Show Hide image

The New Depression

The business and political elite are flying blind. This is the mother of all economic crises. It has

We are living through a crisis which, from the collapse of Northern Rock and the first intimations of the credit crunch, nobody has been able to understand, let alone grasp its potential ramifications. Each attempt to deal with the crisis has rapidly been consumed by an irresistible and ever-worsening reality. So it was with Northern Rock. So it was with the attempt to recapitalise the banks. And so it will be with the latest gamut of measures. The British government – like every other government – is perpetually on the back foot, constantly running to catch up. There are two reasons. First, the underlying scale of the crisis is so great and so unfamiliar – and, furthermore, often concealed within the balance sheets of the banks and other financial institutions. Second, the crisis has undermined all the ideological assumptions that have underpinned government policy and political discourse over the past 30 years. As a result, the political and business elite are flying blind. This is the mother of all postwar crises, which has barely started and remains out of control. Its end – the timing and the complexion – is unknown.

Crises that change the course of history and transform political assumptions are rare events. The last came in the second half of the 1970s, triggered by the Opec oil price spike and a dramatic rise in inflation, which marked the end of the long postwar boom. Its political consequences were far-reaching: the closure of the social democratic era, the rise of neoliberalism, the discrediting of the state, the embrace of the market, the undermining of the public ethos and the espousal of rampant individualism. For the next 30 years, neoliberalism - the belief in the market rather then the state, the individual rather than the social - exercised a hegemonic influence over British politics, with the creation of New Labour signalling an abject surrender to the new orthodoxy.

The modalities of this present crisis are entirely different. Extreme as they may have appeared to be at the time, the economic travails of the 1970s were progressive rather than cataclysmic. The old system did not hit the wall, but became increasingly mired and ineffectual. What swept the social democratic era away was not the force de frappe of an irresistible crisis but that it was accompanied by the steady rise of a new ideology and political force in Thatcherism - and Reaganism in the United States - and its victory in the 1979 general election.

In contrast, the financial meltdown of 2007-2008 demolished the neoliberal era and its assumptions with a suddenness and irresistibility that was breathtaking. The political class, from New Labour to the Conservatives, is standing naked. They are still clinging to the wreckage of their old ideas while acknowledging in the next breath that these no longer work. The financial crisis is a matter of force majeure; political ideas and discourse change much more slowly, even when it is obvious that the old ways of thinking have become obsolete. Meanwhile, there is no political alternative waiting in the wings, refining its radical ideas in think tanks ready to storm the citadels of power as there was in the 1970s, notwithstanding the fact that think tanks are now far thicker on the ground. Instead, it has been the mainstream which senses that neoliberalism no longer works, fatally undermined by events and, ultimately, the author of its own downfall. This crisis will have the most profound and far-reaching political consequences and will in due course transform the political landscape, but it remains entirely unclear in what ways and when that might be.

In all these senses the financial meltdown has far more in common with the Great Depression than the Great Inflation. When the financial crisis consumed Wall Street in 1929 and proceeded to undermine the real economy, engulfing Europe in the process, it was not accompanied by a radical shift towards Keynesianism, but rather a reassertion of sound finance orthodoxy, followed in due course by the adoption of protectionism. The political mainstream as represented by Labour's Ramsay MacDonald and Philip Snowden and the Conservative Stanley Baldwin all sang from the same hymn sheet. Only Keynes and a faction of the Liberal Party enunciated a plausible alternative. Eventually a programme of fiscal deficits and public works was pursued by Franklin D Roosevelt in the United States, but in Britain Keynesianism was not properly embraced until rearmament and the approach of war. Indeed, it was not until 1945 that the combined legacy of war and the Depression belatedly resulted in a fundamental political realignment and the birth of the social democratic era.

The Grim Reaper has finally spoken:

a boom pumped up by credit steroids and a bust that takes us back to the 1930s

Since the financial meltdown dramatically intensified in September 2008, Gordon Brown has managed to ride the economic storm rather more successfully than the Conservatives, or, for that matter, than Tony Blair would have done. It is Vincent Cable, the Liberal Democrats' econo­mics spokesman, however, who has indubitably emerged as the political sage, unafraid of confronting neoliberalism's shibboleths, demonstrating a clarity of mind and the political courage to tell things as they are, in a way that has escaped all other prominent politicians. Although Brown was the economic architect of the past decade and was responsible, more than anyone else, for its excesses and was shaping up to be a rather disastrous Prime Minister, he displayed last autumn, at least initially, an agility of mind and nimbleness of foot that defied the expectations of those who believed he was capable of neither. He revelled in the sense of purpose and vision offered by the crisis, seemingly prepared to jettison the thinking that had imbued his previous decade as chancellor.

