Alistair Darling's story of his time as Gordon Brown's chancellor of the exchequer is intriguingly titled Back from the Brink. There are many brinks in this book - the near-collapse of the British banking system and the world economy, for one. The relationship between Mervyn King, governor of the Bank of England, and Callum McCarthy, then chairman of the Financial Services Authority, is also said to have been "on the brink of collapse". But the brink that Darling is chiefly concerned with is his relationship with Gordon Brown. Frequently they contemplated divorce on the grounds of incompatibility, but soldiered on like an estranged couple, tied together by old loyalties.
The two were long-standing political allies, and Darling had served under Brown amicably as chief secretary to the Treasury from 1997-98. Yet Brown saw him as a stop-gap chancellor, keeping the seat warm for his protégé Ed Balls, newly elected to parliament, who needed to
acquire ministerial experience. That Darling stayed until the end was the result of Brown's political blunder in not calling a general election in 2007, when he could have won. The British phase of the global crisis started soon after that. By the time Brown tried to remove Darling, in 2009, it was too late.
Brown stalks Darling's story as a continually disturbing presence, impossible to cast off but impossible to settle down with. The book will be remembered, if at all, as an unflattering portrait of him as a political leader. Darling puts much of the blame for Labour's debacle in 2010 on his boss - on his chaotic work habits, his paranoia, his "attack dogs" (Charlie Whelan and Damian McBride) who "briefed" against his supposed enemies, his penchant for consulting with small groups and playing them off against each other, his dithering, his failure to use the cabinet for collective discussion, his political blunders, and so on.
All this may be true, or partly true, but it is only one side of the story, and Brown has not told his version of events (his book Beyond the Crash was devoid of politics). In fact, he soon lost confidence in Darling's ability to stand up to Treasury orthodoxy, especially once the economic tsunami got going in 2008. Whether a Brown-Balls partnership would have made a better fist of things between 2007 and 2010, it is impossible to say. Given the constraints, Labour did not do badly, and this is reflected in the inconclusive result of the 2010 general election. But the politics of Brown and Darling's management of economic policy were terrible. From the summer of 2008, there was an all-too-visible rift between the Treasury View and the Brown View, with Darling caught in the middle. The lack of a coherent narrative undermined the public's confidence in the government's ability to handle the financial crisis.
What exactly was it they disagreed about? It is hard to get a very clear sense of this from Darling's somewhat disjointed storyline. In headline terms, the conflict arose from Brown's determination to portray the dispute between Labour and the Conservatives as being one of "investment v cuts" and Darling's recognition that Labour would have to cut, too. Brown accepted, or came to accept, the need to slash the growing budget deficit, but to him presentation and timing were crucially important. That is why he was furious when Darling, on holiday in the Hebrides in August 2008, was trapped by a Guardian journalist into saying that conditions were "arguably the worst they've been in 60 years", spun in the headline into "Economy at 60-year low, says Darling". (The choice of 60 years illustrates a carelessness with dates which runs through the book: 1949 was certainly a year of economic troubles, but by no means the start of a big downturn. Eighty years would have been accurate.)
Yet presentation and timing do not get to the heart of the matter. Both men were trapped by the lack of an accepted theory with which they could justify rising public deficits in a slump. Darling writes: "In late 2008, I was influenced hugely by Keynes's thinking, as indeed were most other governments dealing with the fallout from the crisis." Stimulus policies, applied nationally and globally, averted a slide into another Great Depression, but the cost to governments of keeping insolvent firms afloat and unemployment down became dreadfully large, calling into question the sustainability of public finances. So, from mid-2009, Keynes was put back in the cupboard and the making of public policy was handed to the bond markets, which demanded austerity. Darling accepted the logic of this and set the Treasury the task - congenial, considering its history - of "balancing the budget". Brown accepted the logic, too, and yet found it intolerable. "I will not be another Philip Snowden," he raged, referring to Labour's pre-Keynesian, budget-balancing chancellor of 1931.
However, because he could neither overthrow Darling nor suggest a coherent alternative, Brown finally had to put the best face he could on his chancellor's deficit-reduction strategy. Darling's last budget, in March 2010, aimed to halve the structural deficit by 2013-2014 in a series of yearly steps. In practice, George Osborne's commitment in his first budget to eliminate it entirely by 2014-2015 was not much different, except for the relish with which it was undertaken. Both plans were equally dependent on estimates of structural deficits and growth forecasts for years ahead which were little better than guesses.
Back from the Brink will be read as a disobliging portrait of a defeated political leader. This is a pity, not only because there is a great deal of admiration for Brown mixed up with the resentment, but also because Darling offers good inside accounts of many other aspects of his chancellorship. His description of the failure of Northern Rock in September 2007, and the dysfunctional system of financial regulation that did not anticipate it or understand its ramifications, is particularly notable. He also refutes the charge that Labour's pre-recession spending had become profligate, but concedes that it assumed "tax receipts would continue to flow in from the financial sector".
The book points to the huge difficulty of making sensible policy in the continual glare of the media spotlight as the press thrived on the crisis. Premature disclosure of the rescue plan for Northern Rock by the BBC's Robert Peston "precipitated the first run on a British bank in more than a century". (Wrong - there were runs on the retail banks in 1914.)
For a politician, Darling writes well, and his story is agreeably if sparsely sprinkled with choice anecdotes and tart observations - the literary equivalent of raising those bushy eyebrows. My favourite is Tony Blair's description of talking to Brown as being like having dental treatment without anaesthetic: "The drilling goes on and on."
And what about Darling? He emerges as able, decent and thoughtful, but he lacked the ability to think "outside the box" that is essential to command Treasury officials who are superb at thinking within a framework of fixed ideas. Nigel Lawson was able to do this as chancellor, and Brown, at his best, could also do it. Darling was a safe pair of hands. In those thousand days, however, one needed something more.
Robert Skidelsky is a crossbench peer. His book "Keynes: the Return of the Master" is published in paperback by Penguin (£9.99)