Rachel Reeves styles herself a social democrat. The term once described those who sought to defend the interests of the working class, balancing individual freedom with an egalitarian and interventionist approach to the market economy. But today it really just means a centrist who believes in the value of public services. Reeves, like much of the Labour Party, doesn’t place great emphasis on egalitarianism and takes a mostly orthodox free-market approach to the economy.
But Reeves now finds herself in a bind, one largely of her own making, as she seeks to reconcile her gradualist left principles with the unforgiving demands of the bond markets. And rather than seek to restructure how the country’s wealth is fundamentally produced and valued, Reeves’ instincts are to preserve her party’s fiscal credibility. Apparently unable to escape the suffocating embrace of global neoliberalism (which Labour themselves turbocharged during the Blair/Brown era), the party satisfies itself with a tepid technocratic take on supply-side economics. Even the party’s most limited redistributive policies, such as abolishing non-dom tax status, are on the verge of being softened, with Reeves telling the Davos summit, without a whiff of irony, that she has “been listening to the concerns… raised by the non-dom community”. Instead, as restated in her speech yesterday, her priority is growth and wealth creation, primarily in and around the south-east where the benefits of her proposals for Heathrow and Oxbridge will be felt.
I have long dismissed this tendency in the party as “Rawlsian”, after the liberal American political philosopher John Rawls. In particular, it puts me in mind of his “Difference Principle” which, broadly put, allows for social and economic inequalities to be maintained if the least advantaged are made better off from that arrangement. The well-paid, well-travelled and well-educated managerial classes of the knowledge economy have been among the main beneficiaries of late capitalism. They are also an exemplar of this intellectual tendency, and now one of Labour’s natural constituencies. And like turkeys not voting for Christmas, while this new progressive left will advocate strongly for modest redistribution to benefit the most disadvantaged and oppressed, they also seek to retain their own often grossly disproportionate share of economic and social capital. But, in portraying the progressive left in this way, I think I have mischaracterised and underestimated Rawls and, in turn, flattered a philosophically moribund Labour Party. Revisiting Rawls, I now see there is nothing particularly Rawlsian about today’s Labour – and that there is instead a great deal they might learn from him to build a more just politics.
Working in the classic social contract tradition of Thomas Hobbes and John Locke, the starting point for Rawls’ theory of justice is the abstract concept of the “original position”. This is an imagined situation in which rational individuals living behind a “veil of ignorance” (knowing nothing about their class, education, ethnicity or gender) get to choose the basic principles of justice. Rawls argues that they would come to two broad conclusions: that each person should have the most extensive system of liberties compatible with individual rights; and that social and economic inequalities should only be tolerated if they benefit the least advantaged (for example, a higher salary might be necessary to incentivise or reward individuals with particular talents that benefit society as a whole, such as doctors, scientists and engineers). Although this second principle is commonly misinterpreted as a justification for trickle-down economics, Rawls in fact argues at length for strict limits on inequality, suggesting that (following his schema) only a “property-owning democracy” or system of “liberal socialism” is sustainable in the long run.
The Labour government’s economic policies, closely following those of its Conservative predecessors, are by contrast characteristic of what Rawls describes as “welfare-state capitalism”. Such a system provides protection for the least advantaged but allows for gross inequalities in wealth and opportunities. For Rawls (as he presciently argued in his 1985 essay “Justice as Fairness”), this system leaves control in the hands of wealthy private actors and allows the least well off to become demoralised and withdraw from active participation in democratic life. And though this has served as an accurate description of Britain for some decades now, the malaise is only deepening on Labour’s watch.
Rachel Reeves argues that she is “fixing the foundations”, championing growth in order to invest in public services. But her policies fail to redress the fundamental inequalities that have persisted since the early 1990s. Reeves may have raised the overall tax burden to its highest levels since 1948, but her changes to National Insurance employer rates are highly regressive and will be felt mostly by the less well-off in terms of lower wage growth, job losses and increased prices. A Labour government with any sense of Rawlsian fairness would have increased the tax burden on those who can easily afford it. Such a government might even have considered raising the tax burden further, bringing it more into line with less unequal countries such as Denmark and Norway. Reeves, trapped within the centrist paradigm, will have her head full of Laffer curves and other neoliberal orthodoxies. In this sense, her much-vaunted “Securonomics” is drawn from the same fundamental tradition as Reaganomics or even Trussonomics.
Central to Rawls’ philosophy is the concept of reciprocity: the idea that all who take part in a well-ordered society are equally deserving of the benefits of cooperation. Gains to the more advantaged are not made at the expense of the less advantaged. There is a distinct lack of reciprocity in neoliberal Britain, one starkly exposed during the pandemic years when the middle classes in their townhouses or country gardens became a genuine leisure class, leaving the less well-off cooped up in small flats or working to deliver essential services. A stark division not just between the poorest and the wealthiest but a fundamental separation more generally between those with capital and those without. And Labour appears blind to this basic unfairness. Earlier this month, the Blairite Wes Streeting (having already paid off the junior doctors with a 22 per cent pay increase) now apparently seeks to offer financial incentives to (already well-paid) GPs to essentially do their job while the government insists on retaining the contemptible two-child benefit cap and leaving pensioners in the cold.
Ed Miliband, whose political instincts are closer to the traditional Labour left, might have been a counter to the neoliberal fervour of his Treasury colleagues. But in his endeavours to hasten a net zero future he is choosing to pile additional regressive costs (from green levies to ruinously expensive heat pumps) on to the already hard-pressed working classes. The government’s strategy to bring forward the banning of internal combustion engine cars is skewed in favour of the better-off: those able to park their car in a driveway enjoy significantly cheaper electricity costs (and a lower VAT rate to boot). Again, the Labour government (and, presumably, its civil service advisers) fail to recognise the pervasive inequality that exists between those on average incomes, for whom the increasing cost of living hits hard, and those (usually in the professional classes) with significantly above-average incomes who remain untroubled. I don’t see many Tesla EVs in my local Aldi car park, but it’s a very different story up the road at Waitrose.
With six months of flatlining growth representing their current record in government, and borrowing becoming more expensive, the government may have to consider raising taxes again if it is to meet its spending commitments. However, rather than see this as an opportunity to reset expectations about how the tax burden might be more fairly felt and raise taxes appropriately, Rachel Reeves appears to be looking to cut public services. Instead of seeking to undo decades of structural inequality (and reintroduce that lost “Rawlsian” sense of reciprocity that I remember when growing up in the 1970s), the Chancellor has immeasurably more modest redistributive ambitions. Rather than considering how the sixth-largest economy in the world can be more fairly organised, the government insists, so far in vain, in seeking only to grow it. Here’s a radical thought: maybe the modern progressive left, and its representatives in government, could consider that the better off might learn to live with a little less?
[See also: The Thatcher delusion]
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