Trade unions: No room for romance

Economists don't dominate British politics. In fact, they aren't listened to enough.

Jon Cruddas launching his deputy leadership bid in 2007. Photograph: Getty Images

Whatever happened to the passion of post-war British politics?

What became of: "U-turn if you want to"?; of "The only limits of power are the bounds of belief"?; of Arthur Scargill and Jimmy Reid? Of the drys and the wets? Of volatile picket lines and rousing demos? And beyond our shores, where are the Mitterands, Kohls, Gorbachevs and de Klerks of today? The Occupy movement swept loudly across the globe – and there’s not a soundbite to show for it.

Perhaps 24-hour news channels and social media make it easier to communicate policy without using impassioned oratory to create a memorable message. But it is more fundamental than that: mainstream politics itself has moved to the centre. Blair and Cameron dragged their respective parties kicking and screaming into the centre ground, because it is where the votes are. For Blair’s New Labour, this meant shaking off the stereotypes of socialism; for Cameron, the "nasty party" image. And recently, there is a more potent force at work:

Economics.

When times are good, economists are seen as tweed-wearing philosophers, their Nobel prizes viewed alongside those for Literature and Peace. When confident, efficient markets are creating growth, there is no need for academic theorists.

But as soon as recession looms, they are dusted off and brought out as scientific advisers, their theories and models no less venerated than those that uncovered the Higgs boson. Radical party ideologies take a back seat to the rational, value-free, scientific rigour of the dismal science. Already, Greece and Italy have surrendered their governments to economic technocrats.

Ironically, the economics profession itself is growing healthily. In the 1930s, following the Great Depression, enrollments in economics degrees shot up, and a recent paper shows that this trend has been replicated after the latest global financial crisis (the author is a guilty passenger on this bandwagon). Both The Economist and the Financial Times have reported record circulation figures this year.

So if the science of economics reigns in Westminster today, what kind of policies should we expect?

The central tenet of economics is the efficient allocation of resources. Therefore we might expect Government to become a vehicle for cost-benefit analyses and utilitarian policies. But Britain still has a fully elected government – shouldn’t it govern according to the ideology those who elected it expected? Economics tries to be value free. But governments are supposed to make value judgements; to select policies that their voters have given them a mandate to enact – and the vast majority of voters are not economists.

However, for the time being, polls continue to show that fixing the economy is by far the most important issue to voters. This gives both sides of the political spectrum a unique opportunity.

Just as the nationalistic protectionism of the 1930s plunged the world economy into a depression, so the ideological policies of the last 30 years are to blame for much of the recent global crisis. The Euro project ignored decades of economic theory in order to pursue a political utopia. Freddie Mac and Fannie Mae were lent on by politicians to provide mortgages for poor people who clearly couldn’t afford them. And the banks were allowed to dish out leveraged loans and investments like punch at a party. A rational government would and should have made the unpopular decision to take the punchbowl away, but as Professor Brian Cox said this week on, well, This Week: "you might make it that you have to base your policies on evidence… but that would make it very hard to get elected".

Never has the time been better to change that. Just as businesses have recently had to make efficiency savings, so political parties should prune ideological policies that fly in the face of economic rationale. Joseph Schumpeter’s mantra of "creative destruction" should be applied to beliefs.

For the Tory party, this might mean ditching the Euroscepticism; the single market- and the immigration that comes with it- is an asset to this country. But far more pertinently, the time is right for Labour to renegotiate its relationship with the trade unions.

Try a Google search of the following terms: "economic benefits of immigration" – over 50,000 results; "economic benefits of the euro" – almost 3 million results; "economic benefits of trade unions" – just one result.

Trade unions force up wages meaning that employers can employ less people – they increase unemployment. This might seem against the grain of socialism but when viewed from a rational economic perspective it makes perfect sense: as long as the workers that have paid their Union fees get a better deal, why should Union bosses care about the wider economy?

This is especially important for one economist in particular: Ed Miliband. His speech at last Saturday’s Fabian conference was preceded by a Q&A with Jon Cruddas who spoke of the two sides of the Labour Party; the rational, pragmatic side of Progress and the Fabians and the "romantic" socialist side of the Trade unions.

As the dull, calculated rationale of economics continues to proliferate, there is little room in politics for romance or passion. And that is no bad thing. Most of us mere mortals are more concerned with employment and cheque-writing than empowerment and speech-writing.

For Ed Miliband, his love may long have been a red, red rose, but the time has come for that rose to be pruned.