But Package Part I, widely hailed at the time and imitated elsewhere, proved woefully inadequate, and the financial system remains frozen. Meanwhile the waters are rising up the Good Ship UK, threatening to transform the banking crisis into a fiscal and currency crisis. It seems unlikely that, if that should happen, Brown will survive the next election.

Even if it does not happen, Brown faces a serious problem about his own past role, because Britain’s crisis has been greatly exacerbated by the soft-touch regulation, easy credit, runaway house inflation and overexpansion of financial services over which he presided and for which he is accountable. So far he has refused to admit or accept responsibility for his actions – he initially had the temerity (or foolhardiness) to argue that the UK was better placed than other countries to deal with the credit crunch, even though it has become abundantly clear since that the very opposite was the case. So while Brown remains in denial, the plausibility of his new turn, and his understanding of what is entailed, must be seriously doubted.

Indeed, after its initial boldness, the government now seems trapped by its past actions and its former ways of thinking. Brown's failure to accept the need to nationalise the banks suggests the limits of his new-found political courage, and his inability to embrace the logic and imperatives of the new situation. He is still a prisoner of his old timidity and his conversion to the neoliberal cause. It is his good fortune that the Cameron Conservatives have been hugely wanting in their response to the financial meltdown. Having spent his first years as leader of the opposition seeking to reassure the country of his centrist credentials, David Cameron, at the first whiff of gunfire, has turned on his heels, rejected Keynesianism and, at the very moment when events have shown Thatcherism to be deeply flawed and historically out of time, headed back to the Thatcherite womb of sound finance, arguing that a government must balance its books and that deficit financing, Keynesian-style, is reckless and irresponsible.

But all this, it must be said, is the small change of politics. The crisis threatens in time to sweep away the political world as we know it and those who fail to grasp its magnitude and meaning. Far more is at stake than the fortunes of a few leaders, be their name Brown or Cameron. Who knows where things will be this time next month, let alone next year or, indeed, in 2012? The financial meltdown now rapidly plunging the western world into what increasingly looks like a depression is the first great crisis of globalisation. There was plenty of warning. The Asian financial crisis of 1997-98 proved a salutary lesson about the dangers posed by huge capital movements that were subject to precious little regulatory control. Three economies capsized (South Korea, Thailand and Indonesia) and others stood on the brink.

There were other earlier warning signs, notably Mexico in 1995, when GDP fell by 9 per cent and industrial production by 15 per cent, following a run on the peso. These crises were blamed on the immaturity and fecklessness of national governments - in the case of east Asia on so-called crony capitalism (which, incidentally, prompts the question of how we should describe Anglo-American capitalism) - which the International Monetary Fund obliged to engage in swingeing cuts in public expenditure as a condition of their bailouts.

Yet what if such a crisis were to be no longer confined to the peripheries of global capitalism but instead struck at its heartlands? Now we know the answer. The crisis has enveloped the whole world like an uncontrollable virus, spreading from the US and within a handful of months assuming global proportions, at the same time mutating with frightening speed from a financial crisis into a fully fledged economic crisis. In so doing, it has undermined the foundations on which the present era of globalisation has been built, namely scant regulation, the free movement of capital, a bloated financial sector and immense reward for greed, thereby bringing into question the survival of globalisation as we now know it.

Enormous international flows of unregulated capital have capsized the international financial system - with disastrous consequences for the real economy - in a manner akin to the effect of a roll-on, roll-off ferry shipping too much water. We can now see the cost of free-market capitalism and light-touch regulation. Iceland may provide an extreme example of the consequences of the credit crunch but it also illustrates the dangers facing the more vulnerable economies, the UK included, in a deregulated world where the market rules: a small, open economy; a large, internationally exposed banking sector; an independent currency that is not a serious global reserve currency (of which there are only three); and limited fiscal strength. These propositions have constituted the core economic beliefs - from Thatcher and Lawson to Blair and Brown - that have informed policymaking over the past three decades and without which, it was claimed ad nauseam, an economy could not succeed. Heavy-handed regulation and an overbearing state would serve only to frighten off capital and condemn a country to slow growth, stagnation and global marginality. Now we know the fallaciousness of these claims and the consequences of "letting the market decide".

