Since losing last year’s general election, Labour has broken its traditional habit of responding to defeat with introspection and division. Partly spurred on by the common purpose of its coalition opponents, unity has broken out in the party.

Paradoxically, while contributing to the party’s current poll lead, this sense of unity may also be related to the perception of many voters that they don’t quite know what Labour stands for. Although this carries obvious risks, in the short term party unity creates the space for constructive argument through which political definition can be forged.

And, while too much debate is currently focused on either abstract values – like fairness and equality – or micro-policies – like opposing particular cuts – between the very general and the very specific lie questions of broad orientation. These are the stakes in the ground that indicate where Labour stands on the big political and policy issues of the future: the shape of our economy, the nature of public services, the character of our welfare state, and the common life we build together. Together, these form the building blocks of a story that links the condition of the country to the project of the party.

Addressing these questions requires a spirit of honesty and pluralism in search of a creative tension between different strands of thought and practice. One such paradox which could prove fruitful is between New Labour and blue Labour. If these apparently contradictory worldviews engaged with each other, what sort of Labour party would emerge from the battle?

First, some definitions. In some ways ‘New Labour’ has become a deeply unhelpful political label, tossed around to the point of meaninglessness. But let’s take its general spirit, especially in its early phase, rather than specific policies. Its emblematic concepts and themes were modernity, progress, globalisation, mobility, flexibility, individual rights and universal values. Its orientation was for Labour to modernise Britain through an accommodation with capitalism and the pursuit of social justice via the state.

At first blush, the growing band of thinkers associated with blue Labour – Maurice Glasman, Marc Stears and Jonathan Rutherford – stand in direct opposition to this political perspective. They want to resuscitate the Labour movement’s concern for family, faith, flag, a sense of place, the dignity of work and the value of ordinary life and common institutions that make us human. They are critical of New Labour’s naivety about capitalism and over-reliance on the state, arguing that these combined to undermine relationships and turn people into commodities. They want Labour’s project to be about creating the conditions for ordinary people to lead decent lives together – by constraining capitalism, strengthening associations, and decentralising power.

These are, of course, shorthand for broad and general political perspectives, but they provide a guide, or pivot, for orientation and direction. Most promisingly, New and blue Labour are the smartest critics of each other. And on the fault lines of their disagreement lie the most important – and often most difficult – questions facing Labour. In some areas the paradox is illusory; in others it is real, as is evident if we look at the economic, public service and social policy challenges.

First, the tension between the best of ‘new’ and ‘blue’ would mean advocating a competitive, entrepreneurial and creative economy; one open to trade, investment and innovation. It would not endorse protectionist or inward-looking instincts, or linger under the illusion that an old, industrial age can be recreated. However, it would be discerning about claims of permanent and unprecedented transformation associated with a ‘new economy’. The world is not flat, capital is not rootless, the era of permanent employment has not ended. Labour’s political economy would attend to the reality of a significantly local, regional and national economy, such as the large domestically traded sectors, as well as globally focused activity.

This economic orientation would mean celebrating the incredible capacity of markets to incentivise innovation, drive prosperity and challenge the status quo. But it would also recognise that they won’t achieve this naturally; indeed, left unchecked markets can humiliate, dominate, and concentrate power. The friction of ‘new’ and ‘blue’ would generate a political economy pursuing a more relational, democratic and productive capitalism. It would bust monopolies and champion consumer power. It would support powerful city mayors able to drive economic development, and reforms to corporate governance to balance the interests of owners, workers, managers and users who have a stake in the firm.

One of its central priorities would be increasing the historically low levels of investment in business and the productive capacity of the economy. The main critique of financialisation would be the way it has starved capital and constrained private sector growth in other sectors and regions of the economy. It would support an expansion of university participation alongside the strengthening of technical skills and status. Its goal would be to unleash a new wave of solidarity and innovation to improve living standards and meet the needs of the country. Put another way, it would argue that Thatcherism wasn’t nearly entrepreneurial enough.

Critical engagement between ‘new’ and ‘blue’ would lead to a greater concern with the share of national wealth going to wages relative to profits rather than the level of the Gini coefficient. Reducing unjustified inequalities would be a necessary condition for a more democratic and relational society. There would be less reliance on state-led redistribution and a more robust engagement with the structure of market outcomes, such as steps towards a living wage and labour market institutions aimed at raising productivity and pay. It would oppose the idea that cutting public spending, regulation and corporation tax amount to a strategy for economic reform and renewal, though it would not fetishise higher taxes or argue that public spending is the solution to every problem. It would claim that George Osborne is right to want an economy driven by exports, investment and saving, but that his old-fashioned 1980s policies will not deliver it.

