Category Archives: Journalism

New Statesman & Society, 5 April 1996

Tony Blair’s plans to put an early draft of Labour’s manifesto to a vote of party members has been welcomed by the media – although not by the trade unions. But what does it actually mean? Paul Anderson investigates

Tony Blair’s announcement last week that his party’s National I Executive Committee had agreed to put an early version of the Labour manifesto to a vote of all individual party members came as a complete surprise to just about everyone – including, apparently, most of the people who were at the NEC meeting just before Blair’s press conference.

Trade union members of the NEC say that they thought the Labour leader had agreed to tone down his proposal for a referendum of individual members, replacing it with a plan to invite party members “to pledge support” for Labour’s programme. And they were not pleased when Blair announced to the television cameras that the plebiscite would go ahead. “I’ve never known the NEC to be so furious,” said one. “The trade union group is apoplectic.”

The apoplexy is unlikely to last too long, however. It’s mainly the result of union resentment at yet again being outmanoeuvred, not just by Blair himself but by his spin-doctors, who managed to give the impression that the referendum marked a definitive downgrading of the unions’ role in Labour politics. That resentment is real enough, and will eventually rebound on the Labour leader – but on the substantive question of the plebiscite the dust is likely to settle sooner rather than later. Although the vote is undoubtedly intended to give the public the impression that Labour has utterly transformed its policy-making procedures, in fact its direct effects are marginal.

For a start, it will make no difference to the method the party uses to draw up the first draft of the manifesto: a committee under the firm control of the party leadership, but with serious input from the unions, will distil and refine various policy documents that have been produced by the party’s National Policy Forum, endorsed by the NEC and (in most cases) passed by the annual conference. The policy forum, the NEC and the conference all give the unions key roles, most notably the conference, in which they still command 50 per cent of votes.

Nor will the referendum on the draft manifesto materially affect the role of the conference: the document – after modifications to take account of “consultations” with members over the summer – will be voted upon in Blackpool this autumn just like any other policy paper from the NEC, before it is put to the membership.

What’s more, after the vote of all members, the draft programme will be subject to change by the party leadership to take account of changing circumstances (in particular, on taxation and public spending, on which shadow chancellor Gordon Brown will not pronounce – assuming John Major does not decide to go early to the polls – until after this autumn’s budget). In the last instance, it can be given a final tweaking at the “Clause Five” meeting of the shadow cabinet and NEC (so-called because of the section of the party constitution that defines its role) on the eve of the election campaign proper.

On the face of it, in other words, there’s no arguing with Robin Cook’s claim in an interview with GMTV’s Sunday Programme last weekend that “this document will go through the full party procedures”. Those procedures are of course somewhat unfamiliar because the National Policy Forum has been going only since the last general election – but last week’s announcement changes them only at the edges.

Nevertheless, the plebiscite decision is significant – partly because of what it says about Blair’s fear of losing the party’s support when in government, and partly because of what it might presage in Labour’s internal politics.

Like many of his political generation, the Labour leader is haunted by the revolt of the constituency left in the late 19705 and early 19805, which he believes has kept his party out of government ever since. And the reason for that revolt, he thinks, was that the governments of Harold Wilson and James Callaghan lost touch with the party, allowing the left free rein with its rhetoric of “betrayal”. The idea of the referendum is that it will tie the party – in parliament and outside – into support for a minimalist, responsible programme, and that as a consequence the cries of betrayal two or three years into a Labour government will have no purchase.

But will it work? There’s no doubt that a vote of all individual members will give the manifesto a legitimacy within the party that it has not enjoyed before – which will make it difficult for anyone to complain because a Blair government hasn’t done what it never promised to do in the first place. That, however, wasn’t actually the problem that did so much damage to the 1970s Labour governments: rather, it was that – under duress – they really did renege on promises that Labour had made to the electorate in 1974. If a Blair government fails to do what it says it will do – which is not impossible, however minimal the programme – the fact that the promises have been explicitly endorsed by the party membership will be a liability, not a strength. Moreover, there will be plenty that the manifesto will not cover or will fudge. Whether or not it is backed by the membership, it will not be the last word on European monetary union, for example, nor will it guarantee the party’s support for a Blair government’s handling of, say, a sterling crisis in 2001.

All the same, Blair’s initiative might presage a shift in Labour’s political culture that would have major implications. Although the use of a referendum to rubber-stamp the manifesto will have little impact in itself on Labour’s policy-making process, and is unlikely to do much to stem party criticism of a Labour government, there’s no doubt that habitual use of plebiscites would radically change the balance of power inside the Labour Party. If the Labour leadership decided, as a matter of course, to appeal on matters of controversy directly to individual members over the heads of the representatives of the party’s various parts in the NEC and at conference, the power of both NEC and conference would be seriously reduced vis a vis the leadership, much as regular use of referenda in a country’s politics reduces the power of the legislature over the executive.

That would be a real blow to the unions, and it’s not surprising that their NEC members are keen to emphasise that, whatever else, the manifesto poll should not be seen as a precedent. The GMB’s decision to ballot all its members on the manifesto, but to deduct the £250,000 it will cost from funds that would otherwise go to the Labour Party, is the sort of support for Blair’s initiative that a rope gives a hanged man.

How far the power of the ordinary membership would be enhanced by the regular use of internal party referenda is a moot point. If only the party leadership could choose what went to a vote of all members, plebiscites would empower the grass-roots not a jot – whereas if ordinary members could choose (for example, if a certain percentage of them signed a petition demanding a poll on a particular issue), referenda could make Labour an unprecedentedly democratic party. Something says that it’s the first of these models that Blair has in mind.

New Statesman & Society, leader 5 April 1996

John Major and Kenneth Clarke have stolen a march on the Tory anti-Europeans with their deal on a referendum on the single European currency. Now the ball is in Labour’s court

You’ve got to hand it to Kenneth Clarke. Last week, he appeared to be heading for the back benches in protest at John Major’s insistence on committing the Tories to a referendum on joining a single European currency. Now, after this Tuesday’s deal with Major on the terms for such a referendum, he looks by far the most effective political operator in the cabinet.

Although Clarke has conceded that the Tories should promise to hold a single currency referendum in certain circumstances, he and Major have contrived to ensure that those circumstances will be as favourable as possible to securing the result both want: popular endorsement of monetary union once the government decides that the conditions are right. The Eurosceptics’ bluff has been called.

The deal is that the Tories will go into the next election promising a referendum, but only if the government has decided to join a single currency during its next term and parliament has legislated accordingly. Collective cabinet responsibility will be maintained, which means that cabinet opponents of joining will have to resign if they want to campaign for a “no” vote. It’s a set-up even more likely to produce a large “yes” majority than the arrangements for Labour’s 1975 referendum on continued membership of the EEC.

Of course, as Labour has said, all this has more to do with papering over Tory cracks than with laying down a credible policy on monetary union – but it would be foolish for Labour not to take it seriously. At the very least, it means that the Conservatives will go into the election temporarily united on Europe. More important, it could be an effective vote-winner. For the first time in years, Labour is now on the defensive on Europe.

So what should Labour do? For a start, match the Tories’ promise of a referendum on joining a single currency. Labour has been playing with the idea for the best part of 18 months, and both Tony Blair and shadow foreign secretary Robin Cook have made it clear that a Labour government will hold a single currency referendum if the electorate is not faced with a clear choice in a general election among parties holding different views on the issue. It is now time to endorse a referendum without this qualification. Even if there is a growing sense in Labour circles that Britain will not have to decide on whether to join a single currency during the next five or six years – with some senior figures now reckoning that a single currency is not feasible for 20 years or more, if at all – it would be a mistake to allow the Tories to steal a march on the party on such an easy populist issue.

This said, there are real questions about what sort of referendum Labour should advocate. The party’s Europhobes – who still haven’t quite died out – would like to hold the vote before any negotiations start, but that’s hardly a serious option because it would run directly counter to party policy of agreeing to a single currency in principle, but making sure the conditions for it are right.

A thornier question is whether cabinet collective responsibility should be upheld during a referendum campaign that takes place after negotiations have been successfully concluded. There’s no problem in theory with allowing cabinet members to do what they want. That, after all, was what happened in 1975. But Tony Blair is all too aware of the damage done by the deep Labour divisions over Europe that the 1975 campaign opened up – and which will almost certainly dictate that Labour adopts an arrangement similar to that embraced by the Tories, with the cabinet bound to arguing for a “yes” vote.

