IT SOMETIME SEEMS it is the destiny of the Labour party to trail behind the Conservatives on economic thought and practice.
In a new and influential industrial history of the 20th century British state, historian David Edgerton demonstrates that the Tory party – the true ruling organism of British capitalism – was typically the most intellectually sensitive and practically decisive force when it came to grand policy.
This is hardly surprising given that “the Conservative party was in office for nearly 70 of the 100 years of the century” and that “the politics of capital – whether of free trade versus protectionist or nationalist versus global – were the central political fights of the 20th century.”
Meanwhile on the left, “social democratic political economy was weakly developed… at least until the 1970s”. He firmly plants the 1945 Labour government (significant though it was) in its post-war reconstruction context, as a carrier of the economics of national development, rather than some kind of radical experiment.
That history of social democracy since the 1970s was, of course, short-lived. A decade and some later, Thatcher was driving her new neoliberal economic orthodoxies into ascendancy. Labour, as we all know, would shortly follow suite.
Speaking, in his ‘landmark’ economy speech (18 February), to Conservative policy from 2010, Labour leader Keir Starmer bemoaned a party dogma “…guided by the notion that government can’t interfere in the market. That you can strip back public services, ignore inequalities and take money out of the pockets of people who need it most”.
What he is referring to is, of course, austerity. He cannot, of course, be referring to the year from March 2020, when the UK Government has brought millions of workers onto state-backed furlough schemes, printed a mass of money through the Bank of England to blast into the economy, and called on the British public to ‘Eat Out to Help Out’ – a state-sponsored dining discount scheme that saw the Weatherspoons pub franchise introduce a cheap range of beers called ‘Sunak Specials’ after the Tory Chancellor who made it all possible.
Economics is changing fast, and it’s the right in the UK driving it.
As James Meadway, former economic adviser to John McDonnell, put it: “It should bother everyone on the left that, after [a] few years patting ourselves on back about having new ideas [and] fresh thinking, we too often settle for only opposing austerity [and] attacking neoliberalism – even as the right are thinking creatively about getting past both.”
That is not to say there is no exterior pressure on Tory policy, beyond the desperate pandemic conditions. In the United States, Joe Biden’s new administration has unveiled a $1.9 trillion relief plan. From the headquarters of the world system, the memo could not be clearer: don’t take the foot off the stimulus pedal.
This argument in the transatlantic ruling elites has a longer vintage. Obama met eye-to-eye with Gordon Brown on the need for a stimulus in 2008, and he chided Cameron for his adoption of severe austerity measures in his recent memoir. This was not unconnected to contemporary events, with Obama eyeing the White House for his one-time vice president, and mindful of Biden’s need to marshal Britain behind his own global strategy for recovery.
Pressed by the BBC’s Faisal Islam on the cleavages in his party, Sunak said: “We’ve been able to respond comprehensively and generously through this crisis, in part because of our strong public finances”.
It was a bid to pave-over the splits in the government party, and to spare the blushes of Cameron and his Chancellor Osborne. It would gain Sunak and Johnson (who is thought to be firmly on the anti-austerity wing of the party debate) nothing to trash the Tory 2010s. Why dredge up controversies about the past when they are writing the present and future?
In March, Sunak’s budget is expected to be another major ‘giveaway’ fund – crucially holding back on tax rises. New tax rises in the coming period are expected to focus on squeezing corporations and perhaps new carbon charges and similar official state-greening.
This does not mean that the spectre of austerity is banished completely. Neither does it mean that post-neoliberal models won’t be built on the backs of workers and for the enrichment of bosses (a permanent, epoch-defining motion). But it does mean that it is still the Tories, and not Labour or anyone on the left in British politics, defining the present debate about economics.
In Scotland, the independence movement faces, if anything, an even sharper clash with the emerging policy reality. Officially, the headline case for independence is a throwback to the 1990s heyday of liberal economic orthodoxy, and some yards further. Little to nothing hinted at in Starmer’s speech – or more concretely asserted by Conservative leaders – could even be countenanced by a new state without its own central bank or control over monetary policy.
These are ideas for the wrong century, and the gulf is widening.
Picture courtesy of Number 10