Labour’s Future

In May 1998 I attended an academic seminar in Downing Street organized to discuss the meaning of Tony Blair’s ‘Third Way’. The event was hosted by David Miliband, then the head of the No 10 Policy Unit. Before the meeting I sent Miliband a document I entitled ‘Two Lanes on the Third Way’ pdf(95.5kB), in which I argued that since ‘when we increase the capacity of others to help themselves, we also increase their capacity to help us’ the Labour government should embrace proportional representation and economic democracy. Both of these, in the form of a manifesto commitment to a referendum on electoral reform, and as an exploration of the stake-holding idea espoused by Will Hutton among others, had already entered ‘New Labour’ thinking.

David Miliband thanked me in person for the paper, but I don’t know if he actually read it. In any case, stakeholding died rapidly at the hands of, according to Alastair Campbell’s latest revelations, Gordon Brown. Electoral reform expired more slowly, with the Jenkins Commission’s proposals for the Alternative Vote supplemented by open top-up lists eventually being kicked into the long grass, quite possibly by feet that included those of Raith Rovers’ foremost supporter.

Fortunately, the formation of the Conservative-Liberal Democrat coalition has now given Labour a chance to reinvent itself in a more fundamental way than any since the party’s formation. Since the breakaway of the Social Democratic Party from Labour in 1981, it has been possible for another major party to claim that it is the true standard-bearer for practical left politics in Britain. If Labour can get clear in its collective head what distinctively left-wing politics means, this can be ended. Through their coalition with the Conservatives, the Liberal Democrats are now firmly wedded to a view of how society and the economy should be organized that has no authentic left-wing element. And yet many aspects of the coalition’s policies are attractive, desirable and at odds with Labour’s stance in government. To square this circle, we need to arrive at a new definition of left-wing politics.

Twelve years after that Downing Street seminar, David Miliband and his brother, Ed are among the rivals for the vacant Labour party leadership. I hope that one or other or both of them will look again at the arguments I made then. Ed has offered some hope that he understands the issues in his comment that ‘while the New Labour combination of free markets plus redistribution got us a long way, it reached its limits some years ago.’ Labour should not be about ‘helping the poor’; ‘one-nation’ conservatism is as capable of doing this as social democracy. Indeed, in their acceptance of the imperative of profit-driven capitalism, there is nothing to choose between them. It’s not about ‘representing the working class’ either. Most of those lucky enough to have a proper job these days would be better off expecting this from their union or an employment lawyer.

The truly left-wing idea is the realisation that when social groups become detached from society as a whole, either due to excessive wealth or due to an absence of it – either giving little benefit to society or receiving little from it – then we have an intolerable state of affairs. Neither have any interest in the needs of the other. Yet the irreducible state of uncertainty and incomplete information in the world (as amply demonstrated by climate change and the financial crisis) makes it costly to both groups and those left in the middle. This leads to the conclusion that both democratic politics and markets must lead to inclusive, rather than exclusive, dialogue between us all.

Conservatism and liberalism accept (the former often grudgingly) equality before the law and equality of basic rights, but the distinctive belief of the left must be that equality is not just a moral or an ethical issue but, above all, a practical one. Unless we have effective routes of negotiation, on an equal basis, with each other about the management of society and all of its resources, the sheer unpredictability of the world must crush us all, rich and poor alike.

What does this mean in practice? Politicians should no longer consider themselves as managers (practically none of them are trained to be, in any case) but as conduits for knowledge about society. They must connect the ideas of the population with the experience of the population. Politics must become a true market for policy, where we learn from each other as well as registering our own opinions. Many of the political reform proposals put forward by the Conservative-Liberal Democrat coalition pay lip-service to this: tinkering with the voting system; regulation of lobbying and reviewing ‘big-money’ funding of political parties. Labour should embrace real change – moving to a voting system that gives true proportional representation in the ‘political market’ while prioritizing voter power over party power.

In economics, the same principle of maximizing communication between individuals is just as valid. This is the great theoretical benefit of markets that transmit complete information about the demand for and supply of goods and services through the price mechanism. Our current economy fails to make the most of this theoretical benefit, for two main reasons. Firstly, demand can only be expressed in the form of money – 97% of which is issued as a result of decisions taken by the commercial banks. If money is in ‘short supply’ for whatever reason, real demand can remain unexpressed; if in ‘excess supply’ fictitious demand may rule the roost. Secondly, supply and demand (especially for labour) are largely in the control of organizations whose structure is designed to streamline the interests of their monetary beneficiaries (corporate shareholders), and sideline the interests and experiences of all others.

The resultant power in the hands of the corporate sector (particularly the financial sector) has resulted over the last 30 years in Britain and many other countries in the crowding out of power from the political sphere. However much social democrats and one-nation conservatives would like to alleviate the fall-out from an unimpeded and dynamic private sector, it becomes less and less possible to do so with each passing year. As banks’ and corporations’ control of resources grows, the more they can manipulate in their favour the flow of information into government and the flow of policies out of it. A truly left-wing politics would confront this problem head-on, and look for effective ways of reforming the monetary system to make it more responsive to human and social needs, and of re-casting corporate governance in a more pluralist mould.

Conservatives and Liberals together may be willing to disperse the structures of power in somewhat arbitrary transfers of control between local authorities, central government and public service providers, and perhaps in breaking up the largest banks – but this is just to shift the same processes around the same board. The appearance may change but the functions and outcome are essentially the same. The left, as represented by Labour, can and must now be the advocates of opening up the structures of political and economic power in such a way that all individuals have equal access to them.