Leaders offering old-fashioned state welfare are getting elected everywhere

Internal Labour debate rages over whether Gordon Brown should continue on the new Labour path, appealing to middle-class floating voters, or revert to a traditional programme, appealing to the working-class core vote. It is a false opposition. The middle classes, at least by their own lights, are struggling as much as the working classes. Both are apprehensive about the credit crunch and the prospect of recession.

Both resent how a tiny minority - perhaps 600,000 people - benefited disproportionately from rising prosperity, but are not sharing the pain. Both are frightened by globalisation.

The effects of outsourcing, which hit the working classes so badly during the past quarter-century, are about to move up the social scale. The Indians and the Chinese increasingly read the X-rays of western patients, develop computer software, prepare tax forms, and carry out R&D for multinational corporations. In the US, real incomes have declined since 2000, even for those with Master's degrees. A successful leader will be one who convinces the mass of voters he or she can protect them from the worst effects of economic and technological change. That, for the foreseeable future, is the only game in town.

Brown is stuck in a mindset that, in the words of the pressure group Compass, is neither new enough nor Labour enough. There is no longer any need for stealth in redistribution. As a report this month from the Institute for Fiscal Studies shows (Poverty and Inequality in the UK: 2008), the top 1 per cent are racing ahead of everybody else, gaining more than 5 per cent in the year to April 2007 alone. The bottom 1 per cent continue to suffer a steep drop in their real incomes, as they have done since 1997. For everybody in between, income growth is now close to zero.

In a report just out, Globalisation and Labour Markets (www.oecd.org/dataoecd/10/44/39608656.pdf) by David Coe, the OECD, hardly a hotbed of socialist thinking, argues that "policymakers need to ensure that the gains from trade are sufficiently shared to generate political consent". Redistributive policies, it says, generally "have adverse economic effects", but they "may nevertheless be necessary".

The international love affair with the free market is over. Germany, under a coalition led by a centre-right chancellor, has halted the dismantling of its social market and reversed some of the reforms introduced by Gerhard Schröder of Neue Mittel fame. The result has not been economic disaster: unemployment has fallen from five million to just over three million, and the country has overtaken the US as the world's leading exporter. In Italy, Silvio Berlusconi's government proposes to raise corporate taxes on oil companies and hand out discount cards for food and fuel to the poor.

In Australia, Labor's Kevin Rudd - who has as little cha risma as Brown but seems to make it go further - was elected last December largely because his predecessor made it easier for employers to sack workers. In the US, the next president, whether he is Barack Obama or John McCain, will have to offer voters more security if he is to resist the clamour for a return to protectionist policies.

Voters everywhere want old-fashioned state welfare, control of financial institutions' wildest excesses, and a fairer sharing of national income. Brown, judging by everything he said before 1997 (and continued to say in coded language after that), believes in these things. He also believes in the benefits of the globalised free market. There is no contradiction here. The continuation of the second is conditional on delivery of the first. All Brown has to do is to act on his beliefs.

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