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Learning from Europe

Robin Wilson

The real reason for Labour’s dire predicament is not just Brown’s leadership. It is that, after more than a decade of New Labour, nobody in the party knows what it stands for.

Jackie Ashley (1)

The leadership speculation is clearly taking serious risks with the public’s patience. But, whatever the Labour parliamentary party does now, they should at least realise that opening up the question of the leadership would resolve very little if we can not define what Labour wants to stand for and against.

Sunder Katwala (2)

There is a very real danger that history will repeat itself with the current Labour leadership crisis. That the party leadership needs to change is not in doubt. But this is only a necessary, and by no means a sufficient, condition of renewal.

This was the disastrous mistake made in 2007 – to think Blair, rather than Blairism, was the problem. For its consequence was to assume that Brown, absent any debate about where the party should go, was the solution.

The mistake, of course, was above all Brown’s: he thought Blair was the problem more than anyone else, even though he had been least as much the architect of ‘New’ Labour. And he invested huge energy in displacing his rival from Downing Street – energy that should have been devoted to elaborating the content, when he moved into No 10, of what turned out to be his empty promise of ‘change’.

What needs to happen now is that the agenda moves on to the challenges to which Labour must find answers if it is to re-establish public credibility. In that context, a more collegiate Labour leader can and must play a key role.

The ABC of social democracy

After the euphoria of the 1997 landslide had dissipated, it became evident during the first term that the ‘third way’ which underpinned ‘New’ Labour as an idea was charting a wrong course. Symbolised by the orchestrated spectacle of flag-waving for the Blairs’ arrival in Downing Street, it betrayed what can most charitably be described as complete ignorance of what would more broadly in Europe be understood as social democracy or liberal socialism (Wilson, 1999).

Key to this philosophy is a recognition, which ‘New’ Labour grasped in only the fuzziest way, that yes, it is important for social-democratic parties to be able to recruit middle-class support beyond their core, working-class constituency if they are to secure electoral majorities – but they do so by being liberal as well as left, rather than by falling into an authoritarian-populist competition with the right which only disillusions their progressive supporters.

The successive electoral successes of the PSOE under the leadership of José Luis Rodríguez Zapatero in Spain – despite, or because of, intense confrontations with the Catholic Church over liberal reforms towards gender equality – contrast with the evaporating support for ‘New’ Labour. The real error of the Labour Party in the early 80s was not to be ‘left’ but to lose liberal support to the Social Democrats by dogmatic, and spuriously radical, hostility to European integration and proportional representation – keys elsewhere to progressive coalition-building.

‘New’ Labour made a virtue out of being philosophy-free, claiming its only interest was in ‘what works’, implying that left and right were no longer meaningful political landmarks. But this led to two defining wrong calls, respectively in terms of international relations and domestic governance, as had become clear by the second term (Wilson, 2003).

Lacking a clear compass, ‘New’ Labour lost its place on the geo-political map, reinventing a 50s Atlanticism based on a concept of the ‘special relationship’ famously rubbished by John Foster Dulles when, as secretary of state, he suggested that Britain had lost an empire and was yet to find a role.

This led inevitably to Britain’s cavalier involvement in the Iraq adventure, in the face of the intelligence evidence and with no apparent thought for the human consequences. The scale of the anti-war demonstrations, way beyond what the left can normally mobilise, indicated just how successfully ‘New’ Labour had alienated the liberal centre.

Keynes famously remarked that anyone who disparaged theory was usually in thrall to some dead economist. And, domestically, ‘New’ Labour was certainly in thrall to Adam Smith – its ‘pro-business’ boosterism reliant on the ideological belief that the ‘invisible hand’ of the market would align the pursuit of private interests with those of society as a whole. Markets were unleashed into the public realm under the banner of a (dated) New Public Management to keep supposedly rent-seeking ‘knaves’ on their mettle, replacing reliance on networks of professional expertise by populist political pitches.

Yet increased investment in public services thus failed to secure the anticipated social and political return in effectiveness they anticipated. Discounting any employee commitment to a public service ethos and reducing users to passive ‘customers’ undermined the very goodwill and capacity for ‘co-production’ on which public services depend. This led ever more desperately to ever more arbitrary central targets and the haemorrhaging of core political support.

