Will the right face its 1989 moment?

by James Watkins

1989 was a bombshell for many people on the left. Any hopes that a communist utopia would flourish went up in a puff of smoke when the peoples of eastern Europe turned against their governments.

In Britain, the impact of 1989 was profound. The Communist party went into freefall, various factions split into further factions, Marxism Today went off the shelves and a further spur was given to the changes in the Labour party.

So why has there not been a “1989 moment” for the right? For in 2008, the confidence in laissez-faire markets should have gone up in a puff of smoke when the markets failed – and the only thing that held economies together was the intervention of the nation states.

The 2008 moment went against everything that Friedman, Hayek and other free market thinkers had been advocating. This was clear, conclusive evidence that rolling back the state and giving free rein to markets does not lead to a natural equilibrium in the economy. Former US federal reserve chairman, Alan Greenspan, said he was “surprised” by this. One former Tory Parliamentary candidate told me at the time that if free markets led to the collapse of all the banks and the mess that this would lead to, then so be it. This was the confused and muddled state the right was in back in 2008.

So, how is it that in 2011, despite the events of a few years ago, the right is leading the agenda on its plans to roll back the state via its “age of austerity” cuts agenda? One reason is that, unlike 1989, a new alternative was not forcefully put forward. For the contrast with 1989 is striking. Then, free market thinkers quickly filled the vacuum left by the collapse of communism. The privatisation agenda in Britain was stepped up a gear, and this example, combined with the further opening up of the European single market and the policy lead set by president George H W Bush, affected the course of events.

In 2008, there was no forceful alternative put forward. In part this was because – as luck would have it – the market failure happened on the watch of centre left governments, who got the opprobrium for the crisis but little credit for the state intervention to correct the markets. So, in 2011, it is now a distant memory that George Osborne opposed government action to get the economy back on track.

There was one other major difference between how responses were developed to the events of 1989 and 2008. In 1989, due to the nature of the changes, there was real engagement with peoples, and not just the political elites, to gain support for the free market agenda.

Regrettably, from 2008, the left missed the initial chance to stake out its alternative to the Friedmanite consensus that had dominated politics for so long. So, for instance, Barack Obama was impressive in harnessing mass support to win the White House from 2008 – but neglected this active engagement with supporters once the election was won.

This contributed, this summer, to the mass mobilisation of the Tea party movement, winning significant concessions from the White House in reducing the role of the state in public life. In Britain, the prime minister’s aide, Steve Hilton, is given airtime on his musings to end consumer legislation to kick start the economy – though it was the lack of firm regulation that led to the markets collapsing in the first place.

However, all is not lost for the left. For, sadly, the turmoil in markets are continuing, doubts are growing that cuts are the answer to achieving economic growth with people demanding answers to get jobs created in their communities. This is where Labour can provide this alternative.

For Labour, this means learning the lessons of 1989. Getting out a robust, clear and positive vision combined with a focus in mobilising support for the change – by articulating the stance that the state, as an enabler, can provide support for families.

These are the lessons for Labour today from 1989. If taken on board then, maybe, the right will feel the cold wind of a delayed “2008 moment”.

James Watkins is on the executive of the Labour movement for Europe.

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5 Responses to “Will the right face its 1989 moment?”

  1. JohnB says:

    If we are to overthrow the free-market right, we need to avoid buying into one of its historical myths, namely that before 1989 everyone to the left of Jim Callaghan (and maybe even him) was in thrall to the Soviet Union. Can you name me one person on the left, outside the CPGB, who still believed in 1989 that a ‘communist utopia’ was about to flourish in the Eastern bloc? Come to think of it, there weren’t many inside the CPGB either, and certainly none on Marxism Today (which was the whole point of the magazine), let alone (bizarre suggestion!) the Labour Party. Apart from a few lingering tankies those to the left of the Labour Party had lost any faith they had in the USSR in 1956, 1968, and during the Gramscian-Eurocommunist phase of the 1970s-80s, in search of a non-Soviet left alternative (from the Mayday Manifesto to Marxism Today – and much good it did us). Nor was the rise of the free-market right a consequence of 1989 as you sort of imply: it had already happened in the preceding decade.

    However, I agree very much with your analysis of the left’s spinelessness in putting forward even a moderate Keynesian alternative to the currently fashionable economics of suicide, let along the kind of root and branch change which common sense surely suggests is necessary now.

  2. AnneJGP says:

    Off the top of my head, this seems to be drawing a false analogy.

    Your “1989 moment” was actually populations deciding they’d had enough of living under a dictatorship, which happened to be left-wing. China seems to be going strong in its left-wing world view.

    In this country, if we “turn against our government” we can kick the blighters out through the ballot box, and do so, regularly.

    So, one might view the French revolution as the right-wing equivalent of that. In which case, England then was the equivalent of China now.

    Your “2008 moment” may well trigger deep and profound changes to any number of peoples and their world views. But those changes could be based around something as simple as a fear of living beyond one’s means, which was actually normal (among working people at least) until the 1960s or so.

  3. Rob Marchant says:

    @James: sorry, but I think the fundamental premise of this article is wrong. Markets did not fail in 2008: *financial* markets failed, and you are confusing the two. There has been no step change because it was these which needed rectifying, not the idea of a market economy.

  4. leftie says:

    ^good point. there’s a lecture on youtube called “why financial markets are different” where adair turner (chairman of the FSA) outlines this. a free market in, say, restaurants will generally give you better restaurants. it doesn’t work like that for banks, as we found out.

  5. Stephen W says:

    You also stunningly miss the point.

    Under leftie governments a massive crisis of public and private debt occurred, fueled by a mix of banker greed and the stupid policies of various governments, encouraging sub-prime morgatge lending, running huge deficits in a boom, the Euro etc. These leftie/interventionist governments then tried to solve the problem by running up even more massive debts and handing over vast sums of the public’s money to their rich friends among the greedy bankers.
    This has now led to even further chaos and destruction 3 years down the line, as this strategy continues to fail.

    Please explain to me which precise part of this means that the public should have naturally embraced more leftie government and running up debt more and more and more, i.e. precisely the things that got us into this mess in the first place.

    People ran a mile from leftie governments because they got us into this ridiculous mess. And they are supporting austerity because running up ever more debt is also what got us into this mess. It’s not rocket science.

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