Like Iceland, albeit not as extremely, Britain has been living in a fool's paradise. A failure to regulate the banks and other financial institutions in any meaningful fashion allowed bankers to behave in a grossly irresponsible and avaricious fashion; a boom that was made possible only by a government-enabled credit binge in which people borrowed recklessly; a bloated financial sector that grew to represent over 8 per cent of the total economy and which was found to have been built on foundations of sand; an overvalued currency that made manufacturing exports uncompetitive and thereby resulted in an unnecessary and counterproductive contraction in the manufacturing sector which must now be reversed; an absurd belief that boom and bust had been banished for ever, allowing the banks to turn a blind eye to the inflating of various asset bubbles and display a profound ignorance of the history of capitalism; a persistently chronic current account deficit that can no longer be compensated for by inward capital flows; monstrous salaries for those at the top of the financial and corporate tree, which were justified in terms of a trickle-down effect that remained a chimera, and as the reward for risk which was, in fact, a reward for greed and failure; growing inequality, which was justified in the name of a more competitive economy accompanied by declining social mobility in the cause of an open and flexible labour market; and, finally, the mushrooming of what can only be described as systemic corruption on a mega-scale as the state ignored the gargantuan abuses of those who ran the banks and other financial institutions, while regulatory authorities willingly colluded in their excesses.

This is the sad story of the New Labour era.

The ultimate cost of this debacle as yet remains unknown. What began as a financial crisis is threatening, as the government seeks to bail out a bankrupt financial sector, to become a currency crisis, with foreign investors concerned about the effects this might have on the value of sterling, and perhaps even worse, ultimately a sovereign debt crisis, with growing doubts about the UK’s financial viability. Until there is some end in sight to the financial crisis, and a line can be drawn under the banks’ indebtedness, we will not know the answer to these questions. One thing is clear, however: whatever the limitations of the social democratic era, it was never responsible for such an all-enveloping and cataclysmic crisis as the one that the neoliberal era – and the Thatcherites and New Labour – have managed to produce. After all the boasting about the virtues of the Anglo-American model of capitalism, the Grim Reaper has finally spoken: a boom pumped up by credit steroids and a bust that takes us back to the 1930s.

There are two key aspects to this crisis: national and global, with the latter promising to be rather solutions are concerned, we are in uncharted territory, with close to zero interest rates, a Keynesian-style fiscal boost that may prove inadequate to the task and could well fail, a hugely indebted financial sector that threatens to leave us with an enormous future tax burden and a greatly expanded national debt. All of this, furthermore, must be addressed in the context of an open-market regime which is very different from those of previous eras, and which could render Keynesian-style national solutions ineffectual. What would greatly assist any national recovery is a co-ordinated global response to the crisis; in other words, global co-operation at the highest level. This cannot be ruled out, but it would be a brave person that would bet on it. It was exactly the lack of international co-operation that bedevilled recovery in the 1930s and eventually led to the Balkanisation of the world into regional currency and trading blocs.

The most important single question in this context is the relationship between the US and China. Will the Obama administration be able to resist the slippery slope of creeping protectionism? Will arguments over the revaluation of the Chinese renminbi be resolved amicably? If the answer is in the negative, then the global outlook will be very bleak indeed and so, also, as a result, will be the prognosis for national recoveries. Indeed, the prospects would look disturbingly like those of the 1930s, with growing international antagonism and friction and a continuingly intractable crisis at a national level, with only the very slowest of recoveries.

Around the world there is growing evidence by the week of a resort to national solutions at the expense of others: measures to subsidise industries that are in severe difficulties; the Buy American clause that was inserted by the House of Representatives into Barack Obama's latest package (though since weakened); the industrial action in Britain against foreign workers; the withdrawal of banks to their national homes; the attack by Timothy Geithner, the US treasury secretary, on China as a currency manipulator. No Rubicon has been crossed but the warning signs are clear. A retreat into protectionism and beggar-thy-neighbour policies will deliver the world into a second Great Depression.

So what will be the political effects of the financial meltdown? Some are already evident. Just as the Great Inflation of the 1970s played to the tunes and concerns of the right, with its invocation of the market, the New Depression suggests the opposite, the inherent limitations of the market and the indispensability of the state. Indeed, the speed with which the neoliberal refrains and invocations have unravelled has been breathtaking. The single most discredited aspect of the social democratic legacy was nationalisation, and yet the government, with the most extreme reluctance, has been obliged to nationalise Northern Rock and partially nationalise the Royal Bank of Scotland and the merged Lloyds TSB and HBOS. Who would have ever imagined, at any point during the past 30 years, that no less than the financial commanding heights of neoliberalism would have ended up in the hands of the state, with precious little opposition from anyone except a few disgruntled shareholders? Even now, however, the Labour government, still trapped in the ideological straitjacket of New Labour and displaying extreme timidity in the face of powerful vested interests, which has always been a New Labour characteristic, is running scared of the inevitable logic of the situation, namely that all the high-street banks should be taken into public hands until the mess is sorted out. Anything else leaves the public responsible for all the debts and risks, while the banks continue to be answerable to the very different interests of their shareholders. But such is the fury and depth of the crisis that this scenario is highly likely.

