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Beware the clunking fist

Ignore the conventional wisdom. The combination of an improving economy and Gordon Brown’s sheer blo

Conventional wisdom is a poor guide to the future.

At the end of the 20th century, few would have thought that the coming decade would see the election of a black US president, a power-sharing deal between Sinn Fein and the Democratic Unionists, and the nationalisation of some of Britain’s biggest banks.

Yet, even in the face of such unexpected recent events, we still cling to the notion of political ­inevitability. It is now widely regarded as a certainty that Labour will lose the next election, with the Tories on course to form a large majority in the Commons.

A combination of sleaze, exhaustion and economic meltdown are said to have finished off the Labour government. Gordon Brown is seen as a political corpse. The only question to be decided at the polls, it seems, is the scale of his defeat.

But once more, conventional wisdom could be wrong. Labour might look doomed at the moment, in the febrile atmosphere created by the expenses scandal, but the picture could be very different next summer, if the worst of the charlatans have been kicked out of the cabinet and an economic recovery is under way. Moreover, a number of features of the structure of our political system are likely to benefit Labour in the run-up to the next general election.

Even now, in the midst of crisis, it is not all gloom for the government. On 21 May, Labour won a council by-election in Salford, the seat of the discredited Communities Secretary, Hazel Blears, whose conduct over her home allowances has been condemned by Brown as “totally unacceptable”.

Given Blears’s role at the centre of ­Scamalot, the Labour vote in Salford might have been expected to collapse dramatically, but it held up. Meanwhile, the Tory vote dropped, as the party’s candidate was overtaken by both Ukip and the BNP.

Indeed, the Conservatives have not been doing nearly as well in council by-elections as they should be for a party on the verge of government. In one poll at the start of May, in the Rossmere ward of Hartlepool, the Labour vote actually went up, while the Tories were consigned to fifth place.

The national opinion polls are, of course, bleak for the government, but then they also were at the time of the European elections in 2004, a year before Blair’s third triumph. The average Tory lead of 10-12 per cent in recent months might look healthy, but, in truth, if replicated at a general election, it would be barely enough to win. After three successive landslide defeats, the task facing the Conservatives at the next election is daunting.

Taking account of boundary changes, they have to gain at least 112 seats to form an overall majority in the Commons. That would require a 7.1 swing, the equivalent of an 11 per cent lead over Labour in the national British vote, far beyond the scale of anything achieved by a previous Tory opposition.

It is a remarkable historical fact that since the end of the Victorian age, the Conservatives have only once turned out a government which possessed a working majority in parliament. That occurred in 1970, when Ted Heath – defying conventional wisdom and the polls – defeated Harold Wilson’s government, though even then the swing was 4.7 per cent, significantly lower than that needed by Cameron.

Every other Tory victory since 1900 has been against a dying coalition or Labour government which had lost its majority, or never held one.

Nor do all of Cameron’s target seats appear to be in fertile territory for Conservatism. On the list are places such as Keighley, Dewsbury, Derby North, Rossendale and Dumfries and Galloway. It is difficult to envisage all of them turning blue, especially if the general election next year takes place against a backdrop of improving economic news.

When the Chancellor, Alistair Darling, announced in the pre-Budget report last year that recovery could start in the autumn of 2009, he was derided for his prediction. But this could be the reality. Such a recovery would not address the appalling state of the public finances, with levels of national indebtedness far worse than at any time in our history.

Yet it is unlikely that the ­question of the national debt will be a deciding factor at the next election. People will be much more influenced by their own job prospects and personal income. Most homeowners lucky enough to be in work have not suffered too badly in this recession because of the dramatic fall in ­interest rates. There is no sign that rates will increase over the coming year.

By next year, the impact of the expenses scandal and the Smeargate fiasco may have faded. All the opinion polls over the past two years demonstrate that Brown’s ratings improve when economic questions predominate. Again in defiance of conventional wisdom, the Prime Minister’s strange political personality might assist in Labour’s revival in the months before the next election.

His combination of bullying, indecisiveness, cowardice and lack of vision have rightly made him despised by large sections of the public. Yet his strongest trait, his aggressive partisanship, currently a vice, could in future become an asset to Labour.