If the conditions for monetary union are right, that will be no problem. But what are the “right” conditions? Labour has made much of the importance of “real economic convergence” on top of the criteria for inflation, government debt and public-sector borrowing laid down in the Maastricht treaty – which is enough to keep all but the Europhobes happy in the run-up to the election. It has not, however, defined what it means by “real economic convergence” – and that means there is plenty of room for fierce internal Labour disagreements once the party comes to power. As with the Tories, a referendum is useful for Labour, but by no means a panacea.

John Major and Kenneth Clarke have stolen a march on the Tory anti-Europeans with their deal on a referendum on a single European currency. Now the ball is in Labour’s court

New Statesman & Society, leader 29 March 1996

The BSE scandal is the final nail in the coffin for the Tory government

Forget arms-to-Iraq, cash-for-questions, homes-for-votes in Westminster, or any of the other scandals that various pundits have claimed would mark the beginning of the end for John Major’s shabby administration – mad cow disease trumps them all. The official admission last week that there might, just might, be a connection between bovine spongiform encephalopathy in cattle and one variant of Creutzfeldt Jakob disease in humans – BSE and CJD – has had a far more dramatic impact in undermining public faith in the government than anything else it has done.

Everywhere, people are asking the same questions. If some respected scientists have been saying for several years that there might be some connection between eating B S E-infected beef and contracting CJD, a fatal neurological illness, why on earth did ministers and their advisers ignore them, claiming beef was entirely safe? Why was the programme for eliminating BSE pursued so half-heartedly? And how many of us are going to die horrible lingering deaths because we took the government’s advice seriously?

Health Secretary Stephen Dorrell’s explanation, that the government was only doing what the scientists on the Spongiform Encephalopathy Advisory Committee (Seac) suggested it should do, is not good enough. The committee’s membership was chosen by the Ministry of Agriculture, Fisheries and Food and initially failed to include any public health experts (their appointment last December almost certainly precipitated this month’s warnings over BSE) and was consistently laggard in acknowledging mounting evidence that there is indeed a link. Maff in turn has, until last week, been equally sluggish in implementing Seac’s recommendations.

Even if, like Lord Justice Scott in his report on arms-to-Iraq, we assume that ministers have acted at all times “honestly and in good faith”, the government deserves to be condemned for its absurdly Panglossian optimism, for its rank incompetence and for its extraordinary procrastination. But that is the bare minimum of which it can justifiably be accused. All the evidence points to the conclusion that ministers have not been acting from the purest of motives, but have been pawns throughout of the powerful agribusiness lobby. The most convincing explanation of their behaviour is that, from the first appearance of BSE, they have been less concerned with public health than with maintaining the profitability of Britain’s pampered beef farmers and of the food processing industry. It is no accident, as the Marxists used to say, that there are nearly 40 Tory MPs with direct interests in farming.

Now, however, the deranged cattle have come home to the cowshed. The past week has seen a collapse in demand for British beef worse than the government’s worst nightmares. Sales of beef in butchers’ shops and supermarkets have slumped, and beef prices at every level are tumbling. McDonald’s and the other big hamburger chains have announced that they will no longer be using British beef, and the export market has vanished, as first Europe and then the rest of the world have put up the shutters. Thousands of workers look set to lose their jobs.

All this is the government’s fault. It is fatuous for John Major to blame Labour “scare-mongering” for the panic that has swept Britain in the past week: people would have been scared whatever the opposition had said, for the simple (and very good) reason that CJD is a frightening disease with no known cure. And now the government must pay the price.

In cash terms, that will be at very least between £400 million and £700 million a year for five years in compensation to farmers – the estimated cost of the (wholly inadequate) compulsory slaughter scheme favoured by the National Farmers’ Union, under which only older dairy cows would be destroyed – and could be as much as £20 billion if every single one of the 11 million cattle in Britain is killed. Politically, the price is likely to be that Major will have to kiss goodbye to any hope of winning the next general election. Whether that means a new government that will tackle the agribusiness lobby head-on, however, is another matter entirely.

New Statesman & Society, 15 March 1996

The Labour leader has decided that he needs a dialogue with the centre-left intelligentsia. It could be a tricky business, writes Paul Anderson

The participants in last month’s private meeting at King’s College, London, between Labour leader Tony Blair and what the Guardian described as “80 intellectuals and businessmen” are not keen to talk about it – at least on the record.

“It was done on the basis that we wouldn’t be identified,” says one abruptly. “All I’ll reveal,” says another, “is that the people named by the Guardian were all there.” So Stuart Hall, Anthony Barnett, John Gray, Geoff Mulgan, Andrew Adonis and Vernon Bogdanor are all considered worthy of the Labour leader’s attention – but there are no surprises there. “It would be fair to say that Blair did most of the talking,” says yet another. “He said he wanted a dialogue about ideas. I think that’s a good sign. But I really can’t say any more.”

Big deal, you might think. But the secrecy speaks volumes, even though the participants won’t. The official explanation is that Blair didn’t want to burden the invitees with the tag of being tame party stooges, which is fair enough. There was also, no doubt, a certain wariness in the Labour leader’s office about the mischief the Tory press would make of the event –  although in fact the only hostile mention that has appeared since news of it broke last week is one sarcastic diary paragraph in the Sunday Times. It was headlined “Blair says goodbye dearies, hello drearies”, an allusion to his alleged preference for boring academics, rather than the literati and glitterati cultivated by Neil Kinnock.

But the low-key approach also reflects Blair’s worries about the lukewarm reception new Labour has been getting from the intelligentsia. It’s easy to see why he’s concerned. After nearly 17 years of uninterrupted Conservative rule, his party is so far ahead in the opinion polls that just about everyone thinks it will form the next government. Since his election as Labour leader in 1994, he has consistently stressed the importance of “new ideas” to his political project – and he has made an extraordinary number of speeches outlining his thinking. New members have flocked to Labour. Blair believes, with some justification, that the impending end of a political era should be generating excitement among intellectuals – just as it did in Britain in the run-up to Harold Wilson’s first general election victory in 1964 or in France before Francois Mitterrand became president in 1981.

In fact, there has been little sign of any such thing. The depoliticisation of the intelligentsia that was the most marked trait of British intellectual life in the 1980s has not been reversed. Little of the left-leaning intelligentsia has survived the wreckage of its projects since the late 1970s: the scrapyard contains not just the social democratic corporatism of the Wilson-Callaghan era and the “actually existing socialism” of the Soviet bloc, but also the left-wing Keynesianism of the Alternative Economic Strategy, the “57 varieties” of Trotskyism and neo-Leninism, quasi-syndicalist “class politics” and all but the most supple libertarian leftism of the 1968 generation. Feminism is no longer the sole prerogative of the left; environmentalism never has been. Postmodernists of various hues have long replaced Marx and Gramsci as undergraduate fashion accessories.

Except when it comes to the constitutional questions raised so effectively by Charter 88 and others, those one-time left intellectuals who have not simply given up politics are, for the most part, engaged only peripherally: the dominant mood is one of pessimism about the powerlessness of political action in the face of a triumphant global capitalism. Worse, there is no influx of enthusiastic young people, keen to seize the initiative from the sad old fifty-somethings who are still hanging on in there banging away, to the left intellectual milieu. With the partial exception of the peace and environmentalist movements, the “new social movements” of the past two decades have done little to rejuvenate or enlarge the left intelligentsia.

It’s true that the surprise success story in British publishing in the past year has been Guardian economics editor Will Hutton’s elegant statement of the case for Germanic corporatism and radical constitutional reform, The State We’re In. For the first time since 1980, when Edward Thompson and others launched the movement against the stationing of American cruise missiles in Britain with Protest and Survive, a serious forward-looking political book has been riding high in the bestseller lists for several months. Blair himself has embraced the idea of “stakeholding” that is central to Hutton’s argument, although he has steered clear of his detailed poliq prescriptions.

It’s also true that Blair is not short of supporters in senior editorial position; on the quality newspapers. The Independent is the most pro-Blair daily (his fans include columnist Andrew Marr, political editor Donald Macintyre and political correspondent John Rentoul, the author of a sympathetic biography of the Labour leader), and he has plenty of admirers both on the Guardian (notably, political correspondent Patrick Wintour) and on the Observer, at least as long as Andrew Jaspan remains editor – which might not be for very long.

