for.

    Labour should be ready to take on the tired and discredited proponents of austerity, monetarism and the “free” market with some bold new (or, in most cases, revived) thinking. What about, for example, abandoning the backward-looking and static view of the economy taken by monetarism (and the irrational reliance on austerity to recover from recession) in favour of a recognition of the great power of a competitive market economy to grow – like the US at the outbreak of World War II, the Japanese in the 1960s and 1970s, and the Chinese today? The new Governor of the Bank of England is signalling that he is already looking at this approach.

    What about addressing that issue of competitiveness, or lack of it, that has held us back and constantly threatened inflation and trade deficits when we have tried to grow, by making improved competitiveness the central determinant of policy – as Singapore does?

    Why not tackle that issue by ensuring that – as Keynes warned – a shortage of money (for which read credit) does not hold us back, but that the credit that is created is put to productive purposes by being channelled, with the aid of an industrial strategy agreed with government, business and banks, into strengthening our neglected manufacturing base?

    What about using specific and focused measures to control inflation through restraining bank credit creation for non-productive purposes, so that the real and positive purpose of macro-economic policy – the productive use of all our resources, and the achievement of full employment in particular – become the main focus?

    And why not restore such macro-economic goals to their proper place in a democratic society – as the prime responsibility of elected and accountable governments, rather than being sub-contracted to unaccountable and self-serving bankers? And when government uses its power to “print money”, shouldn’t we ensure that those resources help industry through productive investment rather than sitting unused while they boost the balance sheets of the banks?

    And should we not nail forever the canard that we have to choose between social justice on the one hand and economic efficiency on the other? We have seen just how economically efficient is an economy that is run in the interests of a privileged few. There is nothing economically efficient about placing huge purchasing power in fewer and fewer hands, about allowing the wealthiest to treat the meeting of their tax obligations as a minor voluntary donation, about keeping large numbers out of work so that they are claimants rather producers, about leaving manufacturing flat on its back, about using vast amounts of money from both the taxpayer and the central bank to boost the banks’ balance sheets while both demand and investment remain depressed.

    A real debate about economic policy would produce great benefits – not just for the party brave enough to initiate it, but for the country as well.

    Bryan Gould

    15 April 2013

  • Labour Bounces Back

    Eight months after the general election defeat, Labour is in surprisingly good shape – and, paradoxically it may seem, that perception is strengthened rather than reversed by the Shadow Cabinet reshuffle forced by Alan Johnson’s resignation.
    The improvement in Labour’s fortunes is not just a matter of the encouraging bounce back in the polls or the Oldham by-election victory. It is not even the choppy water already encountered by the briefly popular coalition government or the prospect of the much stormier seas yet to come. Labour, it seems, has started to feel good about itself again.
    This is partly because it is now becoming clear – assuming that it wasn’t on the day after the election – that, as Ed Miliband said in his Guardian article last week, Labour may have lost the election but the Tories failed to win it. That failure was more than a statistical fluke; it was a reflection of the fact that progressive opinion in Britain is in the majority. Labour lost because it failed to represent that opinion. It now sees the need and the opportunity that remedying that failure represents.
    But Labour’s improved morale is also the consequence of the canny strategy being pursued by its new leader. Ed Miliband has been criticised, in media accustomed to a diet of constantly manufactured headlines, for a lack of action. But what he has done has been well directed.
    He has understood the need to distance himself and the party from New Labour. Newness is of course and by definition a wasting asset, but Miliband recognises that “New” Labour was a victim not just of the passage of time but of its own hubris.He has accordingly done what is needed to acknowledge the most egregious of New Labour errors – the invasion of Iraq, the obeisance to the City, the tolerance of widening inequality, the “intense relaxation” about the “filthy rich”, the genuflection to market forces, the subservience to President Bush; the list must be ended for reasons of space rather than because it has run out of items.
    The one significant area where the new leader has seemed reluctant to start afresh has been the economy. The uncertain response to the government’s deficit inherited from the Brown government has left the coalition government free to re-write history and to invent a new narrative which lays the deficit at Labour’s door.Miliband has seemed content to allow unfolding events to conduct the argument for him. Fortunately for him, Alan Johnson (whose appointment as Shadow Chancellor was in any case a puzzle) has forced his hand. Ed Balls seems certain to carry the argument to the Tories, and to expose the supposedly inevitable cuts as an ideologically driven attack on public spending in principle and as precisely the wrong response in economic terms – a response which guarantees a longer recession and tougher times.
    But Labour’s bounce back is more than merely the renunciation of particular items on the agenda of the new leader’s predecessors. Miliband has begun the task of re-building the values and principles on which a modern progressive party must operate.In doing so, he has of course half an eye on disappointed and disaffected Lib Dems. This is partly a matter of electoral calculation and none the worse for that. But the attempt he makes to re-position what, in today’s Britain, should constitute the progressive force in British politics, while of obvious interest to many Lib Dems, is also critical to Labour’s future.
    His starting point seems to be that New Labour’s fundamental mistake was to abandon Labour’s historic mission by aligning itself with the big battalions. Those big battalions included most notably the rich and powerful who had most to gain from the unfettered operation of market forces. If the market was not to be challenged, was to be regarded as virtually infallible, (and this was the sometimes explicit basis of New Labour policy), the ability of a supposedly progressive government to intervene in the search for social justice and – crucially – economic efficiency as well was severely curtailed.
    But the powerful forces with which New Labour aligned itself were not limited to those who were dominant in the market. To many of those ordinary people who expected the support of a progressive government against those big battalions, the government itself was one of the oppressors. Ed Miliband is clear that New Labour’s betrayal of its natural supporters was a double let-down; they not only left many defenceless against the economically powerful but they used the power of government to reinforce that sense of powerlessness by failing to listen to what ordinary people wanted.
    In arguing that Labour must now correct those mistakes, the new Labour leader seems to adopt a view of progressive politics with which I strongly agree. I have long argued that the fundamental issue in politics is the response that must be made to what – if left uncorrected – will be the inevitable concentration of power in a few hands. Dominance of an unfettered market is one obvious form of that concentration. A government that is unresponsive to the people is another. The role of progressive politicians should be consciously to counteract those concentrations of power, and to ensure that power is as widely diffused as possible throughout society. The goal of progressive politics must be that people should have the greatest possible degree of control over their own lives.
    This kind of thinking is not new. It gains increasing expression in the many voluntary and community-based activities and initiatives that are springing up around the country. The task for progressive politicians is to show that government is an essential ally, and not an obstacle, to this kind of people- and community-based politics. People who are active in politics will be more effective if the government is on their side. That, after all, is what Labour came into being to achieve.
    Bryan Gould
    22 January 2011

