How did we get here?

After ten years of new Labour in power, the academics and commentators have been taking stock. David

Ten Years of New Labour
edited by Matt Beech and Simon Lee Palgrave Macmillan, 256pp, £19.99
Labours Old and New: the Parliamentary Right of the Labour Party 1970-79 and the Roots of New Labour
Stephen Meredith Manchester University Press, 256pp, £42.25

There have been three phases in the 90-odd years since Britain finally acquired a more or less democratic suffrage. Phase one started with the Lloyd George coalition's crushing victory in the 1918 election, and petered out in frustration, self-deception and humiliation under the ill-starred Callaghan government of 1976-79. Its dominant theme was a sometimes feeble, but sometimes brilliantly successful attempt to tame capitalism in the interests of class collaboration and national unity.

Phase two was much shorter, but packed with incident and marked by fierce social and political conflict. It began in the early 1980s and ended roughly 15 years later. It was dominated by an astonishingly vigorous and sometimes reckless effort to "untame" capitalism in the interests of social discipline, property rights and economic dynamism. Phase three has been a time of consolidation. It began when phase two ended, and it still continues. It has two central themes. On the one hand, governments have sought to soften the hard edges of the newly untamed capitalism of our time so as to embed it more firmly in the moral and political economies. On the other, they have tried, with increasing desperation, to halt the drain of legitimacy which has begun to call the survival of the Ruritanian British state into question.

To make sense of the new Labour project, it has to be seen in the context of this long sweep of economic and political history. Blair and Brown, the leading paladins of phase three, did not suddenly materialise out of a void to take their places on the Treasury bench of the House of Commons. They were formed politically during the closing stages of phase one, when their party was overwhelmed by repeated crises, and they were toughened by its long sojourn in the wilderness during phase two. Equally, Margaret Thatcher, the Boadicea of phase two, was formed by her party's less-than-glittering performance during the last 20 years of phase one. Blair and Brown are Thatcher's children, as Simon Lee reminds us in his illuminating essay in the collection that he and Matt Beech have edited. By virtue of that parentage, they are also the grandchildren of Callaghan, Heath, Wilson and Macmillan - to say nothing of Churchill, Attlee and Baldwin.

Less obviously, they have a large and disparate foreign cousinage. Too often, unhistorical talk of globalisation has given the impression that until the 1980s, or perhaps even the 1990s, national economies were islands unto themselves. Nothing could be further from the truth. The taming of capitalism in Britain's phase one was the local example of a worldwide trend, set in motion by the collapse of the global economy after the First World War. It was exemplified as much by the American Democrat Franklin D Roosevelt, the French socialist Léon Blum, the Swedish Social Democrat Ernst Wigforss and Hitler's finance minister, Hjalmar Schacht, as by its British notables. The same was true of the untaming phase that followed. Margaret Thatcher was the most brilliant and passionate of capitalism's untamers, but Ronald Reagan's America, Bob Hawke's Australia and, to some extent, Helmut Kohl's Germany followed similar paths in response to similar imperatives. Even François Mitterrand's France gave an occasional, surreptitious nod towards Thatcherite economics.

Britain's phase three is a more complicated creature. It, too, has foreign counterparts. The gales of creative destruction that the capitalist renaissance of the 1980s and 1990s let loose have swept across the globe. In society after society, the hunt has been on for a holy grail capable of combining the social protection of phase one with the economic dynamism of phase two. That was the inner meaning of Bill Clinton's new Democrats, as well as of Blair's new Labour Party. Blair's Third Way briefly became a talisman for the German Social Democrats and was also taken up by the reformed communists in the Italian Democratic Party of the Left. Outside the former communist bloc, however, the Blair government's partial reconstruction of the British state stands virtually alone. Only fissiparous Belgium has experienced anything as far-reaching.