But one best-selling centre-left book and a gaggle of broadsheet journalists hardly constitute a wave of intellectual enthusiasm for new Labour. The most important point about the success of The State We’re In is precisely that it was wholly unexpected, and the Blairites and the newspapers are, for the most part fans of the man rather than his programme. Even the Independent’s enthusiasm has been noticeably muted since last autumn, when its management dumped Ian Hargreaves as editor and former Marxism Today editor Martin Jacques as his deputy; while Guardian editor Alan Rusbridger has maintained; fiercely independent line, on occasion running stories deeply embarrassing to the Labour leadership. The Financial Times is as sympathetic as any international journal of record can be; the Independent on Sunday no more reliable than the Guardian; the Times even worse; and the Sunday Times largely hostile, despite the recent return of Robert Harris (a close chum of Peter Mandelson) as a columnist. That leaves the two Telegraph titles, both wildly Tory, and the weeklies. The Economist, under the influence of its political editor, David Lipsey (an aide to the last Labour government), is sympathetic but critical, as is NSS; Tribune and the Spectator are vitriolically antipathetic.

Blair’s problem is simple: if there’s anything that approaches a consensus among Britain’s centre-left intellectuals, it is that a Labour government would mean a welcome change of personnel but that, certain constitutional reforms apart, it wouldn’t be able to do very much that is radically different from the Tories under John Major and Kenneth Clarke.

There are, of course, important dissidents from this view – and they number more than Peter Mandelson and Roger Liddle, whose much-hyped The Blair Revolution was published earlier this month. The most significant is a group of writers who see constitutional reform as the key to all sorts of other changes: eloquent examples include Will Hutton, Charter 88 founder Anthony Barnett, Labour MP Tony Wright and former Liberal Democrat adviser David Marquand. But it’s remarkable how small this group is, and even within it there are big frustrations with the way new Labour has played its cards, particularly over Freedom of Information legislation and the promised referendum on electoral reform, neither of which are now considered immediate priorities for a Labour government.

It’s also notable who doesn’t feature in this circle. Stuart Hall, during the 1980s (through his pieces in Marxism Today) the most influential proponent of the idea that Labour’s class-based political culture had lost touch with the real world and needed to be radically transformed, has written witheringly of the absence of big ideas in the Blair “project” (although he welcomed Blair’s reduction of the role of the trade unions in Labour’s organisation and his removal of the commitment to common ownership in Clause Four of the party constitution).

Anthony Giddens, probably the second most influential left-of-centre “moderniser” social theorist in recent years, has been equally critical, as have the intellectuals around New Left Review, which has made a particular point in recent years of engaging critically with western European social democracy.

Blair gets upset by the charge that new Labour lacks intellectual beef, but he shouldn’t be too surprised by it. Labour has consciously opted for a responsible, minimalist programme. The intention is worthy – to avoid scaring off affluent middle-class voters while preventing trade unionists and Labour Party members from building up unrealistic expectations of a Labour government – but the side-effect is that there isn’t too much for intellectuals to get worked up about.

Of course, there is plenty of Labour policy-wonking going on, particularly on the welfare state, and a key role here is played by the Institute for Public Policy Research, the independent-but-Labour-leaning think-tank created when Neil Kinnock was Labour leader. The IPPR oversaw the work of the Commission on Social Justice, set up by Blair’s predecessor John Smith to examine the future of welfare, and it publishes New Economy, a quarterly edited by former Labour economic policy adviser Dan Corry that is the closest Labour gets to a forum for public debate on economic policy.

But the IPPR’s work does not really amount to a ferment of ideas, and there’s not a lot that is useful to Labour coming out of the other think-tanks. The most important exception is Demos. Set up by another former Marxism Today stalwart, Geoff Mulgan, once an adviser to Gordon Brown, Demos has been responsible for the only significant import of recent years in the field of political ideas, the communitarianism of the American polemicist and activist Amitai Etzioni. Etzioni’s emphasis on responsibilities as well as rights chimes with the austere Christian socialism of Blair and shadow home secretary Jack Straw, and the Labour leader has declared himself a communitarian.

Communitarianism has articulate advocates in John Gray, the Oxford political philosopher who was a key thinker of the new right in the early 19808, and Observer columnist Melanie Phillips – but the wider left intelligentsia is suspicious of what it sees as the conservatism, or even authoritarianism, of communitarian prescriptions for dealing with family breakdown and crime. Whatever else left intellectuals might have abandoned since the 1960s, they remain as strongly committed as ever to social liberalism, if not libertarianism. And that almost inevitably means that most of them will keep a respectable distance from new Labour, no matter how much Blair urges them into the fold.

New Statesman & Society, leader 8 March 1996

Labour’s modernisers are going to have to do a lot better than Peter Mandelson if they are ever to convert the left intelligentsia to their cause

Labour used to have intellectuals: now it has Peter Mandelson. Because of the influence he has in his party’s upper echelons – as great as that once enjoyed by Sidney Webb. G D H Cole, Hugh Dalton Harold Laski or Anthony Crosland, if rather different in nature – the publication this week of his new book, The Blair Revolution, co-written with ex-SDPer Roger Liddle, is a politically significant event. But the book itself is a disappointment.

There’s little in it by way of prescriptions that is not already Labour policy – apart, that is, from the bizarre plan to lend young couples £5,000 as a deposit for a mortgage if they get married. One can just see the happy couples laughing all the way from the bank to the divorce lawyer. Moreover, for the most part, it takes the most conservative interpretation of what Labour policy would mean in practice. Although there’s much of sense in it, it does not offer a “radical, exciting vision”, as its jacket blurb promises. Rather, The Blair Revolution is an exercise in trying to make “safety first” sound daring. Labour’s modernisers will have to do a lot better if they are ever to fulfil their dream of dominating not just their party’s machine, but Britain’s political culture.

Nowhere is the caution more apparent than in The Blair Revolution‘s sections on constitutional reform. In the week of shadow foreign secretary Robin Cook’s triumphant performance in the Scott debate, it is notable that Mandelson and Liddle do not even press the case for a comprehensive Freedom of Information Act, which until recently Labour was promising to pass in its first year of government.

Instead, they back “a public right to know, underwritten by legislation, unless there is a clear stated reason why something cannot be disclosed on grounds of national security, personal confidentiality or strict commercial confidence”. Documents made public should not “include private office working papers and advice to ministers from senior officials”, disclosure of which “would fatally prejudice the political independence of the senior civil service”. Such a mandarin’s charter could not have been bettered by Sir Humphrey Appleby himself. lt would not help a bit in exposing a future government that operated an arms sales policy of the kind revealed by Scott. The House of Lords gets similarly soft treatment.

Mandelson and Liddle back Labour’s plans to remove voting rights from hereditary peers, but are circumspect about what happens after that. “In the long run,” they write, “it maybe that the second chamber needs to be made more representative – perhaps there could be a directly-elected element with an avowedly regional flavour.” Wow. On electoral reform, they are sceptical about the need for change, but back the alternative vote – a system that would do nothing to ensure the representation in parliament of minority opinions – as the best option if a change has to be made. Labour’s promised referendum on electoral systems doesn’t get a look in.

So one could go on through the sections of the book on economic policy, Europe, the future of the welfare state or reforming the machinery of government. Everywhere, the message is the same. New Labour really is a different party from old Labour, it really wants change, it really is radical – but it won’t do anything to frighten the horses.

And to think that the modernisers wonder why what there is of an intellectual left in Britain hasn’t rallied enthusiastically to their cause. The reason is not that there is some diehard old-left clique yearning for the good old days of the 19703 and desperately hanging on to its positions of influence at the Guardian, at the BBC, in the universities and even, God forbid, here at NSS. It’s that the modernisers’ “project”, as they like to call it, isn’t particularly inspiring to anyone with a penchant for radicalism, at least as it has so far been spelled out.

Caution is caution, however it is packaged. And although there are undoubtedly grounds for it in Labour’s case in the run-up to the election – the voters are worried by the prospect of change, and it would be foolish for the party to promise more than it can actually deliver – it can never send the mind or the pulse racing. That might come if there were some grand overall long-term strategy – precisely what the modernisers have yet to elaborate.

Until they do so, and do so convincingly, the majority of the intellectual left will maintain its scepticism about the “project” – as indeed it should. Intellectual political cultures are not like parties: they cannot be captured by skilful manoeuvring and they cannot be disciplined into subservience. It’s the quality of argument that counts – and, so far, the modernisers have not come up with the goods.