The state is experiencing an extraordinary revival. The credit crunch is the most catastrophic example of market failure since 1945. It became almost immediately obvious to wide sections of society that there was only one institution that could potentially sort out the mess: the state. Far from being a rational distributor of resources, the market had proved the opposite. Far from bankers and financial traders embodying the public interest, they have been exposed as irresponsible and dangerous risk-takers whose primary motivation was voracious greed. If trade unionists and the nationalised industries were the demons of the 1970s, bankers and the financial sector have assumed the mantle of public enemy number one in the late Noughties. In fact, the irresponsibility of bankers, and the damage they have inflicted on the economy, hugely exceeds anything that the unions could possibly be held responsible for in an earlier era. Meanwhile, the fallen heroes of the pre-Thatcher era, most notably Keynes, are duly being exhumed, restored to their rightful position, and pored over for their ability to throw light on the present impasse and what might be done; if the recession turns into a depression, Marx will once again become required reading.

This political shift is not just a British phenomenon, but a more general western one. The most striking feature of President Obama's inaugural speech was the way in which it embraced and legitimised African Americans for the first time in American history. But it also had another powerful theme, namely its invocation of the public interest and public service. After decades during which American political discourse has been dominated by the language of individualism and the market, it came as a shock to hear a US president articulate a very different kind of philosophy, renouncing private greed in favour of the public good. Obama's election can in part be seen as a response to the failure of the neoliberal era, as well as of Bush's neoconservative agenda; certainly his election represents a remarkable shift to the left in US politics, in contrast not just to Bush, but every recent US president, including Reagan, Bush Sr and Clinton. That Obama is the first African-American president also represents a remarkable redrawing of the political landscape. There is no more powerful - nor difficult - way of redefining society or to embrace a new form of representivity than to include a racial minority that has been excluded.

This brings us finally to what might be the longer-term global consequences of the crisis. Again, we are inevitably stumbling around in the dark because so much depends on whether the recession metamorphoses into a fully fledged depression and in what way and shape the world eventually emerges from the debacle. That said, two key points can be made. First, the credit crunch signals the demise of the Anglo-American, neoliberal model of capitalism, which has exercised a hegemonic influence over western capitalism and been the blueprint for globalisation since 1980. Because of its catastrophic failure there seems very little chance of its resurrection. The process of recovery - whenever that might be - will be accompanied by an overriding concern to ensure that the events of 2007-2009 are not repeated in the future, just as happened in the US in the 1930s with the strict regulatory framework that was introduced for the banks after their comprehensive failure in 1929. This will include the search for a new global regulatory framework that controls and constrains international movements of capital, as well as strict controls over the financial sector at a national level. A new set of political priorities - and with it a new political language - will be born.

Meanwhile, the influence and prestige that the US, and to a far lesser extent Britain, have enjoyed will vaporise in the same manner as their neoliberal model. Their 30-year project has failed and they will be obliged to pay the price in their reputation and the esteem in which they are held. The countries of the former Soviet Union and the casualties of the Asian financial crisis that were forced to swallow the neoliberal medicine will have good reason to feel aggrieved and resentful. The west has been forthright in accusing the non-western world of corruption. The financial meltdown suggests that the west has been guilty of huge hypocrisy. Systemic corruption has lain at the heart of the western financial system. An entirely disproportionate and extortionate level of bonuses has ensured the enormous enrichment of top executives in the financial sector, all in the name of reward for success, when in fact it was the reward for failure. In addition, we have had the collusion of the credit-ratings agencies; a regulatory system characterised by its failure to act as any kind of constraint; and governments that ensured the continuation of this web of relationships and applauded its achievements. The corruption was on a breathtaking scale as evidenced by the size of the bailouts required to rescue the banks. It will be difficult for western governments to make these kinds of accusations of others in the future. That Obama represents such a voice of hope will help to mitigate the inevitable ill-will towards the US, but this should not be exaggerated amid the euphoria surrounding developments in Washington.

