Has New Labour moved left?

Submitted by cathy n on 29 January, 2009 - 1:25 Author: Rhodri Evans

Government economic policy has shifted drastically. But it is not a shift to the left. Today’s capitalism is, as the Financial Times writer Martin Wolf has put it, a machine for “privatising gains and socialising losses”. The change is that, in the crisis, the focus has shifted from the private gains (currently more meagre) to socialising big losses.

A genuine left-wing response to the crisis requires a workers’ plan — a drive to mobilise the working class to take control of the huge accumulated gains of capitalist production, currently monopolised by the rich elite.

• When Northern Rock first ran into trouble, in September 2007, the New Labour government shied away from talk of nationalising it (as the Lib Dems quickly advocated) like an old-fashioned prude from talk of sex.

Now talk of nationalisation is as commonplace in government as talk of sex in a brothel. The latest step-up in Government ownership of the banks could even be a slide towards full nationalisation.

Yet the same bank bosses, or similar people, like nationalised Northern Rock’s £90,000-a-month new boss Ron Sandler, still run the banks. And they run the banks on the same principle: private profit. A real left-wing answer would mean taking all of high finance into public ownership (with no compensation for the big shareholders).

• The first New Labour measure in 1997 was to decree that in future the Bank of England would be run by bankers free from even formal democratic control. The bankers would restrain inflation by keeping the supply of money and credit in check, without worrying about whether people liked it or not.

Now Mervyn King, Governor of the Bank of England, speculates about full nationalisation of all the banks, declares the need to “to protect the economy from the banks”, and prides himself on his “unconventional measures” to pump unprecedented amounts of cash and credit into the banks.

But Mervyn King has not become left-wing. “Left-wing” would be sacking the bank bosses and reorganising high finance as a public banking, pension, and mortgage service under democratic control.

• When New Labour took office in 1997, it stuck rigidly to the public spending limits of the outgoing Tory government for its first two years, even while Tory ex-ministers said derisively that they would not have held those limits sacred themselves.

Now the Government boasts about how much extra public spending it plans to counter the slump.

Yet the planned extra public spending is generally construction projects and aid to bosses, and certainly not more public service jobs or wage rises for public service workers to make up for the real wage cuts they have suffered in recent years.

The choice is made for simple class reasons. Increased public service wages and jobs would raise the "baseline" from which workers will start in an economic recovery; once-off construction projects won’t.

“Left-wing” would be to increase public service jobs and wages.

• For a decade New Labour echoed the Thatcherite dogma that "the markets" must and should rule economic choices, with political intervention limited to securing the framework, infrastructure, and conditions for orderly markets. Now there is massive intervention, for example Government guarantees for the ordinary processes of firms' trading credit.

But New Labour's latest bail-out, for the car and car components bosses, was greeted by the Tories with the criticism that it wasn’t big enough. The Tories have not become left-wing.

“Left-wing” would be to take failing firms out of the hands of the bosses, and to put funds into reconverting them to socially-useful production, under public ownership and workers’ control.

• As long ago as 1976, old-Labour prime minister James Callaghan said that: “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists...”

For much of three decades, old Labour, New Labour, and Tory politicians all took that announcement as signalling the end of what had been called “Keynesianism”, the doctrine of keeping capitalism stable by countering downturns through increased public spending and easing credit.

Now the Financial Times reports that: “Richard Nixon, the Republican US president, [once] declared: ‘We are all Keynesians now’... The phrase rings truer today than at any time since...”

Actually, though the right-winger Nixon did say in 1971 that “I am now a Keynesian in economics”, the phrase “we are all Keynesians now” was coined by Milton Friedman in 1965. Friedman was a fierce right-winger, the intellectual inspirer of the economic policies of the military regime which took power in Chile in the coup of 1973.

Contrary to myth, Friedman always admired Keynes. He differed from some of Keynes’s ideas, and more pointedly with the cod-Keynesian idea influential in the 1960s that capitalist economies could be kept in a more or less permanent boom by “fine-tuning” public expenditure.

Keynes probably would not have agreed with the “fine-tuning” doctrine either. In a broad sense, “Keynesianism” was never discarded by capitalist governments. The economic successes, such as they were, of the very right-wing Reagan administration in the USA in the 1980s were based on “military Keynesianism” — government military spending pulling the whole economy up.

The cod-Keynesianism of the 1960s, in Europe and the USA, went together with increased welfare spending and some measures of social reform, left-wing as far as they went. John Maynard Keynes, the economist after whom the doctrine is named, was a reform-minded Liberal, though he declared openly that “the class war will find me on the side of the educated bourgeoisie”.

Keynes also said that “the difficulty is that the capitalist leaders in the City and Parliament are incapable of distinguishing novel measures for safeguarding capitalism from what they call bolshevism”. Those capitalist leaders have since become less short-sighted. It does not make them left-wing. There have been and are plenty of “right-wing” versions of “Keynesianism”.

• While New Labour semi-nationalises the banks, it pushes ahead with privatisation in public utilities and services, for example in Royal Mail. While it talks about counter-crisis public spending, it puts pressure on local government to make more privatisations and cuts. It is as adamant in keeping the Tory anti-union laws as ever. It has not moved left.

In fact, the policies in the crisis are the clearest expression so far of New Labour becoming (as Tony Blair stated his aspiration in 1994) “the party of business”.

The quirk in current politics is David Cameron’s Tories, for whatever reason, choosing to court middle-class ignoramus Daily Mail readers by ranting about “save, save, save” — pandering to the sort of people who splutter indignantly in wine bars over Mail headlines like “Let’s print more money! Labour’s latest big idea to fix Britain’s economic crisis”. (Mail writers evidently don’t know that Milton Friedman’s major work of economic theory was an attempt to demonstrate, essentially, that the Great Depression was due to the Federal Reserve not printing enough money).

The “educated bourgeoisie”, in papers like the Financial Times, is frankly aghast at the Tories’ nonsense. Presumably the more educated Tories reflect that Cameron’s stuff is just small-change vote-catching, without serious implications for what a future Tory government in 2010 might do. In any case, the Tories’ demagogy certainly does not show that New Labour has moved left.

• There is, however, a sense in which the shift in capitalist economic policies - all across the world, and in George W Bush’s USA much more than in Gordon Brown’s UK — opens up things for the left.

Actually, large-scale modern capitalist economies have never been regulated solely by the market. In recent decades more of the “planning” has been done by big global corporations and banks rather than governments, though mostly government economic management has been changed in character rather than abolished.

But with the crisis, what Frederick Engels pointed to over a century ago is forced upfront. “This rebellion of the productive forces, as they grow more and more powerful... this stronger and stronger command that their social character shall be recognised, forces the capitalist class itself to treat them more and more as social productive forces, so far as this is possible under capitalist conditions...

“The crises demonstrate the incapacity of the bourgeoisie for managing any longer modern productive forces... The modern state... essentially... the state of the capitalists, the ideal personification of the total national capital [steps in]...

“The capitalist relation is not done away with. It is rather brought to a head. But, brought to a head, it topples over...”

Engels meant: it could be made to topple over. To admit the necessity of the state regulating economic life is not necessarily left-wing. But once that admission is out in the open, a new question is pushed upfront.

Who then regulates the state? How, with what criteria and aims, should economic life be regulated?

The working class, the creator of wealth, should regulate the state: that is the essence of our call for the labour movement to reshape itself so as to fight for a workers’ government. And economic life should be regulated by social need, not private profit.

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