New Statesman & Society, 23 February 1996

The free-market right has long dismissed the ideas of John Maynard Keynes as outmoded. Now much of the social-democratic left is doing the same. But has Keynesianism outlived its usefulness? Paul Anderson and Kevin Davey investigate

Sixty years ago this month, John Maynard Keynes published his magnum opus, The General Theory of Employment, Interest and Money, a book that even his detractors say revolutionised the way that the world thought about economics. Precisely what the legacy of that revolution comprises, however, is now seriously contested – and not just by the free-market right whose nostrums were Keynes’ target.

There are still some who echo the accepted wisdom of left and right in the 19508 and 19605, that The General Theory provides nothing less than a working theoretical framework for the management of the economy to secure full employment. But today these enthusiasts are outnumbered by sceptics. Even in social democratic circles, where Keynes enjoyed unparalleled influence for nearly 40 years after his death in 1946, his star is on the wane. Of the few social democrats who still call themselves Keynesians, most are careful to distance themselves from what is popularly known as” Keynesianism” – and there are many on the left who now argue that Keynes’ insights were specific to a time and a place long gone. For them, as for the new right, Keynes ‘most enduring achievement is to have established the discipline of macro-economics and to have pioneered the techniques we use to measure the performance of national economies.

Who is right? It might appear a cop-out to say so, but there isn’t an obvious answer. With Keynes, as with most other thinkers who have spawned an “ism”, there are protracted arguments about the relationship between what the master said and meant and what his followers – particularly those who popularised and systematised his ideas – interpreted him as saying.

As usual, however, it is easiest to start with the “ism” – which in Keynes’ case can be traced back to the transformation of the ideas of The General Theory into a neat (but somewhat crude) model of the way economies work by his disciples John Hicks and Alvin Hansen. What might be called the doctrine of Keynesianism used the Hicks-Hansen model to show that the state has the ability to secure full employment by borrowing to boost the overall level of demand in the economy. .

There is no doubt that Keynesianism in this sense had an enormous influence on economists. By the mid-1960s, it was dominant in just about every university economics faculty: even the arch-monetarist Milton Friedman declared in 1966: “We’re all Keynesians now.” The extent of its influence on government practice is, however, arguable. It used to be accepted wisdom that Keynesian demand management was responsible for the unprecedented long boom enjoyed by the western industrial economies in the 25 years after 1945. But in recent years, this idea has come increasingly under fire, as economic historians have demonstrated that even Britain and America, the two countries most directly influenced by Keynesianism, did not systematically run budget deficits to boost demand until the 1960s, while the two most successful economies during the long boom, Germany and Japan, were fiscally conservative. On this view, Keynesianism was not really applied until the end of the “golden age” was already in sight.

Nevertheless, there’s a strong case that Keynesianism did play a major part in the boom. In the words of Keynes’ biographer Robert Skidelsky: “The explicit or implicit commitment to avoid a collapse in demand – and just as important, the belief that Keynesian policy would work if required – may well have secured the expectations necessary to sustain the private investment boom for so long.” Even if government policy wasn’t particularly Keynesian, in other words, the postwar boom wouldn’t have occurred had investors not believed that Keynesianism had smoothed out the business cycle.

By the mid-igyos, however, the golden age was-over – and with it the hegemony of Keynesianism among economists and policy-makers. By the mid-1980s, Keynesianism was everywhere in retreat and the free-market right triumphant.

So what went wrong? The problem both for the real world of economic policy-making and for Keynesianism as an ideology is easy enough to identify: the arrival of “stagflation”, the coincidence of rising unemployment and rising inflation, in the late 1960s. But the causes of stagflation were hotly contested at the time and remain so today. The free-market monetarist right blamed Keynesianism, arguing that the assumption (not actually made by Keynes himself) that there was a simple trade-off between unemployment and inflation ceased to work as soon as people started taking inflation for granted. The constant boosting of demand simply fuelled inflation without having any effect on unemployment. Keynesians replied by blaming factors outside western policy-makers’ control: the oil-price shock of 1973-74, the explosion of wage militancy throughout the industrialised world after 1968, and the collapse of the Bretton Woods system of managed exchange rates.

At first, governments tried to muddle through. Most tried to maintain demand while attempting to dampen inflation with incomes policies. When that didn’t work, they allowed unemployment to rise to counter inflation. And when that in its turn proved painful, they allowed inflation to rise to counter unemployment.

By the mid-1970s, it had all spun out of control – and nowhere more so than here in Britain. Faced with rampant inflation, rising unemployment and a currency crisis, the Labour government went cap in hand to the International Monetary Fund for a loan – and the IMF insisted on swingeing spending cuts as a condition of lending the money. At the 1976 Labour conference, prime minister James Callaghan announced that the Keynesian era was over. “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending,” he said.” I tell you in all candour that this option no longer exists and insofar as it ever did exist, it injected a higher dose of inflation and a higher level of unemployment. Unemployment is caused by pricing ourselves out of jobs quite simply and unequivocally.”

The door back to the forgotten world of laissez-faire economics had been unlocked. In the next few years, every major industrialised country followed Britain’s lead. The last country to attempt a Keynesian dash for growth, France under Francois Mitterrand’s Socialist government in 1981-83, was forced into a humiliating U-turn by rising inflation and a balance of payments crisis. For the next decade, Keynesians were marginalised. Their theories were displaced by the market dogmas that Keynes thought he had disposed of, their old and apparently irrelevant tools of intervention – exchange controls, deficit financing – abandoned by governments unilaterally and through international treaties.

Keynesianism was, however, too deeply entrenched, and too productive, to disappear overnight. Indeed, it even remained an important feature of the avowedly anti-Keynesian governments of the 1980s. As in so many other ways, they said one thing and – when the occasion called for it – did another. By cutting personal taxation and increasing the budget deficit to finance military expenditure between 1983 and 1985, US president Ronald Reagan claimed to be providing supply-side incentives. In fact, he was clearly putting old-fashioned Keynesianism back into practice. In Britain, chancellor Nigel Lawson’s boom of the late 1980s – the product of tax cuts, low interest rates and rising public expenditure – was a similar exercise in hypocrisy. Even today, major infrastructure projects (like road-building and the Eurofighter) bring unacknowledged but indisputably Keynesian benefits to an economy.

Keynesianism by stealth is not the only type to have survived the free-market counter-revolution. Keynesian true-believers – such as the Cambridge School in Britain – were quick to foresee the consequences of savage deflation. In 1980, for example, Wynne Godley predicted that the government’s fiscal policies would produce three million unemployed within three years. He was ignored by the monetarists – but time proved him right. For a time, the majority of social democrats also kept the Keynesian faith. The Alternative Economic Strategy that dominated Labour thinking in the early 1980s was a strange hybrid of state socialism and Keynesianism, combining pre-Keynesian Labour emphases on the ownership, control and planning of industry with a commitment to reflation. Although such a perspective has long since been abandoned by the Labour leadership, its Keynesianism survives in the ideas of many dissidents in the party, from Peter Shore on the right to Roger Berry on the left.

Ever since the collapse of the French Keynesian experiment, however, there have been growing doubts among social democrats about the feasibility of “Keynesianism in one country” because of the increasing globalisation of the economy. No medium-sized nation-state, the argument goes, can possibly hope to counter the power of the markets. If Keynesianism, in the old sense of demand management to secure full employment, is ever to work, it will have to be at a regional or even global level. Such a point of view is certainly in keeping with the spirit of Keynes himself. An early exponent of the need for coordinated international economic policies, particularly on interest and exchange rates, he was one of the architects of the Bretton Woods system of managed exchange rates that lasted into the early 1970s.

But there are major obstacles to the creation of the institutions necessary for regional Keynesian intervention, as Europe shows. European Commission president Jacques Delors’ plans for a modest European Union programme of public works to compensate for the deflationary effects of the Maastricht treaty were killed by conservative opposition – and with the electoral prospects for social-democratic parties poor in every major EU country except Britain, it is unlikely that anything like them will be put into practice for the foreseeable future. To make matters worse, there’s also the question of whether regional Keynesianism would work even if there were the political will for it at intergovernmental level. To Meghnad Desai, the pace and scope of globalisation are such that even regional attempts to manage demand are doomed, “What most people think of as Keynesian economics and Keynesian policy is dead,” he says bluntly.

