In “Operation Fightback”, Labour needs to think big, and they need to be frank. As two more in a long line of nostrums for Labour’s ills (the most recent being Ed Miliband’s “boldness”), these recommendations may already sound a bit wearying - but if now is not the time for recommendations, then when?
One year ago, as the financial crisis really began in earnest, everything politically solid really seemed to melt into air. The scope of political possibility widened, as old economic certainties crumbled. Mainstream media started suddenly started using words like “capitalism” and “crisis”. The sense of possibility was quite palpable, especially as voters in America looked poised to vote Obama into power.
But in the past few weeks, we have seen a vertiginously quick narrowing of the political debate: where once it looked as if fundamental questions about the nature of our economic life seemed up for question, now the political debate is all but exhausted by the rather tawdry debate about whose decisions on spending cuts will be the “toughest”. Now the lexicon of political debate does not take in fundamental terms like “capitalism”, “state”, and so on; it stretches only from “savagery” to “kindness” in cutting spending. The only political possibilities seem to be those of taking up positions on this grim spectrum.
With all this, there has been a concomitant shift of responsibility for our economic woe – from bankers to ministers, from the unregulated free market to the hand of the state.
It’s not just that – as Cameron egregiously charged of Labour – anyone is singularly guilty of “rewriting recent economic history”, but that, collectively, we seem to be suffering a dangerous and strange bout of amnesia about our shared economic history. As Joseph Stiglitz and Jean-Paul Fitoussi have written, this is a crisis of capitalism whose “roots lie as much in structural causes as in the loose regulatory framework of the financial sector” – structural causes related to the economic settlement that has dominated our politics for 30 years. If you’d just been paying attention for the past three weeks, you could be forgiven for thinking that Gordon Brown had single-handedly pushed the British economy off the precipice and into the abyss.
There is certainly enough intellectual firepower in Labour’s arsenal (e.g. David Blanchflower) to lend credence to the view – should Labour wish to make a stronger case for it – that the gravest challenge we face is not yet public debt, but still the crushing consequences of unemployment, especially on the young – and so that the rush into the cuts debate can be coherently resisted.
Labour should resist this rush, and keep open the bigger, more fundamental debate which the financial crisis made possible.
But Labour should also be frank about its mistakes. Lord Mandelson tells the Economist that the crisis shouldn’t upset the conclusion that New Labour got its approach to the economy and to finance “fundamentally right”, and that the lesson of the crisis is one only of the perils of a lack of oversight, in a structure otherwise sound. In my economic semi-literacy, I can still tell a contradiction when I see one – and there is a stark one here between Mandelson’s evaluation and Stiglitz and Fitoussi’s. Keeping open the more fundamental debate which Labour needs to take to the Tories means ipso facto being frank about the fact that, as Ed Balls admits, New Labour did not always strike the balance between the state and the market quite right.
Of course, Labour should stand the achievements of the last twelve years. But Labour’s fightback must be, in part, a frankness also about that period's shortcomings – only given this frankness can Labour reopen the “big” debate, which does not get drawn into the Conservative/Liberal race to the bottom on cuts, and into the perverse air-brushing of history to which we have been subject over the past few weeks. Of course, this opens up territory which should be the natural home for social democrats and progressives - and it is therefore territory in which the left are well-equipped, and the right ill-equipped, to win the argument.