It was an object lesson on how to destroy the ‘historical bloc’ on which Labour depends for election. Hence the paradox that ‘New’ Labour, presented as the only route for the party out of the political wilderness, had become by 2005, and still more since, a toxic electoral brand.

Yet Brown endorsed without question the new faith, in America and markets. A tub-thumper for the American model of ‘flexible’ labour markets – which have seen median wages hardly rise for decades – Brown also refused to hand monetary policy to the European Central Bank by joining the euro but, as with the Federal Reserve, handed it to the Bank of England instead. Those struggling with their mortgages might reflect that interest rates have been consistently higher – currently 0.75 per cent higher – than in the euro zone as a result.

Supposedly committed to ending ‘Tory boom and bust’, Brown thus presided, Lawson-like, over an unregulated explosion of private credit which not only saw the savings ratio collapse but sooner or later was bound to end, alongside the ‘sub-prime’ recklessness in the US, in a shuddering re-equilibration. And market dogma led to his relentless pursuit of the Underground public-private partnerships against London’s elected mayor, despite the gigantic transaction costs of the contracts and the inevitable resumption of public responsibility for risk when Metronet failed.

What united these two wrong calls – and what united Blair and Brown for all their personal antipathy – was disdain for the European social model. This is a notion widely understood on the continental mainland (3) but hardly ever even discussed in Britain. Social democrats and Christian democrats agree – hence Angela Merkel can come across as left of ‘New’ Labour – that markets should be regulated for the public good and that social pacts allow wage moderation to be traded for wider social goals.

In the absence of such basic recognition, ‘New’ Labour has been bereft of a script when the times clearly require a paradigm shift away from market mania. Ted Heath could lambast Lonrho as ‘the unacceptable face of capitalism’ in 1973 for evading international sanctions against Rhodesia, amid claims by dissident directors that Tiny Rowland had bribed African leaders. Yet Blair succeeded in blocking the Serious Fraud Office inquiry into prolific allegations of bribery by BAe in arms deals with Saudi Arabia, in defiance of an OECD anti-corruption convention.

‘New’ Labour has even allowed the Tories, with breathtaking chutzpah, to paint themselves as the friends of the poor – unable as it is, with the bizarre embrace by the ‘business secretary’ of individual acquisitiveness, to offer the fairly devastating rebuttal that Britain’s yawning inequality is (outside of Ireland) distinctive among affluent European countries and that the gulf between rich and poor opened precisely during the devil-take-the-hindmost Thatcher years.

Reconstructing the project

Amid the ruins of ‘New’ Labour, we have to reconstruct the progressive project in a way which engages more effectively than conservatives with the challenges contemporary capitalist societies represent. It is unlikely that the errors of the past decade and a half can be unwound quickly enough to win the next election, but this is the only way to have a fighting chance. This approach has however the immediate benefit of looking outside these shores for answers, as well as looking within.

Fundamentally the political questions on which the European liberal-left must provide a lead in the twenty-first century – as no other force on the globe is likely to do so – are similar and they are simple to construct a new narrative around. They can only be solved in a cosmopolitan way, working at local, regional, national, European and global levels – there is no ‘British way’ to do so.

These three questions are: can we live together as equals, can we live together and can we live at all? They are thus the questions of equality, diversity and sustainability.

‘New’ Labour’s mess, and Brown’s in particular, can also be understood as a complete inability to answer any of these questions. On equality, the move to reduce the basic rate of tax by removing the 10p rate not only showed how talk of ‘hard-working families’ merely revives Victorian language of the ‘deserving’ poor. It also turned out not even to be effective populism, as it offended against the basic social-democratic commitment to fairness shared by most members of the public, even where they stood to be beneficiaries.

Brown, of course, has been the principal author of ‘New’ Labour’s ‘welfare to work’ programmes, the centrepiece of the response to poverty. These were themselves of US provenance, developed in a context where ‘welfare’ had acquired a strongly negative connotation – as ‘dependency’ and explicitly coloured by race – rather than as a universal source of security in ‘risk society’, as in continental Europe. Welfare recipients were stigmatised by the ‘undeserving poor’ assumption that all of their problems were on the ‘supply side’ and that pressure into work was the route out of poverty – particularly single parents, even if that might not have been ideal in terms of child development.

