Fundamental flaw of the Blair project

By flirting with the anti-liberal prejudices of the right-wing media, new Labour has alienated its c

Whether on Iraq, health reorganisation, schools reform or civil liberties, the relationship between Labour and millions of progressive voters has become sour and distrustful. It flourished in the mid-1990s and underpinned our landslide victory in 1997. Now fractured, it puts the party's chances of a historic fourth-term victory at risk, allowing the Conservatives back into power.

George Bush's two terms in the White House graphically demonstrate the danger. The Tories, fronted by a fresh face and projected with slick spin, promise a break with a deeply unpopular party's nasty past. Ominous echoes of the "compassionate conservative" governor of Texas as he campaigned for the US presidency seven years ago.

But scaring progressive voters with the image of David Cameron crossing the threshold of No 10 won't win Labour the next election. Instead, we need to understand why it is that - despite all the achievements of the past ten years - so many of those who enthusiastically supported us in 1997 are now so deeply hostile.

The progressive coalition that Labour so successfully assembled in 1997 has splintered because we have been careless, indifferent and, at times, needlessly offensive to the concerns and values of too many of our natural supporters.

This has not simply been a sin of omission. Instead, it has appeared a conscious strategy. Too often, the credo has been that winning the centre ground - itself unquestionably vital for electoral success - is, in part, achieved by Labour defining itself against the values of progressive Britain. This has always been a false choice. We proved in 1997 that it is possible to win both Middle Britain marginals and Labour heartlands; indeed, since then, we have lost support in both simultaneously.

The chase for headlines in the right-wing press is based on a fundamentally flawed calculation: that progressives have nowhere else to go but to vote Labour. This is a dangerous assumption. In 2001, some of those who had voted Labour four years earlier simply stayed at home. Only Tory weakness and a very low turnout prevented serious electoral damage.

In 2005, however, substantial defections from Labour to the Liberal Democrats not only produced losses from Cambridge to Cardiff Central, they also handed the Conservatives - often without raising their own vote at all - more than 30 seats. Labour ended up with a shaky win and a vote, at just 36 per cent, lower than when we lost to Margaret Thatcher in 1979.

What credit?

If this strategy was electorally risky in the face of a string of overtly right-wing and weak Tory leaders, it could be near-suicidal when we are up against today's reinvigorated Con servatives. Cameron's sidling up to progressive causes such as civil liberties, inequality and climate change is entirely synthetic, all spin and no substance. Nevertheless, it is cunningly calculated to make the Tories appear a whole lot less threatening - if not necessarily attractive - to large numbers of those who were willing to rally around Labour in 1997 in order to evict John Major from No 10. They might well not vote Tory, but equally they might not vote at all if the prospect of a Cameron victory doesn't overly bother them.

But flirting with the anti-liberal prejudices of the right-wing media is counterproductive in another way. When some at the top of the party have seemed at best sullen and at worst downright hostile to our progressive record, what chance do we have of asking people on the left to give us any credit for it?

The Human Rights Act is a case in point. Sometimes we have seemed more concerned with colluding in fantasies and fallacies than with robustly and proudly defending legislation that embodies our commitment to human rights. This has left the door open to Tory right-wing attacks; a stark contrast with other parts of our record that have been solidly defended, such as the minimum wage, civil partnerships, or the creation of devolved institutions in Scotland, Wales and London, all of which the Conservatives have been forced to accept.

On the fight against terrorism, everyone understands that, after 9/11 in New York and 7/7 in London, we need to have a serious debate about the balance between liberty and security. But we have contrived, through government rhetoric and spin, to appear casual about, or even indifferent to, civil liberties, which itself undermines the fight against terrorism. We may not have encountered so much hostility and difficulty with our anti-terrorism laws if we had led the debate in a manner that suggested we cared both about the security of the country and the civil liberties of those who live in it, rather than appearing to suggest that the former can be achieved only by sacrificing the latter.

Gordon Brown's recent suggestion that any further anti-terrorism powers must be accompanied by stronger judicial and parliamentary oversight offers the prospect of a welcome new approach.

The war in Iraq has, of course, also played a significant part in fracturing the progressive coalition. Like all my fellow deputy leadership candidates, I voted for the war. It does nothing to rebuild trust in politicians if, at the moment when it would be most politically expedient to do so, I followed the example of two of my colleagues, renounced my vote and tried to write myself out of the decision. I know only too well the damage to Labour and the anger the war has caused, not only on the doorstep, but over family dinners and in conversations with long-time friends who have felt unable to remain in the party.

Rather than trying to wriggle out of personal responsibility for our decision, I think people should ask that those they entrust to make decisions learn from those decisions. The lessons of Iraq are that military power alone is no substitute for winning the battle of hearts and minds, and that we need to reform and strengthen the capacity of the UN, Europe and other multilateral bodies, including the Arab League.

It is also vital that the left and wider progressive opinion does not, because of Iraq, abandon the internationalism that first brought me from the struggle against apartheid into the Labour Party. An isolationist foreign policy, usually favoured by the right, would not have saved the people of Sierra Leone from savage butchery, nor Kosovans from genocide. The ongoing suffering of the peoples of Burma, Zimbabwe and Darfur underlines why international intervention to protect democracy and human rights must always be high on the left's agenda. The failure to resolve the continuing, and often bloody, impasse between Israelis and Palestinians remains the principal failure of global diplomacy.

Unguarded flank

Forging a progressive internationalist foreign policy built on these lessons - coupled with a renewed drive to promote global social justice and tackle climate change - is the way to win back Labour support among progressive voters, by renewing confidence that we share the same values.

Domestically, we must prioritise tackling inequality. Top of our agenda must be the lack of affordable housing for rent and purchase, the need to ensure the proper enforcement of employment rights in the disturbing twilight world of agency, temporary and subcontract work, and a major push for free universal childcare. Coupled with greater individual empowerment, strengthened local government and finishing the job of democratic renewal - redistributing not just wealth, but also power - the drive against inequality should be the golden thread that runs through our entire agenda.

We leave our progressive flank unguarded at our peril. How on earth did we allow Cameron to steal a march on green issues, given the government's international and European leadership on climate change? The truth is that we failed for too long to prioritise the green agenda as the core Labour issue it so palpably is. If the Tories can attempt to steal progressive voters from us when they have barely any green policies, no record of prior commitment and, until very recently, zero credibility, then no territory is safe. We must challenge them with a red-green agenda that combines social justice and environmental protection, tackling climate change but ensuring that the responsibility for doing so is fairly shared.

However expedient their motives, the Conservatives have finally realised the electoral importance of Britain's progressive majority. A decade ago, so did we. It's now high time we did again. And that means we need to stop insulting it.

Peter Hain, Secretary of State for Northern Ireland and Wales, is a candidate for Labour's deputy leadership

His manifesto is available at http://www.Hain4Labour.org

Peter Hain is a former Labour cabinet minister and was MP for Neath between 1991 and 2015 before joining the House of Lords.

This article first appeared in the 11 June 2007 issue of the New Statesman, Russia: The beggar becomes the belligerent

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 11 June 2007 issue of the New Statesman, Russia: The beggar becomes the belligerent