Every decision Brown makes is dictated, not by the national interests, but by his narrow determination to outflank the Tories. This has led him to absurdities like his notorious pledge of “British jobs for British workers”, but some of his negative campaigning may prove more fruitful.

The stark warnings about “Tory cuts” will be pounded home relentlessly over the next 12 months, and this message is bound to find a receptive audience among two key groups of voters: public-sector workers and welfare claimants, both of whom have done comparatively well from Labour rule. Together, these two groups have more than 12 million votes.

Brown’s partisanship will ensure that every aspect of the political system is ruthlessly exploited to Labour’s advantage. Labour’s turnout will be heavily boosted by postal voting, which, as a series of fraud scandals have proved, is open to corruption by agents and activists. One judge, presiding in 2005 over a case involving a municipal postal voting fraud in Birmingham, said the scale of abuses by six local Labour candidates would have “disgraced a banana republic”.

Indeed, the Labour government cynically introduced postal voting on demand without safeguards in 2000 precisely because it knew the party would be the big winner from such a flawed method. At the 2005 election, 6.5 million people voted by post. The figure will be even higher in 2010 and the misrepresentation even worse.

Similarly, the government will indulge in a wealth of feel-good propaganda over the next year, dressing up pro-Labour publicity as consultation and information exercises. Already the government is by far the biggest advertiser in the country, with the Central Office of Information holding a budget of £400m. Marketing by other pro-Labour public-sector organisations will be added to the political spin.

We can expect schools, hospitals, regeneration projects, community groups and Sure Start centres to start putting up signs at their entrances explaining how much the government has recently invested in their sites. In the same way, the £2.3bn regional development agencies, which the Tories have pledged to abolish, will have everything to gain by launching expensive billboard campaigns telling us about wonderful economic success ­stories in their regions.

Conventional wisdom holds that there will be a big anti-incumbency vote at the next election because of public disillusionment over the current House of Commons. But the opposite may be true. Sitting MPs have two great advantages.

First, their casework means that they have had supportive contact with thousands of voters. The huge increase in staffing allowances in the past decade means that they can often employ two or three assistants in the constituency working on behalf of their local public.

In the 1980s, Chris Smith managed to hang on to a wafer-thin majority in Islington South partly through his assiduity in handling an epic volume of casework, most of them housing issues that should really have been dealt with by local councillors. His winning slogan in the 1987 election was: “Everyone knows somebody who’s been helped by Chris Smith.”

This will be a theme taken up by a host of Labour MPs in 2010. The second advantage is the £10,000-a-year communications allowance, which enables incumbents to spread the gospel of their devotion to their constituents through glossy newsletters.

The changing demography of Britain will also help Labour. The phenomenal increase in mass immigration over the past decade has not only transformed the make-up of our urban society, but has undoubtedly been a significant boon to Labour. All studies show that the overwhelming majority of voters in migrant communities tend to vote Labour. Eighty per cent of black voters back the party and at least 60 per cent of Asians.

Tellingly, many of the highest concentrations of ethnic minorities are in the swaths of marginal seats in outer London, the West Midlands and South Yorkshire. According to the campaign group Operation Black Vote, as many as 70 marginals could be decided by black and Asian voters.

Harriet Harman’s Equality Bill, with its legalisation of positive discrimination in favour of minorities, will be a strong campaigning point for Labour. The influence of the ethnic vote on Labour thinking was graphically revealed in the diary of Chris Mullin, where in January 2004, he lamented how little the government had done to tackle immigration abuses. “We’ve barely touched the rackets that surround arranged marriages. What mugs we are.” Then he added a comment to the effect that there was the difficulty that “at least 20 Labour seats, including Jack Straw’s, depend on Asian votes”.

Brown’s campaign in 2010 may be desperate, cynical, even deceitful, but that does not mean it will not work. Negative campaigning has worked in the past, most famously in 1992 when the Tories’ demolition of “Labour’s tax bombshell” led to John Major’s victory and one of the biggest upsets in history. A discredited government in the fifth year of its third term can stil

This article first appeared in the 01 June 2009 issue of the New Statesman, Big Brother

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 01 June 2009 issue of the New Statesman, Big Brother

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