The financial crisis was unprecedented and complex. But the left’s interpretation of it tended to be straight-forward. Banks and bankers were bad. Government and politicians were good. Government saved the banks from themselves and would stimulate economies. This enlarged role for government made a “progressive moment” inevitable. Yet government is now being scaled back and the left is out of power across Europe.
The left must move beyond its misconceptions to recover. While Labour’s plans to close the deficit concede limits to government’s size, George Osborne was much quicker than Gordon Brown to acknowledge such limits. The lesson of the debate on the deficit during and after the general election is that the left cannot be abashed by fiscal reality. It must confront it squarely. This is a lesson that Barack Obama might now reflect upon as debate in the US on the size of government moves to a similar place to that in the UK in the six months or so prior to the general election.
Reluctance to acknowledge limits on government’s size indicate how little the third way shifted the left’s gut instincts. The girth of government is still too readily taken as a virility symbol of leftism. This is in spite of government sometimes being a shackle upon the people the left exists to empower. Of course, government isn’t always so. Often it is a saviour and liberator. But to only see these aspects of government is not to see the full picture.
Jim Larkin, a pioneer of the Irish trade union movement, said: “The great only appear great because we are on our knees. Let us rise”. Government keeps people on their knees when it pays people to do nothing while others work ever harder, penalises people for its mistakes in miscalculating tax credits and loses personal data on a grand scale. From the rural payments agency, characterised by late payments, to the learning and skills council, with its abrupt termination of 144 college building contracts, the catalogue of failing public institutions is considerable. It hasn’t gone unnoticed. Almost half the voters in the south believe that public spending under Labour was largely wasted and did not improve services.
They may not be wholly justified in this view, but it forms an important part of the present context. Within which, the notion, taken as given by much of the left, that the public would welcome an expansion of government in a “progressive moment”, was always flawed. The failings of the public sector under the last government, whether perceived or genuine, rolled the pitch for the aggressive bowling with which Osborne has dismissed the “progressive moment”.
The MPs expenses scandal, by encouraging cynicism about public service, also assisted this pitch rolling. No appeal to a revitalised Keynesianism or other reasoned argument could hope to override the emotional resistance to an argument from politicians in the aftermath of this scandal, and the long-term decline in trust that the scandal compounded, that said “let us have more of your money and control of your lives”. Which is what the argument for a bigger role for government within the “progressive moment” amounted to.
This isn’t to say that the public didn’t feel, and do feel, disgusted by bankers and let down by banks. It is to say that the left needs to acknowledge that people feel similarly about politicians and government. And understand why people feel so and act upon this understanding.
These feelings about banks and government seem consistent with the argument of a Labour party discussion booklet, Small Man, Big World, written by Michael Young in 1949. This was, as his later collaborator Peter Willmott summarised, that the large institutions of modern society tended to ignore the interests of ordinary people, who suffered collectively as a result. Ordinary people see banks and government, for the most part, as such large institutions. Fred the shed and an MP’s subsidised moat are closer in the public mind than the political class might like to admit.
The left’s recovery in the UK depends upon Labour’s ability to disassociate ourselves with these large institutions and to become realigned with ordinary people. This emphasis should be central to our attitude to banking reform. It should also be so fundamental to our approach to government that Labour comes to be synonymous not with more government, as in the flawed “progressive moment” thesis, but with a wholly different kind of government. This requires, as Patrick Diamond argues, moving beyond the Westminster model to change the state and citizenship.
Young wrote his pamphlet four years after drafting the most celebrated manifesto in Labour’s history. However, the enactment of this manifesto made him concerned about the implications of a centralising bureaucratic state. The left’s failure to grasp this insight, even after 60 years, explains the faulty expectation of a “progressive moment”. Our ability to now run with this insight will determine the strength and speed of our recovery.
Jonathan Todd is Labour Uncut’s economic columnist.