  • Seeking The Middle Ground

    Labour has made its choice. The question now is, will that choice be shared and endorsed by the wider electorate? Ed Miliband must now not only re-energise a party that has been sapped of confidence and enthusiasm, but at the same time reach out to a range of voters who will vote Labour only when they are satisfied that they can do so without prejudicing their interests.

    That unavoidable battle for the middle ground has always been more difficult for the left than for the right. Individual rights and interests – so much the focus of the right – have always had a clearer identity in the forefront of people’s minds and seem to be more directly at risk and impacted by political action than the more diffuse and less clearly defined social concerns highlighted by the left.

    The left’s response to this challenge has often been uncertain. On the one hand, there was the stance that dominated in the early 1980s and that was memorably characterised by Denis Healey as “no compromise with the electorate”. At the other extreme has been New Labour’s adoption of Clintonian triangulation and the conviction that power could be won and held only if Labour’s traditional opponents in the City and the Murdoch press could be placated by conceding to them in advance.

    It was of course the issue of how the Labour party might appeal to the middle ground that prompted the Guardian’s leader-writer, no less, to argue that the supposed greater ability of the elder Miliband to reach out to middle England was enough to get him the nod over his younger brother. It was feared that Ed Miliband’s use of language that would resonate with Labour loyalists would handicap the party in making that essential pitch for uncommitted votes.

    It is certainly true that a leader who fails in that respect can be fatal to Labour’s electoral chances. When Neil Kinnock lost a second general election – and the second, one that could have been won – he concluded that it was his inability, despite his considerable qualities, to reach out to the English middle-class that had cost victory and, to his great credit, he resigned rather than fail again.

    The question is, however, whether the contest for the middle ground necessarily demands a Labour leader who is prepared to dissemble on the core values that brought most Labour activists into politics in the first place. Is it really a pre-condition of a Labour victory that the clear outlines of a programme for reform should be smoothed over so that it is unrecognisable? Is it really the case that the English middle-class is so set in its ways that it will vote for a departure from extreme free-market orthodoxy, despite all its manifest deficiencies, only if it is presented in a sanitised and ersatz form?

