Miliband has reaffirmed the original neoliberal ideal

The early neoliberals recognised the need for a strong state to challenge private monopolies.

Last year, Ed Miliband proclaimed the neoliberal era of the last thirty years to be over when he argued that “responsible capitalism” should be instituted to promote producers and prevent economic predators. This year, the Labour leader’s challenge was to communicate how this path could be developed in a language that people can understand. His chosen idea was Disraeli’s “One Nation”, but the vision for the economy set out in Manchester drew upon a surprising source: the German Soziale Marktwirstschaft (the social market economy). In fact, in pronouncing the death of Anglo-American neoliberalism, the Labour leader has rediscovered the original European neoliberal idea.

In interwar Europe, a group of intellectuals from Freiburg, Vienna, Paris, London and Manchester reformulated liberalism. They advocated a strong state to prevent concentrations of economic power, “whether through cartels, trusts or giant enterprise”, in the words of Harvard Political Scientist Carl Friedrich. As Stephanie Flanders showed last week in her programme, Masters of Money, Friedrich Hayek was the leader of these early neoliberals. But instead of the Austrian business-cycle theory with which Hayek famously opposed Keynes, the group’s main aim was a new middle way between laissez-faire and economic planning. It was a vision that its adherents, including Hayek, saw as entirely compatible with a basic social security safety net.

In 1948, this early form of European neoliberalism entered power in Germany. Ludwig Erhard, a member of Hayek’s Mont Pelerin Society (founded in 1947) became finance minister under the Chancellorship of Konrad Adenauer. German neoliberalism was characterised by a firm commitment that the economic benefits of competition as guaranteed by the state were balanced with the solution of social problems. This included a robust welfare state, worker involvement in the management of companies (“codetermination”), and a strong trade union movement, which saw its role as protecting jobs.

As the German Social Democratic Party signed up to a neoliberal approach through the Godesburg Programme of 1959, free market ideas travelled across the Atlantic. In the United States, neoliberalism turned into an uncompromising creed of market fundamentalism. This movement, led by Milton Friedman and the Chicago School on the one hand, and by James Buchanan and the Virginia School on the other, inspired, among other things, monetarism, privatisation, and the introduction of market-style incentives into public services and administration under Thatcher and Reagan. This brand of neoliberalism most famously advocated the economic and financial deregulation that led ultimately to 2008. The original European neoliberal preoccupation with competition and the targeting of monopoly (as well as its concurrent pursuit of social justice) was almost entirely absent from the priorities of its transatlantic cousin.

Thus, in expressing his confidence that people are sick of the ‘greed is good’ culture brought about by the unconditional embrace of free markets since the 1980s, the Labour leader has given voice to a visceral popular anger at the excesses of finance capital. Although he has signalled the abandonment by Labour of many of the tropes of Anglo-American neoliberalism, Miliband has championed some important pillars of German neoliberalism as he attempts to flesh out the meaning of “responsible capitalism”.

In his speech in Manchester, Miliband said he would use procurement rules to encourage a more long-term culture among business by rewarding those who offer apprenticeships and vocational training with government contracts. In the past year, he has proposed worker representation and “codetermination” for British companies to tackle excessive executive pay and bonuses. On Sunday’s Andrew Marr Show, the Labour leader supported the German trade union model of protecting jobs. Most importantly, in pushing the gimmicky-sounding “predistribution”, a term coined by Yale Political Scientist Jacob Hacker, Miliband has embraced one of the most important insights of the German neoliberals: the crucial role of the state in designing the rules of the economy to achieve particular goals. As Miliband said on Tuesday, this means, for example, changing the rules and incentives in areas such as corporate takeovers or the promotion of a living wage.

Now, for the early neoliberals the aim of the state was the achievement and maintenance of competition. For Miliband and the Labour Party there is a fundamental difference, which adds an exciting twist to their new agenda. In place of competition, “responsible capitalism” substitutes the reduction of inequality, a fairer distribution of wealth and power and increased opportunity for all as its central aims. Moreover, the lesson of the German experience is that with a political will, there is a real alternative to the Anglo-American neoliberalism of Thatcher and Reagan.

Daniel Stedman Jones is a barrister practising in London. His book on the history of neoliberalism, Masters of the Universe, is published this month by Princeton University Press.

Ed Miliband sings at the conclusion of the annual Labour Party conference in Manchester. Photograph: Getty Images.

Daniel Stedman Jones is a barrister practising in London, and the author of Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics.

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Westminster terror: Parliament hit by deadly attack

The Met Police is treating the events in Westminster as a "terrorist incident". 

A terrorist attack outside Parliament in Westminster has left four dead, plus the attacker, and injured at least 40 others. 

Police shot dead a man who attacked officers in front of the parliament building in London, after a grey 4x4 mowed down more than a dozen people on Westminster Bridge.

