Taking ‘One Nation’ Labour to the next stage
We can agree that the tough positions Ed Miliband has taken on welfare and public spending since the spring are necessary, because Labour will not be trusted to govern if its numbers do not add up. But the immediate price has been a loss of definition, which is something else Labour cannot win without. It is problematic that many voters now see too little difference between government and opposition rather than too much. Labour will not return to power as a slightly nicer version of the coalition.
Yet we also know that Labour will not win as a party of protest either. The idea that victory would be assured if only the party hardened its opposition to the cuts is as much of a dead end as the strategy of tacking right to minimise areas of disagreement with the Conservatives. The problem is that to succeed Labour must convince those who are not persuaded that it stands for change as well as those who worry that the party stands for the wrong kind of change.
These sentiments appear to be opposites, but they are both products of the economic crisis and the insecurities it has generated. Much harder to grapple with than a straightforward shift to the left or right, they are expressions of a new politics of anxiety and resentment. This has caused both a heightened desire for change and a heightened fear of it. It has created new obstacles to wealth redistribution towards the bottom and new opportunities for wealth redistribution from the top. And it has produced a harsher, more judgemental focus on behaviour across the social spectrum, from welfare recipients to bankers.
By developing ideas like the ‘squeezed middle’, responsible capitalism and the need for responsibility at the top and bottom, Miliband has done far better at making sense of these conflicting pressures than anyone else. ‘One Nation Labour’, the term he coined at last year’s party conference to pull these themes together, won approval partly because it was seen as a shrewd move onto the terrain David Cameron had vacated with the retreat from ‘compassionate conservatism’, but also because it said something important about the state of the nation. Despite the promise that we were ‘all in it together’, there was a palpable sense that the burden of austerity was not being fairly shared. It worked because it encapsulated the idea of a patriotic egalitarian alternative.
As talk shifts from austerity to prospects of recovery, the temptation might be to regard One Nation as being of its moment. But the return of growth should be seen as an opportunity for Labour to put the distributional concerns that define One Nationism more firmly at the centre of the political debate. After years of falling living standards, our economic goal should be to direct the fruits of recovery to people on low and middle incomes while the financial elite repays its debt to the nation. Given their instinct to reward those at the top first, it is an offer the Conservatives would have difficulty matching.
But if One Nation Labour is to work successfully as an organising concept for Labour between now and the general election, two things will need to change. First, it will need to be given a much sharper populist edge with the themes of patriotism and egalitarianism brought out more strongly. Those who make money in this country have a duty to pay tax in this country. Bringing in skilled workers from abroad should be a last resort, not a first resort, with business investing more in British skills. Labour should set targets to reverse the decline in the share of national wealth distributed to wage-earners. A windfall tax should be imposed on the excess profits of energy companies to fund a national investment programme. Labour should stand for national recovery based on an ethic of patriotic endeavour.
The second thing that needs to change is that the link between Labour’s support for fiscal restraint and the reform of capitalism should be made more explicit. At the moment, these look like two different arguments made by two different parties, leading to a loss of definition and uncertainty about what Labour stands for. But, if we have learned anything from the crisis, it is that a Labour government that relies on distributing the surplus of an unstable, financialised variant of capitalism ends in economic and political disaster.
The tighter limits on public spending faced by the next Labour government make it all the more important to create a market economy that generates better social outcomes without the need for corrective interventions by the state. It means changes to corporate governance, a financial sector that works for industry, new forms of economic democracy, more employee ownership and a shift towards long-termism, manufacturing, exports and skills. A more patient, productive capitalism offers a route to long-term fiscal health while justifying the sacrifice of medium-term spending restraint. Reform and restraint should be seen as two elements of a social compact for national recovery, just as they were in 1945.
The return of growth may look like a gift to the Conservatives, but it is periods of recession that the left really struggles with. In a debate about how to sustain recovery and share the proceeds of growth, Labour should have an advantage, if used with skill and courage. The recent euphoria over the surge in house prices is a sign that little has really changed. We are still relying on asset-price bubbles to mask the decline in real living standards caused by a dysfunctional style of capitalism. Labour should argue forcefully that we cannot rebalance the British economy without rebalancing British society. That has to be the essence of the One Nation message.
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David Clark is editor of Shifting Grounds and was an adviser to Robin Cook