And indeed, if Keynesianism is about expansionist demand management, many of today’s self-styled Keynesians don’t really deserve the name. Will Hutton, for example, whose The State We ‘re In has been the best-selling book on economics in years, argues that Keynes has been traduced by his systematisers and popularisers: he was actually far more important as an advocate of reforms that would change the ways in which investors behave than as the father of high public spending demand management. Other “new Keynesians” are primarily interested in supply-side policies for the labour market, a topic on which Keynesianism had little to say at the height of its influence. This trend is reflected in mainstream social democratic politics, where the current emphasis is on curing unemployment through education and training rather than bv boosting demand.

For these economists and politicians, the legacy of Keynes has not been properly understood: “what most people think of as Keynesian economics” is not what Keynes meant at all. Robert Skidelsky agrees with them. He insists that, far from encouraging inflation, Keynes was implacablv opposed to it – and he was not averse to the idea of imposing old-fashioned austerity if it got out of control. The General Theory was not the theoretical licence to print money that 1960s-stvle Keynesianism claimed it was,” he argues. Neither would Keynes himself have endorsed the massive extension of the role and powers of the state that has come to be associated with his ideas.

On this reading, Keynes is neither the hero whose brilliant reworking of economics saved capitalism from the business cycle, nor the villain whose ideas were responsible for the inflationary crisis of the 19708. Which is probably an accurate assessment – but hardly the stuff on which a revival of his influence will be made.

MISUNDERSTOOD OR OUTMODED?

“By bastardising Keynes into the simple advocacy of high government spending, both the right and the left secured important political objectives. The left was given the means to temper the Marxist/socialist tradition in British politics into a devotion to the idea of a high public spending social democracy, while the right translated Keynesianism straight into the tradition of paternalist intervention to preserve the status quo. It suited neither to interpret Keynesianism as it actually was: a demand for the state to change the behaviour of financiers and businessmen by prosecuting an active fiscal policy in tandem with an assault on the portfolio preferences of the financial institutions.”

WILL HUTTON The Revolution That Never Was, 1986

“Keynes saved capitalism from its worst crisis; it survived and revived and now has seen him off…The Gadarene volatile behaviour of thousands of operators on stock markets around the world imposes a real time constraint on governments. This is a discipline that is hard to fight against. Global coordination of economic policies may work to regulate these markets and global Keynesianism may be possible in theory. But such scenarios require a lot of consensus and a strong regulatory authority which can punish free-riders. We are a long way from that, much as we may wish otherwise.”

MEGHNAD DESAI What is Left of Keynes? 1994

“Keynesian policies come to us today wrapped up in a history of rising inflation, unsound public finance, expanding statism, collapsing corporatism, and general ungovernability, all of which have seemed inseparable fromthe Keynesian cure for the afflictions of industrial society. We do not want to traverse that path again. By the 1980s, Keynes, who was praised for having saved the world from Marxism, had joined Marx as the God that failed… If we are to draw a lesson from postwar historical experience, it is that Keynesianism works best as a discretionary resource in a rule-based framework which places strong constraints on the actions of governments and which promotes the well-being of peoples through the widest possible measures of free trade. Those who look for inspiration from Keynes today are more likely to be impressed by the care and thought which he gave to the design of the Bretton Woods system than with Keynesian prescriptions for the parochial diseases of individual economies.”

ROBERT SKIDELSKY Keynes, 1998

LISTENING WITH ONE EAR: KEYNES AND THE LEFT IN HIS LIFETIME

The history of Keynes influence on the left during his lifetime and on the Labour Party in particular, is complex. It began with his assault on the Versailles treaty’s insistence on punitive German reparations for war damage, The Economic Consequences of the Peace (1919). Keynes had resigned as a Treasury civil servant to write the pamphlet, which became a bestseller and according to his biographer Robert Skidelsky, made him “a hero of the left”: “Henceforth the intelligentsia of the left always listened with one ear to what Keynes was saying.”

But Keynes’ critique of laissez-faire economic orthodoxy from the mid-1920s, starting with his polemic against returning to the gold standard, A Tract on Monetary Reform (1923) at first found few takers in the Labour Party (let alone to its left). One reason was that Keynes was distrusted as a prominent member of the Liberal Party: in the late 1920s, he was the brains behind David Lloyd George’s radical Liberal programme for tackling unemployment, most famously spelt out in The Yellow Book: Britain’s Industrial Future in 1928.

Political tribalism was by no means the whole story, however. On one hand, the Labour leadership was unstintingly orthodox in its economics. The dominant figure in Labour economic policy-making in the 1920s was Philip Snowden, the chancellor of the exchequer in Ramsay Macdonald’s 1924 and 1929-31 Labour governments, a fierce proponent of free trade, low public spending and maintenance of the value of the currency. Keynes’s ideas were anathema to him. On the other hand, most of Snowden’s critics on the left took it as axiomatic that capitalism was on the verge of a fins-crisis and could not successfully be reformed. For them, Keynes’s alternative simply made no sense.

Not that Keynes thought much of Labour. Although he saw the potential for a Lib-Lab coalition, he disliked Labour’s class politics – “the class war will find me on the side of the educated bourgeoisie – and he was dismissive of the left’s anti-capitalism. “The Labour Party has got tied up with all sorts of encumbering and old-fashioned luggage,” he wrote in 1927. “They respond to anti-communist rubbish with anti-capitalist rubbish. The consequence of all that is that, whether in or out of office, the business of orderly evolution seems likely to remain with the Liberal Party.”

For all this, Keynes had sympathy with some of the ideas of the Independent Labour Party, which had at least realised that unemployment could be reduced by increasing the overall level of demand in the economy (although its policy ideas were far-removed from Keynes’s own). On the right of the Labour spectrum. Ernest Bevin, the general secretary of the Transport and General Workers Union, was close to Keynes on economic policy from the time of his warnings of the deflationary consequences of returning to the gold standard. And in Oswald Mosley, then a maverick Labour MP with a significant following on the left, Keynes had an articulate disciple who consistently advanced a programme of public works and monetary reform along the lines of Lloyd George’s proposals.

But Mosley flounced out of the Labour Party in early 1931, after the government rejected his pleas for protectionism and public spending to counter the effects of the slump that followed the 1929 Wall Street Crash. And the advice of Keynes and Bevin (who both sat on the Macmillan Committee on Finance and Industry set up by Snowden in 1929) was ignored by the government at every turn. In August 1931, Macdonald and Snowden infamously preferred to desert Labour to form a National government with the Tories and the laissez-faire wing of the Liberal Party, rather than deviate from plans for swingeing spending cuts, including reductions in unemployment benefit) as demanded by the bankers and the orthodox economists.

The general election that followed, which saw Labour reduced to 52 seats and the Lloyd George Liberals to four, was a sensational political victory for laissez-faire orthodoxy. But the debacle of 1931 also made Labour intellectuals much more receptive to Keynes as they struggled to understand what had gone wrong, and as he developed the over-arching economic theory that reached maturity in The General Theory of Employment, Interest and Money, published 60 years ago this month.

Well before The General Theory, Keynes’s polemical writings – he was a prolific contributor to newspapers and magazines, including the New Statesman, whose board he chaired after its merger with the Liberal Nation in 1931 – had had a profound effect on the “New Fabian” thinkers who were to play a key role in formulating the policies on which Labour won the 1945 election, among them G D H Cole, Hugh Dalton, Evan Durbin, Hugh Gaitskell and Douglas Jay. It was his magnum opus that realty made the difference, however. Cole described it in the New Statesman as the most important book on economics since Marx’s Capital: Jay embraced it enthusiastically in his widely read 1937 book, The Socialist Case.

Meanwhile, Keynes continued to contribute directly to Liberal thinking; and there were even some Tories who drew on his ideas (among them Harold Macmillan, whose The Middle Way was published in 1938). But it was in the United States, where President Franklin D Roosevelt’s New Deal programme for economic recovery drew heavily on his thinking, that Keynes’s impact in the1930s was greatest. In Britain it took the 1939-45 war for his influence to become pervasive.

Brought back to the Treasury after publishing How to Pay for the War in 1940, he played a central part in British wartime finance. He negotiated the Lend-Lease scheme with the US that provided Winston Churchill’s coalition government with arms after Britain’s money had run out, and in 1944 he was the chief British representative at the Bretton Woods conference that set up a managed postwar international currency system and brought about the World Bank and the International Monetary Fund.

After that, he negotiated the US loan that kept Britain afloat after the war had ended. Domestically Keynes played a significant role both in William Beveridge’s 1942 report that provided the blueprint for the postwar welfare state and in the 1944 White Paper on employment that famously accepted government responsibility for maintaining a high and stable level of employment. Earlier in 1944, someof Keynes’s most enthusiastic followers, among them Joan Robinson and Nicholas Kaldor, had drafted Labour’s own, much more explicit, policy document committing the party to full employment.