Yet what matters in terms of overall social well-being is the depth of the social gradient (Marmot, 2004; Wilkinson, 2005), not individual movements up or down it. The labour market certainly churned more rapidly as a result of Brown’s frenetic activism but the Gini coefficient of income inequality has continued to rise, to its highest level since records began in 1961 (IFS, 2008). ‘New’ Labour’s failure to recognise equality is the alpha and omega of left-wing politics (Noël and Thérien, 2008) has meant it has inevitably missed its talismanic child-poverty targets.

On the challenge of managing ever-growing social diversity, Brown’s clumsy answer has been to foreground ‘Britishness’. This led to his infamous conference invocation of ‘British jobs for British workers’, more appropriate on a British National Party platform. Bizarrely, given his own background, it has left the party wide open to the Scottish National Party’s opportunistic combination of left- and right- sounding claims under the common oppositional banner of ‘Scottishness’, deployed to effect in Glasgow East, while leaving Labour in Scotland (at time of writing) without a leader and rudderless.

Worst of all, allied to support for the US ‘war on terror’, this approach has led inexorably towards a more and more authoritarian response to Islamism, encapsulated in the hugely damaging proposal to extend detention without charge to 42 days. Even four-day detention was found by the European Court of Human Rights in a ruling two decades ago on a Northern Ireland case to be incompatible with the requirement, in the European Convention on Human Rights, to bring suspects ‘promptly’ before a court. It sent a demoralising signal to all progressives that Brown could only swing the Commons vote by allying with the homophobic, anti-abortion Protestant fundamentalists of the Democratic Unionist Party.

On sustainability, fatalistic deference to the market has inexorably brought more unpopular, as well as unethical, decisions. These have ranged from the endorsement of nuclear power, despite the eye-watering £73 billion estimated bill for clearing up after the last generation of plants, to new coal-powered stations in the absence of CO2 capture technology, despite direct action, to the third runway at Heathrow, despite huge protest in London.

Brown appears unable to comprehend the basic ecological argument – the ‘tragedy of the commons’ which results from private economic actors being encouraged to pursue their own interests, mindless of how the ‘externalities’ they generate destroy the very fabric of the planet. This is the latter-day equivalent of the case for the Factory Acts. As brilliantly analysed by Marx in the first volume of Capital, restrictions on child labour and the length of the working day were introduced in Britain in the teeth of capitalist opposition, yet they not only prevented the degradation of the workforce on which capital depended but critically spurred the modernisation of industry in the process.

The danger in this context is that even a policy-free Conservative Party is able to make sufficiently plausible changes –including its ‘greener’ logo – to appear more ‘progressive’. Meanwhile, Labour was reduced to desperate class-against-class rhetoric in Crewe and Nantwich, flailing against the ‘toffs’, when at its best during the last century Labour was an alliance of the Labour movement and intellectuals, including of course Oxbridge products. ‘Liquidate the Etonians as a class!’ proved not to be a resonant slogan.

These three questions, however easily posed, are fiendishly complex to answer. It is beyond the capacity of any one individual to do so. David Miliband’s much-discussed Guardian article, for instance, skated quite lightly over their surface. Regardless of whether he or someone else becomes Labour’s next leader, they must behave in a more collegiate way.

Ironically, given ‘New’ Labour’s worship of private enterprise, a corporation which followed its old-fashioned, top-down, hierarchical model would rapidly go out of business. (Indeed, so atrophied has the party’s base become and so massive its indebtedness as the high rollers have pulled back, only the goodwill of the Co-operative Bank sustains it as a going concern.) Google, for example, while rigorously reviewing particular projects, works by a system of disorganised teamwork, thereby maximising the potential for creative solutions to problems to come forward (Caulkin, 2008).

Labour must learn the basic sociological principle of the wisdom of crowds – whether that crowd be the cabinet, the PLP, the party membership or the Party of European Socialists – and so avoid the elephant traps into which the principle of uno duce, una voce has led it. And here it can point to real exemplars of good practice elsewhere on the continent, as well as the potential of European solutions to otherwise apparently intractable global problems.

Meeting the challenges

What does this mean for an agenda which would be adequate to the three challenges outlined?