    What is it, in any case, that is thought to be so frightening to middle voters about a return to Labour’s core message? Is it the commitment to building an economy on a stronger foundation than the greedy irresponsibility of the City? Or to reducing the inequality that now disfigures and splinters our society? What about ensuring the delivery of high-quality, publicly funded health services and education so that everyone has a fair chance? Or restoring an ethical foundation to the way we deal with the rights and freedoms of our own citizens and those of other countries? And are Keynesian economics really so revolutionary that they cannot be trusted as a guide to resolving our economic problems without asking the most vulnerable to bear the burden? Are these so frightening to uncommitted voters that they cannot be articulated clearly and persuasively?

    The authentic voice of social democracy – humane, moderate, inclusive – should surely be heard again. People can be inspired with a vision that does not place the naked individualism of “grab all you can” above all else but sees the fulfilment of every individual’s potential as not only valuable in itself but as an essential element in building a stronger, happier and more successful society in which everyone can prosper.

    So, let us celebrate the election of a leader who promises to do exactly that. There could be rich dividends to be reaped in the face of a coalition government of disparate parts and an uncertain policy stance adopted by default rather than conviction. There is nothing to fear and everything to gain from speaking clearly and confidently – from the heart as well as the mind – to voters from right across the spectrum. New Labour is dead. Long live Labour renewed!

    Bryan Gould

    26 September 2010

  • The Labour Leadership

    After thirteen years in government, it is not perhaps surprising that Labour’s response to election defeat has been somewhat uncertain. Almost all of those who now seek to lead the party have spent most of their political lives persuading both themselves and the electorate of the great virtues of New Labour. Their forward political horizons were bounded, until a few months ago, by New Labour. Now, with the voters’ rejection of New Labour, their lodestar has been shot out of the sky.

    It is true that the candidates have, to varying degrees, recognised that change is now the order of the day. They have understood that a line must be drawn beneath election defeat. As professional politicians, they have quickly learned to speak the language of new beginnings. But the suspicion must be that the need for change is something they know, but do not yet understand.

    So, while each of the candidates is clear that a readiness to embrace change is required to win the leadership and, more importantly, lead Labour back to power, there is a marked lack of any precision about what that change might comprise. There is confusion not only about where change might take the party, but even about what it is in the party’s present and immediate past that needs changing.

    Some say that a change of direction is needed; others that going further in the same direction will bring success. Some urge a return to basics; others argue that the party must recognise and adapt to the new political imperatives created by a right-wing coalition government. Those at the back cry “forward” and those at the front say “go back”.

    Underpinning this confusion is a great mystery. We have lived through the most serious economic crisis of most lifetimes, a crisis brought about by the individual greed and irresponsibility of those exploiting an unregulated market for their own ends, a crisis averted only by government which alone had the will, legitimacy and resource to undertake the task – and the election result seems to mean that the correct response is to diminish the role of government so that it is smaller and weaker and less able or willing to restrain the greedy and selfish.

    Here, surely, is the change that is needed for Labour. Instead of New Labour’s acceptance of the supposedly inevitable triumph of the “free” market, why not say in terms that the whole point of democracy is to use the political power of the people, as exercised by their government, to offset and restrain the overwhelming economic power that an unregulated market otherwise delivers to a tiny and selfish minority? If market outcomes cannot be challenged, what is the point of democracy?

    Why not say that a strong and successful society depends on a real sense of community – not the meaningless slogan of “we’re all in this together” which is manifestly contradicted by the purpose and impact of government policy – but a genuine community of interest in which the gap between rich and poor is reduced, the old and the sick and the poor – not forgetting those who might become so some day – are supported, everyone gets a fair share of the benefits of economic and social cooperation, and the potential of every individual skill and talent is realised for the common good?

    Why not say that, despite the bad press that government has received – something largely engineered by media barons and exacerbated by the self-inflicted wounds of the expenses scandal – it is government that, by setting the ground rules to take account of the interests of everyone and not just a minority, remains the best hope for building a society in which everyone feels they will get a fair deal.

    The loss of faith in government over recent years, even by those who have most to gain from effective government and most to lose from its enfeeblement, is one of the most serious indictments of New Labour. Nothing better serves the interests of the selfish and privileged than the acceptance that government is just another part of a power structure that ordinary people have no ability to change.

    The conviction that progress is possible, that a better society can be built by giving people more control over their own lives, and that the task is best undertaken by harnessing the power and legitimacy of democratic government, is central to Labour politics.

    Votes in the Labour leadership contest should be given to the candidate (Ed Miliband?) who most convincingly and clearly re-states the case for government and spells out the intention to use the power of government to build a fair, strong and united country. This is not “going back to basics” or re-inventing “old” Labour. It is the re-affirmation of a bedrock of vision and principle from which to face the sharp and changing challenges of the modern world.

    Bryan Gould

    12 September 2010

  • Labour-Saving Devices