What Keynes’s influence on policy would have been had he lived longer has been the subject of much speculation. He was an adviser to the 1945 Labour government’s first chancellor, Hugh Dalton, and, according to Dalton’s biographer Ben Pimlott, his influence is discernable in Labour’s first two budgets to the extent that Dalton “accepted that fiscal policy could be used without qualms as a long-run full-employment weapon”.

Nevertheless, Dalton was by no means as enthusiastic a Keynesian as his successors. Keynes died of a heart attack in April 1946 at the age of 62 – before what can properly be termed the Keynesian era had really begun. (Paul Anderson)

New Statesman & Society, leader 16 February 1996

The Scott report should provoke more than ministerial resignations. It makes imperative a radical shake-up of British foreign policy and a new strategy to wean British industry off its reliance on the arms trade

The timing of the release of the Scott report on arms sales to Iraq is just about as bad as it could be for New Statesman & Society – yet more proof that there really is an international conspiracy to ensure that the most important events happen between NSS going to press and its reaching the newsstands. At least Robin Cook was granted three hours’ viewing of the report before publication: we have to comment sight unseen.

But that’s enough grumbling about the lot of the weekly magazine. Things could be much worse. Because Sir Richard Scott was explicit from the start about what he was looking into, and because the inquiry hearings were held in public, we have a pretty good idea of what is at stake.
It will be a big surprise, for example, if the report is not critical of the way that government ministers modified guidelines on arms sales to Iraq and then misled public and parliament about having done so. Similarly, it is almost inconceivable that Scott will not have harsh words for the ministers who signed Public Interest Immunity certificates in an attempt to prevent businessmen charged with selling arms to Iraq proving in court that they did so with the full support of the government.

Most commentary on the report in the days immediately following publication will be on these two aspects, not least because there is a real possibility – if the opposition plays its cards right – of securing at least one ministerial resignation. Most vulnerable is Chief Secretary to the Treasury William Waldegrave, one of the ministers who lied about the arms-sales guidelines being changed, closely followed by Attorney General Sir Nicholas Lyle, who was responsible for the PII certificates that could have sent innocent men to jail. Less likely to have to go are the ministers who unquestioningly signed the certificates, although they will certainly be severely embarrassed by what Scott has to say.

And of course, it’s quite right that the initial focus is on all this. Being found to have lied to parliament should be a resigning matter in any democracy, and the same goes for being discovered to have engaged (however unwittingly) in a course of action that might have ended in criminal convictions of innocent people. But we didn’t need the Scott inquiry to tell us that Tory ministers were guilty of such behaviour over arms-to-Iraq: the evidence was incontrovertible before the inquiry was set up, and the guilty men should have gone long ago. Resignations now would, of course, be welcome, but it would be more in character for the Tories shamelessly to tough it out.

In the longer term, what is most important about Scott is the spotlight he has turned on the deep assumptions of British foreign and industrial policy in recent years. In particular, he has exposed the central role of the arms trade in Britain’s relations with the outside world. If it was not clear before that the British government is prepared to do just about anything to secure overseas sales for British arms manufacturers, it is now.

So too is the short-sightedness of this whole approach and its corrupting effects on our political life. The arms-to-Iraq policy played a crucial role in encouraging Saddam Hussein to believe that there would be little resistance to an Iraqi invasion of Kuwait. Itwas all paidfor by British taxpayers, through the Export Credit Guarantee Department. And all the decisions pertaining to it were taken in secret, without the knowledge of parliament.

The lesson is simple: nothing short of a transformation of the whole culture of British foreign policy is now warranted, and it has to start with tackling the arms trade. The first step is clearer and firmer rules governing the export of arms, with a ban on sales of military and military-related equipment to countries with poor human-rights records (which includes Saudi Arabia and Indonesia, currently two of Britain’s biggest customers) and a much more effective licensing regime (not least to prevent the export of arms to blacklisted countries via others). Butthis is just a start. It needs to be accompanied by radical measures to destroy the culture of secrecy surrounding foreign affairs, and by a long-term industrial strategy to wean British manufacturers off their addiction to military markets.

This was just the sort of package that Labour promised during its “wilderness years”. These days, it’s more cautious. Although shadow foreign secretary Robin Cook has promised tougher guidelines on military exports, the idea of a policy to reduce British reliance on the arms business is just a little too dangerous for new Labour in the run-up to an election: too many jobs are at stake. Once it is in power, however, as British arms manufacturers are squeezed out of the shrinking world arms market by US competitors, silence will not be an option.

New Statesman & Society, 9 February 1996

Shadow foreign secretary Robin Cook didn’t really want his job and is now rumoured to be about to quit politics altogether. But Paul Anderson finds him as keen on taking on a ridiculous workload as he ever has been

For a man reported last week by the Daily Express to be so fed up with being snubbed by Tony Blair that he wanted to quit politics, shadow foreign secretary Robin Cook seems remarkably happy with his lot.

He is sitting in his Westminster office overlooking Whitehall, answering questions as confidently as ever. The phone rings three times as we talk, and twice it’s the leader’s office asking for help. Whatever the tensions in the Labour leadership as the election comes up, Cook is definitely in the loop. Blair knows that he needs Cook to keep the party’s soft left on board – and also for his remarkable skills in presenting arguments. Cook will have an exceptionally high-profile role in the next couple of months, simultaneously leading Labour’s response to the Scott report on arms sales to Iraq and pushing his party’s position in the run-up to the intergovernmental conference on European union. And he appears to relish the prospect.

Cook’s most pressing priority is Scott. He has been Labour’s leading protagonist on the arms-to-Iraq scandal since 1992, when as trade spokesperson his devastating parliamentary performances played a decisive role in forcing Prime Minister John Major to set up the inquiry under Lord Justice Sir Richard Scott, whose report will finally be published next week. Cook kept the Scott brief when he was shifted – against his preference – to the shadow foreign secretary’s job in 1994.

The report, which runs to four volumes and 2,000 pages, will be released at 3.30pm on 15 February – and the government has decreed that it will not be made available to the opposition (let alone the press) in advance of publication, even though ministers received copies this week.

“It’s a blatant attempt to manipulate media coverage in the government’s favour,” says Cook. “The Conservatives are desperate to limit the damage done by Scott, which is why Geoffrey Howe and others have been trying so hard to rubbish the inquiry. But they simply cannot get away from the fact that the scandal Scott has investigated took place under a Conservative government and involved Conservative ministers.”

Labour is sparing no effort to get the government to allow it to see the report before publication – and in the meantime is making as much as it can of leaks of early drafts that have already appeared in the media. Cook is particularly scathing about the extracts published by the Sunday Times last weekend, in which Chief Secretary to the Treasury William Waldegrave was excoriated by Scott for misleading parliament and the public about defence-related exports to Iraq when he was a junior Foreign Office minister. “If the final report includes anything like that sort of criticism, Waldegrave should resign,” he says.

The parliamentary debate on Scott, likely within a week of publication, will be a crucial set-piece, comparable to the Westland debate ten years ago, and Cook knows he cannot blow it. But the Tories are on the defensive, and they know that the best they can hope for is to weather the storm.

By contrast, on Europe, his other big brief, there is a surprising optimism on the Tory benches. John Major’s strategy since last summer’s leadership election, of marginalising the hardcore Eurosceptic right in the cabinet while getting the government to adopt a populist nationalist anti-European rhetoric, has served its cynical purpose better than most commentators expected. Although the most Europhile Tories, including Chancellor Kenneth Clarke, deplore it – and there remains a massive split even in the cabinet on economic and monetary union – there is growing confidence among the rest that they now have a good chance to make political capital out of Labour’s supposed “federalism” and willingness to kow-tow to Brussels.

Cook is unworried. He spent his first year as shadow foreign secretary repositioning Labour on Europe, and believes that the party policy he forged is more than robust and popular enough to withstand any Tory assault. “For a start,” he says, “it is simply absurd to describe us as federalists. Labour’s vision of Europe is of independent member-states voluntarily coming together to cooperate. We do not want to surrender our independence to some kind of super-state. At the same time, however, Britain will never get the best deal from Europe by remaining isolated. Being constantly the odd one out is a very difficult position to bargain from.” The new Labour line is a skilfully negotiated compromise between the party’s Eurosceptic and Euroenthusiast wings – and it looks a lot more likely to hold until the election than the Tories’ fragile peace. Labour’s Euro-rebels have been notable by their silence in the past year. But what does the Labour consensus mean in practice? To start with the most controversial issue for both parties,

Labour is in favour of economic and monetary union (EMU) – but not on any terms. It would back it only with the explicit consent of the British people (not necessarily a referendum: a general election “in which the public had a clear choice and the result was clear-cut” might settle it) and only at a reasonable price.