Living as equals

If we take the first question, equality, it is little recognised that the overall impact of direct and indirect taxation and duties in the UK is slightly regressive (Fabian Commission, 2006, 129). Hence it has a much higher Gini coefficient than the EU average (Guio, 2005, 4).

In a context where monetary policy has been forsworn, a ‘one-club’ fiscal policy is risky enough without insisting that that policy can only ever be relaxing. Far from being the epitome of ‘prudence’ and ‘stability’, Brown has had to stretch to breaking point his fiscal rules because he has not been willing to say that the rich must pay more if the alternative is a soaring budget deficit.

There is no way of avoiding the conclusion that if struggling, low-income households are to be meaningfully assisted – never mind if the effects of Thatcherism are ever to be undone – the tax burden on the wealthy must be raised. The system should be considerably simplified, with income-tax rates of 20, 40 and 60 per cent and the ceiling on national insurance contributions removed.

Pensions should be raised, and then relinked to earnings on the insurance principle. Unemployment benefit should be restored as a liveable, short-term benefit lubricating job changes, as in the ‘flexicurity’ Danish model. And there should be a basic income for adults not participating in the labour market, which should be linked in the absence of caring responsibilities or disability to engaging in education or retraining or some other recognised form of social participation.

The Nordic countries, France and some former eastern-bloc countries all do much better in reducing the risk of poverty in this way. Yet the World Values Survey indicates that, of these countries, only France and Slovenia could be defined as to the left of the UK in self-positioning on the left-right spectrum (Noël and Thérien, 2008, 36).

A key benefit of Nordic-style universal welfare systems, funded from progressive taxation, is the cross-class political coalition they engender: welfare recipients cannot be stigmatised as the ‘other’, concerns about abuse are removed, and the equality engendered by redistribution indirectly enhances trust (Rothstein, 2005, 90). No doubt rich Swedes would like to pay much lower taxes – but not if that means having to pay through the nose for private provision when the public system is funded to the level which alone allows the personalisation of which ‘New’ Labour often aspirationally talks.

Cameron’s argument on welfare has been a subtle one: he has moved on from Thatcher’s ‘no such thing as society’ to a Burkean support for the ‘little platoons’ – in effect a call for a return to the Victorian world of the Charity Organisation Society and its hostility to statutory provision. But the Nordics demonstrate that a strong state does not ‘crowd out’ the voluntary sector, as Cameron implicitly claims. On the contrary: in Sweden, citizens are members of nearly three associations on average (Grassman and Svedberg, 2007, 134).

There is, however, genuine difficulty in meeting social aspirations at national level in an economy dominated by transnational companies and global financial markets. Labour needs to drop its bizarre ‘red line’, defending only the City elite, on harmonised European taxation. In its absence there will be a race to the bottom – as with the recent speculation that British-based companies would move to the Republic of Ireland – with the tax burden displaced on to labour.

Labour should also revoke its City-driven hostility to the euro – this would represent an immediate windfall gain to UK manufacturing firms by reducing their euro transaction costs. More, it should support the longstanding French aspiration for a system of ‘economic governance’ to ensure that management of the currency is subjected to democratic social objectives, rather than the ECB following the Bundesbank model.

Living together

As to managing diversity, ‘New’ Labour’s mistake was not to conclude that multiculturalism had been discredited by the 2001 riots in the northern English mill towns. It had been discredited in the Netherlandstoo, the other European country with large-scale immigration stemming from its colonial past, and for the same reason that it had inadvertently encouraged ghettoisation and mutual incomprehension. The mistake was a return to an even older assimilationism, where the onus was placed entirely on members of minority communities to integrate, when this should have been understood as a ‘two-way street’ (Habermas, 2004).

In that context, it has been impossible to give the key policy notion of ‘community cohesion’ traction. When the Commission on Integration and Cohesion (2007) was established after the 2005 London bombs, the overwhelming response to its consultation was confusion as to what ‘community cohesion’ meant. It was dismissed by a recent study (Robinson, 2008, 15) as an ‘ill-defined concept’.

The UK has been left unable to do other than retreat into a security state as the threats against it have mounted. Contrast Zapatero’s response to the Atocha Station bombings in 2004 which precipitated his election. By removing Spanish forces from Iraq and by ensuring the perpetrators were pursued through the courts, without undermining the rule of law, he ensured Spain was no longer a significant terrorist target: ETA, too, is being weakened by the same means.