The second point is more far-reaching. It is doubtful whether we can still describe ourselves as living in the American era or, indeed, the Age of the West. If not yet quite over, both are certainly drawing to a close, and it seems likely that the effect of the financial meltdown will be to accelerate the rise of China as a global power. The contrast between the situation in China and that in the US could hardly be greater, even though it has been partially obscured by the depressive effect of the western recession on Chinese exports and on China’s growth rate. While the US economy is contracting, China’s grew at roughly 9 per cent in 2008 and is projected to grow at about 6 per cent in 2009. Its banks, far from bankrupt like their US counterparts, are cash-rich. China enjoys a large current account surplus, the government’s finances are in good order and the national debt is small. This is a crisis that emanates from the US and whose impact on China has been essentially indirect, through the contraction of western markets. It is the American model that has failed, not the Chinese.

One of the factors that intensified the Great Depression, and indeed was part cause of it, was Britain's growing inability to continue in its role as the world's leading financial power, which culminated in the collapse of the gold standard in 1931. It was not until after the war, however, that the US became sufficiently dominant to replace Britain and act as the mainstay of a new financial system at the heart of which was the dollar. The same kind of problem is evident now: the US is no longer strong enough to act as the world's financial centre, but its obvious successor, namely China, is not yet ready to assume that mantle. This will undoubtedly make the search for a global solution to the present crisis more difficult and more protracted.

Martin Jacques's new column will be published fortnightly in the New Statesman. His book "When China Rules the World: the Rise of the Middle Kingdom and the End of the Western World" will be published in June (Allen Lane, £25)

the global downturn in numbers

    0.5%

    IMF prediction for global growth in 2009 - worst since WWII

    Up to 40 million

    Number of people who will lose their jobs this year, according to the International Labour Organisation

    $9.7trn

    Total pledged by the US alone towards solving the crisis

    3.6%

    Proportion of GDP pledged by the G7 and BRICs countries towards fixing the crisis (1.5% this year)

    2.3m

    Number of US properties that received a default notice or were repossessed in 2008. In the UK, 45,000 homes were repossessed - another 75,000 are expected to be taken in 2009

    14

    Number of major global banks which collapsed, were sold or were nationalised during 2008

    200,000

    Number of European companies expected to fail this year; an additional 62,000 are expected to fail in the United States. These figures represent record levels of insolvency

    52%

    Increase in UK company failures between late 2007 and late 2008

    14%

    Drop in level of Chinese exports during January

    1%

    Current UK interest rates (down from 5% in October 2008). In the US, rates have fallen to between 0 and 0.25%

How the crisis unfolded

13 September 2007 Run on Northern Rock begins when it is revealed that the bank has requested emergency support from the Bank of England

21 January 2008 FTSE suffers worst falls since 11 September 2001

February 2008 Northern Rock nationalised

17 March 2008 JP Morgan Chase takes over the US investment bank Bear Stearns

12 July Mortgage lender IndyMac collapses - second biggest US bank in history to fail

9 August 2007 European Central Bank pumps ?95bn into banking market

7 September Financial authorities step in to rescue Fannie Mae and Freddie Mac

9 September Bradford & Bingley becomes second British bank to be nationalised

15 September Lehman Brothers files for bankruptcy

16 September AIG, biggest insurance firm in the US, receives $85bn rescue package

3 October 2008 US government announces $700bn Troubled Assets Relief Programme

8 October UK launches its first bank bailout plan, making £50bn available

October 2008 Iceland's banks collapse. IMF extends £1.4bn ($2.1bn) loan a month later

24 November Alistair Darling announces a temporary cut in VAT from 17.5 to 15 per cent

23 January 2009 UK enters recession

28 January US Congress passes Barack Obama's $819bn stimulus package

5 February UK Monetary Policy Committee votes to cut interest rates to 1 per cent - the lowest in over three centuries

Michael Harvey

Martin Jacques is a journalist and academic. He is currently a visiting fellow at the London School of Economics Asia Research Centre and at the National University of Singapore. Jacques previously edited Marxism Today and co-founded the think-tank Demos in 1993. He writes the World Citizen column for the New Statesman. His new book on the rise of China, When China Rules the World, will be published in June.

This article first appeared in the 16 February 2009 issue of the New Statesman, The New Depression

Ralph Steadman
Show Hide image

Discipline over dazzle: Helen Lewis interviews Yvette Cooper

Yvette Cooper is offering Labour a platform of cautious pragmatism – but will that be enough to take the crown?