“I don’t think that anyone should underrate the very strong political will behind the creation of a single currency on the part of French president Jacques Chirac and German chancellor Helmut Kohl,” says Cook.” But there are undoubtedly problems with the Maastricht timetable for EMU. We can see the benefits of a single currency, but it can only work if there is real economic convergence among the participating countries – in terms of productivity, innovation and output, as well as public-sector deficits and inflation. Unless we get that, there has to be a question-mark over whether we will be able to give up for all time the right to devalue. Devaluation has been the way that Britain has compensated for its failure to compete over the past 30 years. It is not a strategy, but it does enable you to compensate for the failure of strategy.”

If there are echoes here of Bryan Gould and Peter Shore, the anti-European Labour Keynesians who were the most trenchant devaluationist opponents inside the party of its pro-Europe turn in the late 19805, they are faint. For Cook, the goal is not a go-it-alone economic policy, but a coordinated European attempt at reflation along the lines advocated by former European Commission president Jacques Delors in his (now-abandoned) programme to compensate for the Maastricht treaty’s deflationary consequences.

“For me the most important challenge facing Europe is how we reconnect with the peoples of Europe,” says Cook. “The problem with Maastricht is that the political elites became uncoupled from the concerns and aspirations of their peoples. We have got to get Europe back on to a people’s agenda, and the first priority is jobs.”

Sadly, he goes on, the Delors package has been lost – “largely because of sabotage and obstruction by the British Conservative government” – and there can be no return to its proposals: “They’re now four years old and Europe’s economies have moved on since then.” But “coordinated action to stimulate the economies of Europe and get them moving again” remains imperative.

“Maastricht committed every country to get its deficit down to 3 per cent, in other words to deflate. Delors rightly recognised that we needed to take compensatory measures if this was not to affect demand. In the past three years, Europe has been straining to meet the deficit criteria, but without any means to maintain demand. We have got to get that kind of reflationary package in place again to tackle unemployment.”

Not that some sort of Euro-Keynesian demand management is the whole story: there’s also the question of the quality of the jobs that Europe creates. Here, says Cook, “the specific issue for us is the government’s refusal to sign up for the social chapter. I am greatly entertained by the Tories’ intention to fight the next election promising that people in Britain will have fewer rights and worse working conditions than people on the continent.”

The social chapter, he continues, fits perfectly with Labour’s commitment to a “stakeholder society”, the “big idea” embraced by Tony Blair last month as Labour’s over-arching theme. “The Tories are barking up the wrong tree if they claim that the social chapter will compromise competitiveness. Its key commitment is to more consultation of workers. A workforce that knows the strategy of a company and is involved in drawing it up will be more committed to it and therefore more competitive. Continental companies with a culture of consensus and consultation have been able to implement long-term investment strategies – unlike most companies in Britain, where we have a culture of confrontation between management and the workforce and a tradition of keeping the workforce in the dark.”

If EMU and the social chapter are likely to be the European issues that figure most prominently in the election campaign, the most pressing question now is the forthcoming intergovernmental conference, the “follow-up-to-Maastricht” negotiations that will attempt to reach agreement on reform of the European Union’s political institutions and enlargement of the EU to include eastern Europe.

On the institutions, Cook says that the principle of Labour policy, set out in a document passed by its annual conference last year, is that “the European Commission should be accountable to the European Parliament, while the Council of Ministers should be more accountable to national parliaments”. Both national parliaments and the European Parliament should therefore be given more powers. Labour rejects the idea of a “two-tier” or “a la carte” Europe; wants majority voting in the Council of Ministers extended to cover social affairs, the environment and industrial policy, but not home affairs, taxation or security policy; and backs a simplification all round of the EU’s decision-making procedures.

But it is enlargement to the east, initially to Poland, Hungary, the Czech Republic, Slovakia and possibly Slovenia, that Cook thinks is the most important task of the IGC. “We need to ensure that the countries of central Europe go down the road of postwar western Europe, not that of the post-communist Balkans,” he says, although he is a realist about the problems of enlargement, both for existing members and for the central European countries. There is no way the existing EU could cope with enlargement without reform, he says: in particular, and the Common Agricultural Policy has to be radically changed if the demands of eastern-central Europe upon it are not to prove intolerable. On the other side, the east-central European countries will find the shock of opening up their inefficient economies to western European competition too much to bear if it is not carefully managed.

“Both sides need a period of adjustment,” says Cook. “One possible way forward is to put some more rungs on the ladder, to allow the countries of eastern-central Europe more gradual entry to the EU – so they could join a political union that is not a free-trade area, for example, and could then join a free-trade area without signing up for some aspects of economic and monetary union. Enlargement also means looking seriously at the EU’s institutions, which are still to a large degree those of a European Community of six and are not going to work with an EU of 26. We have to make sure that the institutions work more effectively and efficiently, and we need to improve democratic accountability.”

All of which amounts to a position as comprehensive as anyone would want, and there are few Labour dissidents who are prepared to break ranks on it this side of a general election. In the longer run, however, the tensions inherent in Labour’s Euro-policy could provoke real controversy. Even now, Labour’s Europhiles talk sotto voce of the incompatibility of EU enlargement and a Europe-wide strategy for jobs, while its Eurosceptics are uneasy about how far a Labour government would insist on its tough line on convergence conditions for EMU.

In other words, Cook has done the business in opposition – which is no mean feat given the depth of Labour feeling on Europe in recent years. In power, however, the story could be very different.

New Statesman & Society, 2 February 1996

The political philosopher John Gray has just published a pamphlet arguing that social democracy is obsolete. Paul Anderson finds out why

It isn’t easy in Britain to succeed both as an academic political philosopher and as apublic intellectual. But Oxford don John Gray has managed it with apparent ease for more than a decade.

He made his name in his thirties as the most urbane and sophisticated intellectual adherent in Britain of the early-1980s new right – but it was as a critic of its nostrums that he gained his current prominence. In a series of essays in the late 1980s and early 1990s, he moved further and further away from the neo-liberalism he had once embraced. Since he published his book Beyond the New Right in 1993, he has been a regular on the Guardian‘s op-ed pages and a willing participant in all sorts of left-leaning conferences and seminars.

Now, though, the new right’s most articulate renegade has sprung a new surprise. Just when his lazier admirers thought he was safe for Blairism, he has written a tract that consigns social democracy – a term he uses to cover everyone in British politics from Tory wets like Ian Gilmour to Labour left-wingers like Peter Hain – to the proverbial dustbin of history. “The postwar social-democratic settlement in Britain, and indeed in most other west European countries, has ceased to exist,” he says, “and it is now irrecoverable.”

It’s not that he has returned to his new-right past. The argument of After Social Democracy, published this week by the think-tank Demos, is anything but sympathetic to the neo-liberal project: indeed, Gray’s starting-point is the exhaustion of the free-market ideology that gripped Britain in the 19803. His case, however, is that the mainstream left alternative to that free-market ideology is just as worn out.

“The new realities that spell ruin for the social-democratic project are the billions of industrious and skilled workers released on to the global market by the communist collapse and the disappearance of any effective barriers to the global mobility of capital,” he writes. “In this changed historical circumstance, the central economic programme of social democracy is unworkable and social democracy itself a bankrupt project.”

Part of this position is, of course, accepted wisdom even on the mainstream left. Ever since the failure of Francois Mitterrand’s attempt at a radical Keynesian reflationary programme in France in the early 19805, the majority of thinking social democrats have recognised that the mobility of capital now makes it impossible for medium-sized nation-states to go it alone on macro-economic policy. And in the past five years, there has been a growing consensus, on the left as on the right, that western Europe already faces a serious challenge from the “tiger” economies of east Asia and will soon have more competition from high-skill, low-wage former-communist countries.

