Maggie's boy

"You were the future, once," David Cameron famously taunted Tony Blair - but, in our final assessmen

A late by-product of the Eighties, Tony Blair will be remembered for using his party as a vehicle for an outdated version of the Thatcher project. Applying the half-truths of the political generation that preceded him, he secured ten years in office and is sometimes described as the most successful leader Labour has had. In fact, he has wasted a decade of unique opportunity and damaged Labour irreparably.

In domestic policy, Blair pursued the neo-Thatcherite strategy of thrusting markets into public institutions while expanding state power. His legacy is a hollowed-out party, which, despite the best efforts of his most likely successor, seems fated to be edged aside by David Camer on's new-model Conservatives. The hegemony that Labour was poised to achieve in 1997 has been frittered away. Whether or not it manages to form a government after the next general election, Labour faces a rerun of the disarray and paralysis suffered by the Tories since the fall of Margaret Thatcher.

Over the past 30 years, the right has been the vehicle for radicalism while the left has been reactive. The pattern continues today. Intriguingly, the Tories are the first to exploit the fact that the Thatcher era is over. Cameron has given voters only a simulacrum of a post-Thatcher project. Despite doffing his cap to local communities, he is unlikely to devolve powers to them. Rather than sweep away the Blairite apparatus of monitoring and targets, he will pretend to make it work. In this, as in much else, Cameron's new Conservatives will follow new Labour, but with a crucial difference: while continuing the neo-Thatcherite trend, they will be talking to the public of other things. The soft rhetoric of green consumerism has replaced new Labour's grating pro-business rant - a shift that appeals to voters who want the benefits of the market while feeling virtuous.

Cameron has grasped the central paradox of the Thatcher era: while it has been highly successful in strictly economic terms, it has bred a generation that wants self-realisation and quality of life as much as material wealth. Thatcher aimed to reinvent a country ruled by old values of duty and family. In fact, by rubbishing the ethos of public service and preaching that there is no such thing as society, she helped create a society in which self-realisation is the overriding ideal. Contemporary Britain is lax in its attitudes to sex and debt and uninterested in "traditional values", but it is still Thatcher's creation. Cameron, by turning his back on her while aligning himself with the values of the society she unwittingly created, has rendered new Labour obsolete.

The coup that created new Labour was a reaction to Thatcher's success. Tony Blair, Gordon Brown and the project's other architects concluded that, for Labour ever to return to power, it must adopt Thatcher's policies. New Labour was the result of this strategic choice rather than of any change in the basic beliefs of the party.

Yet, under Blair, the party soon became a vehicle for a version of neoliberalism more dogmatic and mechanical than even that which Thatcher had come to represent. Blair not only endorsed the Thatcherite settlement, in which market forces were accepted as beyond political control, he injected market mechanisms into areas Thatcher never envisioned. The core of the state was targeted - with large sections of the prison system, social services and healthcare being contracted out to private suppliers or forced to create internal quasi-markets. Here, Blair was more of a prisoner of ideology than Thatcher. Unlike Thatcher, however, he is a neoliberal by default rather than from conviction. A politician of considerable intuitive gifts but intellectually mediocre, he allowed himself to be shaped by the conventional wisdom of the Eighties.

If a neoliberal by default, Blair was a neo conservative by instinct. Embracing George W Bush's apocalyptic view of the "war on terror", he compromised British freedoms to a degree that Margaret Thatcher - despite having a close acquaintance with the terrorist threat from Brighton in 1984 - never contemplated. Blair's subservience to the White House went far beyond anything ever seen before, tran scending any geopolitical calculation he may have made about the celebrated Anglo-American "special relationship".

Like his fellow neoconservatives in Washington, Blair believes that America embodies the cause of human freedom, and that in any conflict with retrograde regimes it is invincible. His failure to condemn Abu Ghraib and Guantanamo reflected this: no doubt torture, secret jails and concentration camps are unfortunate, but in the long march of humanity they are unimportant. Like the pro-Soviet intellectuals of the Thirties, Blair identified himself with the state he believed to be in the vanguard of history. Confident a new world is coming into being, he views its human casualties as the acceptable cost of progress.

Article of faith

It would be naive to imagine that the grisly farce that unfolded in Iraq in any way dented Blair's confidence in American power. Despite their vastly superior technology, the US forces have suffered strategic defeat at the hands of 20,000 lightly armed insurgents. The US is no more invincible than other western states whose neo-colonial adventures also ended in humiliating débâcles. France was driven out of Algeria and the former Soviet Union out of Afghanistan, for example, though they waged their wars of occupation with ferocious intensity.

For Blair, however, the evidence of history is irrelevant. His belief in America's big battalions is an article of faith - a modern version of the Whig interpretation of history, in which the advance of an Anglo-Saxon version of freedom is seen as divine providence at work - which he shares with Bush. But Blair's faith in American supremacy has another source, in a mistaken reading of the end of the cold war. Along with many others, he perceived the collapse of communism as creating a unipolar world. He overlooked how other great powers were emerging with the advance of globalisation, leading to a loss of US hegemony - a process that has been accelerated by the disaster of Iraq.

Blair's abject relationship with Bush inflicted untold damage on Labour. He has presided over a huge drop in party membership, which has fallen by roughly a half since he became Prime Minister. Few Labour activists joined the party in order to celebrate the military crusades of a fundamentalist US president, while watching Britain's public services descend into chaos as they struggle to adapt to "market reforms".

The strategic decision to embrace Thatcherism may have helped Labour to exploit Conservative divisions, but it has also deprived Labour of much of its reason for existing. Old Labour had many flaws, some fatal, but it embodied a political culture for which people were ready to work. With the destruction of this culture, Gordon Brown has lost a vital resource. In the interests of party management, he insists he will carry on the course set by Blair. But it is not easy to see how a long spell in power can be secured by pressing on with a decision to continue a Thatcherite project that was devised in the mid-Seventies, the impact of which has been to leave Labour an empty shell.

Blair's departure marks a generational shift in politics. The Thatcher narrative, of achieving national renewal by releasing market forces, has dominated politics for the past three decades. And yet, if the country she helped create is somewhat different from the one she envisaged, it is also in some ways more attractive than the one she inherited. Though less cohesive, it is also more tolerant. If it is highly materialistic, it is at the same time aware that its prosperity is fragile.

A threatening truth

The ruling cliché has it that Cameron models himself on Blair. The truth is more complex - and more threatening for Brown. Certainly Cameron owes his PR techniques to Blair, but in this case the medium is less important than the message. Cameron is identifying with the values of voters who know nothing of the struggles of the Eighties. Thatcher's children may decide the next election, but they know that her story belongs in the past, along with new Labour.

For all the presentational stunts, Cameron remains mired in orthodoxy, and once in power he will faithfully implement the bankrupt consensus. The alacrity with which he saved Blair from defeat over Trident - a ruinously expensive cold-war inheritance that serves no useful purpose - shows him to be at one with the rest of the pol itical class in refusing to question Atlanticist pieties. No party has begun to think about where Britain fits in a world where US hegemony is fast vanishing; and, for all their affectation of novelty, the Cameroons are as much prisoners of anachronistic assumptions as Blair.

In practice, there is likely to be little new or different in a government led by Cameron, but, by speaking to the generation Thatcher created, he has stolen a march on Labour. It looks as if, after ten years in power, Blair will bequeath to Labour a long sojourn in the wilderness.

John Gray's next book, "Black Mass: apocalyptic religion and the death of utopia", will be published in July by Allen Lane (£18.99)