A cautious approach works for Labour only when the economy is booming – not in times of crisis
Last modified on Wed 5 May 2021 07.28 EDT
Keir Starmer approaches his first electoral test since becoming Labour leader – the local and devolved elections on Thursday – with no shortage of advice on how to restore the party’s fortunes. One view is that Starmer must dissociate himself from Jeremy Corbyn’s policy platform and take the party rightwards, back to the moderate centre ground.
This argument fits with the standard academic account of Labour’s history since the second world war. Labour’s membership always wants to push the party to the left, but elections are won on the centre ground. So the party faces a constant dilemma, doomed to choose between ideology and electability.
Labour’s history therefore follows a familiar zigzag pattern: to win, it must move to the right, but when it does so the membership gets disillusioned with the compromises of office and pushes it back to the left. At that point, it loses and the cycle starts again. This time round, it seems, it is Starmer’s task to push Labour back to the right after the catastrophe of the 2019 election defeat.
But this is not the only way of reading Labour’s history. There is another interpretation, which better fits the actual story of the postwar period – and which suggests an alternative way forward.
In this interpretation of Labour’s policy shifts, the party’s oscillations between left and right have been a response not to the competing pressures of ideology and electability, but to the economic conditions the UK has faced in different periods.
Labour’s moves to its right (the terms are of course relative, and such a shift would mark a move towards the centre ground of politics as a whole) have always occurred when the British economy has been doing well: when growth has been steady and living standards rising. In these circumstances it seems rational for Labour to eschew a programme of socialist reform in favour of a more centrist economic policy, in which it focuses on trying to reduce inequality through higher public spending and a more generous welfare state.
This “revisionist” position (so called because it revised the traditional socialist approach which focused on reforming capitalism) was most famously articulated by the future Labour cabinet minister Anthony Crosland in the mid-1950s, when the UK had emerged from postwar austerity and economic growth was running at 4% a year. Crosland’s revisionism was revived by Neil Kinnock and Roy Hattersley in the late 1980s, when the economy was buoyant again after the recession of the early Thatcher years. By the mid-1990s and 2000s, the UK was experiencing its longest economic boom in more than a hundred years. Tony Blair and Gordon Brown saw no need for socialist reform when capitalism was generating huge tax revenues, which could be spent on health, education, pensions, child benefits and overseas aid.
But if Labour’s rightward shifts have occurred in periods when solid growth allowed them, so its leftward turns have been responses to economic crisis. In 1945, Clement Attlee’s government faced an economy in ruins: loaded with debt, its private industrial companies weak and badly managed. In such conditions Labour’s structural economic reforms – nationalisation, industrial planning, financial and trade controls – were widely regarded as economically necessary.
By the end of the 1970s British capitalism was again in profound difficulty, beset by the “British disease” of poor management and overmighty trade unions, and suffering from simultaneous high unemployment and inflation. So it was no surprise that Labour again turned to a more socialist policy stance, the so-called alternative economic strategy of nationalisation, planning agreements and import controls.
Fast-forward to the 2010s, and the economy was once again in crisis. The 2008 financial crash had exposed the fragile foundations of the economic boom years: soaring inequalities of wealth and income, low investment, poor productivity, stagnant wages and trade deficits. Once again Labour turned left, first tentatively under Ed Miliband, then more radically under Corbyn. New Labour’s purely redistributive stance was no use now: the economy needed structural reform.
Keen-eyed readers may have noticed the missing years of this story, when Labour was led by Harold Wilson. Wilson today is often seen as a rightwinger, so one might be forgiven for thinking that his electoral victories followed the Crosland-Blair blueprint. But they didn’t. Wilson was on the left when he became leader in 1963, and Labour’s winning manifestos in 1964, 1966 and 1974 were all leftwing platforms promising further nationalisations, industrial intervention and economic planning. And all were written when the British economy was in crisis and structural reform was therefore seen as necessary.
Contrary to the standard account of Labour’s history that the party wins only when it adopts a centrist position, Wilson – like Attlee – won by offering the voters a radical and credible platform to repair a broken British economy. Both leaders were able to make an ostensibly leftwing position the common sense of their day.
It’s not hard to draw a lesson for Starmer. None of the British economy’s problems exposed after the financial crisis have been solved; on the contrary, Covid has caused further damage. And new challenges demand radical responses: the climate and environmental emergency, the growth of precarious work, regional disparities, automation, an ageing society. In these circumstances a moderately redistributive economic policy on the New Labour model is clearly not sufficient. History suggests that Labour must again embrace its winning tradition of structural reform to a broken economic system.
There is in fact a wider moral in this story. It is too often assumed that political positions must be fixed: a person is left or right, and always so. But that need not be the case. There are times when a more centrist, redistributive approach may be appropriate to the economic conditions, and others when it is not. There’s a case that New Labour got it right when the economy was booming and redistribution was possible. But that was then. And this is now, when a cautious, moderate platform looks to be neither an economically appropriate stance, nor an electorally winning one.
Michael Jacobs is professor of political economy and Andrew Hindmoor professor of politics at the University of Sheffield
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