At least two people died on the bridge, and a number of others were seriously hurt, according to the BBC. The victims are understood to include a group of French teenagers. 

Journalists at the scene saw a police officer being stabbed outside Parliament, who was later confirmed to have died. His name was confirmed late on Wednesday night as Keith Palmer, 48.

The assailant was shot by other officers, and is also dead. The Met Police confirmed they are treating the events as a "terrorist incident". There was one assailant, whose identity is known to the police but has not yet been released. 

Theresa May gave a statement outside Number 10 after chairing a COBRA committee. "The terrorists chose to strike at the heart of our Capital City, where people of all nationalities, religions and cultures come together to celebrate the values of liberty, democracy and freedom of speech," she said.

London Mayor Sadiq Khan has tweeted his thanks for the "tremendous bravery" of the emergency services. 

Labour leader Jeremy Corbyn also released a short statement. He said: "Reports suggest the ongoing incident in Westminster this afternoon is extremely serious. Our thoughts are with the victims of this horrific attack, their families and friends. The police and security staff have taken swift action to ensure the safety of the public, MPs and staff, and we are grateful to them."

After the incident this afternoon, journalists shared footage of injured people in the street, and pictures of a car which crashed into the railings outside Big Ben. After the shots rang out, Parliament was placed under lockdown, with the main rooms including the Commons Chamber and the tearoom sealed off. The streets around Parliament were also cordoned off and Westminster Tube station was closed. 

Those caught up in the incident include visitors to Parliament, such as schoolchildren, who spent the afternoon trapped alongside politicians and political journalists. Hours after the incident, the security services began evacuating MPs and others trapped inside Parliament in small groups. 

The MP Richard Benyon tweeted: "We are locked in Chamber of House of Commons." Shadow education secretary Angela Rayner tweeted: "I'm inside Parliament and me and my staff are safe."

The MP Jo Stevens was one of the first to confirm reports that a police officer had been attacked. She tweeted: "We've just been told a police officer here has been stabbed & the assailant shot."

George Eaton, the New Statesman politics editor, was in the building. He has written about his experience here:

From the window of the parliamentary Press Gallery, I have just seen police shoot a man who charged at officers while carrying what appeared to be a knife. A large crowd was seen fleeing the man before he entered the parliamentary estate. After several officers evaded him he was swiftly shot by armed police. Ministers have been evacuated and journalists ordered to remain at their desks.   

According to The Telegraph, foreign minister Tobias Ellwood, a former soldier, tried to resucitate the police officer who later died. Meanwhile another MP, Mary Creagh, who was going into Westminster to vote, managed to persuade the Westminster tube staff to shut down the station and prevent tourists from wandering on to the scene of the attack. 

A helicopter, ambulances and paramedics soon crowded the scene. There were reports of many badly injured victims. However, one woman was pulled from the River Thames alive.

MPs trapped inside the building shared messages of sympathy for the victims on Westminster Bridge, and in defence of democracy. The Labour MP Jon Trickett has tweeted that "democracy will not be intimidated". MPs in the Chamber stood up to witness the removal of the mace, the symbol of Parliamentary democracy, which symbolises that Parliament is adjourned. 

Brendan Cox, the widower of the late, murdered MP Jo Cox, has tweeted: "Whoever has attacked our parliament for whatever motive will not succeed in dividing us. All of my thoughts with those injured."

Hillary Benn, the Labour MP, has released a video from inside Parliament conveying a message from MPs to the families of the victims.

Former Prime Minister David Cameron has also expressed his sympathy. 

While many MPs praised the security services, they also seemed stunned by the surreal scenes inside Parliament, where counter-terrorism police led evacuations. 

Those trapped inside Parliament included 40 children visiting on a school trip, and a group of boxers, according to the Press Association's Laura Harding. The teachers tried to distract the children by leading them in song and giving them lessons about Parliament. 

In Scotland, the debate over whether to have a second independence referendum initially continued, despite the news, amid bolstered security. After pressure from Labour leader Kezia Dugdale, the session was later suspended. First Minister Nicola Sturgeon tweeted that her "thoughts are with everyone in and around Westminster". The Welsh Assembly also suspended proceedings. 

A spokesman for New Scotland Yard, the police headquarters, said: "There is an ongoing investigation led by the counter-terrorism command and we would ask anybody who has images or film of the incident to pass it onto police. We know there are a number of casualties, including police officers, but at this stage we cannot confirm numbers or the nature of these injuries."

Three students from a high school from Concarneau, Britanny, were among the people hurt on the bridge, according to French local newspaper Le Telegramme (translated by my colleague Pauline). They were walking when the car hit them, and are understood to be in a critical condition. 

The French Prime Minister Bernard Cazeneuve has also tweeted his solidarity with the UK and the victims, saying: "Solidarity with our British friends, terribly hit, our full support to the French high schoolers who are hurt, to their families and schoolmates."

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.