What makes Gray’s perspective different, however, is his insistence that there is no social-democratic way out. For a start, he dismisses the idea that a federal Europe could act as a counter to the forces of globalisation – the basis upon which most west European social democrats, including the British Labour Party, have backed “ever-closer union” – as “hopelessly Utopian”. “Social-democratic politics cannot be recovered at the level of European institutions,” he says. “Since the Maastricht treaty, Europe has taken a neo-liberal turn. Maastricht’s deflationary consequences make the whole federalist project difficult if not impossible to legitimate democratically – and I can’t see that changing. The idea that social-democratic institutions that have gone into decline at national level can be revived at the level of Europe seems to me to be a mirage.”

He is equally scathing about the idea, common in Labour circles these days, at least partly because of the influence of Will Hutton’s The State We’re In, that western Europe provides the British left with a model of capitalism that it can import wholesale. The “Rhine model of capitalism” is in trouble, says Gray, and in any case it is not really social-democratic. Most important, “it relies on cultural traditions of consensual managerial politics that are absent in the individualist Anglo-Saxon model,” he says.

So what is the alternative? Gray favours an approach he calls “communitarian liberalism”, an idea rooted in the anti-rationalist thinking spelt out in his philosophical work, most recently in the book Enlightenment’s Wake. Like all communitarians, he rejects the abstract individualism of most liberal political theory (which is also assumed by most social-democratic perspectives on social justice): people cannot be understood as atomised individuals but are essentially social beings, rooted in families and communities. At the same time, however, he also rejects the view of more extreme communitarians that individual autonomy is no more than a myth.

“Communitarian liberalism departs from individualist liberalisms in that it conceives of choosing individuals as themselves creations of forms of common life,” he writes in the pamphlet. “It rejects the libertarian view that individual choice must always be paramount over every other human need and interest. It differs from conservative and neo-traditionalist communitarianisms by acknowledging the strength and urgency of the need for individual autonomy. Few of us are defined by membership of a single, all-embracing community, and there is no going back to any simpler, ‘organic’ way of life. It differs from social democracy by rejecting the egalitarian imposition of a single conception of justice in all contexts of economic and social life.”

Gray says that what is most important about communitarian liberalism in public policy terms is its insistence that market freedoms have a purely instrumental value, as a means to individual and community well-being. Where the impact of markets on individual autonomy or community life is disabling, competition must be limited. And where the popular consensus is that fairness demands the exclusion of the market – for example in health-care and education – the market should be excluded.

All of which is fine where there is a popular consensus on what is fair, but what if there isn’t – as with selection in schooling (which Gray favours) or welfare reform, where there is both a growing consensus that the social exclusion created by mass unemployment must be ended and also radical conflict over the best means of doing it? For Gray, there’s no point in appealing to some overarching notion of what is just: it’s a matter of conflicting ideas of fairness battling it out politically, appealing to common sense, negotiating compromises if necessary and resolving issues where compromise is impossible (and there will inevitably be many) through majoritarian decision-making.

On the future of the welfare state, for example, Gray argues that common-sense notions of “just deserts” rule out the idea of a citizen’s income as a means of ensuring social inclusion – it would be generally seen as giving people “something for nothing” – but make attractive the other much-touted welfare innovation, a compulsory savings scheme to fund pensions and other benefits. But he accepts that advocates of citizen’s income can appeal to different common-sense notions of fairness, and that, in the end, the only way of resolving the conflict is through collective political choice.

” I think it is crucial that we give greater weight to the political sphere than much recent political thought does,” he says. “Squeezing down the democratic domain to a very narrow space by trying to hive off political decisions to market forces or legal arbitration simply does not work. And to give greater weight to the political sphere, we need to make our political institutions, particularly political parties, more representative. I am strongly in favour of electoral reform, not as some subordinate element in a programme of constitutional reform, other parts of which would have the effect of stripping the political realm of its significance, but as the necessary condition of a new political settlement. The Charter 88 view of constitutional reform, valuable as it was under Thatcherism, is animated in part by a legalist conception of government in which the most important thing is to protect rights-holders from collective decision-making. The idea that these important areas of human well-being should be removed from the political process is a fundamental error.”

So does Gray see any sign that British political discourse is taking on board his perspective? He points to the output of Demos and the writing of Anthony Gid-dens, and says that the current debate over the lessons to be learned from the east Asian “tigers”, however crude it has been, “has at least displaced the parochialism of British political culture”. But, he goes on: “There’s a notable cultural lag in British political life, partly accounted for by the stubborn strength of fixed positions in our major parties. Most people are still tracking a world we have lost.”

WHAT’S IN A WORD?

The British left is uneasy with the idea of “social democracy” – but it needs to take it, and reports of its demise, deadly seriously, writes Paul Anderson

“Social democracy” is not an easy term to throw around in British politics. In most of continental Europe, outside Leninist circles, it has long been more-or-less synonymous with “socialism”-and it used to be in Britain too. For most of the past 40 years, however, it has meant something quite different here.

No matter that, in continental European terms, Labour has always been a social democratic party, with its left as deserving of the label as its right-from the late 1950s until what became the Social Democratic Party split from Labour in 1981, the tag “social democracy” functioned in Britain as a means of distinguishing left and right in the Labour Party.

The right, who called themselves social democrats, believed in a mixed economy, Keynesianism and the Atlantic alliance; the left, who called themselves democratic socialists, wanted more nationalisation and tended to be sceptical about Atlanticism. (The other great foreign policy question, Europe, was not a defining feature at first: both camps were split.)

In practice, the differences were of degree rather than of kind: as the experience of the 1964-70 and 1974-79 Labour governments went to show, what “social democrats” and “democratic socialists” did when they got into government and confronted the real constraints on their freedom of action was pretty much the same. But at least the nomenclature served as shorthand for real political divergences. After the SDP left Labour, “social democracy” became little more than a term of Labour Party abuse.

For several years, Labour loyalists, regardless of their views, described themselves as “democratic socialists”: not even the most right-wing Labourites dared describe themselves associal democrats. Meanwhile, the SDP under David Owen abandoned most of the policies that had once beenthedefiningfeaturesofLabour’sself-styledsocialdemocratsinfavourofanout-and-out neo-liberalism.

Recently, however, linguistic sanity has made a comeback. Although Neil Kinnock and John Smith were reticent about calling themselves social democrats, Tony Blair is not. Increasingly, “social democracy” stands in British political discourse not for the views of a faction of the Labour Party (let alone those of a small centrist splinter party) but for the broad approach to economic and social policy .adopted by Labour and its sister parties in western Europe and the rest of the industrial world since 1945.

But that’s just the beginning of the problem. If it’s now more acceptable than at any time in 40 years to describe Labour as a social democratic party, what social democracy means in practice has changed a great deal in the past 20 years.

Until the mid-1970s, if you stripped away the British left’s difficulties with the words, what it meant to be a social democrat was simple. You backed broadly Keynesian economic policies to maintain full employment, egalitarian taxation, expansion of the welfare state, corporatist management of industrial relations and a substantial state sector in the economy.

But then something started to go badly wrong. In the wake of the first oil shock, social democratic governments throughout Europe found themselves facing crises of inflation and unemployment simultaneously-just what was not supposed to happen with Keynesian economics. One by one, they were forced to adopt austerity policies that owed more to the new right than to orthodox social-democratic thinking. The final straw was the collapse of the French socialists’ Keynesian expansionist experiment in 1983 after the revolt of the financial markets. Since then, there have been few social democratic governments in the west European heartland of social democracy-and not one anywhere in the world has dared to mess with the imperatives of global capital. Most have adopted prudent, privatising economic policies barely distinguishable from those of the right.

So is social democracy dead, as John Gray and others claim? Certainly, 1960s-style “Keynesianism in one country” has few advocates anywhere. Nor are there many enthusiasts for corporatism these days outside those countries – notably Germany – where it is culturally entrenched.

But the notion that Europe, with its extra weight in the world economy, could take over from the medium-sized nation-state as Keynesian manager is still just-about alive. Despite the EU’s effective abandonment of the Delors plan to compensate for the deflationary effects of monetary union under the Maastricht treaty, there is still some hope in European social democratic circles that the Eurokeynesian dream can be revived.

There are also signs of life in social-democratic redistributive taxation, despite the now-general fears of “taxpayer revolt” that have been stoked by the scale of welfare payments in the context of mass unemployment and an ageing population. In an insecure era, the argument goes, taxation fo rwelfare spending will regain popularity.

Is all this clutching at straws? Gray is not alone in thinking that it is – but we won’t really know until a social democratic party wins an election in one of Europe’s bigger countries. As things stand, the most likely place for that to happen is Britain. It’s not just here that Tony Blair’s progress will be noted with interest.