In November 1997, not long after Labour’s landslide election victory, the newly elected Yvette Cooper wrote a column in the Independent, where she had previously worked as a writer on economics. “Seven months ago, I was still a journalist, delighting in the healthy scepticism and intelligent individualism that makes broadsheet newspapers so essential to a thriving democracy,” the new MP observed. “In contrast, I fear now that former journalist colleagues will find me earnest, idealistic and breathless. So be it. We have a unique opportunity.”

Fast-forward to 2015, and although few would accuse the 46-year-old of breathlessness, the charge of earnestness has not gone away. When the Labour leadership race began, the conventional wisdom was that Andy Burnham would run a good campaign but ultimately Cooper would triumph by picking up all the other candidates’ second preferences. Her campaign would not be flashy but it would be reassuring. By not making too many pledges, she would win with a clean slate, rather than being hidebound by promises made to assuage one special interest group or another.

The entry of Jeremy Corbyn into the race, and the subsequent surge of support for a conventionally socialist policy platform, upset that calculus. So, I ask Cooper on a visit to her spartan offices overlooking Big Ben, has her campaign been too nebulous? What does she think Lab­our is for? “The simple answer is the Labour Party has to be for a fairer country,” she says in a soft northern accent. “It has to be for greater equality.”

For her, that means weaving together the two strands of Labour identity that have shaped her politics. The first is the “liberation and emancipation tradition”, which takes in feminism and LGBT rights. One of the first political campaigns she was involved in was against Section 28, the legislation banning the “promotion” of homosexuality. “That is probably one of my only . . . well, my few law-breaking moments, when we graffitied these buildings – hoardings – with triangles before a big march.” I look mildly surprised at such youthful recklessness. Where was that? “At Oxford.”

The second strand of her politics is the “tradition of solidarity from the coalfield communities”, with its emphasis on hard work and looking after your neighbours: “Christian socialism but without the God attached”, she calls it. This might seem familiar: in the early days of his leadership, Ed Miliband also used to talk about communities, under the rubric of Blue Labour, an intellectual project championed by the academic Jonathan Rutherford, the independent-minded peer Maurice Glasman and the Dagenham and Barking MP, Jon Cruddas. It was aimed at finding a way for Labour to appeal to socially conservative, working-class voters – essentially, Daily Mail readers who found the party a bit too Guardian.

But Cooper thinks the project was flawed. “I’ve always found the Blue Labour approach to family and community actually just too traditional, too anti-women,” she says. “There’s something in that whole tradition . . . that always assumes all communities are good. You just have strong communities and that’s a good thing. Actually no, some communities are really oppressive and, you know, divisive. Or that all families are a good thing. Well, actually, there’s abuse and there’s violence within the family, and you should be strong about justice as well as about families.”

Cooper is arguably the most experienced of the leadership contenders. Educated at a comprehensive school, Oxford and Harvard, she made her maiden speech in 1997 days after Labour’s first Budget in 18 years, focusing on unemployment in her constituency and the struggle of former mining communities to adapt. “Keynes said: ‘In the long run we are all dead’ – but I say, ‘So what?’ Our children and our grandchildren will still be alive,” she concluded.

In the years that followed she progressed swiftly, serving as minister for housing, chief secretary to the Treasury (during the financial crash in 2008) and secretary of state for work and pensions. Most recently, she has shadowed Theresa May at the Home Office. What reason does she give for May’s longevity in the post, when her predecessors had the life expectancy of a chocolate teapot? “When things go wrong, Labour home secretaries always used to feel we need to go and reassure people that we’re doing something about it, whereas Theresa May just stays way out of the way and blames somebody else.”

In 2001, with the birth of her second child, she became the first minister to take maternity leave, an experience she found relatively stress-free. But when she had her third child in 2004 she found the civil servants in the Communities Department “very unsupportive”. (In 2001 the Daily Mail had nicknamed her “the Minister for Maternity Leave”, noting that “Mrs Cooper [sic] is known as a self-contained character, who gives little away – even to her family”. Fourteen years later, that still sums up the prevailing opinion of her in the party.)

Her political persona has never been that of a firebrand feminist, but during this campaign she has made an explicitly gendered pitch for the top job. First, there is the assertion that “it’s time Labour elected a woman leader”; second, her pledges include buffer zones around abortion clinics and better provision of women’s refuges, where contracts too often go to generic outsourcing companies rather than specialist providers. She names Jane Ellison as her favourite Tory MP, for the work they did together on opposing a crackdown on sex-selective abortion, which Cooper saw as a Trojan horse for attempts to restrict access to termination more generally. “I wish I was here as Labour home secretary having this discussion, because we would have done a Violence Against Women and Girls Bill,” she adds.