In a second decisive area of public policy – public services – the creative tension between ‘new’ and ‘blue’ would also generate a qualitatively different orientation for Labour. A commitment to high standards, strong accountability and diversity of providers would remain, but the descent of New Labour’s statecraft into paternalism and managerialism would be challenged. Centralism and targets would be kept in check to minimise the disrespect and demoralisation they can breed. Rather than defining equality as everyone receiving the same, greater localism would be embraced – balanced by basic minimums and tough intervention where services are failing.

Policy would seek to balance the interests of the people who use, work in and pay for public services. Power for patients, parents and citizens would be strongly advocated, balanced by a recognition that the quality of the workforce dominates most that is good (or bad) about our public services. At root, it would place relationships – and the conditions needed to make them flourish – at the heart of its agenda. That is essential to meeting the challenges of our age, whether they be loneliness, antisocial behaviour or the importance of soft skills. Practitioners would have greater power and respect – matched by real accountability for poor practice or bad work. This could provide the basis for trade unions to rejuvenate their role as independent advocates of professional status and guardians of good work standards.

The friction between ‘new’ and ‘blue’ would make this set of issues the central axes of policy debate, rather than public or private, market or state. In the short term, this would help to guide Labour’s response to government reforms, like free schools and GP commissioning. Rather than opposing ideas in the abstract, it would provide a Labour orientation against which to define the plans. So, the core problem with the proposed NHS reforms would be the denial of patient power; the bureaucracy of turning every GP into a manager; the downgrading of basic entitlements; and the absence of integration with social care which could enable the relationships essential to supporting people with long-term or chronic conditions.

In a third area – social policy – ‘new’ and ‘blue’ would be clear that society should be intolerant of those who commit crime or free-ride on the effort of others. Welfare would be reciprocal, but fresh ground staked out by matching the duty to work with the right to work through job guarantees – the welfare state would protect better and demand more. The objective would be support that is temporary, generous and conditional. New models of (non-state) social insurance – applying the spirit of the contributory principle to the reality of modern work and family life – would be sought as the basis for a majoritarian welfare settlement.

The paradox of ‘new’ and ‘blue’ is more intense on questions of liberty and community, where support for the universal and the individual on the one hand can clash with a concern for the particular and the collective on the other. For instance, Rutherford has criticised Labour as coming to stand for ‘everyone and no one, everywhere in general and nowhere in particular’. There are some genuine distinctions here that should not be smoothed over; Labour must regain the intellectual and political confidence to disagree. However, it is also wrong to suggest there is no space for a new orientation to be forged, rescuing the left from the circularity of the liberal versus communitarian debate. For a start, the vitality of community depends on leadership and individual initiative, while personal freedom rests on bonds of belonging and a shared fate that embody more than merely instrumental value.

The issue of immigration falls directly on this fault line, tied up with the politics of economic insecurity and cultural identity. There are no easy answers, but the conventional language and strategies of the left struggle to cope. On immigration policy directly, migration would be managed, with new arrivals welcomed but expected to contribute and engage. But this is far from enough.

On wider social questions, the tension between ‘new’ and ‘blue’ opens up terrain for Labour to rediscover a morally engaged voice, while not sacrificing its proud tradition of defending civil rights and opposing discrimination. Family policy would start with the pressures of bringing up children and making ends meet: low wages, long hours and expensive childcare. Marriage would be cherished as a precious institution, though not degraded by using the tax system to promote it. Civil partnerships would be celebrated as much for the value we place on loving, stable and committed relationships as the blow they strike for gay rights.

Within a secular state, our politics would embrace the contribution of faith to the fabric of society and the meaning it brings in people’s lives. All the major world religions share the fundamentally socialist ‘golden rule’ that we must do to others as we would be done to ourselves. On the signature social policy issue of the ‘big society’, a new orientation would see Labour arguing that Osborne’s economic strategy – of cuts to the state and subservience to the market – is killing David Cameron’s brilliant idea at birth.

This brief survey shows that in the friction between New Labour and blue Labour a fresh and attractive political orientation can emerge. On their own, each are insufficient. New Labour’s lack of a clear political economy or critique of capitalism fed through into a reliance on an increasingly exhausted statecraft and a whiff of elitism and disrespect for ordinary ways of life. Blue Labour is an eviscerating corrective to these tendencies. However, it faces hard questions too: turning its insights into a plausible economic strategy; giving a credible account of how society can be strengthened without simply resorting to the state; and showing how conservative instincts can provide momentum for the left. New Labour can help on each.

An engagement between the ideas and instincts of ‘new’ and ‘blue’ provides an axis for debate about Labour’s orientation – one rooted in democracy, people and relationships. Engaging with the tussles and tensions this throws up can help avoid a drift into complacency and conventional wisdom. It can develop a political story and policy agenda that renews the partnership between Labour and a broad majority of the people, one that is the basis for winning and governing again.

Photo Gui Trento