David Coates

Labour’s Historic Defeat: Learning the Right Lessons

If there was any doubt on this matter before the election, there can be none now: those of us making the case for a progressive reconfiguration of advanced capitalisms now start from a position of incredible weakness. The immediate conversation in the UK will no doubt turn on the character of Ed Miliband’s leadership, and on why Scottish Labour was so effectively routed last Thursday. The Blairite wing of the Labour Party, suddenly re-energized, are already stressing the first and discounting the second, as they begin to rewrite history yet again. Which is why from day one, the conversation needs to turn too on the negative legacy of New Labour itself.

It is worth remembering that there was a moment in the late-1990s when a majority of the governments of Western Europe and North America were centre-left ones – when perhaps the chance for progressive politics seemed greater. Sadly that particular moment then passed, and actually did so with remarkable rapidity. The majority of those same governments are now centre-right in both political origin and persuasion; and even where they are not (officially, say in France; or nominally, as in the United States) they are either in retreat or mired in gridlock. But it is also worth remembering that even in the heyday of Clinton and the young Blair, the presence in power of centre-left politicians of their kind did not mark any fundamental rupture with the dominant neo-liberal assumptions surrounding public policy – assumptions that had been put in place in the two decades before. Clinton’s White House triangulated with Reaganomics. Blair’s New Labour was in essence Thatcherism in drag. Centre-left politics in the era of Blair and Brown, no less than centre-right politics now, operated on the premise that capitalism was best managed by being managed lightly, if it was to be managed at all. It was Gordon Brown, we must remember, and not just Robert Lucas, who told the world that, in the first decade of the new millennium, the instabilities of the capitalist business cycle were now behind us.

Because of that centre-left immersion in the neo-liberal understandings of a post-Keynesian world, it was the understandings of capitalist dynamics expounded by New Labour politicians , as well as those embedded in neo-classical economic theory, that were then momentarily discredited by the financial crisis of 2008. And indeed it is a measure of the depth of the difficulties now besetting the centre-left that it is the axioms of neo-classical economics that have re-established their hold on popular thought and public policy, while it is centre-left political parties that are still struggling for popular legitimacy. But we should not be entirely surprised. For in 2010 – and for the second time in my adult lifetime, 1979 being the other – a Labour government lost power not simply because of its own incompetence (as arguably had been the case in 1970) but because the entire economic philosophy and growth strategy associated with it had literally stopped working. Keynesianism in the 1970s, and “post neo-classical endogenous growth theory” in the 2000s, both ended in a serious economic crisis. Both in consequence helped re-legitimated the more conservative (in economic terms, the neo-liberal) alternative that had been hitherto discredited: discredited for a generation prior to the crisis of Keynesian in the 1970s, and discredited just briefly in 2008-09 as Keynesian-type public spending briefly softened the calamitous consequences of a crisis created by the excessive deregulation of particularly finance capital.

In the UK case, that second discrediting was never as deep and prolonged as the first precisely because leading New Labour politicians, no less that their Thatcherite opponents, has spent nearly two decades telling much the same narrative as had Margaret Thatcher before them. New Labour spent the years between Tony Blair’s election as party leader in 1994 until Gordon Brown’s electoral defeat in 2010 telling the UK electorate that “tax and spend” politics was part of Labour’s past, in that way helping to sustain the argument that public spending and debt was something that had to be justified in ways that private spending and debt did not. In that inherited and largely uncontested ideological universe, it did not take Conservatives long to bounce back from the initial discrediting of unregulated private financial speculation in 2008 with the entirely specious claim that too much public spending before 2008 triggered the crisis , and that too much public spending after 2008 had made that crisis worse. And it didn’t take the UK electorate long to start believing these Conservative claims again, in no small measure because a Labour Party now under new leadership could not challenge the basic premise of Osborne-type austerity – namely that excessive public spending is the key thing holding back economic recovery – without admitting that the whole thinking behind 13 years of New Labour rule had been fundamentally wrong.

Yet it had been fundamentally wrong; and austerity politics will continue to hold sway in the UK (both in Whitehall and in the wider electorate) until a new generation of centre-left politicians and intellectuals say so, and formulates a new progressive growth strategy based on a full and honest analysis of why New Labour’s light-touch management of UK capitalism ultimately failed to deliver either the economic growth or the social justice that had been promised. Persuading a skeptical electorate to believe in the credibility of such a new growth strategy will then be hard enough. Electorates have been promised things, and then let down, many times before. But no such rupture with neo-liberal orthodoxies will be even possible until that new growth strategy is designed and refined. Designing and refining it is the most pressing task before us.

First posted on SPERI COMMENT, the blog site of the University of Sheffield’s Political Economy Research Institute.1

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David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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