Like many women, she says, she has been reluctant to push herself forward. Although she comes from a politically engaged family – her father was general secretary of the Prospect trade union – she “ended up as an MP by accident” after being urged to stand in 1997 by her fellow candidates Ruth Kelly and Lorna Fitzsimons. “Women often need to be asked to apply for things or to stand for things or to be encouraged, whereas men are more likely to think to do something,” she says. “So if you want to encourage more women at the top of an organisation you have to actively ask and encourage.”

Yet not everyone is impressed with her feminist credentials. There have been complaints from Liz Kendall’s camp that Cooper’s pitch as a “working mum” is an implicit rebuke to their candidate’s childlessness (Cooper rejects this, saying the point is being used to divide women unnecessarily). Others in the party complain that she has a record of squashing potential female rivals. When I ask which women in the party she is proud to have mentored or promoted, she says she doesn’t want to “take the credit” for anyone’s career, but names Seema Malhotra, a junior shadow minister in Cooper’s team, as someone who is “doing some great stuff”.

She also believes that a female leader would be well placed to attack David Cameron. “I don’t think he sees or gets women’s lives at all, which is why [the Tories] do things like such massive cuts to tax credits, which will heavily hit women . . . I don’t think David Cameron knows how to handle women in parliament, either, in the chamber, in the Commons. You know, the ‘calm down, dear’ moment was an extreme example of it, but it’s not the only example.”

To prove that she isn’t only interested in feminism when there are partisan points to be scored, she shows me a 1999 parliamentary question she found while clearing out her office. In it, she asks Patricia Hewitt – then economic secretary to the Treasury – about the impact of the Budget on women. That’s depressing, I say. Sixteen years later you’re still having to ask the same questions. “It shows consistency about a problem that’s not yet been solved,” she replies. “But it also shows the contrast . . . Labour governments could deliver.”

That is the heart of the Yvette Cooper pitch, and her rebuttal to Corbynmania. She has been a Labour MP in government and out of it, and she prefers the former.

At leadership hustings, she tells the story of speaking to a constituent on election day who was in arrears on the bedroom tax. In between sorting out the woman’s debt, Cooper urged her to go to the polling booth. “What we were trying to do that day was sort out her bedroom-tax arrears but also abolish the bedroom tax altogether . . . So we persuaded her to go and vote, but what difference did it make? We lost. We let her down; we can’t abolish the bedroom tax.”

Election day brought another blow for Cooper – her husband, Ed Balls, who had hoped to become chancellor of the Exchequer, lost his seat to a Conservative candidate. A polarising politician, Balls had won respect from colleagues for his relentless countrywide campaigning although many marvelled that he did not take more care when his own seat was so marginal. “It was admirable, but mad,” a shadow cabinet colleague of his told me afterwards. “You have to mind your own backyard.”

Cooper says that when the results from Balls’s seat, Morley and Outwood, came through on the morning of 8 May, she was devastated, and struggled with an “immediate emotional feeling . . . of wanting to walk away”. But party loyalty and a sense of purpose won out. “You can’t walk away, because it’s too important.”

The unspoken truth, of course, is that her partner’s exit from parliament made it easier for her to stand for leader. After the Miliband v Miliband psychodrama of 2010, who would want to risk stories about cabinet splits between a husband and wife? There are practical benefits to the new arrangement, too: a few days after the election, Balls was pictured collecting the family’s dry-cleaning, and during the Budget he took their teenage daughter on holiday to Greece. Cooper tells me he has recently baked an impressive Go Ape cake for one of their children’s birthdays, and laughs at my suggestion that he go on The Great British Bake-Off. (For an insight into what Ed Balls might be like as a political spouse, consider this, from a 1996 Independent column by Cooper: “Oh for the days – and the balls – of Denis. Male and retired, Denis Thatcher could play the strong, silent type . . . Denis was never required to slide on to the stage at an English seaside resort to snuggle with Margaret at the end of her speech.” So, no snuggling from Ed. Praise be.)

Both Cooper and Balls have tried to keep their children out of the public eye, and insights into their home life are rare. She has said that work, childcare and demands for a “taxi service” don’t leave a lot of time for hobbies. The last book she read for pleasure was an Agatha Christie mystery – “about how the establishment had to stand firm against a communist conspiracy that was manipulating the General Strike” – and she likes watching Strictly Come Dancing and Doctor Who, though she worries that the latter has become “a bit dark”. (Her favourite Doctor is David Tennant but Peter ­Capaldi is growing on her: “Now I really like him. I just feel like he’s too sad, so I feel worried for him.”)