In the wider Europe, events from the wars of the Yugoslav succession to the riots in the French banlieues have provoked in recent years much soul-searching, to which the more robust notion of ‘intercultural dialogue’ (Bekemans et al, 2007; Council of Europe, 2008) has emerged as a new paradigm. This seeks to realise the European vision of ‘unity in diversity’ by ensuring that cultural diversity becomes an economic and social enrichment, rather than being perceived as a threat.

Founded on the bedrock of universal norms of democracy, human rights and the rule of law, the concept of intercultural dialogue breaks out of the fixed, majority/minority way of thinking of the problem which has underpinned the two failed models of assimilation and multiculturalism, risking conflict along the ethnic fault-line. It favours instead an individualist concept of society – more appropriate to today’s complex, fluid and globalised identities than group-rights demands for a new apartheid (Beck, 2006, 115) – and a commitment to dialogue across ethnic divides.

And there is much good practice in this regard. For example, scores of local integration councils/committees have been established by municipalities in Germany and Denmark to develop a dialogue between elected political and minority-ethnic representatives. These can ensure that issues which could escalate into identity conflicts, such as particular pressures on public services, are dealt with as practical problems to be solved.

This and much more has been brought together in a Council of Europe (2008) White Paper on Intercultural Dialogue, to which the UK’s contribution during the preparatory consultation was modest by comparison with high performers like Spain and Germany. Both of the latter have elaborated national integration plans to ensure a committed, ‘joined-up’ approach to the challenge. With this year also the EU Year of Intercultural Dialogue, Europe has the capacity to realise the alternative ‘polycentric’ vision of world order, developed decades ago by the Italian Communist leader Palmiro Togliatti, to a bipolar ‘clash of civilisations’.

Living sustainably

Last but by no means least, on the huge challenge of sustainability, leading the way is again Germany, once more recognised as Europe’s powerhouse economy after the resource-sapping experience of unification. And the big idea is what has come to be known there as ‘ecological modernisation’. As the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (2006, 9) has put it,

Instead of playing economy and ecology off against each other, we need to finally understand the economic potential inherent in the necessary ecological structural change: new growth, new value creation, new products and processes and new jobs are all possible. To make it happen we need an ecological industrial policy that will adapt our industrial structures to the ecological and economic challenges.

In March 2007, the European Council agreed a target of a 20 per cent cut in greenhouse gas emissions by 2020 – 30 per cent if others co-operated. The heads of state and government agreed that they were

determined to promote eco-innovations through an ambitious approach, taking full advantage of lead markets in areas such as sustainable and safe low carbon technologies, renewable energies and energy and resource efficiency.

The German government believes that those countries, and regions, which are able to secure ‘technological leadership in the green markets’ will gain ‘decisive advantages’ in the face of global competition (Federal Ministry, 2006, 10): ‘Anyone who invests here is creating permanent jobs and safeguarding the future– economically, socially and ecologically.’ Denmark, for example, has become a market leader in wind turbines, the environmental sector comprising one of its biggest business clusters.

In the UK, the Renewables Obligation on generators requires them to provide a percentage of electricity from renewable sources or buy out the deficit. In Germany, by contrast, a market-manipulating ‘feed-in tariff’ provides a price premium to generators (including households through micro-generation) for the renewable electricity they supply to the grid. The latter has been vastly much more effective in incentivising new renewable generation, and the costs are small when diffused across the system.

The industry already employs a quarter of a million Germans, ten times as many as in the UK (The Guardian, 6.08.2007). This ‘real’ economy approach is the way to revivify the economy and to take the hard long-term decisions after the bursting of the credit bubble and ‘New’ Labour’s infatuation with financial services, ‘making money out of other people’s money’ (Irvin, 2008, 14).

A new agenda

Answering these three questions will be key to whether Labour can emerge from its slough of despond. They provide a litmus test of any claims to party leadership. But they also provide a great opportunity.

For solutions to these questions, if found, will be self-reinforcing, setting the UK on a progressive path rather than accepting, as did ‘New’ Labour, that the country could and perhaps should never emerge from the shadow of Margaret Thatcher.

