Labour best forget about a quick comeback

What matters is not returning to No 10 as soon as possible, but renewal, argues the prominent econom

I joined Labour after the 1970 election, when against all expectations the party lost. It soon returned to power - thanks to the rise in the oil price, the miners' pay dispute and the terrific mess Ted Heath made of the economy. Even so, Labour only just made it, winning four seats more than the Tories, but no overall majority; at the next election seven months later it did little better, gaining a working majority of three. After 1979, Labour split and quarrelled, and lost four elections. The Tories allowed unemployment to reach three million and doubled VAT, yet Labour kept losing. In 1983 we had our lowest vote share, which Tony Benn hailed as "a remarkable development by any standards". The party went through four leaders before we found a winning formula.

So, how will 2015, the likely date of the next election, turn out? Like 1970, or 1979? Three processes are in play that make me fearful about our chances of a quick comeback. I call them Denial, Disavowal and Delusion; they spell doom for Labour unless we deal with them quickly.

No ideas in the cupboard

Denial. We did not lose the election at all. We prevented the Tories from securing a clear majority. There is a 64 per cent anti-Tory majority (it is 71 per cent anti-Labour, but never mind). Had it not been for the perfidy of the Liberal Democrats, we could have been back in office with a coalition akin to Snow White and the seven dwarves. But fear not: the coalition won't last. It will break up even before the year is out (but not before Labour has a new leader, I hope). So we just sit tight and watch the Lib Dems squirming and falling apart. Victory will be ours. Indeed, one of the candidates for the Labour leadership has already said he wants to get the party ready for a quick return to power.

Disavowal. After each defeat, there is an orgy of self-loathing about what we did in power. The many achievements of the 1964-70 government - reform of the laws on homosexuality, creation of the Open University, overseas aid, keeping Britain out of Vietnam, full employment - were forgotten, and Harold Wilson was blamed for much. It was much worse after 1979. And now the story is the same. Our policy on immigration, perhaps the most liberal and most pro-European possible, is denounced for having cost us the election. Gillian Duffy rules OK, while Iraq is the other whipping boy, though few notice that Iraq has had two general elections and is now the largest Arab democracy in the Middle East. Devolution, the minimum wage, the introduction of civil partnerships, the Human Rights Act and the Good Friday Agreement are all forgotten. One candidate insists New Labour got everything wrong.

Delusion. This is the most serious problem. Capitalism collapsed and the state is back in fashion: all we need to do is wait for the coalition's cuts to increase, voter dissatisfaction to rise and - voilà - we will be back in office. Trade unions will be re-empowered, banks will be cowed and public spending will be revived.

If only. The coalition will last the full five years, in four of which it will go on blaming Labour's fiscal profligacy. As we do not wish to talk about the fiscal mess we have left behind, we shall be on the defensive for a long time. It is the Winter of Discontent revisited.

The truth now, as in 1979, is that the left's cupboard is bare of ideas. Centre-right parties rule in Germany, France and the UK, while George W Bush did as much bank recapitalisation and Keynesian reflation as Gordon Brown. State intervention can be used by the right no less than the left. In the middle of the worst crisis of capitalism for over 50 years, the left is out of power everywhere and has no ideas to combat its retreat. It is neither Old Labour nor New Labour: right now it's Tired Labour.

New Labour was an attempt to come to terms with a world in which socialism had imploded with the collapse of the Soviet Union, and capitalism was rampant in the shape of globalisation. The New Labour project succeeded in making us electable. Like many successful ideologies, it eventually went too far. From being business-friendly, it became uncritical of the City, and the events of 11 September 2001 made counterterrorism the excuse for the worst attacks on civil liberties.

Back to Labour basics

Now is the time to think, to come up with fresh, but workable ideas. We have an old tradition in the labour movement - even older than Old Labour - represented by people such as Edward Carpenter, for whom socialism was about lifestyle and freedom and not about the state. It is a tradition of co-operatives, mutuals and community action.

Labour got into statism after 1945 because of Keynes and Beveridge. But at the same time, we abandoned the rich traditions of collective self-help on which an earlier generation had relied. We may need to revive those traditions. The paternalism of a Beveridge welfare state has been an enemy of the culture of self-reliance because it treats the recipients of welfare as suspects likely to cheat, rather than citizens with entitlements. In our 13 years in power, we increased welfare payments but failed to change the terms of paternalism.

These institutions - the co-operatives, credit unions, housing associations, friendly societies - used to be the support mechanisms of communities. They need to be developed again for the 21st century. Statism has no future.

We have time. The coalition may go after five years if we're lucky. But if we have no new narrative, we will not deserve to be back. Once we get out of the mindset that hankers after a quick return to power, we may secure a better future for the party. First, we must lose the three Ds.

Meghnad Desai is a Labour life peer and professor emeritus of economics at the London School of Economics.