It’s just as well that Cooper doesn’t have many outside interests, because whoever takes over the party will face a formidable task. If you accept the premise that Scotland is lost to Labour for a generation – and most observers do – then the party needs to win more seats in England and Wales than it did in 1997 just to scrape an overall majority. Unsurprisingly, Cooper sees fighting nationalism as critical to Labour’s rehabilitation: challenging not only the Scottish National Party, but also the English nationalism promoted by Ukip and the Tories.

“The biggest challenge for us is Scotland,” she says. “The heart of that is actually how you stand up against nationalism and how you cope with nationalism. When you’ve got falling living standards for a long period of time, that is always fertile ground for nationalism, and has been all over Europe.”

Her analysis, with its emphasis on UK-wide solidarity, reminds me of the one I heard from Labour’s chief election strategist Douglas Alexander before he was swept away by the SNP wave in May. He reflected that it was hard for a party that stressed solidarity to compete with one that gave priority to identity. “The thing about nationalism is it manages to combine the politics of blame with a false politics of hope,” Cooper says. “Hope for a better, sparkly future that is simply about changing the name of your country.” She does not believe that Labour should back full fiscal autonomy (“that’s just bad for Scotland”), but Scottish Labour does need to have “a distinctive Scottish argument about what they want to do” and be able to oppose “very unsocialist” SNP policies such as cutting college places.

As voting for the leadership approaches, Cooper’s campaign has had mixed fortunes. After a slow start in May she finished almost level with Andy Burnham in nominations from constituency Labour parties, clocking up 109 to his 111 (Jeremy Corbyn secured 152). Early in August she was endorsed by Alan Johnson – who declared she had “the intellect, the experience and the inner steel” needed – and by Jack Straw. Her supporters claim that private polling puts her ahead of Burnham, though critics say this is an attempt to claim the “Stop Corbyn” mantle. A YouGov poll on 11 August put her third.

In response to criticisms that her campaign has been too quiet, a small stream of policy announcements began to dribble out. Cooper wants the minimum wage rise to apply first to care workers; the return of Sure Start centres (which looked after young children); and a freeze on appointing new members of the Lords until the second chamber has been reformed or replaced. She is open-minded about the future of the railways but opposes the return of Clause Four, Labour’s commitment to public ownership of the means of production. She scored a decent hit with a list of “Nine Broken Promises From the First 100 Days of This Conservative Government”, including cuts to tax credits. In line with collective responsibility, however, she abstained rather than voted against the Welfare Reform Bill.

There is talk in the Cooper campaign of a “radical centre” but it remains to be seen if her rather cautious platform can tempt back Corbyn supporters. For instance, when I ask her for her opinion on a universal basic income, an idea fashionable among left-wing economists, she says that “if you have a minimum wage and you have tax credits, then you have effectively a basic income”. But you don’t: UBI is supposed to apply even if you are unemployed.

If you believe the polls, Jeremy Corbyn’s lead now looks unassailable. But there is still a small chance for Cooper, as the vagaries of the leadership vote – in which candidates are eliminated in rounds and their support redistributed to their remaining rivals – mean that second preferences are vital.

Among those who will be voting Corbyn first, it is hard to predict whom they will put second. Many I’ve spoken to do not believe their candidate can win in 2020 – but they don’t believe any of the others can, either. “They might create an effective opposition if they can be shown to believe in something,” is a typical sentiment. I put this to Cooper. No one would deny that her career shows she is clever and hard-working: but discipline can feel cautious, even boring. Is there an unavoidable difference between an effective leader and an interesting leader?

“Yes,” she says simply. “And it’s also the difference between being in journalism and being in politics. The great thing I used to enjoy about being a journalist was the irreverence . . . The downside was that you could feel very strongly about something but not actually be able to deliver it or to change it. Whereas in politics there’s a lot of earnestness. Some of that’s inevitable because you’re trying to change important things and, you know, leadership is serious.”

For Cooper, getting the chance to change policy is worth a life of rictus self-control at the despatch box, in media appearances – and even at the checkout. “You can’t lose your temper . . . if someone pushes in front of you in the queue,” she observes of the downsides to life as a politician. “That’s the responsibility.” And so, the question is: does the party want discipline – or dazzle?

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 13 August 2015 issue of the New Statesman, The Battle for Calais