The great question for analysts of the new Labour experiment is: Why? Unfortunately, neither of the volumes under review answers it. They are solid, workmanlike and instructive. The Beech-Lee collection, in particular, will be a useful undergraduate text, while Stephen Meredith's exhaustive study of the parliamentary Labour right in the 1970s throws valuable light on the "unravelling" of the Keynesian social democracy of the postwar years. But both books pay so much attention to the trees that they have too little to spare for the wood. Neither conveys a sense of the furious whirligig of socio-economic change that undermined the tamed capitalism of phase one and made the untamed capitalism of phase two inevitable; and neither fits the British story into its international context.

Yet, perhaps without realising it, they do focus attention on the great paradox of the Blair/Brown years. In the economic and social domains, as Beech and Lee both show, the new Labour regime has been quintessentially conservative with a small 'c'. As Beech puts it, new Labour's overriding aim has been to practise the "politics of dominance" as successfully as Thatcher did. But Blairite dominance differed fundamentally from its Thatcherite predecessor. Thatcher sought to extirpate the legacy bequeathed to her by Callaghan, Wilson, Heath and Macmillan. Blair sought to make Thatcher's legacy a permanent part of the landscape. Both were populists, but Thatcher's populism was the servant of her crystalline vision of reborn market disciplines at home and reborn greatness abroad. Blair's populism was an end in itself. He wanted to dominate in order to go on dominating; he craved popularity in order to be popular.

Of course, the Blair government did not leave Thatcher's legacy entirely untouched. But, except to the eye of love, the economic and social changes it carried through were distinctly small beer. All the great hallmarks of the Thatcher counter-revolution - privatisation, marketisation, centralisation, consumerism, a shrunken public domain and a growing gap between the super-rich and the rest - are still in place. There is nothing surprising, or even particularly shocking, about their survival. They are the hallmarks of renascent capitalism everywhere, from Mos cow to Manhattan. The notion that Blair and Brown could have embraced a vastly different socio-economic model if only they had been braver or more far-sighted belongs to Neverland. (So, of course, does the notion that David Cameron will be able to do so.)

But there is one great exception. Thatcher and her colleagues made their counter-revolution with and through the familiar machinery of the British union state and legitimised it with the familiar unction of absolute Westminster sovereignty. Blair and his colleagues combined their socio-economic conservatism with the most radical reconstruction of the British state since 1707. Blair himself never grasped the full implications of his constitutional changes. As Mark Evans suggests in an excellent essay in the Beech-Lee volume, the later Blair became a constitutional sorcerer's apprentice, desperately trying to hold back the flood of unanticipated consequences let loose by the early Blair. Yet he did not succeed. The devolution statutes have already transformed the territorial constitution of the union state, and it is as clear as anything in politics ever can be that still more transformative changes are in store. And despite the government's fond attempt to square the Human Rights Act with the conventional doctrine of absolute parliamentary sovereignty, Britain now has a fundamental law constraining the executive - and, for that matter, private citizens - in a quite unprecedented way.

The new Labour paradox goes deeper than that. Blair was always a reluctant constitutional reformer. He acted as he did because he had to, not because he wanted to. He had to because the Thatcherite counter-revolutionaries had imposed intolerable strain on the structures they had inherited. The British state had been in disarray long before Thatcher crossed the threshold of No 10; the passionate elan with which she set about untaming capitalism unleashed a torrent of impatient individualism that threatened to sweep the house away. But because his heart was not in it, Blair's attempt to repair the damage did not succeed. Asymmetric devolution backfired. It did not satisfy the Scots or Welsh. Albeit very slowly and gradually, it merely led the English to rediscover their own nationality in the way the non-English peoples of the United Kingdom had started to do 30 years earlier. The Human Rights Act backfired, too. Because ministers would not accept the logic of their own statute, and persisted in forcing through legislation that violated the human rights they said they wanted to protect, it hastened the drain of legitimacy which it had been designed to halt.

This bleak landscape is Brown's inheritance. I hope he realises how bleak it is, but, to put it at its mildest, the omens are mixed.

This article first appeared in the 14 April 2008 issue of the New Statesman, Belief is back