Review of Political Economy and the Labour Party by Noel Thompson (UCL Press, £12.99) and A Short History of the Labour Party by Henry Pelling and Alastair J Reid (Macmillan, £9.99), Tribune, 18 August 1996
Forget the policy shifts that “New Labour” has made in the past couple of years under Tony Blair: as Noel Thompson’s timely historical survey of Labour’s thinking about economics makes clear, the defining moment in the party’s recent recasting of its identity happened nearly a decade ago. After the 1987 general election, under Neil Kinnock’s leadership, Labour ditched the Keynesian approach to management of overall demand in the economy that had dominated its thinking about the economy for more than 50 years.
Ever since, Labour has held fast to what its proponents call “supply-side socialism”. Put crudely, the big idea is that the ability of any medium-sized nation state to manage demand has been dramatically curtailed by the globalisation of the economy. The best any British government can do is to secure low inflation and exchange-rate stability – the preconditions for steady growth – and make the economy more internationally competitive by encouraging long-term investment and by improving education and training. Measures to expand demand have to be internationally coordinated to have any chance of success. Full employment can remain a goal, but only insofar as pursuing it does no threaten the counter-inflationary strategy.
Thompson has serious doubts about New Labour’s “quest for the Holy Grail of international competitiveness”, finding it at best soulless and uninspiring and at worst a capitulation to free-market liberalism: he is much more sympathetic to early-1980s radical-democratic variants of the left-Keynesian Alternative Economic Strategy. (The AES, which proposed reflation, import controls and widespread nationalisation,  dominated Labour thinking throughout the 1970s and early 1980s. It did not, however, have much influence on the practice of the 1974-79 Labour government,  which in its austerity programme from 1976 in many ways prefigured Thatcherism. )
But this is a scholarly history of ideas, not a polemical work, and Thompson is consistently fair even when he is dealing with authors with whom he disagrees. His expositions of the ideas of the key figures, from H.M. Hyndman and William Morris to Neil Kinnock and Gordon Brown, are exemplary in their clarity, and his bibliography is excellent. Thompson is particularly strong on Labour’s thinking in the 40 years after 1945.
The book could have done with more on the “Eurokeynesian” ideas developed by Stuart Holland and others in the past decade – the period that, perhaps unsurprisingly, Thompson deals with most sketchily. More generally, there are a few places where it is weak on political context, exaggerating the importance of some marginal figures and downplaying the significance of major ones – but that is a function of its genre. Political Economy and the Labour Party is more specialist than the nearest thing it has to a precursor, Geoffrey Foote’s  The Political Thought of the Labour Party, published way back in 1985, but it is also more thorough and much more up-to-date. It deserves a wide readership.
A Short History of the Labour Party has already had just that: the first edition of Henry Pelling’s book was published in 1961, and this is the 11th edition, with the updated sections (taking the story up to the abandonment of Clause Four) written jointly by Pelling and fellow Cambridge don Alastair Reid. It certainly gives the bare bones of Labour’s history, but its prose is wooden and its analysis banal (and unerringly sympathetic to the Labour right). Worse, its end-of-chapter guides to further reading are skimpy, dull and often outdated. Strictly for those with no prior knowledge, to be taken with a large dose of salt.
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