Universalism, through enhancing social trust, militates against ethnic conflict (Rothstein, 2005). Cultural diversity is a key asset for sustainable economic development (Florida, 2002). Green taxes are an ideal way to raise money for programmes to enhance well-being – as in the Liberal Democrat proposition that the fuel poor should be immediately assisted by funds released by reducing the free carbon emissions allowance of the generators.

It is this virtuous circle which explains why ‘New’ Labour has failed so significantly to export its brand elsewhere in northern Europe, where to varying degrees it already applies. Anyone who regularly visits France, Germany, the Netherlands and, particularly, the Nordic states immediately recognises the sense of social comfort absent in Britain.

One of the biggest single tests of the next Labour leader is whether they can play a full, rather than semi-detached, part in the Party of European Socialists. He or she will not only have to be able, like Blair, to speak another European language but to speak the language of Europe itself.

 

References

Beck, U. (2006) The Cosmopolitan Vision, Cambridge, Polity Press.

Bekemans, L, et al (eds) (2007) Intercultural Dialogue and Citizenship, Venice, Marsilio.

Brewer, M, et al (2008) Poverty and Inequality in the UK: 2008, London, Institute for Fiscal Studies.

Caulkin, S. (2008) ‘How to make $4bn without really managing’, The Observer, 27.07.2008.

Commission on Integration and Cohesion (2007) Our Shared Future, Wetherby, Commission on Integration and Cohesion www.integrationandcohesion.org.uk

Council of Europe (2008) White Paper on Intercultural Dialogue: Living Together as Equals in Dignity, Strasbourg, Council of Europe.

Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (2007) Environment – Innovation – Employment: Elements of a European Ecological Industrial Policy, Berlin. www.eu2007.de/de/News/download_docs/Juni/0601-U/035Arbeitspapier.pdf

Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (2006) Ecological Industrial Policy: Memorandum for a ‘New Deal’ for the economy, environment and employment, Berlin. www.cleaner-production.de/fileadmin/assets/pdfs/Standards/memorandum_oekol_industriepolitik_eng.pdf

Florida, R. (2002) The Rise of the Creative Class, New York, Basic Books.

Grassman, J. and Svedberg, L. (2007) ‘Civic participation in a Scandinavian welfare state: patterns in contemporary Sweden’, in Trägårdh, L. (ed) State and Civil Society in Northern Europe: The Swedish Model Reconsidered, New York, Berghahn Books, 126–64.

Guio, C. (2005) ‘Income poverty and social exclusion in the EU 25’, Statistics in Focus 13 http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-NK-05-013/EN/KS-NK-05-013-EN.PDF

Habermas, J. (2004) ‘Religious tolerance – the pacemaker for cultural rights’, Philosophy 79: 5–18.

Irvin, G. (2008) Super Rich: The Rise of Inequality in Britain and the United States, Cambridge, Polity Press.

Marmot, M. (2004) Status Syndrome: How Your Social Standing Directly Affects Your Health, London, Bloomsbury.

Noël, A. and Thérien, JP. (2008) Left and Right in Global Politics, Cambridge, Cambridge University Press.

Panic, M. (2003) Globalization and National Economic Welfare, Basingstoke, Palgrave.

Robinson, D. (2008) ‘Community cohesion and the politics of communitarianism’, in Flint, J. and Robinson, D. (eds) Community Cohesion in Crisis? New Dimensions of Diversity and Difference, Bristol, The Policy Press, 15–33.

Rothstein, B. (2005) Social Traps and the Problem of Trust, Cambridge, Cambridge University Press.

Wilkinson, R. (2005) The Impact of Inequality: How to Make Sick Societies Healthier, London, Routledge.

Wilson, R. (2003) ‘Two wrong calls: the third term horizon’, Renewal 11 (3): 38–49.

Wilson, R. (1999) ‘Liberal socialism and the future of progressive politics’, Renewal 7 (4): 16–28.

 

Notes

1. The Guardian, 28.07.2008.

2. Open Democracy, 31.07.2008(www.opendemocracy.net/article/ourkingdom-theme/the-challenges-for-milbands-progressive-fusion).

3. This is well evidenced, and elaborated, in Social Europe, the e-journal of the Party of European Socialists (www.social-europe.eu/home.html).

Renewal